So where does the government's 557 million in grants go then? That's the figure they announced a year ago.
Generation for the industry, Energy efficiency for domestic customers (eg Warm Home Discount).
The Feed in Tariff is not a Government subsidy, it is mandatory for large suppliers to offer it and it in theory is self-financing - although currently the Suppliers are losing large amounts of money on it.
AFAIK battery storage is considered part of the energy market, and that is expected to be self-financing. The electricity infrastructure (both physical and management) of the UK was designed around the fact that electricity can be cheaply transmitted but not stored, so the National Grid was built as a high voltage transmission network and a bunch of low (240V) distribution networks.
Power Stations were all connected directly to the transmission network and the National Grid Company set up the Balancing Mechanism to ensure that the amount of power being generated and consumed exactly balances out at all times. Power stations were massively expensive and most of the old stock was built back in the days of the CEGB - which actually did a bloody good job of ensuring reliable, relatively inexpensive electricity supply.
Now we have a critical need to decarbonise the electricity system, and renewables are a key part of doing this (along with nuclear). But we also have a privatised market, the government can no longer decide to spend money itself, private equity has to be used. The grants go mainly to building big renewables projects like offshore wind farms, they are needed to get investors to commit money and get involved.
The huge new advantage that we now have is that commercial scale battery storage is now available. This means that for the first time we can store excess energy generated when we don't need it - wind is a perfect example of this. If it was windy on a mild summer's night, we couldn't do anything with the power so had to feather the turbine blades. Now we can bung all that free power into batteries and store it for when we do need it. It also enables loads of micro-generators to have their kit connected at distribution network level without running into oversupply problems: without a battery array you have to have a gizmo to prevent your solar panels dumping excess power into the DN if it's not needed.
So now we have the technology that enables battery owners to participate directly in the energy market, to make money from their generation capabilities (most commonly solar in domestic settings), and there's a lot of money to be made - hence all the companies offering VPP deals. That's why the government doesn't have any need to subsidise the battery industry.
