End of Life Industrial Scale Batteries: Who’s in Charge?

Grid-scale batteries are an integral part of a stable electricity network in the UK, their importance being driven in part by the surge of renewable electricity generation assets we have seen coming onto the system in the UK in recent years. However, whilst the requirements for an electricity generation asset approaching the end of its life are well understood, the position in respect of the end of life of the industrial batteries being deployed onto the system at scale is not frequently discussed. Despite this, proper disposal of these batteries at the end of their life cycle is crucial for environmental and regulatory compliance.

This article outlines where end-of-life obligations sit and sets out some of the contractual considerations which should be thought about when developing battery storage projects.

What is a grid-scale battery? 

Grid-scale batteries, or battery energy storage systems (BESS) are electromechanical devices that store energy from the grid or from generation assets directly for later use, thereby providing an on-demand energy reserve.

How are grid scale batteries classified? 

Under the Waste Batteries and Accumulators Regulations 2009 (the “Regulations”), batteries used in large scale energy storage are typically classified as “industrial batteries”. Industrial batteries are those designed exclusively for industrial or professional use as well as those used for electric or hybrid vehicle propulsion. Batteries deployed for the purposes of energy infrastructure projects are almost certain to fall within the definition of Industrial Batteries for the purposes of the Regulations.

Who is the producer?

A producer is defined in the Regulations as “any person in the UK who, irrespective of the method used, places batteries, including those already in appliances or vehicles, on the UK market for the first time, on a professional basis”. Notably, this definition extends beyond the manufacturer and could include developers and contractors alike.

An example of a producer would be a company with a UK presence that imports batteries into the UK and then sells them on the UK market on a wholesale basis. However, a producer would not include a company who imports batteries into the UK and then sells them overseas – there must be placement onto the UK market. Similarly, the definition of producer would also not extend to a company that imports batteries into the UK for its own use.

It is worth noting, however, that a producer does not need to receive payment – a producer could be a commercial entity, such as a manufacturer, exporter, or retailer, but a producer could also be a not-for-profit organisation, such as a public body or charity.

What are the main obligations applicable to producers? 

Producers of industrial batteries must adhere to a number of obligations, including the requirement to:

• register with the Office for Product Safety and Standards within 28 days of first placing the battery on the UK market;
• comply with the content, branding, registration number and labelling requirements set out in the Regulations. These requirements include obligations to report on and keep records of the amount of batteries placed on the market for the first time in the UK as well as the amount of waste batteries collected, and delivered for treatment and recycling;
• retrieve end-of-life batteries from the end user, free of charge either where it has supplied the end user with new industrial batteries during the compliance period (a period of one year), or where it did not supply the end user with the battery, but the end user is unable to return the waste battery to the original producer and the battery is of the same chemistry type as batteries place on the market by the producer; and
• send batteries for treatment/recycling to an approved battery treatment facility or an approved exporter for treatment outside the UK.

It is worth noting that batteries are considered to be hazardous waste, so the Regulations are very clear that these must not be disposed of by landfill.

Consequences of non-compliance 

The Regulations contain broad powers around investigation and enforcement. It is an offence for producers to fail to register, or to provide information. The penalty for most offences under the Regulations is an unlimited fine. In some circumstances officers of a company can also be individually liable.

The vision: The UK Battery Strategy

It is difficult to determine what the direction of travel for regulation in this area will look like over coming years. The current government published the UK Battery Strategy in 2023, which outlined a vision for the UK to achieve a globally competitive battery supply chain by 2030. At the heart of the strategy was recognition of the economic opportunities arising from increased reuse, repair, repurposing, and recycling of industrial batteries. The extent to which this will be developed in its coming form will be evident over the coming months, depending on the outcome of the upcoming UK general election on 4 July.

The EU Perspective

As with the UK, there is real activity in the battery storage markets in a number of jurisdictions across Europe. The EU published new rules for the design, manufacture, and recycling of all types of batteries circulating in the EU in 2023. These EU Batteries Regulation 2023 (the “EU Regulations”) apply to industrial batteries and include a specific sub-category for stationary battery energy storage systems.

Although the EU Regulations largely came into force in 2023, some specific obligations are due to apply on a staggered basis over the next few years. Whilst some of the obligations in the EU Regulations are transferred from the current regime of the EU Batteries Directive 2006/66, many are new and innovative. Most obligations address manufacturers of batteries as key stakeholders and establish preconditions for lawfully placing batteries onto the EU market, but the obligations do go beyond this and address the whole lifecycle of a project.

The Battery Passport

One of the most well publicised announcements at an EU level is the introduction of the battery passport. This regime means that from 18 February 2027, all industrial batteries with a capacity greater than 2 kWh and each electric vehicle battery placed on the EU market must have an electronic record. This electronic record is referred to as the ‘battery passport’ and will contain information relating to the battery model and information specific to the individual battery such as material composition, carbon footprint information and rated capacity. This battery passport must be accessible through an easily legible QR code. Once the battery has been recycled, the battery passport will cease to exist.

Allocating responsibility in contracts

End users may require producers to take back waste batteries free of charge or they may choose to make their own arrangements for disposal. While producers and end-users can agree on alternative obligations and financial arrangements, producers can remain obliged to take back batteries from end users (including end-users they have not supplied) if they are producers in the compliance period when the request for take-back is made.  

If disposing of grid-scale batteries after the calendar year of purchase, the position / approach to take in respect of the supplier or the entity that is stated to have producer responsibilities requires further consideration, for example, are they still registered as a producer? A producer’s obligation to provide take back can be contingent on a number of factors, including the battery chemistry and market-placement considerations. If the original producer is no longer available for take-back there are other options that exist, which will also require further consideration.

The framework for take-back is awkward and poses pose some uncertainties. The regulations do not appear to have been drafted with grid-scale batteries in mind. Of course, these regulations may change in the near future.

End users/ developers / relevant parties in the contract chain, need to therefore understand their role as producer (if any) and take necessary precautions to mitigate or understand their disposal liabilities.  An intermediate contractor wrapping the risk may not necessarily break the chain, as they may be seen as a distributor instead of a producer.

For example, developers will need to consider carefully if the battery manufacturer has a sufficient UK presence which will influence producer responsibilities; and will also need to assess whether there are any risks that the battery manufacturer may restructure in the immediate future to avoid take-back responsibilities.  Change control clauses may be relevant here. Vesting / title provisions can also influence producer responsibilities, in supply chain insolvency situations.

In respect of long-term O&M contracts, considerations in respect of take-back requirements should be considered by the relevant parties. Practice differs between including express terms in the contract to not doing so.

As with most things with this market, whether to include or not is itself a commercial decision, for example, batteries have green metals which do have intrinsic value in respect of what could be a buoyant recycling market in the future.

If including end of life obligations in contract documents, please consider where this is included. We see this sometimes referenced within component warranties. How this is dealt with (and its implications) will require legal advice, based on an analysis of the facts in question.  

Importantly, proper management of grid-scale battery disposal not only ensures regulatory compliance, risk mitigation in respect unexpected costs, but also promotes environmental sustainability.

However, this is not just an “end of life” issue. There are broader reporting and due diligence requirements that exist in respect of a producer and these impact both procurement and the full life span of a battery storage project. Early engagement around these issues is therefore essential.