The UK Government is aiming to create a globally competitive battery supply chain by 2030. Industry legal experts Paul Young, partner, and Colin Bathgate, solicitor, at Shepherd and Wedderburn explore exactly what that means for the BESS sector.
The UK Government has recently published its first Battery Strategy, which outlines the foundations for future development of the UK’s battery industry.
The ambitious strategy seeks to position the UK as a world leader in sustainable battery design, manufacture and use, underpinned by a thriving battery ecosystem, all by 2030.
Developed with the UK battery strategy taskforce, the policy acknowledges the difficulties currently facing the Battery Energy Storage System (BESS) sector. These include volatile supply chains, including a scarcity of raw minerals and potential over-reliance on specifically Chinese imports, which accounted for nearly £1.8 billion worth of battery packs in the UK in 2022.
Despite these challenges, the battery sector in the UK is well-established, and the hope of the strategy is to cement the UK’s position as a world leader in the battery sector, taking full advantage of the projected growth of the battery market in the coming decade.
This is to be achieved by playing to the UK’s existing strengths, specifically battery innovation. The UK ranks third in the world for research quality, and fourth in the world in terms of the enterprise value of battery start-ups.
However, the strategy does not address how recent failures in the domestic market, such as the insolvency of Britishvolt and AMTE Power recently being placed into administration, will be mitigated.
The UK Battery Strategy explained
The strategy builds upon the UK’s existing research and advanced manufacturing base, with a triple focus on ‘design, build and sustain’.
Design
The strategy envisages smaller, lighter batteries with greater capacity being designed in the UK by companies and research bodies. Supporting innovation, assisting with funding and maintaining stringent safety standards are all areas the strategy focuses on.
© Shutterstock / IM ImageryBuild
Working with the domestic battery industry and international partners, the policy plans to ensure the UK supply chain can continue to support growth in the industry, including both the domestic and export markets. Ensuring a robust supply chain and international collaboration will be key.
Sustain
The policy will seek to enable the development of a sustainable battery sector. This will be supported by regulations across the supply chain, including raw materials and recycling, while ensuring a pool of employees with relevant skills and regulatory reform are involved to encourage investment in the circular economy.
This will certainly play to the UK’s traditional strengths. But, with the potential for a divergence of regulation between the UK and the EU post-Brexit on aspects affecting the sector – such as recycling – it will be interesting to see how this element of the strategy will play out.
In addition to the design, build, sustain approach, the policy also outlines some additional commitments the government will make in relation to the battery sector.
These include providing over £2 billion of support to research and development (R&D) until 2030, an additional £38 million of support to the UK Battery Industrialisation Centre and exploring opportunities to establish R&D centres.
What are the implications for the BESS sector?
The energy storage capacity in the UK in 2023 was 1.38GWh. This is expected to rise exponentially to nearly 10GWh by 2030 and nearly 20GWh by 2035.
The opportunity for UK BESS is huge, and, crucially, the strategy signals government acknowledgment of this potential.
To facilitate this growth in storage demand, the strategy seeks to speed up grid connection waiting times and reform the planning and consenting process to allow quicker approvals. As grid connections are one of the biggest challenges facing BESS projects, this will undoubtedly be welcome news to the sector.
In addition to providing improvements to infrastructure, the strategy also highlights the previous support government has provided to the BESS sector. This includes £69m of capital funding available to start-ups developing longer duration batteries, as well as the new UKIB mezzanine loan product available to BESS developers.
While the focus on grid connection and planning is undoubtedly positive news, the strategy is by no means a silver bullet for the BESS sector.
© Shutterstock / petrmalinakThe future of the UK BESS sector
While the strategy acknowledges that there are higher subsidies in other countries, it has not taken this approach. However, that said, generous financial support is to be made available with a particular focus on the BESS sector.
The key takeaway is that, while the UK may not provide the highest levels of subsidies for battery development, targeted funding is to be made available to increase investment in the sector and to support the existing high-level R&D facilities.
Additionally, investment in the planning process and infrastructure to develop projects will reduce the time taken to get projects live, thus making them more profitable.
However, the impact of Brexit on regulatory divergence with the EU and whether the battery sector can develop a domestic supply chain remains to be seen.
Shepherd and Wedderburn at All-Energy 2024
The UK energy sector is changing fast, so staying informed and accessing specialist legal advice is more important than ever.
All-Energy 2024 marks a decade of headline sponsorship by legal experts Shepherd and Wedderburn. Taking place this year at Glasgow’s SEC on May 15-16, this event presents a unique opportunity to share knowledge, forge relationships, and chart the future of one of the UK’s most dynamic and innovative sectors.
Hosting a range of Speaker Sessions, Shepherd and Wedderburn will be sharing specialist legal and commercial insights into trends affecting the clean energy sector, from offshore wind development and sustainable cities to energy efficiency and onshore renewables.
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