6 March 2023

Open Grant Competitions

As of late February, Innovate UK has focused on supporting the scale-up of batteries that are being developed by SMEs in the UK, for a share of up to £1.5m. One of the many interesting factors of this grant is Innovate UK’s collaboration with the Faraday Battery Challenge, which has run since 2017 and  incentivises  the development of cost-effective, high-performance products within this growing market.

Successful candidates will gain access to the UK Battery Industrialisation Centre, funding support for labour, travel subsistence, overheads and subcontracting costs charged back to the UK. It is also important to note that proposals must achieve a ‘Tech Readiness’ level of 5 or above and cost between £100,000 – £1.1m.

Information about the current battery scene

The Compound Annual Growth Rate (CAGR) for the lithium-ion battery market in Europe has been expanding at a healthy 15.3%. It is expected to reach a valuation of $17 billion by 2030, with the UK being a major contributor alongside Germany, France and Belgium. In fact, it is predicted that these countries will each contribute the same as the rest of Europe combined in 2023.

Market drivers include increased demand for lithium cobalt aluminium and usage of batteries in power grid systems and electric vehicles. These factors showcase the need for scaling up R&D battery projects in the UK, and why Innovate UK’s current funding competition is vital for continued UK contribution to Europe’s battery CAGR.

What do previous winners of similar grants look like in the UK

In the last five years, companies such as BMW, Aston Martin, Amite Power, AXA, Breathe Batteries and Aceleron have all previously won competitions. The rise in popularity of electric vehicles alongside the UK’s future ban on sales of petrol and diesel cars explains the move from BMW & Aston Martin to invest heavily in EV’s. However, wins for both Aceleron and Breathe showcase developments that can be unlocked, as the pair combined have accumulated just under £730,000 of government grant funding.

What grants hope to achieve

Generally, the aim of these R&D grants is to establish the UK as a European leader for battery research and development given the world’s growing transition to wireless electronics. On average, there has been a 7.8% increase in battery manufacturing businesses in the UK over the last five years. To ensure this growth continues, it is vital that the UK government supports SMEs that are either emerging in the market or continuing to contribute.

Oyebola Bello (Programme Manager – Faraday Battery Challenge) said ‘We know the leap to manufacturing scale-up can be tricky for SMEs and we wanted to be able to help them make the transition. Our £1.5 million competition is designed to do exactly that.’

SMEs tax changes, important topics

However, we are yet to ask the question if it is important for companies to utilise government grant incentives. To find the answer, you needn’t look further than the recent acquisition of UK battery maker, Britishvolt, by Australian startup Recharge. The collapse of Britishvolt was due to a lack of cash partly caused by overspending on their battery R&D, which could have been avoided through grant applications.

With the UK government R&D tax changes coming into play in April 2023, the amount SMEs can claim back on R&D expenditure will drop significantly from 33% to 18.6%. Therefore, it makes sense for companies that fall within this bracket to consider grant funding as a more lucrative option to finance their innovation.

Final Thoughts

It is clear that the UK has a positive contribution towards European battery development and is expected to continue to be a front runner in this field up until 2030 (and hopefully beyond)However, companies who do not utilise UK government R&D tax incentives or grants risk the chance of using up their cash resources faster than the rest, resulting in scenarios such as the one Britishvolt experienced earlier this year. Overall, it is encouraging to see the UK government incentivising to scale-up of SMEs’ development of batteries through grants like the UK Battery Industrialisation Centre SME Credit.

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