Select Committee on Science and Technology Appendices to the Minutes of Evidence


Memorandum submitted by the Engineering Business Limited


  1.  The Engineering Business has key staff and directors with many years of experience in designing, building and operating shipboard and seabed equipment mainly related to the offshore oil and gas and the submarine telecom industries. The business headquarters is in Northumberland but manufacturing is based on the resources of NE England and EB work closely with a number of key supplier partners. Equipment assembly is in an EB workshop in Wallsend and due to an increase in production EB are also assembling equipment in Cammell Laird workshops at Hebburn. Typical pieces of EB equipment weight one tonne to 40 tonnes and may include high strength fabrication, complex hydraulics and electronics and software written in-house.

  2.  EB was established four years ago and has grown rapidly. EB has 35 permanent employees, mainly professional engineers. EB also employs about 15 contract staff at the moment. EB customers include major international telecom companies and nearly all of EB production is exported.


  3.  Four years ago EB decided that ROPG would be one of three markets in which it would develop new ideas and technology and try to establish new businesses. EB has expertise in building complex offshore equipment that operates effectively and to specification. Two EB directors were part of a team of three engineers who won the 1994 MacRobert Award for the design of seabed cable ploughs. It is reasonable to assume that the above would form the basis of a suitable team to develop ROPG technology.

  4.  ROPG exists in three main forms, wind, wave and tidal. Wind energy is well established on land and development of the technology over the past 15 years has led to large improvements in efficiency and reductions in cost. Offshore wind based power generation is now well established and is set to play a major part in expanding renewable generating capacity in the UK. However most of the technology is not UK based and is being developed more rapidly in other European countries such as Denmark and Holland. If offshore wind power is to rapidly expand to form a significant part of UK electricity generation then it will be necessary to improve and automate the installation and maintenance of wind farms. EB is capable of contributing to this development.

  5.  Wave power systems have been in development for many years and significant amounts of government funding have been used to develop the technology. Results so far have not been very encouraging, particularly in their applicability to large-scale generation on sites close to centres of electric power demand.

  6.  Tidal power has been thought of mainly in terms of large barrier systems such as those proposed for the Severn Estuary and the Wash. An alternative is tidal stream where kinetic energy is extracted from the moving mass of water created by tidal effects. Very large amounts of energy are available in British coastal waters and this form of ROPG has the advantage of being predictable when compared to wind and wave power. The challenge is to develop technology and innovate in a way that will allow this form of low-density renewable energy to become practical and economic.

  7.  After evaluating existing ROPG systems in 1997, EB decided to attempt to develop new technology and a new business exploiting tidal stream energy. The aim was to overcome some of the drawbacks of existing ideas and EB developed a simple concept that used hydrofoils placed in the tidal stream to produce an oscillatory motion in the vertical or horizontal plane. This concept is the subject of an international patent application filed in 1998 and currently being evaluated by the relevant authorities.

  8.  In 1998 EB received a DTI funded SMART award. This contributed £34,000 towards the cost of developing the EB technology, devising a mathematical model and building and testing a small-scale model in a local dry dock. This project was successful but only represented a small start to the development of this technology. Subsequently EB experienced very rapid growth in its other markets and devoted all resources to building the business around sound commercial contracts. This was achieved with a degree of success, growing a start-up design and manufacturing business less than four years ago, into a well-established business with a probable turnover of about £10 million this year.

  9.  In 2000 it appeared that the climate for the development of alternative power generation techniques had improved with rising energy prices and increasing concerns about the effects of fossil fuel emissions and depleted resources. EB again applied some resource in an attempt to generate support and identify a partner so that the technology could be developed and properly evaluated. EB has now invested about £250,000 in TS-ROPG in the form of labour resources, consultants' fees, patent fees and other expenses.

  10.  At a board meeting in January it was decided that EB could no longer justify further investment in TS-ROPG without a clear inflow of funds to support the development. All of the investigations and visits/presentations to funding organisations, commercial companies, electricity utilities, national and regional government organisations have only resulted in more spending opportunities. While EB are not expecting instant profits from TS-ROPG, the directors have a key responsibility to develop the company and secure its long-term future and provide job security for staff.


  11.  EB engineers played a significant part in the development of submarine oil and gas pipeline burial, protection and stabilisation during the development of the North Sea oil fields 20 years ago. These same engineers contributed to the development of cable installation and burial technology over the same period and this has been important in the development of the worldwide submarine telecoms industry. Both of these areas of technology depend on rapid innovation combined with sound engineering. Britain is particularly good at this kind of development. It is less common to find successful businesses developed from these initial activities. NE England now has by far the greatest concentration of expertise and technology in this area and leads the world in new developments and in equipment sales.

  12.  To provide a good chance of success EB believes from previous experience that proposed ROPG technology should have the following characteristics:

    —  The concept should be simple (and preferably elegant);

    —  There should not be a requirement to develop new and doubtful technology;

    —  As far as possible well-established techniques should be used;

    —  Hardware should be designed and built by companies with an established track record;

    —  Concepts should be verified by sound mathematical modelling prior to construction;

    —  There must be a clear commercial incentive to develop the technology.

  13.  Considerable effort has been put into the development of wave power systems and in EB opinion these have not always been based on practical concepts. More importantly these programmes have been developed as R&D projects, often in a university setting. EB engineers have a strong university background and have spent a considerable time developing a commercial business from university research. However, EB are surprised at the apparent lack of ambition in some university-based research, where only limited goals are achieved. EB is regularly subjected to the harsh commercial environment encountered when selling "first of a kind" innovative equipment to international customers, who demand deliverables "as specified in the contract".


  14.  Tidal stream technology is not yet "close to market" and that is the fundamental problem for EB in terms of accessing funds. The "Stingray" technology that EB is promoting is described in a section of the EB website and a paper "Tidal Stream Renewable Offshore Power Generation (TS-ROPG)". This can be accessed through the same website.

  15.  The technical challenges and questions facing designers of tidal stream generators include:

    —  Can a design be produced that is simple and robust enough to survive in the hostile offshore environment for extended periods without maintenance;

    —  Can suitable sites be identified where it is possible to establish tidal stream farms that are close to power consumers, and where the tidal currents are high enough to allow for a reasonable power density (the generator is not so large that it is uneconomic);

    —  Can suitable sites be identified that do not conflict with environmental, shipping and fishing requirements and where suitable cable landing sites can be arranged;

    —  Can the technology be reduced to simple and cheap components that are well proven and readily available;

    —  What is the trade-off between small efficient generators that can only be used in areas of high water speed (where consumer demand tends to be small), and larger more expensive low water speed generators that can exploit the much larger resource available and which are close to power consumers;

    —  Can marine fouling problems be avoided;

    —  Can installation and maintenance schemes be developed that are cheap and practical, remembering that sites with difficult currents have been deliberately chosen.

  16.  The development of effective mathematical modelling is essential as a first step to producing a viable TS-ROPG schemes. EB has developed a model of their scheme and are developing this in conjunction with Durham University and Newcastle University. This can establish confidence that the proposed scheme has some merit and provide design guidelines.

  17.  The key step in developing TS-ROPG is to produce a working demonstration generator deployed offshore for a reasonable period of perhaps a year. This is where tidal stream and offshore wave power systems have struggled in the past. Developers have perhaps been unrealistic in their aspirations and have underestimated the special challenges of the offshore environment. EB, with its background in offshore oil and gas and submarine telecom has the knowledge and experience to build an effective large-scale demonstration device. This is essential if the commercial industry is to take EB ideas seriously.

  18.  The development of TS-ROPG offers an exciting challenge to engineers of the type employed by EB. It requires professional expertise from a wide range of disciplines including seabed geotechnical, structural, hydraulic, electronic and power engineering, environmental and regulatory requirements. There is also the possibility of making a real contribution to increasing the diversity of power sources and reducing the possible effects of global warming.

  19.  If successful, TS-ROPG could provide abundant power to produce hydrogen from seawater for the fuel cell transport age that may come in the next decade. The ability to provide a secure supply that is locally generated may be attractive.

  20.  To demonstrate the merits of the EB scheme a development programme is proposed that leads to the production and deployment of a 150kW generator offshore. A funding proposal has been made to ETSU for this £1.35m programme, although ETSU will only part-fund the project. It is unnecessary to install a submarine power cable and connect this to the consumer. The technology of installing submarine power cables is well established and is an area of activity familiar to EB. EB must demonstrate that the generator is effective and robust and suitable for the environment in which it is deployed. It is also necessary to gather data on actual power production and use this to refine the mathematical model and help to develop the technology. The demonstrator will also provide the first indication that the Stingray scheme has a commercial future. The ability to innovate and develop to improve efficiency and reduce costs has been well demonstrated by the wind power industry and it is reasonable to assume that similar improvements will be possible with the Stingray system.

  21.  If a successful demonstrator can be produced then further development will be needed to establish the effects of installing a TS-ROPG farm. It will be necessary to determine the interaction between TS generators and devise optimal arrangements of generators. It is likely that this will require the construction and deployment of generators on suitable sites and this will form an important part of this developing technical expertise. This is an active area of research at Robert Gordon University in Aberdeen.


  22.  The commercial viability of TS-ROPG in the UK will depend on the economic framework of the energy sector and the political importance given to power diversity and the desire to generate more power from renewable resources. This is discussed briefly in the "Renewables Strategy" section below.

  23.  EB believe that it is realistic to plan for a ten year TS-ROPG programme leading to an installed generating capacity of 1000 MW. This would provide a small but significant contribution to UK power generation, with the prospect of much more in the future. Such a programme would ensure substantial technical development and put the UK in a leading position in this technology. If the development fails to show promise in the early stages then it is easy to scale back the development accordingly.

  24.  Because TS-ROPG is not "close to market" any prediction about economic viability must be viewed with extreme caution. EB designs and builds "first of a kind" machines that operate on the seabed and are successfully deployed and recovered in adverse conditions. These machines have a lot of commonality with the Stingray device proposed. EB is confident that it can cost the production of a Stingray demonstrator with reasonable accuracy. EB is also confident that it can design and built the Stingray device. However until a device is built and deployed there can be no certainty that the scheme will prove to be viable. There may be unforeseen technical problems and output may be lower than that predicted by mathematical modelling. But there may also be technical innovation that makes the concept more attractive then anticipated.

  25.  TS-ROPG will always suffer from the increased costs of deployment and maintenance offshore when compared with more conventional power generation systems. Submarine power cables are expensive to install and grid connection may be difficult in areas where TS-ROPG is attractive. However if successful, there is an abundant supply of available energy in UK waters and the construction of TS-ROPG farms would be unobtrusive.

  26.  In summary, the big question for TS-ROPG is—can the technology be made to work and then can the concept be refined and developed so that large-scale generation is practical and economic? And can this technology effectively compete with alternative renewable technologies such as offshore wind? TS-ROPG has a particular advantage that output is predictable when compared to wind and wave power.


  27.  The installation of TS-ROPG farms will involve securing areas of shallow water around the coasts. It will be necessary to exclude vessels and fishing activity. It is unlikely that marine life will be damaged although there is a potential marine fouling problem that needs solving. A study of the environmental effects of TS-ROPG was carried out as a Masters dissertation at Newcastle University in 1998. This did not indicate any serious problems. A much more thorough investigation is required as part of a TS-ROPG development programme.

  28.  Even if TS-ROPG is very successful in enabling power to be extracted economically from modest tidal currents, the area of UK coastal water used would be relatively small.


  29.  The attraction of a TS-ROPG business for EB is the possibility of developing a business that offers the following features:

    —  Fulfils a real need in society for power generated in a non-polluting sustainable way without consuming depleting fossil fuels;

    —  Requires the development and integration of a range of technologies many in common with existing EB skills;

    —  There is new technology to be developed and EB engineers have a proven track record in doing this;

    —  All of the technology can be developed in NE England and the local manufacturing resources could be fully utilised in manufacturing and installing TS-ROPG farms;

    —  A chance for Britain and NE England to repeat the success with submarine telecom cable installation, in leading TS-ROPG technology.

  30.  The current situation is that EB has expanded very rapidly in submarine telecom in the face of stiff national and international competition. The demand in this market shows no signs of diminishing. EB can only develop TS-ROPG if there is a clear commercial advantage in doing so. However EB engineers are very keen to develop this market and have already made a considerable commercial sacrifice in trying to move the ideas forward. If the technology can be developed properly then the potential market is huge.

  31.  It is clear to the writer that EB is the kind of company that should be developing TS-ROPG. The skills and experience are appropriate and the renewables market has often lacked the input of successful engineers and companies used to producing complex machines for the offshore environment that have to perform to specification, and be delivered on time and to budget.

  32.  It is also clear to the writer that NE England is the most appropriate location to develop TS-ROPG. The skills and infrastructure are all on hand and the local universities have an important role to play. The local manufacturing facilities and shipyards could be utilised and develop the necessary maintenance services for TS-ROPG farms.


  33.  This is not an areas of activity where EB can make a proper professional contribution. However there are some points that the writer offers as a personal opinion:

    —  UK power generation should not rely too much on any one fuel, such as gas. Diversity of supply is essential. A proposal for the UK to mainly rely on gas imported from Eastern Europe in the longer term does not seem sensible;

    —  The £150 million estimate of funds achieved from the Climate Change Levy, whereby £100 million is proposed to finance a system of 100 per cent first year capital allowances to encourage investment in energy saving technologies and £50 million for an energy efficiency fund is really inadequate. This sum does not provide for the large-scale technological developments needed. The structuring of the funding into capital allowances does not reflect the fact that inventions and the development of new technologies are frequently carried out by small companies or engineering groups such as EB. EB simply cannot afford to expend the sums required in bringing their technologies to commercial reality, whatever the capital allowances made. There has to be a more pragmatic form of funding available;

    —  The UK has ambitious targets for the generation of power from renewable resources and these are unlikely to be met with the current level of activity and commercial incentives. If it is really intended that renewables targets should be met, then it is essential that private investors can see a clear incentive to take risk to obtain the rewards that should stem from success;

    —  The UK has a poor reputation for promoting the development of new and risky technology. Foreign countries already have an established lead in many areas of renewable technology and the incentives are much greater than in the UK. Britain has the capacity to lead in TS-ROPG, but will not do so in the current circumstances;

    —  A large proportion of the funds devoted to the development of renewable technology appears to be spent on advisors and consultants rather than on getting the engineering right and manufacturing hardware;

    —  It is not sufficient to provide some encouragement to power suppliers to buy renewable based energy, government has a difficult role to play in enabling the development of new technology. Accepting that there will be failures is a part of the necessary risk taking that allows the possibility (and probability) of some real success;

    —  Government must back the development of some new renewables schemes and a large proportion of the funds should be devoted to designing and building mathematical models and demonstration systems, rather than writing reports and papers.

  34.  It is very noticeable that the submarine telecom business has quietly got on with the job of wiring up the whole world overcoming tremendous difficulties and developing excellent new technologies. This has been achieved without much political interference and without the enormous overburden of experts, consultants and paper that seem to be the main product of the renewable energy business.

  35.  The Engineering Business is very keen to contribute to the development of TS-ROPG but can only do so in the context of a commercial business. It is not guaranteed to be a success, but it is worth some investment and risk because if it is successful the benefits could be huge.


    —  EB is one of only a small number of UK companies capable of developing and innovating TS-ROPG technology;

    —  EB cannot develop TS-ROPG technology alone;

    —  Because the technology is not "close to market" it is difficult to obtain commercial backing at the moment;

    —  A larger share of available funds should be spent on actually doing the engineering and building equipment, rather than carrying out studies and writing reports;

    —  Other countries are forging ahead with ROPG schemes and the UK will fail to exploit its natural lead in this technology without a change of government policy.

12 February 2001

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