The Energy Transition | Government publishes UK battery strategy

This week we look at the government's new battery strategy, NGED's new reporting tool and more.

Government publishes UK battery strategy

The government has announced its overarching strategy for achieving a globally competitive battery supply chain by 2030. The plan was developed in conjunction with the UK Battery Strategy Taskforce

and builds upon a call for evidence which ran from 24 August to 4 October 2023. The strategy is geared towards enhancing the domestic supply chain for batteries to reduce the reliance on imports, particularly from China, which the government aims to pursue in a way that "supports economic prosperity and the net zero transition".

The strategy outlines how the government will invest £2 billion into new capital and research and development across the electric vehicle and battery sectors, including their supply chains. The funds will be injected over the next five years and includes a £38 million upgrade to the UK Battery Industrialisation Centre, and a further £12 million to fund a new Advanced Materials Battery Industrialisation Centre. A further £11 million will be allocated between 20 competition winners which have proposed technological advancements across all stages of the supply chain.

Other elements of the plan are designed to support start-ups across the industry and expand market access for the trade of critical minerals such as lithium, cobalt, nickel and graphite. The government estimates that the annual demand for UK battery manufacturing capacity will reach over 100GWh in 2030, and 200GWh by 2040.

The strategy comes in addition to the £960 million funding package for the clean energy sector announced by the government last week, a share of which will be directed towards the battery industry.

Minister for Industry and Economic Security, Nusrat Ghani, underlined the strategy's goal to "help businesses become more innovative and productive, future-proofing our economy and supporting our ambition towards a cleaner, greener future".

NGED launches reporting tool to inform developers on grid connection

National Grid Electricity Distribution (NGED) has announced the launch of a new reporting tool, ClearViewConnect, which is designed to give customers a high-level view of connection costs and timelines for Grid Supply Points (GSPs) and help reduce grid connection wait times.

NGED has been working in partnership with Octopus Energy, RWE and Severn Trent to develop the tool. The ClearViewConnect report compiles connection data and insights, allowing customers to look into the technical data regarding specific GSPs in their licence areas, including information relating to capacity and reinforcement works. This will give developers a more accurate picture of connection timescales and costs for potential renewable projects, helping with the decision-making process and identifying the most suitable connection point for their asset.

It is anticipated that this tool, together with NGED's other recently announced initiatives such as the introduction of milestone management in connection agreements (which we reported on previously), will speed up grid connection time. NGED hopes that the report can be used to help identify schemes in the connection queue which are less viable and which can potentially be removed from the connection pipeline to free up space for shovel-ready projects to connect.

The president of NGED, Cordi O'Hara, stated that the report is "an important step to deliver insights about the profile of our connection pipelines, helping customers make informed decisions." She also shared that NGED is "keen to work with the rest of the industry to share the learnings and model from this process, so that they can be easily replicated by individual [distribution network operators] as an offer to their customers.”

Demand Flexibility Service goes live for first time in 2023

The National Grid Electricity System Operator (ESO) has triggered its first Demand Flexibility Service (DFS) event of the year.

Between 17:00 and 18:30 of Wednesday 29 November, the ESO reduced demand by approximately 550MW to mitigate the increased strain on electricity supply margins.

The DFS, which was approved in its current form by Ofgem earlier this year, operated a test event earlier in November. Under current projections, the ESO expects that in a "fairly moderate" scenario, 1GW of capacity could be reduced under the DFS. In more optimistic forecasting, this could potentially increase to 2GW. Either scenario would represent a significant increase on the 350MW which was reduced during peak times in DFS events across the previous year.

Speaking before the DFS went live, an ESO spokesperson commented that: "Our forecasts show electricity supply margins are expected to be tighter than normal. We are activating a Live Demand Flexibility Service event. [The DFS event] does not mean electricity supplies are at risk and people should not be worried. These are precautionary measures to maintain the buffer of spare capacity we need."

As part of the DFS, the ESO is also planning to run 12 incentivised test events that consumers and businesses can participate in. Stakeholders who directly contract with the ESO will receive a guaranteed acceptance price of £3/kWh for the first six test events. However, in a bid to increase competition within future DFS test events, the ESO will remove the guaranteed acceptance price of £3/kWh for the six tests after Christmas Day if capacity reaches 1.25GW, with the price then being determined at auction.

UK offshore wind Industrial Growth Plan expected in early 2024

A new partnership between RenewableUK, the Offshore Wind Industry Council, The Crown Estate and Crown Estate Scotland has been announced to develop a new Industrial Growth Plan to deliver long-term growth to the UK's offshore wind sector. The IGP will be published early next year and KPMG has been appointed to support its development.

As we previously reported, the creation of an IGP was recommended by Tim Pick, the government's Offshore Wind Champion, as a means for the UK to take advantage of the rapidly expanding global offshore wind industry and deliver the pipeline of domestic projects. The Offshore Wind Industry Council published a report in September stating that there was a £92 billion opportunity for the UK economy if the UK's offshore wind capacity and expertise could be sufficiently developed in a number of key areas. The IGP is intended to build on the UK's existing competitive advantage in this sector in and encourage the investment needed to drive the innovation required to maintain this advantage.

Commenting on the IGP, RenewableUK CEO, Dan McGrail, said: “The UK has a solid foundation on which to build a globally competitive supply chain but we’re battling headwinds from high inflation, investment challenges and increased ambition from competitor nations. That’s why this is the right time to take a more strategic approach that defines our position and the unique value offering the UK can bring to the international supply chain and meet our domestic targets. The Industrial Growth Plan will set out strategies for capturing value across the lifecycle and steer investment into critical areas to grow the economy and secure our energy future.”