Recommendation 2

HM Government Accepted

A) The UK Battery Strategy has evaluated a series of independent battery demand estimates and presented a reasonable forecast of demand by end use, including private cars, light commercial vehicles, larger vehicles, aerospace, rail, marine, micromobility, and grid storage. The Faraday Institution estimate that the demand for UK battery manufacturing capacity will reach around 100GWh per annum in 2030, predominately for private cars and light commercial vehicles. The battery sector has the potential to become highly diverse, with different battery types used for different applications based on their key characteristics – including size (volumetric energy density), weight (gravimetric energy density), use-cycle and life-cycle longevity, and power performance. As highlighted in the Call for Evidence responses, the trajectory that technological advances will take and the way the market will evolve are uncertain. The strategy outlines the potential next generation technologies, competing drivers on how markets may evolve and residual uncertainties. We will continue to keep this evolving market evidence under review through the Battery Strategy Taskforce and relevant experts to inform the UK’s approach. B) In November 2023, the UK published its Advanced Manufacturing Plan (‘the Plan’), which includes a £4.5 billion package of targeted funding for manufacturing, tax cuts and business environment measures to make the UK the best place to start and grow a manufacturing business – including battery manufacturing. C) As part of the £4.5 billion funding for strategic manufacturing sectors announced at Autumn Statement, we will make available £2 billion of capital and R&D funding for zero emission vehicles, batteries and their supply chains to 2030, building on the work of the Automotive Transformation Fund and the Advanced Propulsion Centre. This long-term commitment provides certainty to markets and will boost investment in UK manufacturing of zero emission vehicles, batteries and the supply chain. D) Government support ensures that the UK continues to lead the way in the development of batteries for different applications. The Aerospace Technology Institute (ATI) leads a £3.58 billion programme to 2025, jointly funded by the Government and industry, to accelerate aerospace electrification and keep the UK competitive in the global aerospace market1. A further £975 million is being made available for the aerospace sector2, as part of our £4.5 billion manufacturing funding package.3 E) Moreover, the Government continues to facilitate the deployment of grid-scale battery energy storage systems (BESS) by working with the Electricity System Operator and the Energy Networks Association to speed up connections and provide greater flexibility 1 Aerospace Technology Institute. ‘Transforming aerospace through technology and innovation.’ 2023. 2 Aerospace Technology Institute. ‘Government announces ATI Programme funding up to 2030’. 2023. 3 GOV.UK. ‘Billions of investment for British manufacturing to boost economic growth’. 2023. to storage customers. The Government is also exploring options to reform the capacity market to promote the use of BESS and other forms of storage following the 2021 Call for Evidence on long duration electricity storage (LDES), thereby stimulating demand for batteries beyond the transport sector. F) In February 2023, the Government announced the British Industry Supercharger, a package of measures offering electricity price support to the most energy intensive industries (EIIs) including in sectors such as batteries. The package will support approximately 300 firms in those sectors that are most exposed to international trade and high industrial electricity prices. The package comprises three measures – the 100% EII Exemption Scheme will be implemented from April 2024, the 100% Capacity Market Exemption will follow in October 2024, followed by the Network Charges Cost Compensation scheme in April 2025, with compensation backdated to cover costs incurred from April 2024. G) The Department for Business and Trade will continue to ensure that existing public funding is used in a targeted and strategic way across all our programmes to support battery manufacturing, including the Advanced Manufacturing Plan, the Battery Strategy and Auto2030. This funding is complemented by measures to continually improve the UK business environment, which drives long term investment. This approach was set out in the Advanced Manufacturing Plan, with the Government three key priorities to build on recent successes: investing in the future of manufacturing; supporting resilient global supply chains; and addressing barriers to investment.