Emergent Markets: Energy Storage


From 7 May 2024, The North East Evidence Hub is a project of the North East Combined Authority. Find out more at northeast-ca.gov.uk/north-east-lep Search Search Home Spotlight Analysis Evidence by Theme News & Commentary Energy Storage Energy storage systems make use of large battery powered installations to store power by charging them, which can be available as per demand. Home Spotlight Analysis Emergent Markets Evidence BaseEnergy Storage {{element.textContent}} Page Menu {{element.textContent}} Introduction This is one of the 16 market profiles produced as part of the Economic Market’s foresight study commissioned by the North East LEP. It provides an overview of the future growth prospects for the Energy Storage market globally, a summary of the enterprise base serving the market in the North East and relevant regional assets, and an analysis of how the continued convergence of global trends will affect future market development. These markets were selected as those most likely to present opportunities for future regional growth in the North East LEP. This was done based on a trends analysis conducted by Frost and Sullivan, which identified 37 high impact trends driving continued change and growth in these markets globally. A shortlist of markets from this trends analysis was then cross-referenced against the current North East position by Cambridge Econometrics. This analysis identified the most significant opportunities for the North East LEP. Each of these profiles also uses findings from the Data City platform to quantify the number of firms serving the Energy Storage market in the North East. This platform links companies house data to companies’ websites and uses the website text and machine learning to classify firms into Real Time Industrial Classification Codes, which can allow analysis of markets often too emergent to be precisely measured in SIC codes. The data from this platform has been triangulated against ONS data to consider a variety of perspectives on the market. More detail about the methodology can be found here for the 16 market profiles. Established status in the North East and assoicated value chain International scope in terms of firm activities and ownership. Significant presence with more firms in this market in the North East than the national average Description and global outlook Energy storage in batteries Energy storage systems make use of large battery powered installations to store power by charging them, which can be available as per demand. Market drivers The market is being driven by the need for flexible power supply and increasing adoption of renewable energy. The demand for continuous and reliable power supply, smart grid solutions, demand from critical operations markets, electric vehicles and lowering costs have increased the focus in integrating energy storage systems in the power supply. The energy storage market is benefiting from overall improvement in performance, declining cost of technology and increasing integration of behind the meter and off-grid power supply. The key challenges are regulatory policies which need to be updated, lack of standardisation of technology and high cost of initial investment. The market is impacted by concerns over performances and industry acceptance. Scale and scope of global market In 2020, the global market size for the energy storage market was estimated at US$ 2.9 billion with the forecasted growth rate to be CAGR 32% for the period of 2021- 25. APAC (Asia-Pacific) is the largest energy storage market led by South Korea, China, Japan and Australia, in-line with these countries moving away from fossil fuels. In terms of the grid-connected energy storage market, the US and South Korea are the global leaders. The implementation of storage solutions has been important in making renewable energy more usable and stable, while reducing the distribution cost in some markets as well. The UK has been among the leading countries in the energy storage market, with a large number of storage projects to be deployed within country. The UK maintains a large share within overall the battery storage market in Europe, providing stability and flexibility to the increasing mix of wind and solar energy in power generation. Some of the leading global energy storage companies are ABB, Siemens AG, Panasonic NEC Corporation, Toshiba, Samsung, LG Chem, Hitachi, and Tesla. Capital flows and FDI Investment in Energy Storage technology has historically been driven by centralised (and highly regulated) investment plans from Distribution Network Operators (DNOs), which are now in the process of transitioning to a more regionally focused model as Distribution System Operators (DSOs). This transition will push further capital into investments in smart grid and oher energy management technologies over the next decade, and support the establishment of rich supply chain ecosystems for technology and service provision. The rate and scope of investment is in large part the result of brokered agreements between the Electricty System Operator, The energy regulator (OfGem) and the DSOs themselves. This is expected to create some uncertainty in the investment landscape in a post-covid environment, where drivers around energy pricing caps for the consumer, system resilience and decarbonisation timelines are in tension. Within the sphere of private capital, VCs remain highly active around technologies and platform models that are predicated on energy storage, smart grid and associated demand response technologies. North East presence and capabilities Regional overview Based on the Newcastle Helix site, Connected Energy is accelerating new approaches to grid-load management with it’s British designed battery storage systems and energy optimisation expertise. A variety of local businesses are developing products and services related to energy flexibility and storage, including Equiwatt, Hyperdrive, and Connected Energy. Based on the Newcastle Helix site, Connected Energy is accelerating new approaches to grid-load management with it’s British designed battery storage systems and energy optimisation expertise. A variety of local businesses are developing products and services related to energy flexibility and storage, including Equiwatt, Hyperdrive, and Connected Energy. Battery technology investor, Britishvolt, has acquired exclusive rights to a site in Blyth, Northumberland, with construction starting in 2021. The company says world-class lithium-ion batteries will be in production by the end of 2023 in its £2.6 billion site, the largest industrial investment in the North East since Nissan’s arrival in 1984 and one of the largest-ever industrial investments in the UK. By the final phase of the project in 2027, the site will aim to employ up to 3,000 highly skilled people, producing over 300,000 lithium-ion batteries for the UK automotive industry. It will provide up to 5,000 jobs in the wider supply chain as well. A UK gigafactory is widely regarded as being strategically important for the UK automotive industry for it to maintain competitive advantage as the country accelerates towards an increasingly electrified future. The gigafactory will be built on a 95-hectare site, formerly the site of the Blyth Power Station. It will use renewable energy, including the potential to use hydro-electric power generated in Norway and transmitted 447 miles under the North Sea via the world’s longest inter-connector from the North Sea Link project. The North East LEP area has also made advances in district energy plans and schemes, mine energy and geothermal heat, demand-side response schemes (DSR), and other renewables. R&D capability includes: The Offshore Renewable Energy Catapult and the Emerson Cavitation Tunnel based at the Port of Blyth The National Centre for Subsea and Offshore Engineering Pipeline test facilities at Northern Gas Networks test facility, DNV GL, and Smart Grid Laboratory Hyperbaric testing and research at Tyne Subsea The National Centre for Energy Systems Integration (CESI) at Newcastle University Supergen Energy Networks Hub at Newcastle Universit Integrated Transport, Electricity and Gas Research Laboratory (InTEGReL) in Gateshead Durham Energy Institute at Durham University The Smart Grid Lab at Newcastle Helix. The North East LEP area has a strong and diverse university sector, with over 85,000 students studying at four regional universities. In 2018/19 there were 31,475 enrolments in the four universities in the North East LEP area. Other subjects that are a particular specialism by one or two of the universities include Engineering and technology (Newcastle). It has been a priority of the North East LEP to increase the enrolment in STEM qualifications. Overall, the change in total graduates between 2014/15 and 2018/19 and who studied a STEM related subject has been roughly in line with the UK average at around 10%. However, some subjects have experienced a much faster increase in graduates, most notably in computer science, where the number of graduates increased by over 40% in the space of four academic years, compared to 19% in the UK as a whole. Over 85,000 students study at four universities in the North East LEP area. In terms of higher education specialisms: The University of Newcastle teaching includes degree apprenticeships in power engineering, range of undergrad engineering degrees, masters courses incl. Offshore Engineering and Renewable Energy. Furthermore, it is a global principal partner with Siemens, and has strong relationships with many firms including Tyne Subsea, BEL Valves, Reece Group and Soil Machine Dynamics (SMD). Northumbria University is ranked in the top 300 for engineering and technology in the Times Higher Education’s World University subject rankings 2018, Northumbria University offers courses in Electrical Power Engineering (MSc), Renewable and Sustainable Energy Technologies (MSc), and has an expanding degree apprenticeship programme. It has established links with major energy companies in the region, delivering a bespoke master’s course for a global oil economy. Durham University Energy Institute is one of the key national research centres for renewable energy. There is an emphasis on science and society that provides Durham with a unique socio-technical approach to energy research and teaching. Durham offers a series of related masters courses along with a Centre for Doctoral Training in Energy, offering significant interaction with both local and international companies Furthermore, the Witty Review identified North East Univeristies in the top 20 for research publiciations for 11 subjects: Advanced materials and nano-technology (Durham, 16th); Energy storage (Newcastle, 7th; Durham, 9th); Offshore wind (Northumbria, 19th; Durham 3rd) and Oil and gas (Durham 11th; Newcastle 7th). Looking at the research funding awarded between 2007 and 2017 to North East based organisations, the subject areas that secured the most funding from the UK Research Councils and Innovate UK included: Energy (with 79 projects securing £46.2 million). There are nine Further Education colleges, providing technical education and further learning opportunities. These colleges are brought together through the North East LEP area College Hub, which has a broad remit to support the implementation and achievement of the Gatsby Good Career Guidance Benchmarks, as well as the brokering of strategic employer partnerships with further education institutions. According to the Local Skills Report from the North East LEP, a recent survey of FE colleges recorded a strength in engineering and manufacturing technology subject areas, specifically: Based on the North bank of the Tyne, the Newcastle College Energy Academy provides a centre of innovation, training and development for the energy sector. The academy delivers qualifications from level two through to degree level in energy technologies, manufacturing and maintenance, as well as apprenticeships. Courses include a level two and three in Welding and Fabrication, level three in Renewable and Subsea Engineering, and Foundation degrees (FdEng) in Renewable Energy Technology and Subsea Engineering. The Energy Academy has successfully developed a Maintenance and Operation Engineering Technician apprenticeship for the wind energy and subsea sectors. Zero Carbon Futures, a subsidiary of Gateshead College, was set up in 2011 as an independent consultancy specialising in low carbon vehicle technologies. The company develops electric vehicle infrastructure, and has managed a range of projects to increase electric vehicle uptake. Its ultimate aim is to research and develop new and emerging technologies, as low carbon vehicles move into the mainstream and become a major part of our transport system. The North East LEP area has significant capabilities in engineering, marine and subsea technologies making the area a global hub for energy and environmental technologies. Particular areas of expertise include subsea engineering, robotics, planning and development and the design and fabrication of components including pipelines, umbilical’s and wind turbine foundations. The universities of Durham, Newcastle and Northumbria all have globally recognised research assets in this sector as well and have supported the development of skills in this area. Key sites and assets include: leading offshore energy support base in Port of Blyth, along with other UK East Coast centres in Teesside (GE) and Humber (Siemens); 7 EZ sites around North Bank of the Tyne, and Port of Blyth; 7km of quay next to deep water; 400ha of key riverside development; Northern Powergrid electricity distribution network and Northern Gas Networks infrastructure. District energy: The North East has a number of existing district heating schemes including; the Freeman Hospital, North Tyneside General Hospital, The Royal Victoria Infirmary, Sunderland Royal Hospital, Riverside Dene high-rise Newcastle, The Rise new build housing scheme Newcastle, Newcastle University, the Gateshead Energy Centre. Studies undertaken by the Association of Decentralised Energy (ADE) estimate that the North East is home to around 9% of UK heat networks. However, adjusted for economic activity (heat capacity per £m GVA), the North East is second only to the North West and London. Across the North East a significant number of new heat network feasibility studies have been undertaken. The results show huge potential for new schemes to be deployed, as well as for extension of existing schemes. This feasibility work has largely been led by local authorities, with many studies capitalising on BEIS funding via the Heat Network Delivery Unit (HNDU). This aggregated pipeline of schemes, across both the North East LEP and Tees Valley Combined Authority areas, comprises 23 potential schemes with a total estimated value of over £280 million. Schemes vary in terms of progress, between pre-feasibility and planned network extensions. Mine energy and geothermal heat: The North East has a particularly rich geothermal potential, with both deep and shallow resources. This includes radiothermal granites in the North Pennines, and flooded mineshafts in abandoned coalfields particularly in Durham and Northumberland. Mine energy heat schemes have also already been deployed in the North East, with two existing projects; at Lanchester Wines and Dawdon Colliery. Wider geothermal schemes have also been explored to various stages, including the Eastgate Borehole. This research well was the first deep geothermal exploration to be drilled in the UK for over 20 years when it was drilled in 2004. More recently Large-scale renewables: The North East has a track record of delivering renewable energy capacity, capitalising on available natural resources, supportive planning regimes, and local supply chain capacity and skills. A number of Local Authority areas within the region are in the top 50 for renewable energy, across 406 UK authorities. Most notably, Northumberland generates the most renewable electricity from hydro, and second most from onshore wind, of any English Local Authority area. County Durham is also in the top six English Local Authority areas for onshore wind generation. The North East generates a significantly greater proportion of renewable electricity from onshore wind than the UK average. Demand-side response (DSR) schemes: incentivise users to change the profile of their consumption, and energy storage technologies which allow surplus energy to be stored and sold when its needed. Organisations in the North East are already exploring these emerging solutions, for example several utility-scale energy storage and demand side response schemes are in place, including: A 25MW lithium-ion battery close to the Cobalt Business Park, North Tyneside, developed by Element Power and since acquired by Enel; A 35MW battery at Port of Tyne, developed by Renewable Energy Systems, and since acquired by Foresight Group; A 3MW battery which is part of the Gateshead Energy Centre, developed by Gateshead Borough Council. Other renewables: County Durham, Northumberland and Sunderland are all in the top six UK Local Authority areas for solar PV sites. The region also produces a greater proportion of renewable electricity from landfill gas and anaerobic digestion than the UK average, including through advanced anaerobic digestion processes pioneered by Northumbrian Water at its Howden site. Overall Northumberland generates almost 40% the amount of its total electricity use from renewable sources. A number of companies are also exploring and developing specific large-scale low carbon energy innovations in the North East. These include the Catfoss-owned ‘Graphite Resources’ energy from waste facility in Gateshead, which is developing is processes to convert waste into compost like output (CLO), refuse derived fuel (RDF) and solid recovered fuel (SRF). Analysis of GVA and employment by SIC sectors The tables below summarise the findings from socio-economic data and economic forecasts, presenting headline findings for the most relevant SIC classification industries to Energy Storage: Electrical Equipment Maufacturing; Electronics Manufacturing; and Electricty and Gas Electrical Equipment Manufacturing is highly productive and employs 3,500 in the North East LEP area, a small sector relative to other sectors in the area. Manufacture of Electrical Equipment is a North East specialism, with a Location Quotient of 1.4 demonstrating that the industry is 40% more concentrated in the region compared to nationally. The sector experienced a decline in the number of jobs over the past 38 years, but continued to increase GVA. Future projections indicate continued job decline in Electrical Equpment. The Electronics Manufacturing industry employs 2,100 in the North East LEP area, and is less of a specialism than nationally, with a location quotient of 0.6. The sector, although highly productive, has experienced a steep decline in employment and GVA. The outlook is forecast for an increase in jobs and GVA growth. Electricity and Gas is highly productive and employs 8,000 in the North East. It is a moderate sized sector relative to other sectors in the North East LEP area. The sector has experienced a decline in jobs over the past 38 years, but continued to increase GVA. Future projections indicate modest jobs growth in Electricity and Gas. Electrical equipment manufacturing Electronics manufacturing Electricity and Gas The Data City findings The Data City provides company data based on an AI-driven taxonomy search of terms and content on company websites. This is then connected to companies house data for each company and allows an aggregate analysis for new industry and market definitions. The data captures the number of business branches in the North East LEP area. The Data City data suggests that there were 36 active firms in the energy storage sector in June 2022. This was about 4% of all firms operating in this sector in the UK. Location quotients The locations data from the Data City suggests that the North East is a centre for energy storage in the UK. Five of the seven local authorities in the North East LEP had a location quotient above one, and Sunderland had a location quotient in the three highest in the UK. Gateshead and Northumberland also had very strong location quotients. Connections with other regions The locations data from the Data City shows that 39% of North East LEP firms had a location outside of the wider North East region, compared to only 24% of firms nationally with a location in more than one NUTS region. London was the most common region for North East firms to have an additional location in, but Scotland was the only sector which North East firms were more likely to have an additional location in that the national average. Sectors crossover One of the innovative features of the Data City methodology is that it allows firms to be classified in multiple sectors. The platform does so through real time industry classifications (RTICs), which are constantly evolving classifications generated by an AI from companies’ websites. Firms can be classified under multiple RTICs at any one time. This means the data can be used to demonstrate interdependencies where sectors overlap. In terms of the North East energy storage sector, the strongest areas of overlap were with Net Zero, the Lion-battery supply chain, and Data infrastructure. However, compared to nationally the North East LEP had a strong focus on autonomous vehicles, with almost half the firms operating in both energy storage and autonomous vehicles having locations in the North East. Subsectors The Data City methodology also includes individual subsectors within the RTIC taxonomy which allows detailed analysis of the North East LEP’s focus within the energy storage sector. These subsectors show that half of North East energy storage firms include a focus on the batteries RTIC subsector, with over 40% having a focus on the data centres RTIC subsector and the same percentage focussing on battery cells. The former is a slightly higher percentage than nationally, the latter is slightly lower. The North East has particularly high percentages of energy storage firms focused on autonomous vehicles beta testing and low emission vehicles than nationally. Locations map As anticipated from the location quotients there is a concentration of energy storage firms in Sunderland, but there are also many firms in South East Northumberland near Cramlington and the Port of Blyth. Regional prospects A critical part of this study is to shortlist which emergent markets represent “hot prospects” for the North East economy in the future. Using the findings from the study, and the assessment framework below – Energy Storage is rated as a market with: Established status in the North East International scope in terms of firm activities and ownership Significant presence in the North East, with 4% of firms in this market having a North East LEP location (compared to 2% of all firms) Existing regional specialisms Moderate: average location quotient; some employment and firm presence Firms Moderate: 1 to 3 major firms and/or start-ups and SME presence Value chain cluster Moderate: 1 to 3 major firms and/or start-ups and SME presence Innovation / technology Significant: national or global leader in R&D activity and capability at scale Skills and human capital Directly relevant: foundation and specific skills, with infrastructure and provision Local institutions Relevant institutions Local assets Relevant major assets: of national significance Click here to download the assessment framework. Strategic Commentary Energy storage is of critical national strategic importance, with demands for resilient and economic storage solutions expected to escalate as the transition to a low carbon generation economy develops. There is therefore a significant market opportunity for the North East in Energy storage. The North East LEP already enjoys a strong position in this market due to its position as a hub for the energy transition. In addition to the rapidly emerging expertise and industrial centres of excellence for battery storage, the North East’s history in energy onshoring and storage lends itself very well to embracing new trends such as the hydrogen economy. This flexibility should allow the North East to respond to the continued progression of market trends. The key market enabled by energy storage in the North East, highlighted in the table below, is Electric vehicles. Nissan Leaf’s replacement EV Hub and new model will be built in Sunderland, bringing over £1bn FDI into the region, while EV’s is one of the markets with the highest location quotients contained in this study. However, this dependency shows that to grow this market the North East needs to also maintain its current capabilities in Energy storage. The dependencies table highlights the importance of building regional capability in applied digital technologies too. The digital economy is a significant strategic driver for growth around Smart grid technology, Energy storage and associated and capital projects. Without capability in these areas the North East may find it slowly loses its competitive advantage. Interactions and Dependencies Connected markets Energy generation Smart grids Autonomous and electric vehicles Robotics More about Emergent markets

Home Spotlight Analysis Emergent Markets Evidence BaseEnergy Storage

Introduction

This is one of the 16 market profiles produced as part of the Economic Market’s foresight study commissioned by the North East LEP. It provides an overview of the future growth prospects for the Energy Storage market globally, a summary of the enterprise base serving the market in the North East and relevant regional assets, and an analysis of how the continued convergence of global trends will affect future market development.

These markets were selected as those most likely to present opportunities for future regional growth in the North East LEP. This was done based on a trends analysis conducted by Frost and Sullivan, which identified 37 high impact trends driving continued change and growth in these markets globally. A shortlist of markets from this trends analysis was then cross-referenced against the current North East position by Cambridge Econometrics. This analysis identified the most significant opportunities for the North East LEP.

Each of these profiles also uses findings from the Data City platform to quantify the number of firms serving the Energy Storage market in the North East. This platform links companies house data to companies’ websites and uses the website text and machine learning to classify firms into Real Time Industrial Classification Codes, which can allow analysis of markets often too emergent to be precisely measured in SIC codes. The data from this platform has been triangulated against ONS data to consider a variety of perspectives on the market.

More detail about the methodology can be found here for the 16 market profiles.

Description and global outlook

Energy storage in batteries

Energy storage systems make use of large battery powered installations to store power by charging them, which can be available as per demand.

Market drivers

The market is being driven by the need for flexible power supply and increasing adoption of renewable energy. The demand for continuous and reliable power supply, smart grid solutions, demand from critical operations markets, electric vehicles and lowering costs have increased the focus in integrating energy storage systems in the power supply.

The energy storage market is benefiting from overall improvement in performance, declining cost of technology and increasing integration of behind the meter and off-grid power supply. The key challenges are regulatory policies which need to be updated, lack of standardisation of technology and high cost of initial investment. The market is impacted by concerns over performances and industry acceptance.

Scale and scope of global market

In 2020, the global market size for the energy storage market was estimated at US$ 2.9 billion with the forecasted growth rate to be CAGR 32% for the period of 2021- 25. APAC (Asia-Pacific) is the largest energy storage market led by South Korea, China, Japan and Australia, in-line with these countries moving away from fossil fuels. In terms of the grid-connected energy storage market, the US and South Korea are the global leaders. The implementation of storage solutions has been important in making renewable energy more usable and stable, while reducing the distribution cost in some markets as well.

The UK has been among the leading countries in the energy storage market, with a large number of storage projects to be deployed within country. The UK maintains a large share within overall the battery storage market in Europe, providing stability and flexibility to the increasing mix of wind and solar energy in power generation. Some of the leading global energy storage companies are ABB, Siemens AG, Panasonic NEC Corporation, Toshiba, Samsung, LG Chem, Hitachi, and Tesla.

Capital flows and FDI

Investment in Energy Storage technology has historically been driven by centralised (and highly regulated) investment plans from Distribution Network Operators (DNOs), which are now in the process of transitioning to a more regionally focused model as Distribution System Operators (DSOs). This transition will push further capital into investments in smart grid and oher energy management technologies over the next decade, and support the establishment of rich supply chain ecosystems for technology and service provision.

The rate and scope of investment is in large part the result of brokered agreements between the Electricty System Operator, The energy regulator (OfGem) and the DSOs themselves. This is expected to create some uncertainty in the investment landscape in a post-covid environment, where drivers around energy pricing caps for the consumer, system resilience and decarbonisation timelines are in tension.

Within the sphere of private capital, VCs remain highly active around technologies and platform models that are predicated on energy storage, smart grid and associated demand response technologies.

North East presence and capabilities

Regional overview

Based on the Newcastle Helix site, Connected Energy is accelerating new approaches to grid-load management with it’s British designed battery storage systems and energy optimisation expertise. A variety of local businesses are developing products and services related to energy flexibility and storage, including Equiwatt, Hyperdrive, and Connected Energy.

Battery technology investor, Britishvolt, has acquired exclusive rights to a site in Blyth, Northumberland, with construction starting in 2021. The company says world-class lithium-ion batteries will be in production by the end of 2023 in its £2.6 billion site, the largest industrial investment in the North East since Nissan’s arrival in 1984 and one of the largest-ever industrial investments in the UK. By the final phase of the project in 2027, the site will aim to employ up to 3,000 highly skilled people, producing over 300,000 lithium-ion batteries for the UK automotive industry. It will provide up to 5,000 jobs in the wider supply chain as well.

A UK gigafactory is widely regarded as being strategically important for the UK automotive industry for it to maintain competitive advantage as the country accelerates towards an increasingly electrified future.

The gigafactory will be built on a 95-hectare site, formerly the site of the Blyth Power Station. It will use renewable energy, including the potential to use hydro-electric power generated in Norway and transmitted 447 miles under the North Sea via the world’s longest inter-connector from the North Sea Link project.

The North East LEP area has also made advances in district energy plans and schemes, mine energy and geothermal heat, demand-side response schemes (DSR), and other renewables.

R&D capability includes:

The Offshore Renewable Energy Catapult and the Emerson Cavitation Tunnel based at the Port of Blyth
The National Centre for Subsea and Offshore Engineering
Pipeline test facilities at Northern Gas Networks test facility, DNV GL, and Smart Grid Laboratory
Hyperbaric testing and research at Tyne Subsea
The National Centre for Energy Systems Integration (CESI) at Newcastle University
Supergen Energy Networks Hub at Newcastle Universit
Integrated Transport, Electricity and Gas Research Laboratory (InTEGReL) in Gateshead
Durham Energy Institute at Durham University
The Smart Grid Lab at Newcastle Helix.

The North East LEP area has a strong and diverse university sector, with over 85,000 students studying at four regional universities. In 2018/19 there were 31,475 enrolments in the four universities in the North East LEP area. Other subjects that are a particular specialism by one or two of the universities include Engineering and technology (Newcastle).

It has been a priority of the North East LEP to increase the enrolment in STEM qualifications. Overall, the change in total graduates between 2014/15 and 2018/19 and who studied a STEM related subject has been roughly in line with the UK average at around 10%. However, some subjects have experienced a much faster increase in graduates, most notably in computer science, where the number of graduates increased by over 40% in the space of four academic years, compared to 19% in the UK as a whole.

Over 85,000 students study at four universities in the North East LEP area.

In terms of higher education specialisms:

The University of Newcastle teaching includes degree apprenticeships in power engineering, range of undergrad engineering degrees, masters courses incl. Offshore Engineering and Renewable Energy. Furthermore, it is a global principal partner with Siemens, and has strong relationships with many firms including Tyne Subsea, BEL Valves, Reece Group and Soil Machine Dynamics (SMD).

Northumbria University is ranked in the top 300 for engineering and technology in the Times Higher Education’s World University subject rankings 2018, Northumbria University offers courses in Electrical Power Engineering (MSc), Renewable and Sustainable Energy Technologies (MSc), and has an expanding degree apprenticeship programme. It has established links with major energy companies in the region, delivering a bespoke master’s course for a global oil economy.
Durham University Energy Institute is one of the key national research centres for renewable energy. There is an emphasis on science and society that provides Durham with a unique socio-technical approach to energy research and teaching. Durham offers a series of related masters courses along with a Centre for Doctoral Training in Energy, offering significant interaction with both local and international companies

Furthermore, the Witty Review identified North East Univeristies in the top 20 for research publiciations for 11 subjects: Advanced materials and nano-technology (Durham, 16th); Energy storage (Newcastle, 7th; Durham, 9th); Offshore wind (Northumbria, 19th; Durham 3rd) and Oil and gas (Durham 11th; Newcastle 7th).

Looking at the research funding awarded between 2007 and 2017 to North East based organisations, the subject areas that secured the most funding from the UK Research Councils and Innovate UK included: Energy (with 79 projects securing £46.2 million).

There are nine Further Education colleges, providing technical education and further learning opportunities. These colleges are brought together through the North East LEP area College Hub, which has a broad remit to support the implementation and achievement of the Gatsby Good Career Guidance Benchmarks, as well as the brokering of strategic employer partnerships with further education institutions. According to the Local Skills Report from the North East LEP, a recent survey of FE colleges recorded a strength in engineering and manufacturing technology subject areas, specifically:

Based on the North bank of the Tyne, the Newcastle College Energy Academy provides a centre of innovation, training and development for the energy sector. The academy delivers qualifications from level two through to degree level in energy technologies, manufacturing and maintenance, as well as apprenticeships. Courses include a level two and three in Welding and Fabrication, level three in Renewable and Subsea Engineering, and Foundation degrees (FdEng) in Renewable Energy Technology and Subsea Engineering. The Energy Academy has successfully developed a Maintenance and Operation Engineering Technician apprenticeship for the wind energy and subsea sectors.
Zero Carbon Futures, a subsidiary of Gateshead College, was set up in 2011 as an independent consultancy specialising in low carbon vehicle technologies. The company develops electric vehicle infrastructure, and has managed a range of projects to increase electric vehicle uptake. Its ultimate aim is to research and develop new and emerging technologies, as low carbon vehicles move into the mainstream and become a major part of our transport system.

The North East LEP area has significant capabilities in engineering, marine and subsea technologies making the area a global hub for energy and environmental technologies. Particular areas of expertise include subsea engineering, robotics, planning and development and the design and fabrication of components including pipelines, umbilical’s and wind turbine foundations. The universities of Durham, Newcastle and Northumbria all have globally recognised research assets in this sector as well and have supported the development of skills in this area.

Key sites and assets include: leading offshore energy support base in Port of Blyth, along with other UK East Coast centres in Teesside (GE) and Humber (Siemens); 7 EZ sites around North Bank of the Tyne, and Port of Blyth; 7km of quay next to deep water; 400ha of key riverside development; Northern Powergrid electricity distribution network and Northern Gas Networks infrastructure.

District energy: The North East has a number of existing district heating schemes including; the Freeman Hospital, North Tyneside General Hospital, The Royal Victoria Infirmary, Sunderland Royal Hospital, Riverside Dene high-rise Newcastle, The Rise new build housing scheme Newcastle, Newcastle University, the Gateshead Energy Centre. Studies undertaken by the Association of Decentralised Energy (ADE) estimate that the North East is home to around 9% of UK heat networks. However, adjusted for economic activity (heat capacity per £m GVA), the North East is second only to the North West and London. Across the North East a significant number of new heat network feasibility studies have been undertaken. The results show huge potential for new schemes to be deployed, as well as for extension of existing schemes. This feasibility work has largely been led by local authorities, with many studies capitalising on BEIS funding via the Heat Network Delivery Unit (HNDU). This aggregated pipeline of schemes, across both the North East LEP and Tees Valley Combined Authority areas, comprises 23 potential schemes with a total estimated value of over £280 million. Schemes vary in terms of progress, between pre-feasibility and planned network extensions.

Mine energy and geothermal heat: The North East has a particularly rich geothermal potential, with both deep and shallow resources. This includes radiothermal granites in the North Pennines, and flooded mineshafts in abandoned coalfields particularly in Durham and Northumberland. Mine energy heat schemes have also already been deployed in the North East, with two existing projects; at Lanchester Wines and Dawdon Colliery. Wider geothermal schemes have also been explored to various stages, including the Eastgate Borehole. This research well was the first deep geothermal exploration to be drilled in the UK for over 20 years when it was drilled in 2004. More recently

Large-scale renewables: The North East has a track record of delivering renewable energy capacity, capitalising on available natural resources, supportive planning regimes, and local supply chain capacity and skills. A number of Local Authority areas within the region are in the top 50 for renewable energy, across 406 UK authorities. Most notably, Northumberland generates the most renewable electricity from hydro, and second most from onshore wind, of any English Local Authority area. County Durham is also in the top six English Local Authority areas for onshore wind generation. The North East generates a significantly greater proportion of renewable electricity from onshore wind than the UK average.

Demand-side response (DSR) schemes: incentivise users to change the profile of their consumption, and energy storage technologies which allow surplus energy to be stored and sold when its needed. Organisations in the North East are already exploring these emerging solutions, for example several utility-scale energy storage and demand side response schemes are in place, including: A 25MW lithium-ion battery close to the Cobalt Business Park, North Tyneside, developed by Element Power and since acquired by Enel; A 35MW battery at Port of Tyne, developed by Renewable Energy Systems, and since acquired by Foresight Group; A 3MW battery which is part of the Gateshead Energy Centre, developed by Gateshead Borough Council.

Other renewables: County Durham, Northumberland and Sunderland are all in the top six UK Local Authority areas for solar PV sites. The region also produces a greater proportion of renewable electricity from landfill gas and anaerobic digestion than the UK average, including through advanced anaerobic digestion processes pioneered by Northumbrian Water at its Howden site. Overall Northumberland generates almost 40% the amount of its total electricity use from renewable sources. A number of companies are also exploring and developing specific large-scale low carbon energy innovations in the North East. These include the Catfoss-owned ‘Graphite Resources’ energy from waste facility in Gateshead, which is developing is processes to convert waste into compost like output (CLO), refuse derived fuel (RDF) and solid recovered fuel (SRF).

Analysis of GVA and employment by SIC sectors

The tables below summarise the findings from socio-economic data and economic forecasts, presenting headline findings for the most relevant SIC classification industries to Energy Storage: Electrical Equipment Maufacturing; Electronics Manufacturing; and Electricty and Gas

Electrical Equipment Manufacturing is highly productive and employs 3,500 in the North East LEP area, a small sector relative to other sectors in the area. Manufacture of Electrical Equipment is a North East specialism, with a Location Quotient of 1.4 demonstrating that the industry is 40% more concentrated in the region compared to nationally. The sector experienced a decline in the number of jobs over the past 38 years, but continued to increase GVA. Future projections indicate continued job decline in Electrical Equpment.

The Electronics Manufacturing industry employs 2,100 in the North East LEP area, and is less of a specialism than nationally, with a location quotient of 0.6. The sector, although highly productive, has experienced a steep decline in employment and GVA. The outlook is forecast for an increase in jobs and GVA growth.

Electricity and Gas is highly productive and employs 8,000 in the North East. It is a moderate sized sector relative to other sectors in the North East LEP area. The sector has experienced a decline in jobs over the past 38 years, but continued to increase GVA. Future projections indicate modest jobs growth in Electricity and Gas.

Electrical equipment manufacturing

Electronics manufacturing

Electricity and Gas

The Data City findings

The Data City provides company data based on an AI-driven taxonomy search of terms and content on company websites. This is then connected to companies house data for each company and allows an aggregate analysis for new industry and market definitions. The data captures the number of business branches in the North East LEP area.

The Data City data suggests that there were 36 active firms in the energy storage sector in June 2022. This was about 4% of all firms operating in this sector in the UK.

Location quotients

The locations data from the Data City suggests that the North East is a centre for energy storage in the UK. Five of the seven local authorities in the North East LEP had a location quotient above one, and Sunderland had a location quotient in the three highest in the UK. Gateshead and Northumberland also had very strong location quotients.

Connections with other regions

The locations data from the Data City shows that 39% of North East LEP firms had a location outside of the wider North East region, compared to only 24% of firms nationally with a location in more than one NUTS region. London was the most common region for North East firms to have an additional location in, but Scotland was the only sector which North East firms were more likely to have an additional location in that the national average.

Sectors crossover

One of the innovative features of the Data City methodology is that it allows firms to be classified in multiple sectors. The platform does so through real time industry classifications (RTICs), which are constantly evolving classifications generated by an AI from companies’ websites. Firms can be classified under multiple RTICs at any one time.
This means the data can be used to demonstrate interdependencies where sectors overlap. In terms of the North East energy storage sector, the strongest areas of overlap were with Net Zero, the Lion-battery supply chain, and Data infrastructure. However, compared to nationally the North East LEP had a strong focus on autonomous vehicles, with almost half the firms operating in both energy storage and autonomous vehicles having locations in the North East.

Subsectors

The Data City methodology also includes individual subsectors within the RTIC taxonomy which allows detailed analysis of the North East LEP’s focus within the energy storage sector. These subsectors show that half of North East energy storage firms include a focus on the batteries RTIC subsector, with over 40% having a focus on the data centres RTIC subsector and the same percentage focussing on battery cells. The former is a slightly higher percentage than nationally, the latter is slightly lower. The North East has particularly high percentages of energy storage firms focused on autonomous vehicles beta testing and low emission vehicles than nationally.

Locations map

As anticipated from the location quotients there is a concentration of energy storage firms in Sunderland, but there are also many firms in South East Northumberland near Cramlington and the Port of Blyth.

Regional prospects

A critical part of this study is to shortlist which emergent markets represent “hot prospects” for the North East economy in the future. Using the findings from the study, and the assessment framework below – Energy Storage is rated as a market with:

Established status in the North East
International scope in terms of firm activities and ownership
Significant presence in the North East, with 4% of firms in this market having a North East LEP location (compared to 2% of all firms)

Existing regional specialisms

Moderate: average location quotient; some employment and firm presence

Firms

Moderate: 1 to 3 major firms and/or start-ups and SME presence

Value chain cluster

Moderate: 1 to 3 major firms and/or start-ups and SME presence

Innovation / technology

Significant: national or global leader in R&D activity and capability at scale

Skills and human capital

Directly relevant: foundation and specific skills, with infrastructure and provision

Local institutions

Relevant institutions

Local assets

Relevant major assets: of national significance

Click here to download the assessment framework.

Strategic Commentary

Energy storage is of critical national strategic importance, with demands for resilient and economic storage solutions expected to escalate as the transition to a low carbon generation economy develops. There is therefore a significant market opportunity for the North East in Energy storage.

The North East LEP already enjoys a strong position in this market due to its position as a hub for the energy transition. In addition to the rapidly emerging expertise and industrial centres of excellence for battery storage, the North East’s history in energy onshoring and storage lends itself very well to embracing new trends such as the hydrogen economy. This flexibility should allow the North East to respond to the continued progression of market trends.

The key market enabled by energy storage in the North East, highlighted in the table below, is Electric vehicles. Nissan Leaf’s replacement EV Hub and new model will be built in Sunderland, bringing over £1bn FDI into the region, while EV’s is one of the markets with the highest location quotients contained in this study. However, this dependency shows that to grow this market the North East needs to also maintain its current capabilities in Energy storage.

The dependencies table highlights the importance of building regional capability in applied digital technologies too. The digital economy is a significant strategic driver for growth around Smart grid technology, Energy storage and associated and capital projects. Without capability in these areas the North East may find it slowly loses its competitive advantage.

Energy Storage

Introduction