Why the UK is in the global race for battery production

By Scott Poulter

Britain is aiming for “a globally competitive battery supply chain that supports economic prosperity and the net zero transition” under a new government strategy.

The UK Battery Strategy  was unveiled by the Department for Business & Trade at the end of November 2023 as delegates set off for climate talks in Dubai, where Britain’s decarbonisation credentials were in question following the granting of new oil and gas drilling leases.

Published alongside an Advanced Manufacturing Plan, the strategy includes a government commitment to more than £2 billion in capital and research and development (R&D) funding to support the manufacturing and development of zero-emission vehicles, batteries and their supply chains for five years, up to 2030.

“Batteries will play an essential role in our energy transition and our ability to successfully achieve net zero by 2050,” said Nusrat Ghani, Minister of State for Industry and Economic Security, in a foreword to the strategy. 

“High capacity and reliable rechargeable batteries are a critical component of many devices, modes of transport, and our evolving energy generation capability,” she said.

Ghani predicted: “The UK will be a world leader in sustainable battery design and manufacture, underpinned by a thriving battery innovation ecosystem. 

“Batteries represent one of the highest growth clean energy sectors and the UK is well placed to reap the rewards thanks to its comparative advantage in research and advanced manufacturing. … The scale of the opportunity for the UK economy is huge.”

The UK’s role in lithium-ion battery R&D is not in question. The technology was invented by a Briton, M Stanley Whittington, in 1974. And the potential for industry growth is similarly clear. 

The UK strategy envisions creating an industry that could employ 100,000 people by 2040, including 35,000 in battery manufacturing and 65,000 in the supply chain. And direct job creation is just part of the picture. 

The strategy recognises that the UK has the second most valuable automotive manufacturing sector in Europe, with an annual turnover of £70 billion supporting 166,000 workers. However, this sector is still mostly dedicated to internal combustion engine vehicles. 

In 2022, just 9.5% of vehicles made in the UK were electric, and a further 21% hybrid, according to the Society of Motor Manufacturers and Traders. Almost 58% of UK vehicle exports are to the European Union, which is mulling a complete phase-out of internal combustion engine vehicles by 2035. 

This means that if the UK does not secure battery manufacturing capacity for electric vehicles in the next decade, then it could end up losing one of its most prized industries. And securing that capacity is no easy task. 

The UK’s highest-profile battery gigafactory venture, Britishvolt, went into administration in January 2023, and moves to resurrect the company are dragging out. Meanwhile, the UK faces growing global competition in its attempts to build a battery industry supply chain. 

In November 2023, for example, the European Union launched a €4 billion funding package for decarbonisation technologies including energy storage. In May 2023, it was reported that Europe was still hitting gigafactory milestones as the UK fell behind. 

In North America, meanwhile, the US is looking at a battery manufacturing boom after the Biden administration passed the Inflation Reduction Act, widely viewed as the most ambitious piece of clean technology legislation in the world, in August 2022. The Act has galvanised investment. 

As the UK was celebrating its £2 billion battery strategy commitment, a single US firm—Kinterra Capital—said it had raised $565 million in private equity to invest in mines and processing plants for battery materials. Yet even the US lags far behind China, the global leader in lithium-ion battery manufacturing. 

China currently accounts for 70% of global lithium-ion battery cell production, compared to less than 10% for the US, as well as controlling between 60% and 100% of mining and refining for five minerals that are critical for batteries. 

Against this backdrop, it is clear the UK will need to punch well above its weight to secure a place at the global battery manufacturing table. To achieve this, the UK battery strategy has a three-pronged approach. 

The first prong is to build on the UK’s R&D capabilities by developing and designing better batteries than those available at present. For this, the strategy will support innovation, finance scale-ups and develop safety and product standards. 

The second prong is to build out a resilient battery supply chain, for example by opening new markets, speeding up energy grid connections and reforming planning and permitting processes. And the third is to sustain the sector by identifying skills, reducing trade barriers and investing in a circular economy.

All three areas are of course key, with the creation of a resilient supply chain perhaps the hardest to achieve given global competition for battery materials and resources. From an energy storage developer’s point of view, however, this strand of the strategy is also the most interesting. 

While the strategy is clearly aimed at electric vehicle battery manufacturing, the technologies involved will also likely be used for stationary storage applications. 

In this respect, improvements to planning, permitting and grid connection processes are welcome, since these are among the biggest roadblocks to project development. 

We applaud the strategy’s commitment to: “Work with industry, Ofgem, and the network companies to deliver the actions needed to accelerate connection timescales, including strategic investment, efficient and flexible management of network capacity, and a connections process that is fit for the future.”

More generally, if the government can bring low-cost, high-quality battery manufacturing to the UK then that would greatly improve the cost and procurement processes for new stationary storage projects, helping to boost the scale and pace of projects that will be key to decarbonising the energy system. 

For this reason, we are glad to see the UK government setting out a strategy for battery manufacturing. Now it must deliver on the strategy’s objectives, not just by putting money on the table but also by dealing with roadblocks—such as permitting and grid connections—that the private sector cannot address on its own.