Select Committee on Innovation, Universities, Science and Skills Written Evidence

Memorandum 34

Submission from East Midlands Development Agency


  1.  The East Midlands Development Agency (emda) recognises both the economic risks as well as the opportunities that the new energy agenda presents and has worked to ensure they are reflected in the Regional Economic Strategy, in its own Business and Corporate Plans and in the Regional Energy Strategy priorities.

  2.  emda would like to bring a number of points to the notice of the Committee, in part relating to clarity of the terms of reference, but mainly in response to the areas in which the Committee are seeking information. In particular, we believe that the diversity of the technologies must be recognised as well as the risks associated with the perception that activity (deployment) equals progress.

  3.  emda would like to emphasise the need to review the approach to "demonstration" with respect to replicability, return on (public) investment and relationship with actual deployment. There is also a need to integrate consideration of barriers to deployment into the R&D of the technologies themselves rather than consider deployment or integration issues as a separate or secondary issue.

  4.  Finally emda would raise with the Committee the role that buyers (public and private) should play in encouraging new technologies to market as well as demonstrating and building confidence in them.


  5.  East Midlands Development Agency is one of nine Regional Development Agencies in England set up in 1999 to bring a regional focus to economic development. We work across a broad set of areas that are important to those that live and work in the East Midlands, such as:

    —    business support;

    —    enterprising communities;

    —    skills;

    —    innovation;

    —    international trade and inward investment;

    —    environment;

    —    property;

    —    tourism and culture;

    —    rural development; and

    —    urban regeneration.

  6.  Part of our work includes the development of a Regional Economic Strategy, setting out the regional investment priorities. "A Flourishing Region" is the third Regional Economic Strategy (RES). It sets out our aspirations and vision for the region over the next decade or so to 2020. Its production follows the most extensive consultation process we have ever undertaken and is informed by the most comprehensive evidence base assembled on the East Midlands, its economy and its strengths and its challenges. A Flourishing Region can be found at

  7.  Energy (and renewable energy) technologies apply across the region and to all sectors and this is reflected in the RES in two of its three main themes:

    —    Raising Productivity: recognising the benefits to our businesses in both developing and exploiting as well utilising new energy technologies.

    —    Achieving Sustainability: recognising the important role energy has to play in terms of natural resources, wellbeing and quality of life and addressing environmental concerns such as climate change.

  8.  The RES identifies Priority Actions that are important to the regional economy and emda has a key role, working with appropriate partners, to take them forward. Our regional aim in terms of energy (and resources) is "To transform the way we use resources and use and generate energy to ensure a sustainable economy, a high quality environment and lessen the impact on climate change".

  9.  emda has worked with the East Midlands Regional Assembly (EMRA) and the Government Office for the East Midlands (GOEM) to respond to national policy objectives and drive forward the regional opportunities. We have jointly published a Regional Energy Strategy. The vision of the Regional Energy Strategy is that "The East Midlands will take a lead in moving towards a low carbon future that benefits our economy, protects our environment and supports our communities".

  10.  The aims of the Strategy are to achieve a low carbon future that will deliver economic opportunities through the exploitation of new markets and technologies as well as the efficient use of resources; ensuring that low carbon design and construction through the planning and regeneration process deliver affordable warmth and cooling and, through a reduction in green house gas emissions, ensure that changes experienced in our climate are within limits that we can adapt to.

  11.  In support of delivering this strategy, emda is leading on the "Energy for Enterprise" work stream.

  12.  The priorities for this work stream are as follows:

    —    Energy for Enterprise, emda leading.

    —    Business Performance—Improving the productivity and performance of businesses in the region through more efficient use of energy and resources.

    —    Economic Exploitation—Enabling the region to exploit new economic opportunities from new and emerging technologies, processes and services.

    —    Energy Capacity—Supporting an appropriate regional level of generation and supply of energy to meet future energy needs reliably, securely and in a sustainable way.

  13.  Set out below are the key issues that emda would like to raise with the Committee.

Issues for consideration

  14.  The Committee should be clear in its terms of reference about whether it is examining electricity-producing technologies or energy-producing technologies. If it is the former then this should be made more explicit in the wording. emda would prefer the latter as we believe that once again the scope of an examination into this area is likely to be dominated by the need to fulfil a target (ie proportion of electricity produced from renewables) rather than the need to explore and understand the evidence.

  15.  If it is the latter, then technologies such as solar thermal, biomass heat, wider bio-fuels (including automotive and even aviation) and more process-based approaches such as passive ventilation (and heating/cooling) for buildings, heat recovery technologies and perhaps CHP should be included.

  16.  emda also believe that fuel cells (and hydrogen for that matter) can only be considered a renewable energy technology if the fuel (hydrogen) is produced in a renewable-energy system. If hydrogen formed from natural gas is used, then it could be a very efficient producer of electricity, but it is not renewable.

  17.  On 27 October 2005 in a House of Lords debate on energy security, Lord Sainsbury (then Parliamentary Under-Secretary, Department of Trade and Industry), said "...nuclear is a renewable source of energy—it clearly is so. I am very happy to agree that nuclear is a renewable source of energy." Perhaps the Committee should clarify this position with respect to its Terms of Reference and whether this is indeed the Government's position?

Current state of UK research, development and demonstration (RD&D)

  18.  emda supports research and demonstration in various ways but does not maintain detailed evidence of the broad landscape. We would like to refer the Committee to the Energy Research Partnership work to map the UK's university research into energy;

  19.  We do, however, from time to time, commission specific reviews into areas and/or sectors that we are considering supporting. We would be happy to share (on request) these reports with the Committee: recently these have included (some are still under way):

    —    Low Carbon and Hybrid Vehicle Technologies;

    —    Biomass Markets Analysis;

    —    Energy Investment Prospectus; and

    —    Renewable Energy & Waste Management Sectors: identifying inward investment opportunities.

  20.  emda has worked closely with the Universities of Nottingham, Loughborough and Birmingham in their bid to host the "hub" of the new Energy Technologies Institute. All three universities are world leading in a range of energy research areas and their work on the bid has shown a combined excellence. The Committee may wish to contact these universities with a view to sharing the evidence base that they have developed.

  21.  emda has also directly funded consultancy support to build the industrial RD&D base evidence in support of this bid, but at the time of writing this work has not reported. The Committee may want to view this report, expected by the end of July.

Commercialisation of renewable energy technologies

  22.  One of emda's priorities for energy (see above) is to support the exploitation (deployment) of these technologies by our businesses both at home and abroad. One of the key points to consider is that in many ways the technologies exist as separate "sectors" in that they often do not share the same market, supply chain, skills sets etc. For example, ground source heat pumps have little in common with micro-wind or PV. Similarly, fuel cell technologies have little in common with wave and tidal.

  23.  To further complicate matters, often the small scale version of the technology shares little with the large scale, eg micro-wind involving single 5KW (max) turbines and wind farm developments using 3MW turbines.

  24.  At the larger scale, commercial decision-making based on return on investment drives deployment of renewable technologies, whilst at the small-scale decisions on investment are based on personal value judgements, often the desire to do something good for the environment. The DTI will be commissioning (with joint funding from a number of RDAs, including emda) research into consumers' attitudes towards so-called micro-generation technologies, with a view to better understanding the market place. This work will not report until next year.

  25.  There is increasing evidence, however, that some of these technologies are not efficacious at the small scale. Carbon Trust work has suggested that small scale CHP units may in fact increase CO2 emissions in comparison to conventional best practice and some preliminary work discussed in one of our regional universities suggests that house-mounted wind may be so affected by neighbouring buildings as to reduce its stated capacity by more than 60%.

  26.  The danger that the public makes investments based on perceived value that is subsequently called into question by research and performance evaluation could lead to deepening scepticism—even a backlash—and of course a great deal of wasted investment potential.

  27.  Adequate and effective demonstration of new energy technologies is essential. Historically, the public sector has been guilty of what might be termed PPP (Perpetual Pilot Projects) when it comes to demonstration. In fact most publicly funded demonstration projects demonstrate that almost anything can be achieved if there are large grants available. By their (grant dependent) nature they are not replicable and the funding tends to support the actual installation far more than it supports the demonstration and little attention is applied to how the demonstration activity accelerates deployment (or measuring its effectiveness).

  28.  Where focus is applied to the R&D of a specific technology the institutions involved are rarely tasked with better understanding the wider set of "enabling" technologies and competencies that actually determine the rate of deployment. These might include performance of essential supporting technologies and components (eg reliability and longevity of inverters for Photovoltaics), the manufacturing capabilities, capacities and supply chain issues, installers' and wholesalers' skills and competencies, specifiers' competencies and understanding, building or other system integration issues.

  29.  All of these and more determine the rate of successful deployment yet they are usually dealt with as additional research and support programmes separate from the technology development. More rapid commercialisation could be achieved if deployment issues were considered alongside technology development.

  30.  Large buyers, public and private, could have a more active role in pulling technologies to market, growing supply chain capacity and demonstrating (confidence in) technologies. The public sector has recognised this for some time but downward pressure on spending is stifling innovation and competency in risk management when it comes to new technologies is questionable. The private sector on the other hand is in the main a long way from performing this role in the way they procure goods and services.

  31.  It is commonly cited that the energy labelling on white goods enabled the consumer to make better choices when buying new appliances and as a result selected better performing products; influencing manufacturers to strive towards improving their products' performance. In fact the pressure was far more subtle. Evidence suggests that it was in fact the large buyers (retail chains etc) that, in looking for product differentiation, chose the energy labels as much out of convenience than conscience. It was thus the professional buyers' approach that influenced the market whilst simultaneously imposing a choice, albeit beneficial, on the end consumer.


  The Committee should:

  32.  seek to clarify the range of technologies that are under scrutiny so as to ensure a clear outcome.

  33.  consider the diversity within the renewable energy technologies sectors in terms of scale, market place, supply chains and skills and competencies so as to reflect the variety of needs in its recommendations.

  34.  consider the benefits as well as the risks associated with small-scale deployment of micro-generation technologies in order to inform the buyer of the potential performance of his or her investment.

  35.  scrutinise the approach to the demonstration of renewable energy technologies to reduce the incidence of PPPs and increase the effectiveness of deployment and replication (public purse return on investment).

  36.  review the way that "enablers" of deployment are accommodated in the RD&D process for new renewable energy technologies so that it may recommend a more efficient approach that integrates deployment issues with the technology development.

  37.  consider the role that large buyers should be encouraged to play; in particular how private and public buyers might collaborate to share risk (and risk management skills) in demonstrating and accelerating energy technologies to the wider market.

July 2007

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