Energy storage will play a significant role in the future of the UK energy sector. Effective storage solutions will benefit renewables generation, helping to ensure a more stable supply and give operators access to the Grid ancillary services market. The National Grid's Enhanced Frequency Response programme will provide a welcome catalyst for a significant level of battery storage deployment in the UK.
However, an important factor that can be overlooked by parties involved in new battery storage projects or investing in existing projects is that battery storage falls within the scope of the UK's producer responsibility regime for batteries and other waste legislation. This creates additional lifecycle liabilities which must be understood and factored into project costs, but on the positive side, the regime also creates opportunities for battery recyclers and related businesses.
This briefing explains how the Producer Responsibility regime and other waste legislation will affect those involved in the funding, development and supply chain of battery storage projects.
Producer responsibility and battery storage
Producer responsibility is a concept from EU legislation which aims to encourage the recycling and recovery of certain products and ensure that the costs are borne by the organisations placing those products on the market. Such organisations (which may be manufacturers, importers or distributors depending on the legislation) are termed "producers" under the producer responsibility regime. There is UK legislation which implements producer responsibility regimes for packaging waste, waste electrical and electronic equipment (WEEE) and batteries.
The producer responsibility regime for batteries is set out in the Waste Batteries and Accumulators Regulations 2009 (the "Regulations"). The regime applies to portable (household) batteries, automotive batteries and also, importantly, to industrial batteries. Batteries used in battery storage projects are likely to be classed as industrial batteries.
Producers of industrial batteries
Under the Regulations, industrial battery producers are obliged to:
- take back waste industrial batteries from end users or waste disposal authorities free of charge and provide certain information for end users
- ensure all batteries taken back are delivered and accepted by an approved treatment and recycling operator
- keep a record of the amount of tonnes of batteries placed on the market and taken back
- register as a producer with the Secretary of State
- report to the Secretary of State on the weight of batteries placed on the market and collected in each compliance period (each 12 months starting from 1 January).
A "producer" under the Regulations is not only the manufacturer of the battery. It is "any person in the United Kingdom that, irrespective of the selling technique used, including by means of distance communication, places batteries, including those incorporated into appliances or vehicles, on the market for the first time in the United Kingdom on a professional basis".
This means that producers include:
- a developer, EPC contractor or equivalent supplier with a UK presence (trading arm or office) that imports batteries into the UK and then sells them wholesale in the UK
- A company with a UK presence which imports battery storage units (which include the batteries) into the UK and then sells them wholesale in the UK
- UK manufacturers of batteries used in battery storage units that sell to end users or to retailers
- UK manufacturers of battery storage units (which include batteries) that sell to end users or to retailers.
You can avoid being a producer if you:
- import batteries into the UK and then retain them purely for your own use (although you would still be responsible for the costs of recycling your batteries)
- import batteries into the UK and then sell them overseas without placing any on the UK market
- buy batteries or battery storage units wholesale from another company inside the UK
- import housing and connection equipment for battery storage units into the UK without batteries and then buy the batteries from another UK company
- sell batteries from overseas directly to UK end users via the internet and have absolutely no physical UK presence
- are a lenders, shareholders and other funder of someone who is a "producer"
- are the landlord of a site used for a battery storage project.
Costs for producers
The most significant costs for complying with the Regulations in respect of battery storage projects are likely to be in relation to the take back obligation. A producer will have an obligation to take back waste industrial batteries free of charge from an end user:
- if the producer supplies new industrial batteries to that end user during a compliance period (often referred to as the new-for-old take back)
- if the end user is not able to return waste industrial batteries to his supplier under (1) (for example, when not purchasing new batteries in the same compliance period), and if the waste industrial batteries are of the same chemistry type as the new industrial batteries that the producer places on the market in the compliance period in question, or in any of the preceding 3 compliance periods. The expectation at the time the Regulations were made was that end users would first approach their original supplier, although this is not a requirement in the Regulations.
- if an end-user is unable to dispose of waste industrial batteries by either option (1) or (2) above (for example, when a chemistry type has not been placed on the market for a number of years). In these circumstances only, the end user may contact any current producer of industrial batteries.
Take back in practice
The costs of take back in respect of portable (household) batteries are not borne by producers of these batteries in the same way. Such producers are required to join a batteries compliance scheme. The costs of recycling and recovery are borne by compliance schemes who in turn charge the costs to their members collectively.
The Government consulted on introducing the same arrangement for industrial batteries in 2008. However, the consultation showed that there was already a well-established market for industrial and automotive batteries which was delivering an overall recycling and recovery rate of 95% of batteries. This is because of the intrinsic value in the materials used in industrial batteries.
The Regulations therefore provide that the take back obligations do not prevent a producer concluding an agreement to make arrangements to finance the net costs of the collection, treatment and recycling of waste industrial or automotive batteries which differ from the arrangements provided for under the Regulations. This might include sharing the costs and profits with brokers, recyclers or end users.
The issue for battery storage projects (and also electric car manufacturers), however, is that the technology needed to recycle and recover the batteries used, or at least needed to do so economically, may not yet exist. This potentially undermines the rationale behind the take-back arrangements in the Regulations and could create a significant risk for battery storage projects.
Similar issues arose in respect of lithium ion batteries for laptops when these first appeared on the market. Eventually, the recycling industry developed the technology required to separate the components of these batteries and recycle them but capacity is still limited.
Waste legislation and battery storage
Putting aside the take back obligations under the producer responsibility regime, batteries have the potential to cause harm to the environment if the chemical contents escape from the casing. When a battery within a battery storage unit ceases to operate, it will need to be removed from site and dealt with in compliance with waste legislation. The party discarding the battery will have a waste duty of care under the Environmental Protection Act 1990 to ensure that this takes place.
The Waste Batteries and Accumulators Regulations 2009 (along with separate legislation in Scotland) also introduced a prohibition on the disposal of batteries to landfill and incineration. Batteries must be recycled or recovered by approved battery treatment operators or exported for treatment by approved battery exporters only.
Many types of batteries are classed as hazardous waste which creates additional requirements for storage and transport above the usual requirements for transporting and storing non-hazardous waste.
Types of lithium ion (or Li-ion) batteries also fall within Class 9 Miscellaneous Dangerous Goods for the purposes of The Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2009. The requirements for transporting such batteries as Class 9 goods may include:
- dangerous goods training for personnel involved in the transport
- marking and labelling of packages
- limits on weight per package
- strong outer packaging
- consigning with a shipper's declaration for dangerous goods.
The above requirements need to be factored in to the costs for battery storage projects.
Download our PDF table of some of the key liabilities for different parties that may be involved in a battery storage project under the producer responsibility regime and waste legislation.
For further information on producer responsibility, environmental regulation or Burges Salmon’s work on battery storage contact Ross Fairley, Nick Churchward or your usual Burges Salmon contact.
Burges Salmon is hosting a webinar on Battery Storage Projects in Autumn 2016.
This briefing was written by Associate Ella Curnow