Battery Strategy (Science and Technology Committee Report)

Lord Teverson Excerpts

Wednesday 23rd November 2022 Grand Committee

[Lord Teverson (LD)]

My Lords, I first declare my interest as a director of and shareholder in Aldustria Ltd, a battery storage company, and a trustee of Regen, a renewable energy trade association—I think that that is the best way to describe it. Like many other noble Lords here, I very much welcome the report and congratulate the committee and its chair on it.

One thing that always seems to be forgotten outside this area is the timebomb in the trade and co-operation agreement that is around the 2007 rules of origin and when the percentages come into force. There are different ones for cars, cells and assembled batteries and they are a real challenge to that industry.

Soon after the EU referendum, one substantial vehicle manufacturer in the west of England, Honda, at Swindon, was straight on to me, and I am sure to other Members who were interested in the west of England economy, and said, “If something isn’t sorted out on rules of origin, the automotive industry in this country is going to be dead”. And, of course, Honda has gone; it is no longer there, which is a huge blow to the economy of Swindon. It decided to get out while the going was good.

I am not going to go on hugely about vehicles, because that is what other Members have already done, but the point has come over strongly, in the report and in the Faraday Institution’s work, that at the end of the day it is not just around tariffs—we export around 80% of our car manufacturing and 50% of that goes to the EU—but location. In electric vehicles, batteries are the most substantial accessory or part of the vehicle—quite obviously. There is a huge benefit in terms of colocation between the rest of the manufacture and assembly of automobiles and the gigafactory being close by. If we do not have those gigafactories, almost whatever the tariffs are, those manufacturing centres will disappear out of our area.

I want to move on to something that my noble friend Lady Sheehan has mentioned. It comes also from what the noble Lord, Lord Lilley, referred to. It is around resources and the circular economy. If there is one challenge in this area that is being overlooked, although the committee did look at this area, it is the reuse of scarce resources and rare earths that are used in a lot of electronic goods, in automobiles and in batteries. The stranglehold is largely in China and some other economies as well. We need to make sure that we have a circular economy ability to recycle batteries. On the whole they can be refurbished fairly easily. Often when they are at the end of their life, only one or two cells have gone, which can be replaced. Also, they can then be used for other purposes and have a second life. That industry, I believe, is one area where we could get well ahead. Europe is already on its way, but I believe that it is important for both our resource security and for having a viable industry in this area that we are good on the circular economy as well.

In my last comments, I will come to a completely different sector, which is stationary batteries and those that are to be used in grid balancing. It is chaotic at the moment. One of the big things that it is almost impossible to do if you are a developer is to get access to the grid. It is not just around battery storage but around housing developments—even in west London—and around renewables, solar and offshore wind coming into the UK grid system. To quote a current example, a connection in the south-west given by the local transmission network, Western Power Distribution, is for 2038: that is where the queue has got to. There is no way under Ofgem rules at the moment of undoing that queueing mechanism and getting the right priorities for the right place.

If we want to get to a net-zero electricity and energy system, we need batteries to be a part of that. In fact, if energy storage is seen as a solution to the grid and not a problem—not an extra load—we can in fact move a lot quicker towards net zero and a resilient grid system. This is a serious problem at the moment. The figures I looked up say that 25 gigawatts of battery storage is needed to get to net zero—if they are four-hour batteries, that is roughly about 100 gigawatt hours, obviously. As I say, the connection wait times are now out to something like 2038.

Now this is a sector that does not require any public money at all; it is completely mercantile. But it is unable to bring forward that balancing, and through balancing bring down the cost of energy into the future. So I would be very interested to hear from the Minister what the likelihood is of us solving that. There are various studies going on at the moment, but they are slow and there is not really much light at the end of the tunnel. Frankly, what we need in terms of the national grid is anticipatory investment, not the reactive investment that we have at the moment.

I have a last question for the Minister. In terms of battery storage, there were amendments to change battery storage from being defined as an energy generator in the Energy Bill. I know that he will not say when the Energy Bill will come back to this House, but can he say when there might be a decision as to when the Bill might come back to this House?