Interview: practitioners on Battery chemistry & next-gen storage materials — what they wish they knew earlier

The UK's grid-scale battery storage capacity surged past 4.7 GW in early 2025, representing a staggering 45% year-on-year increase and positioning the nation as Europe's leading battery storage market. Behind these headline figures lies a complex landscape of electrochemical innovation, commercial strategy, and hard-won operational insights. We spoke with practitioners across the UK battery storage ecosystem—project developers, materials scientists, grid operators, and investors—to understand what surprised them, what failed, and what they would do differently. Their candid reflections offer invaluable guidance for founders and operators navigating this rapidly evolving sector.

Why It Matters

The urgency of battery storage deployment in the UK cannot be overstated. As the nation pursues its legally binding commitment to achieve net zero emissions by 2050, with an interim target of decarbonising the electricity system by 2035, energy storage has emerged as the critical enabler of renewable integration. National Grid ESO data from Q4 2024 revealed that renewable sources provided 47.8% of UK electricity generation, yet curtailment of wind power exceeded 6.2 TWh annually—representing approximately £500 million in lost value that effective storage could capture.

The commercial imperative is equally compelling. The Contracts for Difference (CfD) Allocation Round 6 in 2024 secured 9.6 GW of offshore wind capacity, while solar installations accelerated to 1.4 GW of new capacity. This renewable buildout fundamentally transforms grid dynamics, creating unprecedented demand for flexible storage assets capable of providing frequency response, reserve services, and wholesale arbitrage. Bloomberg NEF estimates suggest the UK will require 24 GW of battery storage by 2030 to maintain grid stability—a fivefold increase from current levels.

Yet practitioners consistently emphasise that capacity alone tells only part of the story. The chemistry, duration, and degradation characteristics of storage assets fundamentally determine their commercial viability. As one senior project developer remarked, "We're not just building batteries; we're building complex electrochemical systems that must perform reliably across multiple revenue streams for fifteen years or more. The learning curve has been steep, and the tuition expensive."

Key Concepts

Understanding the battery storage landscape requires fluency in several interconnected technical and commercial concepts that practitioners identified as essential knowledge.

Polymers in Battery Technology: Solid-state electrolytes incorporating polymer matrices represent one of the most promising pathways to next-generation battery performance. Unlike conventional liquid electrolytes, polymer-based systems can potentially eliminate dendrite formation—the metallic growths that cause short circuits and thermal runaway in lithium-ion batteries. UK researchers at the Faraday Institution have achieved ionic conductivities exceeding 10⁻³ S/cm at room temperature in sulphide-polymer composite electrolytes, approaching the performance threshold required for commercial viability.

OPEX (Operational Expenditure): Practitioners consistently identified OPEX management as the determining factor between profitable and marginal storage projects. Beyond obvious costs like site maintenance and grid connection charges, OPEX encompasses cell degradation replacement reserves, auxiliary power consumption for thermal management systems, and increasingly sophisticated software platforms for market trading. Industry benchmarks suggest well-managed lithium-ion installations achieve OPEX of £4-6/kWh/year, while poorly optimised sites can exceed £12/kWh/year.

Ammonia as Energy Vector: Green ammonia (NH₃) synthesised using renewable electricity has emerged as a compelling long-duration storage medium, particularly for seasonal balancing applications where lithium-ion economics become prohibitive. The UK government's 2024 Hydrogen Strategy Update explicitly recognised ammonia's role, with BEIS modelling suggesting 3-5 GW of ammonia-based storage could be economically justified by 2040. The compound offers energy density of 4.32 kWh/kg and established maritime logistics infrastructure.

Additionality: In the context of green hydrogen and ammonia production for storage applications, additionality refers to the requirement that renewable electricity used in electrolysis represents genuinely new zero-carbon generation rather than diverting existing renewable supply from other uses. The EU's Delegated Acts established stringent additionality criteria in 2023, and UK regulators are developing analogous frameworks through Ofgem's consultation on low-carbon hydrogen certification.

Green Hydrogen: Produced through electrolysis powered by renewable electricity, green hydrogen serves as both a storage medium and a feedstock for ammonia synthesis. UK electrolyser deployment reached 45 MW operational capacity in 2024, with a further 1.8 GW in planning. The government's target of 10 GW hydrogen production capacity by 2030 assumes significant storage applications, though practitioners note the round-trip efficiency of 35-45% presents challenges compared to battery storage at 85-92%.

What's Working and What Isn't

What's Working

Revenue Stacking Sophistication: The most successful UK battery operators have developed sophisticated approaches to stacking multiple revenue streams simultaneously. Gore Street Energy Storage Fund's 2024 annual results demonstrated how their 350 MW portfolio achieved revenues of £127/kW/year through a combination of frequency response (42%), wholesale trading (31%), capacity market payments (18%), and ancillary services (9%). One trading manager we interviewed explained, "The secret is dynamic allocation—our algorithms reassess revenue optimisation every four hours based on day-ahead prices, intraday volatility, and National Grid procurement requirements. Static contracts are leaving money on the table."

Longer Duration Assets Gaining Traction: The economic case for 2-hour and 4-hour duration batteries has strengthened considerably as grid requirements evolve. Zenobe Energy's 100 MW/200 MWh installation at the Capenhurst site demonstrated that longer duration assets can capture wholesale arbitrage spreads unavailable to shorter 1-hour systems. Their operational data from 2024 showed revenue premiums of 23% compared to equivalent 1-hour installations, validating the additional capital expenditure on extended duration configurations.

Thermal Management Innovation: UK operators have pioneered advanced thermal management systems that significantly extend battery lifespan. Harmony Energy's Pillswood project, utilising liquid-cooled Tesla Megapack units, reported cell degradation rates of only 1.8% annually—substantially below industry benchmarks of 2.5-3%. A materials engineer working on the project noted, "Temperature uniformity across cell modules is everything. We invested heavily in computational fluid dynamics modelling during design, and that investment has paid dividends in operational performance."

What Isn't Working

Underestimating Grid Connection Complexity: Practitioners universally identified grid connection as the most challenging aspect of project development. The UK's Distribution Network Operator (DNO) connection queue exceeded 176 GW of projects awaiting connection at year-end 2024, with average wait times extending to 8-12 years in congested areas. One frustrated developer recounted, "We secured planning permission in fourteen months but waited thirty-two months for a grid offer. The commercial model we underwrote was obsolete by the time we could build."

Degradation Modelling Failures: Several operators reported that manufacturer degradation warranties failed to reflect real-world operational conditions. A technical director at a major portfolio operator explained, "Warranty terms often assume benign duty cycles—perhaps one full cycle daily. But optimised revenue stacking might push assets through 1.5 or 2 equivalent full cycles. We've seen cells hit warranty degradation limits in year four of a fifteen-year project life." This disconnect between warranted and actual degradation has forced operators to establish substantial replacement reserves, fundamentally altering project economics.

Capacity Market Design Limitations: The current Capacity Market mechanism, while providing valuable revenue certainty, creates perverse incentives for storage operators. De-rating factors—which discount storage capacity based on duration—fail to recognise that a 4-hour battery can provide far more system value during extended stress events than its de-rated capacity suggests. Industry bodies including the Association for Renewable Energy and Clean Technology (REA) have lobbied for reform, though changes remain pending as of early 2025.

Key Players

Established Leaders

Gore Street Energy Storage Fund operates one of the UK's largest battery storage portfolios at 350 MW, with demonstrated expertise in revenue optimisation and a pipeline exceeding 1 GW. Their public listing provides transparency into operating metrics that benefits the wider sector.

Harmony Energy Income Trust manages the landmark Pillswood installation (196 MW/392 MWh), leveraging Tesla Megapack technology and sophisticated thermal management to achieve best-in-class operational performance.

Zenobe Energy has established leadership in both grid-scale and commercial fleet applications, with total assets under management exceeding 730 MW. Their integrated approach spanning development, construction, and operations provides valuable lifecycle insights.

EDF Renewables UK brings substantial balance sheet capacity and technical expertise to the storage sector, with 500 MW of operational and construction-phase assets and ambitious expansion plans through 2030.

Shell Energy operates storage assets as part of integrated renewable portfolios, leveraging trading expertise from their broader energy business to optimise revenue capture across wholesale and balancing markets.

Emerging Startups

Field has emerged as an innovative pure-play storage developer, securing over 1 GW of development pipeline through 2024 and pioneering community benefit sharing arrangements that accelerate planning approvals.

Modo Energy provides market-leading analytics and revenue forecasting for storage operators, with their open-data platform informing investment decisions across the sector.

Kona Energy focuses on co-located solar-storage projects, achieving enhanced grid connection efficiency and revenue synergies through integrated development approaches.

Habitat Energy has developed sophisticated trading algorithms specifically optimised for battery storage assets, claiming revenue outperformance of 15-20% versus industry benchmarks.

AMTE Power represents domestic UK cell manufacturing capability, with their Thurso facility producing cells optimised for grid storage applications and reducing supply chain dependencies on Asian manufacturers.

Key Investors & Funders

Gresham House Energy Storage Fund manages one of the largest dedicated storage portfolios, with total capacity exceeding 580 MW and demonstrated ability to recycle capital into new projects.

UK Infrastructure Bank provides development capital and construction financing for storage projects aligned with net zero objectives, with storage identified as a priority sector in their 2024-2027 strategy.

Octopus Energy Generation deploys substantial capital from retail investor sources into storage assets, combining consumer-facing brand with infrastructure investment expertise.

BlackRock has made significant allocations to UK storage through infrastructure funds, providing institutional validation and competitive cost of capital to the sector.

Legal & General Capital invests in storage as part of broader clean infrastructure mandates, with particular interest in assets demonstrating long-term contracted revenue streams.

Examples

Pillswood Battery Energy Storage System, East Yorkshire: Developed by Harmony Energy and operational since late 2023, Pillswood represents Europe's largest single battery installation at 196 MW/392 MWh capacity. The project utilises 52 Tesla Megapack units with advanced liquid cooling, achieving documented round-trip efficiency of 89.3%. Revenue performance in 2024 exceeded projections by 12%, driven by sophisticated participation in National Grid's Dynamic Containment service during periods of grid stress. The project demonstrates how UK operators can achieve world-class performance through careful technology selection and operational excellence.

Capenhurst Energy Storage Facility, Cheshire: Zenobe Energy's 100 MW/200 MWh installation exemplifies the emerging trend toward longer-duration assets. Commissioned in early 2024, Capenhurst targets wholesale arbitrage opportunities that shorter-duration batteries cannot capture, with trading strategies optimised around morning and evening demand peaks. Operational data indicates the 2-hour duration configuration achieved 31% higher revenue per MW than comparable 1-hour installations in the same trading region, validating the economic case for extended duration.

Thurso Cell Manufacturing Facility, Scotland: AMTE Power's Thurso facility represents the UK's most advanced domestic battery cell manufacturing capability, with production capacity of 0.5 GWh annually scaling toward 2 GWh by 2027. The facility focuses on sodium-ion and ultra-safe lithium chemistries specifically optimised for stationary storage applications. By establishing domestic supply chains, AMTE reduces exposure to geopolitical disruptions affecting Asian cell supplies while creating approximately 300 skilled manufacturing jobs in a region historically dependent on declining industries.

Action Checklist

• Conduct comprehensive grid connection feasibility analysis before site acquisition, including realistic timeline modelling based on DNO queue positions
• Develop degradation models incorporating actual operational duty cycles rather than relying solely on manufacturer warranty assumptions
• Establish trading partnerships or in-house capability for real-time revenue optimisation across frequency response, wholesale, and balancing markets
• Evaluate 2-hour and 4-hour duration configurations against projected wholesale price volatility rather than defaulting to 1-hour assets
• Implement advanced thermal management systems and monitor cell temperature uniformity to minimise degradation
• Build replacement cell reserves into financial models at realistic degradation rates, typically 2.5-3% annually under optimised operation
• Engage early with National Grid ESO regarding future ancillary service requirements and contract structures
• Monitor regulatory developments around Capacity Market de-rating reform and adjust investment cases accordingly
• Consider co-location with renewable generation assets to improve grid connection efficiency and revenue correlation
• Evaluate emerging chemistries including sodium-ion and iron-air for appropriate applications as these technologies mature

FAQ

Q: What is the typical payback period for grid-scale battery storage projects in the UK? A: Current market conditions support payback periods of 7-10 years for well-optimised lithium-ion installations, though this range varies significantly based on grid connection costs, duration configuration, and trading capability. Projects achieving best-in-class revenue stacking report payback periods as low as 5-6 years, while assets constrained to single revenue streams may extend beyond 12 years. The introduction of longer-duration support mechanisms could shorten payback periods for 4-hour-plus configurations by 2027.

Q: How do practitioners assess degradation risk in battery storage investments? A: Sophisticated operators distinguish between calendar aging (degradation over time regardless of use) and cycle aging (degradation from charging and discharging). Financial models should incorporate both factors, with typical assumptions of 2-2.5% annual degradation under moderate cycling and up to 4% under aggressive revenue-maximising operation. Leading practitioners utilise digital twin technology to continuously monitor actual versus predicted degradation, enabling dynamic adjustment of trading strategies to balance revenue against asset longevity.

Q: What role will alternative battery chemistries play in the UK market by 2030? A: Lithium iron phosphate (LFP) chemistry has already achieved dominance in new installations due to improved safety profiles and lower costs, despite marginally lower energy density than NMC alternatives. Sodium-ion batteries are expected to achieve commercial deployment for stationary storage by 2027, offering cost advantages where energy density is less critical. For longer-duration applications exceeding 8 hours, iron-air and flow battery technologies show promise, with several UK demonstration projects scheduled for 2025-2026.

Q: How is green hydrogen integration affecting battery storage strategy? A: Practitioners increasingly view battery and hydrogen storage as complementary rather than competing technologies. Batteries excel at short-duration, high-efficiency applications including frequency response and intraday arbitrage, while hydrogen and ammonia systems address seasonal storage requirements where battery CAPEX becomes prohibitive. Several UK projects are exploring hybrid configurations where batteries handle rapid response requirements while electrolysers convert excess renewable generation for longer-term storage.

Q: What regulatory changes would most benefit the UK battery storage sector? A: Practitioners consistently identify three priority reforms: first, accelerating grid connection processes through the Electricity Networks Commissioner's recommendations; second, reforming Capacity Market de-rating factors to better reflect storage system value during extended stress events; and third, establishing clear frameworks for revenue stacking that provide regulatory certainty for investment decisions. Ofgem's ongoing Review of Electricity Market Arrangements (REMA) consultation offers potential pathways for addressing these concerns.

Sources

• National Grid ESO, "Future Energy Scenarios 2024," July 2024
• Bloomberg New Energy Finance, "UK Energy Storage Market Outlook," Q4 2024
• UK Government Department for Energy Security and Net Zero, "Hydrogen Strategy Update," March 2024
• Faraday Institution, "Solid-State Battery Research Programme Annual Report," December 2024
• Association for Renewable Energy and Clean Technology (REA), "Energy Storage Market Report 2024," November 2024
• Ofgem, "Review of Electricity Market Arrangements: Consultation on Storage and Flexibility," September 2024
• Gore Street Energy Storage Fund, "Annual Report and Accounts 2024," March 2024
• Harmony Energy Income Trust, "Pillswood Operational Performance Update," Q4 2024