By Scott Poulter

Battery storage is rarely a headline-grabbing subject - but 2022 and 2023 saw batteries making a regular appearance in the mainstream UK media. 

The reason was the collapse and posterior resuscitation of a company called Britishvolt in an episode that provides useful insights into the dynamics of the lithium-ion battery market, as well as potential lessons for energy storage investors and developers such as Pacific Green. 

But first, a brief review of events. Britishvolt started out at the end of the last decade as one of several companies worldwide looking to capitalise on the growing lithium-ion battery market for electric vehicles. The business aimed to bring Tesla’s gigafactory manufacturing concept to the UK. 

The plan was to invest £2.6 billion in an electric vehicle battery manufacturing plant in the Port of Blyth, northeast England, employing 3,000 people. 

As work on the factory got underway, Britishvolt announced interest from carmakers including Aston Martin and Lotus, plus investments from mining behemoth Glencore and banking giants Citibank and Bank of America, among others. The UK government also committed funds.  

It was inevitable that there would be political interest in the venture, given its potential for job creation in a region that the government had committed to assist as part of a wider ‘levelling up’ agenda channelling prosperity into deprived northern communities. 

Furthermore, Britishvolt was seen as being of major significance to the UK’s future in car manufacturing. With iconic brands such as Jaguar, Mini and Rolls-Royce, the UK motor industry contributed more than £14 billion to the country’s economy in 2021. 

However, that level was down from a £22 billion peak in 2016 - and fears over Brexit’s impact on UK motor exports have not been helped by a slow start in grappling with vehicle electrification. 

Britishvolt aimed to bring Tesla’s gigafactory (pictured) manufacturing concept to the UK.

Plans for Britishvolt matured amid a global landgrab for lithium-ion production capacity, and the venture was seen as key in giving the UK the battery manufacturing muscle needed to stay in the global motor industry game as vehicles went electric. 

These hopes were dashed in the second half of 2022, when Britishvolt ran out of money. It called in administrators in January 2023 and was sold the following month to an Australian startup called Recharge Industries, for £8.6 million.

Recharge, which has links to a US lithium-ion technology developer called C4V, initially intends to use the Blythe site for stationary storage battery manufacturing, before adding lines for high-performance batteries aimed at the sports car sector. 

It is important to note the Britishvolt saga is far from over. 

Administrators EY estimate that “any purchaser would need access to significant financing in the range of £3 billion-£6 billion to fund the capital expenditure required to complete the development of the gigaplant,” according to the Financial Times

Still, what conclusions can we draw from the affair so far? First and foremost, Britishvolt’s plight has served to highlight the key role that batteries and energy storage will play in the industrial fabric of the future. 

The fact that policymakers believe the UK needs its own manufacturing facilities, as opposed to importing batteries from abroad as has historically been the case, underscores the extent to which the future is seen as electric - and battery driven. 

This is not just a UK concern - in Europe there are 35 similar plants planned or under construction, according to the BBC

The bulk of this manufacturing capacity will be for electric vehicles, but the sheer scale of the output planned bodes well for further cost reductions in lithium-ion technology used in stationary storage. It also bodes well for the lithium-ion battery supply chain. 

There is intense debate over the prospect of bottlenecks in battery materials such as lithium, nickel and—for electric vehicles particularly—cobalt. 

Britishvolt’s misadventures paradoxically point to a bright future for lithium-ion. This mature, highly bankable technology is clearly here to stay, and growing manufacturing volumes can only help to further reduce costs.

However, witnessing the interest and investments in ventures such as Britishvolt, it would be hard not to imagine mining companies scrambling to exploit new reserves. 

Indeed, Glencore’s involvement in Britishvolt highlights the value that mining and metals players see in the battery value chain. It is also likely no accident that Britishvolt’s buyer hailed from Australia, a country with vast supplies of lithium and other battery materials. 

Similarly, gigafactory demand for raw materials is set to stimulate advances and scaleups in battery recycling, further shoring up the supply chain for lithium-ion technology. 

Hence, Britishvolt’s misadventures paradoxically point to a bright future for lithium-ion, which is great news for grid-scale battery storage projects. This mature, highly bankable technology is clearly here to stay, and growing manufacturing volumes can only help to further reduce costs. 

UK projects based on lithium-ion batteries are already very profitable thanks to the range of revenue streams available in the market. Current projects usually have a business case that allows for augmentation or swapping out of batteries to make up for gradual performance degradation. 

Being able to access batteries more cheaply in future clearly makes the profitability of these projects more attractive. 

The same goes for current projects in the pipeline, which are expected to boast continually improving financials through enhanced learning, economies of scale and technology cost reductions. 

At some point, too, having Britishvolt and its European counterparts producing batteries close to project sites should deliver benefits in terms of a more diversified supply and potentially lower logistics costs. 

For now, one final lesson from Britishvolt is that battery manufacturing, like any booming market, can be subject to turbulence that responsible project developers need to keep in mind. 

At Pacific Green, we have worked hard to build resilient supply chain partnerships and testimony to this effort is the fact that the equipment for our first project, Richborough Energy Park, is arriving on schedule despite the major shipping challenges the UK has faced in the last year. 

Novice investors might see Britishvolt’s woes as cause for concern, but in our case, it is quite the opposite: the whole business is evidence of an increasingly vibrant market opportunity that deserves plenty of attention. 

Publish date: 04 April, 2023