The South Australia Labor government has scored a major coup, announcing that leading German battery storage company sonnen is to establish a battery manufacturing plant in Adelaide, creating more than 400 jobs.

Sonnen, which has entered the Australian domestic market with its “sonnet-flat” battery storage package in 2016, says it intends to manufacture 50,000 battery storage units in Adelaide over the next five years.

That compares to its sales to date in Australia of more than 1,900, but sonnen Australia boss Chris Parratt says the market is running hot. “Everyone wants a battery.”

The manufacturing plant proposal also follows commitments by the state Labor government to make $100 million available for “interest-free” loans to enable 10,000 homes to install solar and battery storage.

The Opposition Liberal Party proposes a $2,500 grant for battery storage, while Labor has also unveiled a Tesla-led “virtual power plant” to install batteries in 50,000 homes.

The announcement follows a flurry of major news from the Labor government as it enters a bitter and hard-fought election that has renewable energy policies at its heart.

These include the state’s 75 per cent renewable energy target, a 25 per cent renewable storage target, and numerous individual renewable energy and energy storage projects, including batteries, pumped hydro and hydrogen.

Sonnen has been considering a manufacturing plant in Australia for some time, and appears to have been swayed by state government support, particularly its newly announced “interest free” loans, where preference will be made for locally-sourced products under the interest free scheme.

Parratt says the manufacturing plant, to cost “double figure millions” (of dollars), would target both Australia and overseas markets.

“It realises our expectation that Australia will become the world’s number one market for energy storage systems,” Parratt says.

“This partnership not only underscores South Australia’s reputation as the centre for energy policy in Australia, but provides an opportunity for South Australian households to gain access to sonnen technology at fair prices to dramatically reduce their energy costs.”

Sonnen has manufacturing plants in Germany and the US, and intends to make the Adelaide plant its central shipping facility for Australia and the Asia and South Pacific region. Its regional headquarters will also move to Adelaide, from Sydney.

It says the new manufacturing centre and head office will create 130 jobs in Adelaide, growing to 190 within five years, and with a further 300 installation jobs to be created within six months of the centre’s opening.

Parratt says the economics of battery storage manufacture is based on volume. Cells will be imported but all else will be sourced locally. Currently, too much capital is tied up by the time delay in shipping storage from Germany or the US.

“The economics is about volume,” Parratt told RenewEconomy. “We can go to China and build stuff there, but there is no market in China. We would like to have it the plant up and running and produce our first storage system by the end of the year.”

He is confident that the plant will go ahead regardless of who wins the upcoming election, because the Opposition Liberal party also has its own $100 million plan to encourage battery storage in 40,000 homes in the state,

Sonnen’s unique “sonnen flat” scheme operates like a mobile phone payment scheme. If the household owns the system outright, they pay only a flat monthly fee of $40-$60 a month for their electricity needs.

State energy minister Tom Koutsantonis said the new manufacturing plant would mean South Australian could buy battery storage systems made locally.

“I look forward to the first SA-made sonnen batteries rolling off the production lines and into South Australian homes – delivering cheaper power through more renewable energy,” he said in a statement.