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Germany's Sonnen to set up a battery plant in South Australia

MELBOURNE, Feb 22 (Reuters) - German battery maker Sonnen GmbH will set up a battery manufacturing hub in South Australia state this year to tap what it sees as the fastest global growth market for solar rooftop storage, its Australia managing director said on Thursday.

The plant will make around 10,000 solar batteries a year for the first five years, once it is set up in six to nine months, Chris Parratt said. Sonnen is the world's largest producer of household batteries and solar energy storage systems.

"We believe that Australia will be the biggest market for storage over the next five years," Parratt told Reuters.

"At the moment, Germany is the biggest. But we think given the conditions in Australia: high energy prices; an affluent society; high penetration of solar; these things all add up."

Sonnen will import the battery cells, which are not manufactured in Australia, and rely on local supply for the rest of the products.

The company did not say how much money it would be putting into its South Australia investment.

Sonnen will also become the second battery maker to set up a "virtual power plant" in South Australia, which last summer saw blackouts ripple across the state, forcing mining giant BHP Billiton and aluminum maker Alcoa Corp to suspend production.

Sonnen's installed battery units will be linked together to serve as a power bank, absorbing power when there is a surplus of energy and releasing it to the grid when there is a shortage.

South Australian Labor party previously engaged entrepreneur Elon Musk to build the world's biggest lithium ion battery which went into operation on December 1, in time to feed the state's shaky power grid for the first day of summer.

The state government this week announced that it would increase its target for power produced by renewables to 75 percent by 2025 and also introduced a 25 percent target for renewable storage. (Reporting by Melanie Burton; Editing by Tom Hogue)