The UK aims to spend £246m ($320m) over four years to fund research on batteries.
The plan is to boost the UK’s progress on electric vehicle technology and even help its grid cope with the intermittency of solar and wind power, capacity for which is growing fast.
It’s part of a drive to boost Britain’s competitiveness in six new technology areas.
Government says it will set up a body called a "Battery Institute" to disburse the money to companies interested in doing the research.
The announcement came this week just before the government said new diesel and petrol cars and vans will be banned in the UK from 2040 in a bid to tackle air pollution.
Also this week, car maker BMW said a fully electric version of the Mini will be built at the UK’s Cowley plant in Oxford starting in 2019.
The focus on batteries comes as the regulator Ofgem said major changes in the way electricity is made, used and stored could mean UK consumers could save billions of pounds on their energy bills.
The rules could make it easier for people to generate their own electricity with solar panels, store it in batteries and sell it to the National Grid.
The new approach will reduce costs for someone who allows their washing machine to be turned on by the internet to maximise use of cheap solar power on a sunny afternoon.
Ofgem and the National Grid are trying to make Britain’s transmission and distribution systems flexible enough to accommodate intermittent solar and wind energy sources.
Now there is little capacity to store renewable energy in the UK and there is no commercial mechanism established to buy and sell battery storage as a service.
However, this is set to change. Â Â Â
The government says its £246m, called the "Faraday Challenge", is intended to help UK businesses "seize the opportunities presented by the transition to a low carbon economy".
It also wants the UK to lead the world in making batteries for electric vehicles.
Ofgem said on Monday that the rapidly falling cost of renewables may lead to cheaper power for consumers.
It said "up to £40bn" could be taken off the country’s energy bills "in the coming decades".
The "battery institute" is part of the government’s £1bn Industrial Strategy Challenge Fund (ISCF), intended to promote Britain’s leadership in six technology areas, the five others being medicine, robotics, self-driving vehicles, manufacturing and space technology.
The opposition Labour Party poured cold water on it, with Rebecca Long-Bailey, Labour’s shadow business secretary, calling it a "damp squib".
"The government’s promise of investment in battery technology is simply a re-announcement of funding promised back in April as part of the ISCF, and their record of supporting emerging green industries is abysmal," she said.
She added: "Labour’s plans for energy market reform would see consumers’ bills slashed by £120 and our industrial strategy to create one million good jobs and ensure that we find 60% of our energy from renewable sources by 2030 has real teeth, backed up our £250bn National Transformation Fund."
"A tiny, tiny price"
The National Grid held an auction last year for companies that wanted to supply battery systems to the National Grid as a means of counter-balancing sudden changes in frequency or supply. Â
The tender for 200MW of battery storage attracted 1.3GW worth of applications, mostly using lithium ion technologies, a National Grid official told GCR‘s sister publication, Construction Research & Innovation.
Julian Leslie, head of electricity network development at the National Grid, said they would be coming on stream between the end of this year to October 2018, with prices in the region of £10 per kw/h.
"It’s a tiny, tiny price. We were shocked as to how low that price was," Leslie said.
He added that National Grid had identified up to 11 different services that batteries could offer network operators.
Image: The Mini Cooper is to join the migration to battery power (Mini)
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Why wait till 2040 should it not be 2030 if they are serious about staying below 2 degree climate change target