The UK Government has published its battery strategy

It's been an incredibly busy time over the last 2-3 years for those working on projects with a battery element to them.  This has very much been the case for a number of teams at Burges Salmon and so we had a particular interest when the Department for Business & Trade's UK Battery Strategy report was published over the weekend.  You can download it here.  

The report describes the government’s priorities and vision for battery in the UK and is based on a three-pronged approach:

• Supporting innovation and design of more advanced, efficient batteries, for example by exploring financing mechanisms to support scale-ups and making money available to research centres (like the UK Battery Industrialisation Centre) and commercial ventures (including the Advanced Materials Battery Industrialisation Centre)
• Enabling the development of domestic battery manufacture, including by way of planning and permitting reform and seeking to facilitate trade in critical minerals
• Promoting sustainability, by for example, seeking to incentivise investment in the circular economy and exploring how to maximise collection rates for end-of-life batteries.  

We'll be reviewing the strategy document in more detail over the coming days, but we've summarised below four interesting details that jumped out, on our initial reading. 

Identification of the need for access to scale-up finance

The UK is a great place to obtain funding for cutting-edge R&D, but the report highlights the difficulty companies have in obtaining financing to bring products into commercial reality.  The report highlights some recent investments facilitated by the British Business Bank and the UK Infrastructure Bank (UKIB), such as UKIB’s investment in Cornish Lithium and £60m loan to Pacific Green to develop Sheaf Energy Park but there is clearly more to be done. 

The Strategy outlines that £5 of private investment is expected to be leveraged for every £1 of spending from public sources.  So this is clearly about kick starting further investment and giving assurances to those willing to invest in the technology as a means of propelling the industry forward at speeds needed to cope with public consumption and the upgrading of assets related to the grid.  

Focus on critical minerals

Batteries need critical minerals and to grow a domestic manufacturing hub, we will need access to these in increasing quantities – according to one estimate quoted in the report, 15,000 tonnes of lithium, 90,000 tonnes of nickel, 11,000 tonnes of cobalt, 10,000 tonnes of manganese and 135,000 tonnes of graphite annually by 2030.  The government recently updated its critical minerals strategy and the report highlights plans to secure access to these vital resources against the backdrop of uncertainty as to which minerals we will need and in what quantities, given the fast-paced and responsive nature of battery development , with different chemistries and technologies evolving to address different market needs.

Opportunities for manufacturing equipment supply

Battery manufacture is highly sophisticated, requiring specialist equipment and controlled environments.  The report identifies that existing suppliers (based mainly in East Asia) are already operating at near-capacity.  There are therefore opportunities, given the scale of anticipated growth in the market, but cost will be a barrier.   According to the report, gigafactory construction costs are in the region of £85 to 100 million per GWh of capacity, with around 40 to 60% of the cost relating to process equipment alone.  

Taking a whole life-cycle view

As the battery sector develops, growing numbers of cells will reach the end of their life - 16,500 tonnes by 2028, rising to about 150,000 tonnes by 2035 according to an estimate quoted.  The report focuses on the development of a circular economy as a means to allow batteries’ value to be kept within the UK, estimating that 10% of EV critical mineral requirements could come from recycling by 2035.  For this to happen, the UK needs mechanical processing and mineral recovery facilities and responses to the call for evidence preceding the report suggest that there is appetite here to do this.

If you’ve read the report and seen something you would like to talk about, please get in touch.  Our battery and critical minerals specialists are always happy to chat and are involved in multiple projects and investments in relation to all scales of battery projects and transactions.