Memorandum submitted by the Department
of Trade and Industry, the Office of Science and Technology and
the Department of Environment, Food and Rural Affairs
1.1 The Department welcomes this inquiry.
The Committee's views will provide a valuable contribution to
the current debate on future energy policy. This memorandum has
been prepared by the DTI's Energy Group in consultation with the
Department of Environment, Food and Rural Affairs (DEFRA), the
Department for Transport (DfT), the Office of Science and Technology
(OST) and the Forestry Commission and it incorporates their contributions.
We are aware of the separate memoranda submitted by the Research
Councils and the Carbon Trust and have endeavoured to provide
our information on a comparable basis. This memorandum is structured
in accordance with the inquiry's terms of reference.
1.2 We have assumed that the Committee will
wish to take a broad view of non-carbon fuels. This memorandum
seeks to follow as far as possible the approach adopted by the
Energy Research Review Group (ERRG) and comments on the technologies
referred to annex C of the ERRG report viz. Those supporting clean
fossil fuel power generation, renewable fuel power generation,
nuclear power, carbon sequestration, energy efficiency and the
crosscutting technologies. We understand that the Research Councils
intend to take a similar approach in their memorandum. In addition,
we include direct generation of heat from biomass.
2. ROLES AND
2.1 The Government's key energy policy objectives
are to ensure secure, diverse and sustainable supplies of energy
at competitive prices, and efficiency in energy use. In delivering
these policy objectives, the need to develop those sustainable
technologies which will contribute to achieving increasingly rigorous
and challenging environmental emissions targets (particularly
in relation to combating climate change) needs to be recognised,
as does the finite nature of fossil fuel supplies.
2.2 The Department of Trade and Industry's
Energy Group has lead responsibility for pursuing the objectives
of energy diversity, sustainability and competitive prices. It
works with others (inside and outside Government) to strike the
appropriate balance between these, potentially conflicting, objectives.
Tensions can arise, for example, between increasingly rigorous
environmental targets and the need to maintain competitive energy
prices. The Government believes that innovation is central to
resolving these tensions and, to this end, the DTI's Energy Group
funds a number of support programmes to facilitate technological
development and associated demonstration and deployment activities
in the areas of new and sustainable energy, cleaner coal, nuclear
fusion and oil and gas extraction. In addition to funding provided
by the DTI's Energy Group, substantial public funding for energy-related
R&D activities also occurs via the Office of Science &
Technology (through funding provided to the Research Councils).
The energy industries are eligible also for funding for R&D
related activities from the Innovation, LINK and Smart programmes,
as well as indirectly through various EU programmes.
2.3 The Office of Science and Technology
(OST), through the Director General of Research Councils, is responsible
for advising on the broad allocation of the Science Budget and
in securing the successful operation of the Research Councils
in pursuit of their missions. The Research Councils are responsible
for decisions on the scientific merits of different strategies,
programmes and projects. The Head of OST, the Chief Scientific
Adviser (CSA), has a cross-government responsibility to advise
the Prime Minister, Cabinet, Secretary of State for Trade and
Industry and Minister for Science on science, engineering and
2.4 The Department for Environment, Food
and Rural Affairs (DEFRA) has responsibility for policy on sustainable
development, climate change and environmental protection, as well
as energy efficiency, including combined heat and power (CHP)
and fuel poverty. It funds the Carbon Trust and Energy Saving
Trust to take forward RD & D work on low-carbon technologies.
The Carbon Trust is responsible for the development of pre-commercial
low carbon technologies across all markets. The Energy Saving
Trust is responsible for the deployment of these technologies
into the domestic sector, reflecting its housing remit, and the
road transport sector, reflecting its transport action programmes.
The Carbon Trust is responsible for the deployment of non-domestic
technologies into the business and public sector markets, reflecting
the work of Action Energy (previously the Energy Efficiency Best
Practice programme) and the enhanced capital allowances scheme.
DEFRA leads for the UK in international and EU negotiations on
the UN Framework Convention on Climate Change and the Kyoto Protocol.
It is responsible for policy on impacts and adaptation and for
co-ordinating action on carbon emission mitigation under the UK
Climate Change Programme.
2.5 DEFRA also works closely with the Forestry
Commission on the development of purpose grown energy crops and
forest material for use as sources of biomass for energy. DTI
and DEFRA work very closely together on issues relating to the
environmental and social impacts of energy supply and demand,
especially on energy conservation, renewable energy, CHP and fuel
poverty. These broader responsibilities mean that DEFRA, in consultation
with other Government Departments, needs to consider any wider
environmental impacts (negative as well as positive) of low carbon
technologies, including possible effects on releases of other
pollutants to the environment, and visual impact or other environmental
disturbances or risks associated with infrastructure development
2.6 The Department for Transport (DfT) has
responsibility for co-ordination of the Government's strategy
for promoting the development, introduction and take-up of low-carbon
vehicle technologies and fuels. It works closely with the DTI,
DEFRA and HM Treasury, all of which have an important role to
play. More detail about the Government's strategy document `Powering
Future Vehicles' is provided in Annex B.
3. RECENT DEVELOPMENTS
3.1 In September 2001 the Secretary of State
for Trade and Industry commissioned the Chief Scientific Adviser
(CSA) to chair a review of the UK's public energy RD&Dthe
Energy Research Review Group (ERRG). Their report fed into the
Performance and Innovation Unit's (PIU) review of energy policy
and was published simultaneously with the PIU review in February.
The report made a number of key findings and recommendations which
are summarised in its Executive Summary.
3.2 The Government will produce a White
Paper on energy policy around the turn of the year. This will
build on the PIU and ERRG reports and on other reports which have
looked at major areas of energy policy, including "Energythe
changing climate" by the Royal Commission on Environmental
Pollution in June 2000.
3.3 A group with high-level representatives
from the various public research funders (including Government
Departments, Research Councils, the Carbon Trust and the Energy
Saving Trust) has been formed to improve the excellence of UK
energy research and to help deliver an energy policy which is
supported by scientific evidence and takes advantage of the opportunities
offered by advances in science and technology. Its immediate priority
will be to consider follow-up to the ERRG report. In particular
the group will seek to improve the co-ordination of research and
ensure research priorities reflect adequately ERRG's recommendations.
The follow-up group will have its first meeting in October.
3.4 Also feeding into the White Paper process
is a full public consultation, which began on 14 May and is due
to run until the end of the summer. The Consultation, which is
designed to be as open and inclusive as possible, focuses on the
key issues identified by the PIU Review, and seeks views on how
our future energy policy framework can most effectively achieve
all three objectives of sustainable developmenteconomic,
environmental and social improvement.
4. CURRENT LEVELS
RD&D SUPPORT FOR
4.1 A table is attached at Annex A. This
sets out the technologies in receipt of RD & D support with
annual expenditure in each of the last three years, and allocated
expenditure in 2002-03 and each of the next three years. The R&D
programme covers early demonstration of prototype technologies,
although to date a separate record of projects has not been kept.
The need for a programme of demonstration has resulted in the
domestic and large-scale PV field trials and the capital grants
programmes for PV, Offshore Wind, Bioenergy and Community and
4.2 The DTI's Energy Group will spend around
£55 million supporting sustainable energy-related research
and technological development in 2002-03. This is part of an increase
of Government support for renewables to over £260 million
over the next three years, including the £100 million fund
announced by the Prime Minister, (of which £10m has been
allocated to the Research Councils). In addition to this the 2002
Comprehensive Spending Review allocated £38m to the Energy
Directorate for renewable energy for the year 2005-06. Other general
programmes such as Innovation, LINK and Smart fund some work of
relevance to the energy sector. Collaborative funding is also
available under European programmes such as Framework 5 (now 6)
and ALTENER. Finally there are a number of generic programmes
supported by DTI that may impact on DTI Energy Group programmes
eg materials R&D. Even the DTI Civil Aviation R&D (CARAD)
programme, supports work which has an indirect impact on the development
of gas turbine technology.
4.3 The DTI led Foresight Vehicle programme
includes a number of strands of research aimed at low-carbon technologies.
These include new and improved propulsion technologies and control
systems as well as materials and structures work aimed at light
weighting. About one third of the £90 million presently committed
to the programme could be categorised as "towards low carbon".
Moreover, following the publication of the report in May 2002
of the Automotive Innovation and Growth team, DTI's Automotive
Unit is taking forward plans to implement a new Centre of Excellence
on low carbon and fuel cell technologies. Government programmes
also support pilot demonstration of non-carbon fuel technology
in the transport field, through the DfT's New Vehicle Technology
Programme in particular. Projects include support for the pilot
demonstration of hydrogen fuel buses in London in 2003, and the
development by UK industry of other fuel cell buses. The Government's
Powering Future Vehicles strategy includes new arrangements for
ensuring more systematic links between the Government's programmes,
with the involvement of the Low Carbon Vehicle Partnership.
4.4 The DTI takes account of other UK and
European sources of funding in determining individual programme
strategies which are structured around a technology path progressing
through the stages of assessment, R&D, demonstration, market
entry, full-scale industrialisation and finally open competition.
4.5 The Research Councils, funded from the
Science Budget through OST, will spend over £11m on energy
related research in 2002-02, the majority through EPRSC (Engineering
& Physical Sciences Research Council), with further investments
from BBSRC (Biotechnology & Biological Sciences Research Council),
NERC (Natural Environment Research Council) and ESRC (Economic
& Social Research Council). Figures for expenditure in recent
years are estimated below:
In addition, the Tyndall Centre for Climate Change Research
(funded by NERC, EPSRC and ESRC) will invest a further £1.98m
over the period October 2000 to 2003. Details of the Research
Council's investment in energy research and development, and their
future proposals, are contained in their separate memorandum.
Details of the 2002 Spending Review allocations to Research Councils
will be announced later in the autumn. Research to support sustainable
energy has been identified as one of the opportunities for outstanding
new areas of investment, with a proposed joint Research Council
initiative "Towards a Sustainable Energy Economy". This
would aim to build on the UK's existing research strengths to
address the technological and societal challenges of a sustainable
energy supply. Discussions on the establishment and role of a
UK Energy Research Centre are currently in progress. Those involved
in discussions include: the Director General of the Research Councils,
the Chief Scientific Advisor, BBSRC, CCLRC, ESRC, EPSRC, NERC,
the Carbon Trust, DEFRA, DTLR and the DTI Sustainable Energy Policy
4.6 Information on the state of play for the different
technologies is set out in Annex B.
4.7 The UK Fuel Poverty Strategy launched last November
announced proposals for a micro-CHP pilot. Up to 6,000 installations
were proposed to be carried out over a 3-year period. The Government
is currently considering the timing and practical implications
of these proposals. If successful, the intention would be to offer
micro-CHP through the Warm Front Team. The Strategy also announced
proposals for a joint DTI/DEFRA pilot project to test a range
of renewable energy and related technologies for use in vulnerable
households. A scoping study to assess the contribution that such
technologies could make in delivering affordable warmth to vulnerable
households is now underway. DEFRA fund the Carbon Trust who carry
out energy efficiency R&D and related activities via the Trust's
`Low Carbon Innovation Programme' (LCIP). LCIP has been developed
to support RD&D and innovation to bring forward new and emerging
low carbon technologies and has an initial annual budget of around
£20-25m per year. The Forestry Commission contributes directly
to research programmes to support biomass production and utilisation
as well as timber utilisation and marketing as an energy efficient
5. ASSESSMENT OF
5.1 Across many parts of the energy sector and its major
equipment suppliers, the workforce is skilled but is badly skewed
towards older age groups. There are many reasons for this but
four can be singled out: (i) the traditional routes of entryapprenticeships
or graduate traineeships with big employers such as the CEGB,
Gas Board, ICI etchave disappeared, along with many of
the employers themselves; (ii) the sector is perceived to be in
decline and is unpopular with young people; (iii) past recruitment
moratoria have produced gaps in the age structure and (iv) fewer
young people are choosing to study science and engineering.
5.2 Although these are "old" skills from the
carbon-driven economy, many of them are also critical to a future
5.3 Detailed research into workforce skills and demographics
has been undertaken for a range of sectors including oil &
gas, gas utilities, nuclear, electricity, engineering design and
5.4 In general, current levels of recruitment area a
fraction of what is required to replace the workforce. Towards
the end of this decade, retirement will increasingly take its
toll and a severe cut in workforce numbers can be predictedleading
to a loss of experience and know-how. Moreover recruitment will
become increasingly difficult as the number of young people in
the UK continues to decline.
5.5 Sector-specific activities have had some successes,
such as re-training redundant steel workers to become gas installers
and the introduction of skills and experience passports in the
offshore workforce. But, often, the numbers involved are a fraction
of what is required to replace those will be retiring in the next
5.6 The INREB Faraday Partnership, which deals with the
integration of renewable energy technologies into buildings, is
looking at training requirements at all levels, and will be working
with others to develop courses where needed to address gaps. As
with other Faraday Partnerships, INREB also employs Technology
Translators whose job is to communicate on a face to face basis
with firms in the industry. This is both to disseminate the results
of research and to help to ensure that the research needs of the
industry are being addressed by the Partnership where this is
5.7 Many of the issues go to the heart of Government
policy on skills and education. Energy Group staff continue to
work with the DTI Skills and Education Group to develop strategy
and influence DfES and DWP. Much is being achieved on school curricula
and non-higher education workforce development such as creating
more modern apprenticeships and increasing employer involvement
in the Sector Skills Councils, but, even so, it will be a decade
before real differences are seen in the workplace.
5.8 Higher education is more problematical. Considerable
efforts are being made to encourage young people into science
and engineering. EPSRC and its sister agencies are taking steps
to address the problem at post-graduate level with, for example,
significant investment in doctoral and masters-level training
in low/non-carbon energy R&D.
5.9 Current and future skills are being evaluated for
the forthcoming Energy White Paper, which will make recommendations
on policy in this area. Some specific comments on the skills base
of the different technologies are included in Annex B.
6. FORMULATION, IMPLEMENTATION,
6.1 The rationale for Government funding of R&D,
applied both in the UK and internationally, is based on the premise
that social rates of return on some R&D, for example energy
technologies that can help to address to environmental problems
and which involve lengthy development timescales, are higher than
private rates of return. Investment in these areas is therefore
likely to be to low without Government support or intervention.
Low levels of investment in R&D can be exacerbated by the
existence of specific market failures such as:
Externalities; where, for example, environmental
costs may not be fully internalised in market prices;
free rider problems: where businesses cannot achieve
adequate returns for their own R&D effort;
market barriers to entry: such as predatory pricing
or other action by incumbents; and
information/collaboration failures where markets
fail fully to realise the benefits of innovation due to lack of
information or difficulties in sharing costs and benefits.
6.2 The existence of one or more of these factors may
justify some form of Government intervention, although that intervention
may not necessarily involve direct R&D support. It may be
that market failures are best addressed by policy actions, for
instance by carbon taxation to internalise environmental costs,
or by the provision of information to bring interested parties
together. Direct involvement in R&D activity may still be
justified where other actions are insufficient to deliver an adequate
private sector response. The overarching criteria adopted by the
DTI's Energy Group in testing whether or not direct R&D support
by Government is justified in specific circumstances, are:
R&D funding should be consistent with the
delivery of stated DTI's Energy Group or Government policy aims
and objectives, or inform the policy making process.
Evidence of one or more relevant market failures
should be demonstrable.
Funding should be related to themes or opportunities
identified by Foresight and contribute to wealth creation, jobs
and the knowledge base.
The principle of "additionality" should
apply; ie the DTI's Energy Group should avoid funding activities
that would otherwise be funded by industry.
Funding should not duplicate R&D and related
activities being undertaken overseas unless there is a clear rationale
for doing sointernational collaboration should be used
to maximum advantage and strengthen not weaken UK competitiveness.
Funded projects and programmes should incorporate
a technology transfer/deployment plan; have reasonable prospects
of being developed to commercial success and/or the results can
be utilised by the Government and its agents to enable it to meet
its regulatory functions.
R&D support should have a clear industry focus;
eg the work should be relevant to industry's needs and include
their input on defining the R&D and its evaluation.
6.3 The UK Government has supported the development of
renewable energy since the mid-1970s by funding a programme of
work which included research and development (R&D) into renewable
technologies. This programme initially brought together industrialists
and academics to identify the technological opportunities and
advise on the R&D priorities and, latterly, address market,
planning and regulatory issues. Government support for the development
of renewable energy technologies resulted in a financial support
mechanism under the Non Fossil Fuel Obligation (NFFO) introduced
6.4 The Utilities Act 2000 provided for the development
of the Government's support mechanism for renewable energy and
the NFFO has been replaced by the Renewables Obligation, which
is designed to ensure that 10% of the UK's electricity is supplied
from renewable sources by 2010. In order to help achieve this
objective, the Government has also expanded its support for emerging
renewable technologies via the New and Renewable Energy R&D
programme and by a mechanism of capital grants. Overall Government
support for renewables amounts to £260 million over the next
three years, over and above the support provided by the Renewables
Obligation and exemption from the Climate Change Levy.
6.5 The New and Renewable Energy R&D programme, managed
by an external contractor, consists of seven sub-programmes covering
solar energy, wind energy, bioenergy, water energy, wave energy,
fuel cells and embedded generation. Long term strategies have
been developed involving a technology route mapping exercise for
each specific programme area. As part of the route mapping exercise,
the current status of the individual technologies, UK strengths
and R&D needs of each sector have been identified, a detailed
set of technology targets prepared in consultation with industry
and academia, and strategies developed to ensure the delivery
of those targets.
6.6 The recruitment of projects is via a twice-yearly
call for proposals. Projects are selected in accordance with the
criteria set out above and on the basis of their technical merits.
Selection is by a panel comprising DTI officials, independent
technical assessors, industry representatives and academics that
makes recommendations on the suitability of projects to receive
DTI support and the level of funding they should receive. It is
our intention to refine the technology route maps produced for
each technology in the light of the White Paper.
6.7 In developing policy and addressing longer-term energy-related
issues, the DTI's Energy Group seeks the fullest possible contribution
from industry, academia and other stakeholders. It is advised
by the Energy Advisory Panel across the range of energy issues
and the Renewables Advisory Board provides similar support on
policy making in the renewables areas. Other advisory bodies help
inform DTI's Energy Group thinking on specific technology areas,
such as the Advisory Committee on Cleaner Coal Technology, and
the Distributed Generation Co-ordination Group, which attempts
to facilitate the deployment of small-scale renewable and other
6.8 R&D on energy crops and biomass is co-ordinated
across government departments by the Inter-Departmental Group
on Energy Crops. This DEFRA-led sub-group includes the DTI, Forestry
Commission and the devolved administrations. It identifies research
priorities and looks at departmental R&D programmes in order
to eliminate gaps or overlap.
6.9 The ERRG follow-up group, described in paragraph
3.3, will provide a new mechanism for the co-ordination of energy
6.10 Renewables UK, a unit within the DTI's Energy Group,
has been set up with a remit to maximise the UK's involvement
in renewables projects, both at home and abroad, in terms of jobs
and investment in manufacturing, services and supplies. It has
recently commissioned a UK gap analysis to identify industry's
strengths and weaknesses in each technology and the existing and
potential supply chains.
7. INTERNATIONAL COLLABORATION
7.1 The need to maximise the payback from available funding
by international collaboration is of considerable importance.
Many energy-related technology and development issues are of common
interest across the developed and developing world and significant
advantage can be obtained by buying-in to international R&D
programmes, or those operated by individual countries. This is
leading increasingly to the development of global R&D networks
and increased international collaboration.
7.2 In addition to maximising the cost-effectiveness
of R&D funding, international collaboration has many advantages
such as exposure to the best of overseas innovation and technology
and the involvement of UK technological skills on the global stage.
On the other hand, over-reliance on international R&D collaboration
could result in UK-specific requirements in terms of technology
or timing not be satisfiedor only with additional costs
via plant modification and further R&D. It may also lead to
key technology components and services being sourced from overseas
with consequent lost opportunities in terms of wealth creation
and long term jobs.
7.3 There are three main arenas for international collaboration
in energy R&Dthe European Union's Framework Programme
for Research and Development, the International Energy Agency's
Implementing Agreements and bilateral Memoranda of Understanding,
such as that with US Department of Energy.
7.4 Energy R&D has formed a significant part of all
previous European Framework Programmes. In the Fifth Framework
Programme (FP5) that is just drawing to an end, non nuclear energy
R&D was supported by the ENERGIE programme, an independent
sub programme within the Energy, Environment and Sustainable Development
Programme with its own budget (
1,042 million) and programme management committee. This programme
and its predecessors have covered a wide range of non nuclear
energy technologies that could generally be classified as falling
within one of three broad categoriesrenewables, rational
use of energy and fossil fuels. Nuclear R&D also forms part
of the Framework Programme, but the different Treaty base (EURATOM)
means that it is a distinct and separate entity that is negotiated
in parallel with the main EC programme. Within the EURATOM part
of Framework there are two main programmes, nuclear fission (waste
management and safety) and fusion. The budget in FP5 was
1.26 billion, of which fission had a budget of
142 million, fusion
788 million and nuclear research at the Joint Research Centre
7.5 The Sixth Framework Programme (FP6) will concentrate
on a limited number of priorities, but will continue to support
energy R&D. The budget for non-nuclear R&D has, despite
the efforts of UK, been reduced to around
800 million. The EURATOM programme budget is marginally reduced
1.23 billion, with
140 million for fission and
750 million for fusion.
290 million is for the nuclear research at the Joint Research
Centre. It should however be noted that the cuts in energy R&D
in FP6 appear to have fallen entirely on fossil energy, so that
R&D in non carbon energy technologies may not be disadvantaged,
and may even get increased support.
7.6 Partiticipation in the Framework Programmes is via
calls for proposals issued periodically by the European Commission.
Proposals must be submitted by a consortium involving a minimum
of two Member States (rising to three in FP6). The decision on
whether or not to participate is taken by the research organisations
or industry concerned without any intervention by DTI. DTI does
however seek to influence the shape of the work programme so that
it is attractive to UK organisations and promotes the programme
within the UK, as well as providing an advice and support service
via the "ENERGIE Helpline" based in Manchester.
7.7 In FP5, UK partners participated in nearly 45% of
the successful proposals and were awarded nearly 21% of the budget.
UK coordinated projects at
128 million represented 15% of the total recommended budget. Our
overall performance was second only to Germany.
Multilateral collaborations through the International Energy
7.8 UK participates in a wide range of Implementing Agreements
under the umbrella of the International Energy Agency. These cover
R&D on a range of renewables (biomass from both purpose grown
energy crops and conventional forestry, wind, PV, ocean energy),
fuel cells, fossil fuel and end use technologies and carbon sequestration,
as well as several information centres through which energy related
information is exchanged. The IEA also provides a forum for collaboration
on fusion (UK participates as part of European programme). There
are nine fusion Implementing Agreements overseen by the Fusion
Power Co-ordinating Committee.
7.9 These multilateral collaborations include 420
countries (typically about eight), and are of two basic typestask
sharing and cost sharing. In the former, the partners make "in
kind contributions" (sometimes with a small financial contribution
to support a secretariat), sharing the work and pooling results.
In cost sharing agreements, partners make a contribution to a
central fund that pays for an operating agent to carry out the
task, eg of operating an information centre. In most of these
Implementing Agreements, UK participation is periodically evaluated,
usually before renewal of the Agreement at the end of its term
(usually five years).
7.10 The cost of UK participation varies considerably
from Agreement to Agreement and is difficult to quantify with
precision in the case of task sharing agreements, but most would
fall in the range £50 to £250k per annum. The gearing
on the investment can be substantialfor example, UK contributes
about 5% of the input to the world's largest database of energy
research information (the Energy Technology Data Exchange (ETDE)),
and thereby gains access to the rest of the information from around
7.11 DTI has a Memorandum of Understanding with the US
Department of Energy, the objective of which is "to continue,
expand, and maximise cooperation in energy research and development".
It currently covers:
waste-related management and the environment;
energy end-use technologies and techniques; and
research related to energy technologies, systems,
services, and policies.
7.12 The scope may be expanded by written agreement.
The current MoU was signed in 2000 and runs for 10 years. A meeting
between DTI and USDoE was held in Washington in September last
year with the objective of identifying areas for collaboration,
and giving impetus to the MoU. On fossil energy, a workshop was
held in Tennessee in May last year and a follow up is planned
for October this year in UK. There was also a conference, co-sponsored
by DTI, on zero emission power plant in New Orleans in October
2001. A joint workshop on advanced biomass conversion technologies
is to be held in the UK in October. There will also be a further
meeting between DTI and US DoE in October that aims to take up
some of the opportunities previously identified and develop new
ideas for collaboration.
8. THE EFFECT
RD&D OF PRIVATISATION,
8.1 The ERRG noted that, before privatisation, the nationalised
industries had provided an important source of research effort.
It has been suggested that the alignment of priorities towards
the market may have resulted in a reduction in the overall energy
RD&D effort of UK industry. This is probably untrue but there
was a change of emphasis. The electricity and gas industries were
privatised only a decade after the conversion to North Sea gas
and the power station build programme of the 1970s. With a young-
to mid-life infrastructure, there was less need for R&D. British
Coal was facing the inevitable downsize to a much smaller industry
as the UK switched to other fuels. Thus R&D effort in the
former nationalised industries did fall. R&D effort in the
electricity sector has seen a transfer of responsibility from
the generation companies to the equipment suppliers.
8.2 On the other hand, R&D effort grew strongly to
support the development of North Sea oil. Alongside this was the
first flush of renewables. This was exemplified by the Altamont
Pass wind farm in Californialargely developed and built
by the Glasgow company, James Howden. There was also a great deal
of research into the end use of energy which led, for example,
to improved energy-efficient in buildings and consumer goods,
low-energy lighting and clean, lead-free motor fuels.
8.3 Thus, while the privatised industries did cut back
on R&D, this was bound up in a broader sea change in which
the emphasis of R&D shifted to the new energy providers (the
North Sea and Renewables) and to improved energy use.
8.4 Clearly the next sea change has to shift emphasis
to low-carbon energy technologies. The DTI, through Renewables
UK is already facilitating this change. ERRG recommended (Recommendation
1 page 8) that further investigation and research into non-technical
policy drivers, such as regulation, social, economic and commercial
factors was warranted due to their importance in determining the
level and type of research in the private sector and the commercial
uptake of new technologies. The key issue is to ensure that all
these factors support the low-carbon objective.
8.5 The main effect of privatisation has been to drive
down the cost of electricity which, though an advantage to technologies
with low production cost, has also disadvantaged high production
cost (and possibly low-carbon) technologies. Achieving the right
balance of many competing factors is a central aim of the forthcoming
8.6 A number of factors have led to a decline in nuclear
R&D, in particular longer-term R&D. Financial pressures
in the nuclear industry, the closure of power stations and the
lack of immediate prospect for new nuclear build are unlikely
to encourage growing investment in longer term research by industry.
8.7 The decline in UK nuclear R&D has seen the closure
of most nuclear research facilities. The UK had two world leading
laboratories at Harwell and Berkeley but both are now in the final
stages of closure. BNFL is establishing a Technology Centre at
Sellafield, primarily aimed at supporting its reprocessing and
waste storage facilities. A key issue for the future of nuclear
R&D is attracting young researchers into an area seen to have
9. COMPARISONS WITH
9.1 The ERRG's report included some comparative data
on research by the UK's overseas competitors based on the IEA's
annual R&D statistics reports. This information has been updated
and a revised table is attached at Annex C. Additional information
on the specific technologies is included also in Annex B.
9.2 The ERRG acknowledged the difficulties of comparison
where data may be inconsistent and noted that the UK's position
was improving. It concluded that overall spending lagged behind
some of our main EU industrial competitors such as France and
Germany and recommended bringing spending, over time, more in
line with these competitors.
9.3 The IEA figures show a steady decline in public nuclear
R&D expenditure since 1980. Seven countries account for over
95% of total spend (Canada, France, Germany, Italy, Japan, UK
and US). All of these countries have significantly decreased their
R&D spending since the 1980s, except Japan and France. Expenditure
by these two countries now accounts for 90% of public fission
(non-breeder) R&D. Total IEA public expenditure on fission
(non-breeder) R&D in 1998 was $2,939 million (at 1999 prices).
Against this international background, it is worth noting that
the US has recently increased its public nuclear programme and
that there are recent examples of substantial government sponsored
nuclear R&D programmes such as the CEA's proposal to build
a European Materials Test Reactor (MTR) at Cadarache in France,
and the new US Nuclear R&D Centre at the Idaho National Environmental
and Engineering Laboratory (INEEL).
The DTI has supported biofuels through its R&D programme
since the 1970's, with current funding ranging between £3-4
million per annum. The programme has worked on a range of projects
including field trials of energy crops and development and installation
of cost efficient biofuel conversion technologies. The Forestry
Commission has supported bioenergy from purpose grown energy crops
and conventional forestry since the early 1990s with current funding
of £300k per annum. DEFRA also has an annual research budget
of £600k for the development of energy crops.
So far, the programme has supported research into a number
of biofuels to produce electricity, heat and transport fuels.
Crops such as short rotation coppice (primarily willow) and miscanthus
are potential sources of fuel and are now being commercially developed
in the UK. Research into other energy grasses has also shown considerable
promise and a number of larger trials have been established as
a result. Material from existing forests and woodlands, together
with agricultural residues could provide feedstocks in significant
volumes. Forest and agricultural material and residues are seen
as critical to deployment in the short and medium term until a
diverse range of secure, high yielding energy crops are on-stream
and in the longer term will complement purpose grown crops and
other forms of renewable energy. Research has also been carried
out to improve the efficiency of harvesting and transportation
of biomass, which are key elements in reducing the delivered cost
of the fuel source to the power station.
Research into a number of technologies has progressed under
the programme. This ranges from conventional combustion to advanced
conversion technologies (gasification and pyrolysis) and also
includes anaerobic digestion. Environmental monitoring of biomass
plant has also been a significant feature of the R&D programme
Power generation boilers for CHP and co-firing operations
that combine biomass with fossil fuels are also under research.
Development in these technologies is more advanced in other countries,
The further deployment of bioenergy in the UK will also be
supported by the £66 million capital grants programme for
electricity, heat and CHP plant led jointly by DTI and the New
Opportunities Fund. £32.5 million for energy crops establishment
and infrastructure has also been made available by DEFRA. The
Capital Grants should lead to at least 100MW of electricity from
biomass and significant penetration of biomass in the heat market
in the UK. The Renewables Obligation has the potential to bring
forward some co-firing of biomass and energy crops, as well as
the "advanced conversion" energy-from-waste technologies
of gasification, pyrolysis and anaerobic digestion.
Combined Heat and Power (CHP) is a highly fuel-efficient
energy technology, which puts to use heat produced as a by-product
of the electricity generation process. Most new CHP schemes use
natural gas, but a significant proportion burn alternative fuels
such as wastes or bio-fuels. The Government has set a target of
at least 10,000 MWe of installed Good Quality CHP capacity by
The largest, most economic opportunities for CHP are usually
found in the industrial sectors with their large requirements
for process heat. However, there is a significant number of opportunities
in commerce and public services. The possibility of linking heat
users together, including community heating to link up residential
users, can provide additional opportunities.
CHP's traditional deployment in larger applications will
continue to develop, resulting in improved efficiency and performance
levels. New and novel technologies, including a range of other
mini-CHP technologies are currently being developed. The long
term potential (10-20 years) for mini- and micro-CHP is considerableperhaps
half of UK homes could host a unit, while over 600,000 SMEs could
A number of measures were introduced in April 2001 to help
maintain existing CHP in operation and encourage investment in
new CHP. These include the partial exemption from the Climate
Change Levy of electricity from Good Quality CHP and eligibility
of investments in Good Quality CHP for Enhanced Capital Allowances
(ECAs), together with the exemption from business rates of the
electricity generating plant and machinery in CHP schemes. In
Budget 2002, the Chancellor announced both the completion of the
exemption from the Climate Change Levy of Good Quality CHP electricity
and the eligibility of leased assets for ECAs. DEFRA has also
set up the £50 million UK-wide Community Energy programme
which provides grants to install and refurbish community heating
schemes, primarily using CHP. The programme will initially operate
for this financial year and next.
Leaving aside the market and economic difficulties currently
faced by CHP developers generally, there are several technical
issues that will have to be resolved if the full potential of
micro- and mini-CHP is to be realised. These include:
Support for trials to better understand commercial
issues, network effects, etc.
Technical standards for connection to electricity
Smart metering or profiling to assess the value
of electricity exports.
Development of Domestic Energy Services.
Installation and maintenance requirements, including
infrastructure and skills and resources.
Developing technologies, for example fuel cells.
12. CARBON SEQUESTRATION
Carbon Dioxide (CO2) Capture and Storage applies
to fossil fuel electricity generation (particularly coal-fired
generation) and is a process by which the CO2 is captured
during generation and then transported to a storage facility for
permanent sequestration. If viable this technology would provide
significant opportunities to reduce CO2 emissions from
electricity generation and could support the continued use of
fossil fuels whilst contributing considerably to the RCEP's 60%
target in 2050.
CO2 has limited uses and hence sequestration is
the only solution for removing it from the atmosphere, however
it can also be used as a working gas for Enhanced Oil Recovery
This use would enable the UK to maximise the value of the
oil it extracts from its North Sea reserves which could provide
a return for any capital investment as well as additional revenue
for the Treasury.
Although the technologies involved are well understood and
have been demonstrated individually in industrial applications,
they have, with the exception of one plant in the USA, never been
brought together for demonstration in electricity generation and
at the moment are not considered to be commercially viable. It
is estimated from the preliminary findings of the DTI Cleaner
Coal Demonstration Review that the generation cost (p/kwh) of
a new coal based power generation plant incorporating CO2
capture and storage could be anticipated to be in the range of
1.3 to 2.3 times more expensive than a comparable new plant without
such facility. Site specific investigation would be needed to
improve confidence in such figures. However with the dissemination
of the technology and the development of a CO2 infrastructure
these costs could be expected to decrease. There are also a number
of possible controversial issues around this approach to eliminating
CO2 emissions, particularly around its sequestration.
This involves the risk associated with CO2 leaking
from storage and the public perceptions associated with this,
as well as the position regarding its legalitycurrently
the OSPAR and London Conventions on dumping waste at sea are unclear
about whether CO2 sequestration at significant depths
below the seabed would be legal or illegal. It is clear however
that EOR is permissible.
If such issues can be overcome then there are opportunities
in the depleted oil and gas wells as well as in aquifers under
the North Sea for storing CO2. Once this use had been
exhausted the infrastructure could continue to be used for storage
only if the uncertainties.
Currently, following the recommendation of the PIU Energy
Review the DTI is investigating the feasibility of this technology
and is expected to publish its findings in the Spring of next
year. It is unclear at this stage what recommendations will emerge
although it is clear that the legality of sequestration and its
economic viability are key issues that will affect the final conclusions.
If viable then Government involvement could either be in the form
of providing support for a demonstration facility to "kick
start" investment or alternatively in the form of fiscal
incentives. At present it is not clear what the costs could be,
although it is thought that £billions rather than millions
would be needed to develop such an infrastructure.
13. CLEANER COAL
The Cleaner Coal Technology (CCT) Programme provides support
for R&D projects most of which are concerned with developing
greater efficiencies in pulverised fuel boilers as well as co-firing
coal with other fuels such as biomass and natural gas, all of
which reduce carbon emissions per unit of electricity produced.
The total value of all CCT Programme projects is some £22
million of which government funding is £8 million. Of this
sum, some £1.25 million has been allocated to a coal/biomass
co-firing project at Tilbury power station. The UK is also involved
in the EU700 project which is looking at technologies which will
produce much higher levels of plant efficiency (up to 55%) in
newly constructed coal plant based on much higher (700 deg C)
steam cycles. Such a plant demonstration targeted by European
utilities for commercial tender in 2006 would save around 14%
CO2 in comparison with a current best technology coal
plant whose efficiency is approximately 45% on the assumption
of an efficiency of 52%. Compared to the best existing UK coal
station, Drax, whose efficiency may be assumed to be around 39%,
the equivalent CO2 savings would be approximately 25%.
The recent review of CCT demonstration plant, published by
the DTI at the start of the year, recommended modest support for
retrofitting a supercritical boiler (nominally 300 bar/600 deg
C steam) to an existing power plant for demonstration purposes.
This would kick start the introduction of more efficient technologies
and provide a show-case for other countries such as China and
India. Beyond this it is not expected that there would be any
government support for their dissemination and it is thought that
other measures such as Emissions Trading Schemes would encourage
14. EMBEDDED (OR
Traditionally, electricity distribution networks have been
developed primarily to transfer energy from the transmission system
to end-users and are designed on a radial, tapered basis to handle
uni-directional power flows. Unlike the transmission system where
generation and transmission assets are continually co-ordinated
to achieve security, the distribution networks are operated in
a passive fashion. Due to this design and operational philosophy,
connection to the distribution networks often represents barriers
to the deployment of renewable and efficient generation. Furthermore,
these barriers are reinforced by the regulatory environment, which
offers no incentive to Network Operators to connect generation
with some elements of the current regulatory regime acting as
a positive disincentive.
In recognition of these potential barriers to the connection
of renewable and efficient generation, and the threat posed to
the achievement of Government targets, a segment of the Sustainable
Energy Support Programme has been devoted to addressing a range
of technical, commercial and regulatory issues related to the
deployment of embedded or distribution-connected generation. In
addition to a number of shared-cost projects developed with industry
partners, the programme will, during this and the next financial
year, is expected to support in excess of 60 fully funded projects
designed to address these issues at a potential cost of around
£2 million. This work programme is agreed and reviewed by
the Distributed Generation Co-ordinating Group which brings together
government, industry and the regulator to address these issues.
In addition to this work, £4 million has been allocated
to R&D work on net metering, storage and control from the
Prime Minister's £100 million fund for renewables. This new
funding will be spent via the New and Renewables research and
development programme and projects under each of the three headings
are currently being developed for submission to the October 2002
Further work in this area is being co-ordinated through the
Transmission Issues Working Group which brings together representatives
of the three transmission companies, the devolved administrations,
Ofgem and those conducting relevant studies. The purpose of the
group is to look at the implications for the GB electricity network
of the Government's renewables targets, particularly in relation
to large-scale renewable development.
15. ENERGY EFFICIENCY
Energy efficiency has major economic and social benefits
for households and businesses, helping to protect the environment
by reducing carbon emissions. It reduces energy inputs for the
same output by reducing heat loss from buildings and by using
more energy-efficient equipment such as boilers, lights and more
advanced industrial processes in a wide variety of applications.
Benefits of reduced energy consumption are economic, environmental
and social. Other examples include:
better control systems to reduce the wasteful
use of equipment;
development of alternative processes to achieve
the same outputs;
development of technologies to reduce local demand
(eg insulation); and
improved overall design of buildings and industrial
processes to reduce underlying demand.
Current development is very wide ranging; from mature developments
such as traditional insulation to such laboratory developments
as new light sources and new glazing materials. Some RD&D
needs and problems are generic, for example more efficient motors
and lights, or new materials for insulation while others are very
process-specific. Demonstration is essential for all new commercial
developments, since uptake in the UK is generally very slow.
In round terms, there is longer term potential for 20% energy
efficiency improvement over a 15-20 year period. New developments
continually appear on the market to maintain the cost-effective
potential around this level. A sustained push to achieve a much
higher market share for the most efficient products on replacement,
and possibly earlier replacement of out-of-date equipment, is
expected to stimulate faster development of new products and provide
a continuing long-term potential.
Government has supported energy efficiency since the 70s
in the form of demonstration schemes, subsidised surveys, good
practice guides and support for R&D. For the future, government
support may well be needed for more generic R&D at a pre-competitive
stage. It is also necessary to support demonstration schemes.
16. ENERGY EFFICIENCY
Transport accounts for a major and growing volume of energy
use. At present, it runs almost entirely on carbon fuels. But
vehicle technology is developing quickly, opening up the possibilities
for a switch to a non-carbon transportation system, radically
reducing the impact of transport on the environment, both globally
in terms of climate change, and locally in terms of reduced air
pollution, noise and quality of life. In particular, hydrogen
fuel cell technology is being actively developed by automotive
companies worldwide, and this could enable the shift to a non-carbon
"hydrogen economy", when fuel cells can be run with
renewably-produced hydrogen, or hydrogen produced in conjunction
with carbon sequestration. Vehicle transport therefore represents
both a challengebut also an opportunity for the move to
a non-carbon fuel economy. Meantime, "hybrid" (electric
and internal combustion) vehicles are being developed and are
already starting to appear in the market. Hybrid vehicles provide
an important stepping stone to mass-market fuel cell vehicles,
by supporting the development, commercialisation of the vehicle
technologies needed also for fuel cell vehiclesin addition
to providing energy and carbon savings of up to 50%.
Following wide consultation with industry, consumer, environment
and other stakeholders, the Government in July published its "Powering
Future Vehicles" strategy for promoting the development,
introduction and take-up of low-carbon vehicle technologies and
fuels, and for ensuring the full involvement of the UK automotive
industries in the new technologies.
The strategy was jointly produced by DTI, DfT, DEFRA and
HM Treasury, all of which have an important role. The foreword
to the strategy is by the Prime Minister, underlining the Government-wide
commitment to the shift to new transport technology and fuels.
The strategy made the UK the first country to set itself a target
for shifting its mainstream motoring to low-carbon technology,
specifically with the target that within the next decade, one
in 10 new cars in the UK would be low-carbon, defined as 100 grams
of carbon per kilometre or less, compared to around 180 g/km for
today's new cars. There is also a target for low-carbon buses.
Beyond 2010, the strategy indicated that the Government is aiming
for an accelerating shift to hydrogen fuel cell vehicles and other
The consultation on the Powering Future Vehicles strategy
emphasised that, as well as the different parts of Government,
the shift to new vehicles and new fuels needed the involvement
of the vehicle and fuel industries, consumers, the research and
academic community and others. The Government suggested that a
Low Carbon Vehicles Partnership should be created. This was agreed,
and Ministers have commissioned Professor Jim Skea, Director of
the Policy Studies Institute and a member of the Automotive Innovation
and Growth Team (see also paragraph 4.3) to work with leaders
of the industry, consumer, environmental and other stakeholders,
with the aim of getting the Partnership up and running by the
end of the year.
The DTI's RD&D programme on advanced fuel cells supports
work related to both transport and stationary applications of
fuel cell technology.
17. FUEL CELLS
The DTI has been supporting fuel cells R&D since 1992,
and one of the objectives has been to develop the capability of
UK suppliers. With the commercialisation of the first markets
for fuel cells rapidly approaching, a number of UK companies are
well positioned to compete in this emerging global market. Capabilities
exist for fuel cell stack design and manufacture (PEM and SOFC
types) and for critical components including membrane electrode
assemblies. There is a need for companies with the ability to
design and integrate fuel cells into complete systems although
this is related to the timing of the commercialisation for particular
applications which remains uncertain. A number of serious techno-economic
issues remain to be overcome before mass market applications in
the fields of transport (replacement for the internal combustion
engine) or stationary power generation (distributed generation/CHP)
will be possible, and this is as true for UK firms as for those
from the leading nations (Canada, USA and Japan). Commercialisation
for niche applications is widely expected within the next 2 to
5 years. The DTI works closely with the Carbon Trust to ensure
the respective fuel cells programmes complement each other.
The UK industrial base is well supported by fundamental research
eg on materials and catalysis at a number of universities and
there is also an academic network which facilitates information
At the present time the relatively small number of companies
in the industry do not appear to be encountering problems in recruiting
skilled staff but this could change rapidly as commercialisation
begins. There is an obvious risk of a brain drain to the USA and
Canada with their considerably larger industries. The need for
training at technician level will also need to be addressed, but
again this is dependent on the timing of commercialisation.
The DTI has not to date had a separate programme for hydrogen
but this was recommended by the Chief Scientific Adviser in the
ERRG. The Powering Future Vehicles Strategy also announced the
intention to establish such a programme, which would also cover
low carbon fuels such as methanol. A number of UK Universities
are working in the areas of hydrogen production and storage, including
biological production, and there is an active University network
which facilitates information exchange. UK companies have capabilities
in this area and could become major players if the market develops.
While many experts remain convinced that the Hydrogen Economy
(with hydrogen being generated using only renewable energy sources)
is the end game, the timescale for this is long (three to 50 years).
However, the deployment of hydrogen technology may begin considerably
earlier. A widespread switch to use of hydrogen as a fuel (strictly,
an energy vector) has profound implications for electricity demand
and work is in hand to analyse this is more detail.
Hydro power is a commercial technology and accounts for a
significant proportion of our renewable output. Total electricity
generated from renewables in 2001 amounted to 10099GWh, 38% of
which was from large-scale hydro generation. The UK has a small
number of companies manufacturing hydro plant mainly for export.
However trading conditions for these companies remains difficult
mainly due to exchange rate considerations and cheaper competition
20. NUCLEAR FISSION
Nuclear Power currently accounts for around a quarter of
UK electricity generation. It produces no greenhouse gas emissions
and therefore, compared with the rest of the generation sector,
plays a significant role in helping the UK meet its emission targets.
Nuclear electricity generation is expected to peak at about 85TWh
in 2005 (around 25% of electricity supplied) and then decline
to around 9TWh in 2025 (when only one of the 16 existing nuclear
stations will remain).
Nuclear fission R&D has been declining steadily over
the last 10 to 20 years. Publicly funded research into fission
reactors began to decline with the privatisation of the electricity
sector in 1990-91. DTI (previously Department of Energy) funded
nuclear research has decreased from £164m in 1989-90 to just
£17 million in 2000-01a reduction of 90%. All of this
current expenditure is on fusion related work and there is currently
no expenditure on fission R&D.
The Health and Safety Executive (HSE), administers nuclear
safety research programmes of around £8 million per annum,
which are funded mainly by industry contributors. DEFRA contributes
some £0.7 million (ex VAT) to programmes which include aspects
of safe handling and storage of radioactive wastes and the Department
of Health funds research into the health effects of exposure to
man-made and naturally occurring radiation. The UK Government
also contributes around £4.5 million by year to the Euratom
budget (under the four-year Framework Programme 5 (FP5)) for research
focusing on radiation protection, waste management and plant life
management and safety.
This decline in R&D is also reflected in the private
sectorwhile Nuclear Electric spent £116m on R&D
in 1989, British Energyand
BNFL combined spent £115 million in 1999-2000
representing a considerable reduction in real terms. The break
up of the UK nuclear industry may have made it "meaner and
leaner" but is has created an unattractive environment for
longer term R&D.
There has been a significant decline in university based
fission related research over the same period, which has been
identified by the Nuclear Skill Audit Report. Among the Research
Councils, EPSRC is currently the largest sponsor of fission-related
R&D with commitment for areas such as materials research (eg
for containment vessels) of approximately £350,000 per annum.
However, the nuclear energy sector currently attracts a relatively
small amount of research sector spending when compared with other
sectors of industry.
The nuclear sector is in competition with other sectors for
a diminishing pool of potential recruits and is currently an unpopular
career choice. This shortage affects all users of engineering
and physical science skills, not just nuclear. There are many
reasons for the engineering sector's unpopularity, including pay,
status, stimulation and career development, but a key factor in
the nuclear sector is the perceived uncertainty of future programmes.
Uncertainty is a discouragement and projection of a positive future
and stability in the sector is fundamental to the attraction and
retention of skilled people.
A recent DTI skills study has identified that the nuclear
sector, comprising power generation, defence, the fuel cycle and
nuclear clean up, is currently (2002) approximately 56,000 people
strong. The sector is likely to grow, even without new-build,
primarily in the clean up area. Responding to potential growth,
without new build, and replacing people leaving the sector on
retirement means that the sector may need to recruit 1,000 graduates
and 750 apprentices per year.
21. NUCLEAR FUSION
Unlike its better-known counterpart nuclear fission, where
nuclei are spilt, in fusion nuclei come together rather than split,
and the reaction products are not radioactive. This process also
differs in that the elements required are virtually limitless;
deuterium is derived from seawater and tritium from lithium. The
fuel cycle offers other advantages in that at the end of the process
the waste materials have low radio toxicity, decaying after a
period of 100 years to the same level as power stations using
fossil fuels such as coal. The cost of generating electricity
from fusion is comparable to that of clean coal and renewables.
Taking a long-term view this is a cleaner, safer and perhaps more
socially acceptable energy source than nuclear fission.
The current annual spend by DTI is £14.4 million. £6
million of this represents the sum paid by the Department to EURATOM
under the Framework Programme for hosting the Joint European Torus
(JET) facility in the UK. Of the remainder, £2.8 million
comes from EURATOM as a contribution of 25% towards our national
fusion research programme. Currently the OST provides the funding
directly to UKAEA but this will transfer to EPSRC from the next
The prevailing view until recently was that fusion power
generation was 50 years away. Recent developments have convinced
people that a 25-30 year timescale is now possible and consequently
fusion power has started to figure more prominently in energy
policy formulation. A Fusion Policy Review was carried out in
2001 and this was fed into the UKAEA quinquennial review announced
in November 2001. An external review was also conducted by A D
Little in 2001 and policy recommendations were made by the Fusion
Science Panel. Reducing the fusion power generation timescale
from 50 years to 25-30 remains high on the Chief Scientific Adviser's
agenda and continues to be actively pursued with our international
partners. The focus of that agenda is the construction of the
International Thermonuclear Experimental Reactor (ITER) which
would be the next step after JET. The EU is committed to the ITER
programme as are Russia, Japan and Canada, and there are indications
that the USA is considering whether to rejoin it. Fusion research
is a key element of the Framework Programme, and this is covered
in Section 7 (International Collaboration on Energy RD&D).
(i) Heating & Cooling
Otherwise known as Passive Solar Design, this means making
use of the form, fabric and orientation of a building to capture,
store and distribute the solar energy received. This differs from
other renewable energy producing technologies in that it directly
replaces the conventional energy used in buildings. The DTI supported
a programme of R&D for PSD from the late 1970's until completion
of the final dissemination outputs in 1999. DTI support for this
work was about £20 million, including the Energy Design Advice
Scheme (EDAS). The information gained from the PSD programme is
now fully integrated into the building component of the Energy
Efficiency Best Practice Programme (now Action Energy) which is
the responsibility of the Carbon Trust and funded by DEFRA.
(ii) Solar Thermal
Also known as Solar Water Heating (SWH) or Active Solar Heating
(ASH) this technology was introduced to the UK in the 1960s and
now has an established if small market, principally for domestic
hot water and for heating swimming pools. The DTI had a substantial
technical R&D programme between 1977 and 1984, spending around
£4 million. As the technology is now mature and proven, there
are few R&D opportunities to reduce costs or improve performance.
Since that time a smaller industrial sponsorship programme has
been maintained, helping in the collection and dissemination of
information and in the development of industry infrastructure
including training and standards and support for the Solar Trade
The STA currently has around 20 members, mainly installers
and a few equipment manufacturers. About half of the installation
companies are not members and the industry suffers from a bad
reputation due to the activities of a half dozen less reputable
companies. There is also a shortage of trained plumbers, but this
is being addressed through the EU funded SHINE 21 project and
via other local initiatives such as the 20 or more Solar Clubs
around the country.
Otherwise known as solar electricity or power from the sun,
PV is the technology that converts daylight into electricity.
The DTI has had an R&D programme since the mid 90's at a level
of £0.5£1 million per annum, largely targeted
at paper studies addressing technical and infra-structural barriers
and monitoring the few existing installations.
1999 marked something of a step change in the DTI's support
of PV with Mr Battle's announcement of three new initiatives with
an initial budget of £5 million spread over two to three
years. The first was a £1 million call for proposals for
PV components and systems. This had the aim of reducing the cost
and improving the performance of PV cells and balance of system
components. This programme is ongoing with regular six-monthly
calls for proposals to which industry and research organisations
The second was the £1 million Domestic PV Systems Field
Trial (DFT) which was aimed at clusters of houses in the social
and private sectors, both new-build and refurbishment. This resulted
in some 25 applications, nine of which were supported for an expanded
budget of £1.4 million, representing over 160 homes and 220kWp
capacity. This initiative was so successful that in 2001 Ministers
decided to hold a second round with a budget of £3 million
to extend the trial to other parts of the country. This resulted
in 60 applications, of which 23 were selected for increased support
of £4 million, representing some 380 homes and 600kWp capacity.
The third initiative was the £3 million Large Scale
BIPV Field Trial, which was eventually confined to the public
building sector because of State Aid limitations on grants to
the private sector. This resulted in over 60 proposals for installations
over 20kWp, and there were sufficient high quality proposals to
justify increasing the budget to £4.2 million in order to
support 18 projects with a total capacity of over 1MWp. These
projects are now starting to be installed.
The next stage of the Government's support for PV is the
£20 million First Phase of the Major PV Demonstration Programme
launched by Patricia Hewitt on 26 March 2002. Though entitled
"Demonstration" this is really the first part of a major
market stimulation programme over 10 years intended to rival the
large Japanese and German PV rooftop programmes. It is thus more
akin to the capital grants programmes on offer for offshore wind,
energy crops etc which are also part-funded from the Prime Minister's
£100 million Renewables Fund.
The British Photovoltaics Assocation (PV-UK) currently has
around 50 members, but only a few of these are installers or equipment
manufacturers. There is a definite shortage of skilled engineers
in the industry, which is resulting in some poaching between companies.
There is also a dearth of trained installers to meet the increasing
demand occasioned by the Field Trials and the Demonstration Programme.
However, some companies are attempting to address this through
their own in-house training programmes and by mentoring others
under the MDP installer accreditation scheme. A training course
is also being developed by IT Power with EU ALTENER funding, and
other EU ALTENER projects like RE-TRAIN and PV-DOMSYS are helping
to train installers in specific parts of the UK as the market
23. WAVE AND
Electricity generation from waves and tidal streams, if it
can be successfully developed, offers the prospect of a more reliable
source of renewable energy than wind. The UK has a small number
of companies who lead the development of the technologies as well
as a number of universities with a significant research capability
in this area. The UK has one of the very few operating shoreline
wave energy generators in Europe and is well advanced with development
projects aimed at harnessing the larger resource in offshore waves.
The UK has recently made significant progress with development
projects aimed at harnessing the energy in marine currents and
two are close to demonstration.
An additional £5 million has been allocated to wave
and tidal from the Prime Minister's £100 million for renewables
and some of the £10 million allocated for "blue skies"
research may also be used for wave and tidal research. These new
budgets are in addition to about £5 million currently committed
from DTI's R&D programme and grants of over £1 million
In the last year, DTI has supported three projects that will
lead to demonstrations of prototype devices in a real marine environment.
These represent real progress considering that the programme was
re-launched only in March 1999. These three projects are the most
promising ones from those submitted and we have provided them
with the opportunity to prove their claims. It would be premature
to move on to further development of these projects before the
outcomes of the test programmes are known.
The Government is a founder signatory to the IEA Agreement
on Ocean Energy Systems aimed at disseminating information and
sponsoring the development of these technologies.
The UK has a number of successful companies developing wind
farm projects and a small number of component suppliers but no
major manufacturer of large-scale wind turbines. Denmark is seen
as the example to follow having a thriving wind turbine manufacturing
industry. The reasons for this success include early "green
demand" from the general population, strong geographical
advantage, early experimentation with wind technology, strong
infrastructure, small size of electricity companies, and government
subsidies that guaranteed wind farmers a revenue and made wind
technology an attractive investment. RisO National Laboratory
also conducts extensive research and sets safety standards that
reduces the perceived risk for investors and, because the safety
standards are higher than in any other country, the turbines are
easier to export. There is, however, some evidence that the Danish
industry has begun to lose its lead in the international market
as its competitive advantage is eroded by competition from the
German industry in particular, which now accounts for over 27%
of world sales. Cited reasons for this include: less predictable
government intervention in Denmark, making wind technology a less
attractive investment; and the absence of national standards for
noise that make obtaining a building permit unpredictable or require
design modifications for each site.
Both onshore and offshore wind development will be critical
to the achievement of a non-carbon fuel economy and the government
is working to address both technical and non-technical barriers
to deployment for both. The technology route maps for onshore
and offshore wind development in the UK suggest that the major
issues are the planning framework for both onshore and offshore
wind and foundation design and installation techniques for offshore
Onshore wind is an extensively deployed and commercially
viable technology and so relatively little government research
and development money is allocated to it. The UK has been slow
to develop its resource, however, although it has one of the best
wind resources in Europe. The reasons for this are understood
to be mainly impacts on civil and military aviation interests
and public perception. The former barrier is being addressed through
the Aviation Interests Working Group which has representatives
from the MoD, the CAA and government. The second is being addressed
via work on regional targets and by funding for planning facilitation
of £2.5 million.
Offshore Wind requires further development, demonstration
and assessment before it becomes a proven and commercial technology.
Work on foundation design and installation techniques is being
supported through the DTI R&D programme and early deployment
is being supported through the £74 million capital grants
programme run jointly by DTI and NOF. Planning barriers for offshore
wind are being addressed via a series of studies leading to a
strategic framework for offshore wind, the consultation document
for which will be published in the Autumn of 2002.
The Government is a signatory to the IEA Wind Agreement which
aims to exchange information and promote R&D into the development
of technologies for harnessing wind energy and for removing barriers
to its deployment.
The Government is keen to support the development of this
sector, as it can play an important part in waste management,
increase the recovery of value from waste and make some contribution
to offsetting the environmental burden of fossil-fuel based energy
production. Technology for combustion of waste is well established
on a commercial scale in the UK, whereas new technologies (such
as the "advanced conversion technologies" of gasification,
pyrolysis and anaerobic digestion) are less established. The Government
hopes to encourage the development of these new technologies through
the Renewables Obligation. Where conventional combustion of waste
is proposed, it should include a combined heat and power system
wherever possibleto ensure that energy recovery is maximised.
British Energy Annual Report and Accounts 1999-2000-R&D spend
of £19 million, p 28. Back
BNFL's overall spend on R&D in 2000 amounted to £96
million, compared to £81 million in 1999-BNFL Annual report
and Accounts 2000 p 22. Of the £96 million approximately
50% was spent on plant support activities. Back