Interest in renewable energy and clean technologies is at an all-time high amid growing public concern over our changing climate. How can Australian manufacturing capitalise on the opportunities this shift represents? By William Poole.
It’s been an eventful summer. While the bushfires dominated the headlines, Sydney faced widespread flooding following its heaviest rains in three decades, while Canberra was battered by hailstones the size of golfballs. The Great Barrier Reef is reportedly on the brink of further major coral bleaching, and drought conditions persist across much of the country.
Meanwhile, schoolchildren abandoned classrooms to join nationwide Climate Strike demonstrations, and police battled protesters outside a mining conference in Melbourne. New research revealed that Australian summers are now on average 31 days longer compared to half a century ago. And Shane Warne voiced concern about how rising temperatures might impact cricket.
Recent opinion polls indicate that more than three-quarters of Australians are now concerned about climate change, with a strong majority wanting stronger government leadership in addressing the issue. Business attitudes are shifting too, with the the Australian Climate Roundtable – whose members include the AiGroup, the Business Council of Australia (BCA) and the Australian Energy Council – calling for “deep reductions in Australia’s net emissions”.
There’s something in the air.
Except, perhaps, inside the ‘Canberra bubble’. At federal level, energy and emissions policy remains a long-favoured political football. In February, when Anthony Albanese committed to a target of net-zero emissions by 2050, there was justified scepticism over the lack of detail on how Labor would meet this target. However, the Coalition’s criticism, that Labor had not presented costings for the plan, carried a distinct impression of opportunistic point-scoring. Given the frequency of cost blowouts in much shorter-term government projects, forecasting for a 30-year timeframe seems ambitious. And the Government doesn’t exactly have a clear set of policies in this area either.
Moreover, the net-zero target is hardly controversial. Most state and territory governments – Liberal and Labor alike – have already signed up for it (South Australia is on track to reach net-100% renewable power by 2030), as have the BCA, and several major corporations including Telstra, BHP and AGL. Around 80 countries and 400 cities have adopted the target, in a charge led by British Prime Minister Boris Johnson – not exactly your typical tree-hugging “greenie” radical. Indeed, the Government arguably already took on the target in 2016 when Malcolm Turnbull ratified the Paris Agreement on climate change.
But the continued political skirmishing over emissions and energy has consequences that are felt throughout the country and the economy. According to the Clean Energy Council (CEC), new investment in large-scale renewable energy projects slumped by more than 50% between 2018 and 2019, from 51 projects worth $10.7bn, to 28 projects worth $4.5bn. Kane Thornton, Chief Executive of the CEC, cited policy uncertainty, along with regulatory risks and under-investment in transmission, as key drivers behind the fall, adding that this has implications for the reliability and affordability of energy supplies.
“A continued slow-down in new investment will put greater pressure on reliability and power prices as Australia’s old coal-fired power stations continue to close,” Thornton said. “New investment is critical to replacing these coal-fired power stations and delivering on Australia’s emission reduction targets.”
The collapse in investment reflected earlier findings from the CEC’s latest Clean Energy Outlook Index, released in November, which showed a drop in confidence in clean energy investment over the preceding six months.
“Without strategic and holistic reform of the Australian energy market, we are going to continue to see confidence in new clean energy investment continue to fall,” said Thornton. “Australia has abundant natural resources and huge potential for renewable energy generation, but the industry has been plagued by policy and political uncertainty at the federal level for several years and we are now starting to see the impact of this.”
Despite these setbacks, however, there are still Australian companies out there developing innovative new clean technologies and embracing the opportunities these create for the manufacturing industry in this country.
Capricorn Power – An engine for opportunity
The story of Capricorn Power begins with former CSIRO scientist Dr Noel Barton AM. Having long recognised the challenge posed by global warming, Dr Barton set about finding ways to tackle it after retiring from the CSIRO. The area where he realised he could make a difference was heat engines.
“Most people haven’t heard of heat engines, but over 75% of the world’s power comes from them,” say Mike Hodgkinson, CEO of Capricorn Power. “And yet 72% of the electricity generated by heat engines is wasted. They’re not all that efficient. So Dr Barton went out to create the world’s most efficient heat engine.”
Dr Barton took his concept to some angel investors, who initially thought it too good to be true, so they hired award-winning Geelong-based engineering company Austeng to independently assess it. Not only did the concept hold up, but Austeng liked it so much they took an equity stake and became Capricorn’s manufacturing partner. Formally established in 2017, the company began work on a prototype; in a nice case of Australia’s manufacturing past laying the ground for its potential future, testing was conducted using engines from second-hand Holden Commodores.
“In early 2018 we won a Regional Innovation Grant, which allowed us to build the first prototype,” Hodgkinson continues. “We successfully tested it at a customer site as well as in the factory. Then we designed the commercial engine. We lost a bit of time raising capital, then at the end of last year we finally raised investment through crowd-sourced funding and got a grant from the the Advanced Manufacturing Growth Centre (AMGC), which means we’re now actually in the final stage of detailed design for a demonstration in October.”
Capricorn today operates as a lean, light-on-its-feet start-up, working out of office space within the University of Melbourne. Barton remains involved as the company’s Chief Technology Officer (CTO), with four permanent employees bolstered by a rolling line-up of contractors who come onboard for particular projects, bringing the total head count to around 16.
“I expect we’re about to hit the fast-growth period where you double the head count every year, which is a very exciting time,” adds Hodgkinson.
Capricorn’s technology has applications across a range of areas encompassing energy efficiency and renewable energy. The Barton engine can essentially be deployed with any heat source exceeding 300 deg.C – for example, furnace waste, landfill gas, exhaust heat or waste incineration – and generate electricity.
“The analogy is that people use solar panels on their roofs at the moment to generate electricity,” says Hodgkinson. “We attach a container to your waste heat source, and generate on-site electricity. And that’s a lot more electricity. We’ve got a footprint of less than 0.5% of solar PV panels per kilowatt-hour, so we generate with a much higher power density. And just like solar PV, anything you don’t use can be exported onto the grid.”
Compared with similar technologies already in operation, the Barton engine offers several advantages. For example, the most widely used process, the Organic Rankine Cycle (ORC) engine, generates a fraction of the electricity and is limited in the settings where it can be installed. Moreover, Capricorn’s system is compact, versatile and scalable, delivered ready for installation in a standard 20-foot shipping container.
Eventually Capricorn’s technology could be deployed in energy utilities or in heavy manufacturing operations such as BlueScope Steel. Initially, though, Capricorn is targeting small and medium enterprises (SMEs) where it can offer clear energy efficiency gains. One early customer is Victorian manufacturer Furnace Engineering, which saw an opportunity to use Capricorn’s system coupled with thermal storage to load-shift the heat it creates overnight for electricity generation during the day.
Hodgkinson sees enormous export potential for his product: “I like to call it one of the biggest market opportunities in the history of markets, because the electricity market is large and growing. As the world’s population grows, it’s driving a desperate search for sustainable energy. Water-free energy as well. The Loy Yang Power Station uses about 20% of Melbourne’s water supply. As water becomes more scarce, that’s not sustainable. Our technology is water-free. So does this have export potential? Absolutely. If we can keep control of the intellectual property in Australia, this could be very big in terms of exports overseas.”
Keeping that IP in the country is, according to Hodgkinson, one of the big challenges in developing innovative products and bringing them to market – a challenge he partly attributes to difficulties in raising early-stage investment: “There’s a real problem in Australia in terms of raising early stage investment, so it’s a pressing issue to keep IP in Australia. A lot of companies end up having to take on investment from overseas, which then draws them overseas.
“The biggest challenge for commercialising products is that it’s not enough to be right about something. You’ve got to be right at the right time. And more important than creating a great product, you’ve got to have customers that want to buy it.”
Looking to the future, the team at Capricorn is currently heavily focused on October, when the first commercial engine is due to be demonstrated. After that, once the system’s reliability is proven, Hodgkinson anticipates the business will be able to ramp up quickly. One area that is gaining momentum is in the bio-energy space.
“We’ve got a partnership with a pyrolysis provider,” Hodgkinson explains. “Pyrolysis is taking waste, particularly green waste, and turning it into heat and biochar. This is a form of carbon capture and storage, because the biochar locks up the carbon for hundreds of years. So it’s almost an agribusiness play, because you can use the biochar for feedstock and enhancement of soil for agricultural production. And we take that heat and turn it into electricity. And our technology enables that to happen at relatively small scale. We’ve got a few projects we can host at landfill sites or other suitable locations, so it’s these distributed smart energy hubs that we can hook in. Wherever there’s green waste, we can put one of these systems in. And of course, those are manufactured systems as well.”
Indeed, Hodgkinson sees great opportunities for Australian manufacturers in renewable energy and right across clean tech: “The clean tech space is enormous; it is an absolutely huge opportunity. There’s no reason why innovative Australian companies can’t make the most of that. It’s like a frontier opening up at the moment and people should grab it while they can, or obviously other companies around the world will take it instead. Australia certainly has world-leading ideas. Our challenge is commercialising them and taking full advantage of them globally.”
1414 Degrees – Hot prospects
Based in Adelaide, 1414 Degrees specialises in large-scale energy storage systems. The company was first established in 2009 by a group of investors who recognised that the rise of renewables would create a need for storage to shore up the intermittency of electricity supplied from renewable sources. However, unlike electro-chemical batteries of the kind marketed by Elon Musk’s Tesla, 1414 Degrees’ devices store energy as heat in silicon, which can then be used either as a direct heat source, or to drive turbines and generate electricity.
“Our device is not a battery,” says Dr Kevin Moriarty, CEO at 1414 Degrees. “We do use electricity to charge it, but we store it thermally, recover that energy as thermal energy, and then we can use it to drive turbines or to provide heat – in the same way that conventional power stations are often positioned next to industry to provide heat for industrial processes.
“When you charge or discharge lithium-ion or lead acid batteries, it causes a chemical change. We’re not making any chemical changes to the silicon. It’s like water freezing and melting and then refreezing, we do the same with silicon. Pure silicon melts at 1414 degrees Celsius – hence our name.”
While working at such high temperatures requires some specialised engineering, Moriarty maintains that 1414 Degrees’ device is relatively simple, likening it to “a giant esky” – albeit with an extremely strong steel shell. Moreover, while minerals required for batteries, such as lithium, are comparatively rare, silicon is the second-most abundant element in the Earth’s crust. Silicon also has close to the highest latent heat of any element. And while the chemicals used in batteries eventually become depleted and can be difficult to recycle, the silicon in 1414 Degrees’ machines remains unchanged and can be reused in perpetuity.
“Batteries are lovely things,” says Moriarty. “But they are good for short-term supply, not the industrial scale we work at. Our devices are built to be cycled as often as possible, preferably at least once a day, and they don’t degrade in performance or capacity. In fact, they’re most efficient when kept working around the clock.”
Batteries are also direct current machines, whereas 1414 Degrees’ systems are based on alternating current. This means they don’t need to be close to an energy generation source, be that a wind or solar farm, or a conventional power station. Indeed, the devices are designed to be positioned around the electricity grid.
“We’ll probably position most of our storage out around the grid because we want to supply heat to industries. We’re positioning and building devices for a bunch of industries that have come to us saying ‘We want a solution for our heat. Electricity also, but batteries can’t do heat, and we want to lower our heating costs.’ So, our technology is currently being driven by industries – many of them, very large industry.”
Today 1414 Degrees employs a team of 23, most of whom are engineers. One of its devices has already been operating for 12 months at SA Water’s wastewater treatment plant in Glenelg. Biogas produced by the plant had been burnt off using gas engines. However, by-products of the gas include hydrogen sulphide, which was becoming sulphuric acid, and abrasive compounds that damaged the engines. SA Water figured that 1414 Degrees’ system could cleanly burn off the gas without the need to service or replace engines. The heat generated would sustain the microbes needed to break down the sewage in the process vats, and the accompanying energy could be stored and time-shifted to when power prices are high on the grid.
“SA Water asked us to test whether our device could replace or augment their biogas generation,” says Moriarty. “They asked us to put in a pilot machine, which we’ve done, and it operated – to everyone’s very pleasant surprise – instantly. It’s a 10MWh device, roughly the size of a shipping container, and it’s operating very satisfactorily.”
Another project in the pipeline has seen a feasibility study undertaken on installing an electrically charged device at the Stone & Wood brewery in Murwillumbah, New South Wales, later this year to replace the facility’s current LPG-fired boilers. And the company recently purchased SolarReserve Australia II, as part of a plan to install its technology at the Aurora Solar Energy Project near Port Augusta and deliver stable power to the grid.
Moriarty sees a significant breadth of industries where the technology could be implemented: “Everybody from packaging manufacturers to breweries, through oil refineries, food processing, especially large ones… We’re mainly interested in the big end. And power stations, even coal- or gas-fired ones, have been looking for ways to even out the big variations in power prices on the grid. They think it might be good to store the energy and then regenerate it.”
It has been a lengthy undertaking getting 1414 Degrees and its innovative products to its current position, and Moriarty emphasises the need for a dedicated team: “As with any new technology, you might have the right idea, but you’ve got to actually come up with a device and get it working. You do need engineers and investors who are all prepared to invest the time and money in a relatively uncertain outcome. You need people driven by an understanding of the need for something new, people with a certain amount of what I call ‘relentless optimism’ that you’re going to come up with something that works.”
Nonetheless, he anticipates substantial interest in 1414 Degrees’ products, both in Australia and overseas: “There is huge demand. We haven’t had to do any marketing to potential users or customers of our systems. They want to reduce costs, but in many cases, it’s been driven by two things: to have a reliable supply of heat and electricity, and to reduce emissions.”
It all seems to spell out a lot of positives for Australia: a groundbreaking clean technology, developed locally, using an element highly prevalent in the Earth’s crust, in a country with a strong record of digging stuff out of the Earth’s crust. Moriarty says most of the silicon will be sourced from smelters in Western Australia. But what about opportunities for Australian manufacturers?
“Well we already use them,” he says. “There were about 100 different suppliers for the biogas test, which we manufactured here in our own workshop in Adelaide. Everything from electrical components through to steel fabrication. There’s a lot of stuff that was made in Australia, manufactured to our specification, and a lot of specialised expertise from companies.
“Down the road, we’re going to get big fast, so there’s going to be a big demand for everything. We’ll effectively create a new supply chain for building these silicon storage modules, thousands of tons of containment. There’s going to be a lot of manufacturing activity associated with that.”
Grasping the potential
What’s striking about both Capricorn Power and 1414 Degrees is that neither of them are working in areas typically associated with renewable energy or clean tech. Thinking about those sectors might conjure images of wind turbines or solar panels. But these two companies are instead developing innovative, high-value products and technologies that occupy very specific niches, providing solutions to very specific problems. Both companies are engaged in a very Australian kind of innovation, and they tick a lot of the boxes usually cited as defining characteristics of the type of business that will provide the foundation for advanced manufacturing in Australia in the future.
Perhaps that’s the problem that has dictated the political and commercial response to climate change up to this point: there’s been an overwhelming focus on the cost of addressing the problems, rather than the opportunities that flow from finding those solutions.
It’s a point not lost on Professor Ross Garnaut. An economist and professorial research fellow at the University of Melbourne, in 2008 he produced the Garnaut Climate Change Review for the Federal Government , examining the impact of climate change on the Australian economy and outlining potential policy responses; he provided an update for the review in 2011. Last November he published Superpower: Australia’s Low-Carbon Future, a book detailing how Australia could become an economic superpower in a future post-carbon world.
At a launch event for the book, Garnaut described how renewable energy costs have fallen far faster than he had forecast in his reviews: “I had to make assumptions about how rapidly the cost of renewable energy would fall – by about 3% per annum. In the decade after that, costs for solar fell by 85%, which is much greater than 3% per annum. We’ve also had very rapid reductions in the cost of storage of power. So in the best locations, with the richest renewable energy resources, it’s now substantially cheaper to produce power from new sources than from a new coal or gas power station.”
Moreover, the world’s richest renewable resources, in terms of wind and solar, are in Australia – “by a very wide margin”, according to Garnaut. “So in a world in which we’ll be producing everything with zero emissions, as we have all agreed to do (under the Paris Agreement), in Australia we’ll have some special advantages. We’ll be the low-energy-cost country in the world if we make good use of these resources.”
Garnaut sees all sorts of possibilities flowing from this for Australia, from exports of zero-emission industrial products such as ammonia, to transmission of electricity to Asia via high-voltage cables. He sees a parallel opportunity in our abundant forests and woodlands for sequestering atmospheric carbon in the soil, potentially generating much needed income for rural Australia through the sale of carbon credits.
One particularly promising area is in metal exports. Australia is already the world’s largest exporter of aluminium and iron ores, which are processed into metals overseas, often to then be sold back to us. Garnaut envisages Australia becoming a global hub in the manufacture of zero-emissions aluminium and iron – the latter using green hydrogen.
“If we turn one-tenth of our exports of iron ore, and one-quarter of our exports of aluminium exports into metal, then that will produce more income and jobs and exports than all of our coal and liquefied natural gas exports.”
In an article he wrote recently for The Conversation, Garnaut outlined some of the policy steps the Government should adopt to realise this opportunity. But he also stresses that events elsewhere will dictate the pace of change, as other countries move quickly to decarbonise their economies and industries
“Movement will come gradually, initially with public support for innovation; then suddenly, as business and government leaders realise the magnitude of the Australian opportunity,” Garnaut wrote. “The pace will be governed by progress in decarbonisation globally. That will suit us, as our new strengths in the zero-carbon world grow with the retreat of the old. We have an unparalleled opportunity. We are more than capable of grabbing it.”