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

Memorandum 65

Submission from SEEDA


  1.  The South East England Development Agency (SEEDA) welcomes the opportunity to contribute to the Committee's Inquiry into Renewable Energy Technologies. SEEDA leads on energy policy for England's nine Regional Development Agencies (RDAs); our submission will therefore present a cross-RDA perspective.

  2.  Each of the RDAs is charged with improving the economic performance of its region; also, RDAs are among the few public bodies with a statutory requirement to contribute to sustainable development.

  3.  All RDAs recognise the importance of energy in providing critical underpinning to the sustainable economic development of their regions. Secure, sustainable and affordable energy supplies are crucial to the continuing prosperity of the UK, and this understanding is reflected in each region's policies and programmes, set out in Regional Economic Strategies.

  4.  RDAs support the development and deployment of renewable energy technologies as a key part of the energy mix, contributing to a low-carbon economy while securing further economic benefit through energy sector development. In some regions, key energy schemes are recognized as major strategic economic opportunity, offering the prospect of catalyzing new industrial development—eg WaveHub in the South West, London Array in the South East.

  5.  RDAs prioritise their support for Energy Research and Development, Demonstration and Deployment (R&D, D&D) on the basis of regional strengths, capacities and economic priorities and opportunities. In the 2007 Energy White Paper, RDAs have committed to identifying their priorities in this area for a 10-year period to give greater confidence to business and would-be investors.

  6.  The RDAs have invested some £60 million in energy-related Research & Development, Demonstration and Deployment (R,D, D and D) over the past three years ; we expect to spend more in the next three years and to do this in partnership with other funding agencies in order to optimise leverage and impact.

1.  The current state of UK research & development in, and the deployment of, renewable electricity generation technologies

  1.1  There remains a degree of fragmentation and overlap in support for UK research into renewable energy generation technologies; however recent initiatives such as the Energy Technologies Institute, Technology Strategy Board and the Environmental Transformation Fund would appear to offer some improvement; the Energy Research Partnership (on which SEEDA represents the RDAs) is well-placed to achieve a positive influence on improving alignment between national energy policy and energy-related R,D,D and D.

  1.2  The Regional Development Agencies are actively supporting renewable energy-related R,D D and D. In 2006 the Energy Research Partnership reported that the RDAs provided around 12.5% of all public funding for energy-related R,D, D and D, and the 2007 Energy White Paper highlighted RDAs support of £59 million since 2003 for the development, demonstration and commercialisation of new energy technologies.

  1.3  However, deployment of renewable electricity generation technologies remains relatively slow, notwithstanding some acceleration and expansion—including some high-profile exemplar schemes—and a greater awareness of opportunities and benefits. Given the urgency of moving to a low-carbon economy and the UK's aspirations for global leadership on climate change, incentives for wider deployment of renewable energy remain insufficient, and market responses, while improved, are still slow. This is perhaps not unsurprising, with a low current price for carbon and the market not fully internalising other environmental costs.

  1.4  In the interests of speeding up the process of innovation and technology development from R&D through to deployment, we would recommend that deployment issues, particularly potential barriers, should be addressed at, and as part of, the R&D stage, rather than as a later add-on.

  1.5  We welcome the Government's recent announcement of a major "push" on offshore renewables and look forward to working with energy developers to help to achieve the 2020 offshore target of 33GW. This announcement, together with the Government's recent commitments on the UK contribution to the EU 2020 target—with an expectation that this could require as much as 30-35% of UK electricity to be derived from renewable sources— has helped to allay concerns that the emphasis would shift away from renewables to nuclear, notwithstanding that new nuclear, while part of the energy mix, is unlikely to come on stream before 2020.

  1.6  Delivering this high level of renewables will require major acceleration in deployment (much of the technology is already available) and in the pace of innovation, to bring emerging technologies to market readiness. Further incentives and market interventions will be required. Favourable "buy-back" tariffs are an already proven incentive for large-scale deployment (eg in Germany); we recommend that the Committee should ask for incentivising "buy-back" tariffs to be further reviewed with a view to application in the UK.

  1.7  Demonstration of technologies is of course highly important; however, given that there has been more funding support for demonstration than for deployment, there is a danger that "delivery" could extend only to a range of pilot projects. While arguing for greater support for deployment, we recommend that a greater emphasis is placed on follow-through from demonstrators/pilots to delivery at scale.

2.  International collaboration

  2.1  RDAs are fully engaged in international activity, both in inward investment and overseas business promotion and development. We fully recognise that international co-operation and collaboration are a key requirement in tackling climate change, both in terms of technology development and in finding ways of achieving essential behavioural changes.

  2.2  We see key opportunities for "win-win" benefit through international collaboration in the development of low-carbon technology, particularly with the emerging economies—both in terms of mutual economic benefit through joint development and exploitation of energy technology, and in achieving far greater impact on global CO2 levels tha the UK could achieve acting alone.

  2.3  For example, joint development of Carbon Capture and Storage (CCS) with China, assuming a successful outcome, will ultimately have clear benefit through major reductions in the impacts of their coal-fired power stations. The collaboration could extend to schemes both in China and in the UK.

  2.4  During the Prime Minister's recent visit to China, agreement was reached on on a joint Institute for Sustainability to be set up alongside Dongtan Eco-City, near Shanghai; SEEDA is a partner in a "mirror" Institute at Ebbsfleet, Kent which will develop sustainable solutions in Thames Gateway.

  2.5  We recommend that, particularly in the interests of tackling climate change, Government should use all means at its disposal urgently to stimulate global collaboration on a massive scale (as proposed by Demos in its Atlas of Ideas Study 2007). We suggest that the cross-Government Science & Innovation Forum (GSIF) chaired by BERR's Chief Scientific Adviser could play a coordinating role in such international collaboration, and we would urge that these challenges should be addressed in the emergent International Strategy of the Technology Strategy Board.

3.  Public funding, and other support, for the development of renewable electricity generation technologies and incentives for technology transfer

  3.1  Continued Government support through all stages of the energy innovation chain is essential, particularly in the immediate pre-commercial phase through to demonstration and deployment. The recent report of the Commission on Environmental Markets and Economic Performance (CEMEP) highlights the major global opportunities in low-carbon technology and the critical importance of innovation and market development support in assisting UK businesses to access those opportunities.

  3.2  The RDAs' support for Energy Innovation covers a wide range of activities, which have recently been streamlined under the Business Support Simplification Programme. The package now consists of:

    (i)  Business Expertise for Growth—guidance on innovation.

    (ii)  Innovation Finance—to assist businesses to develop and exploit ideas.

    (iii)  Innovation Collaborations—support for networking for innovation, partnerships for innovation and collaborative research & development.

    (iv)  Skills Support for Business.

  Alongside these "products" the RDAs play a key role in strategic influencing—for example, through influencing priorities for other (non-RDA) public expenditure; this is achieved through strategic planning (Regional Economic Strategy) and exemplar projects.

  3.3  RDAs provide significant funding to support Energy Research & Development, Demonstration and Deployment. An assessment by the Energy Research Partnership in 2006 concluded that RDAs provided over 12% of public funding for RDD&D.

  3.4  Alongside the RDAs having committed £59 million to support the development, demonstration and commercialisation of new energy technologies over the period 2004-07, the Energy White Paper (2007) also reported that UK companies also generated £52 million in income, benefiting from RDAs' assistance in identifying and exploiting new supply chain opportunities or supporting energy sector companies.

  3.5  In the 2007 Energy White Paper RDAs committed to identifying which energy technologies they intend to prioritise and support over the next 10 years. This is intended to give a clear steer to companies and potential investors; and encourage partnership working between the RDAs and research and innovation organisations, including the new Energy Technologies Institute. RDAs also committed to identifying energy supply chain opportunities and setting out priorities for their promotion and support.

  3.6  We recommend that Government and the regions should optimise the impact of public investment, including that of the Technology Strategy Board, through a closely co-ordinated pan-regional approach.

4.  The establishment and role of the Energy Technologies Institute

  4.1  RDAs welcome the Energy Technologies Institute and support its aims and objectives to develop energy technologies close to market.

  4.2  There has been some concern among small businesses that they will have difficulty in engaging and participating in ETI and in sharing its benefits. RDAs have strong links with SMEs and we see an opportunity for RDAs to take on a brokering role,in partnership with ETI member companies, to engage SMEs in accelerating the development and commercialization of promising initiatives, particularly via the sort of "open innovation" model which SEEDA is currently piloting with Johnson & Johnson.

  4.3  RDAs are now partners in the Technology Strategy Board and have the opportunity to influence its direction and development. The role of the TSB is pivotal in increasing business expenditure on R&D. The RDAs have agreed partnership working between the regions and TSB; this will bring £180 million from the regions, £120 million from the Research Councils, together with match funding from business—a joint £2 billion programme over the next three years. Taken together with £100 million per annum ETI funding and TSB's commitment on energy technologies (as one of its priorities), public/private sector support for R&D will be greatly increased. We recommend that in the interests of co-ordination and cohesion, the ETI should be a partner in TSB, and TSB should have strong links with ETI.

5.  Commercialising renewable energy technologies

  5.1  Given the imperatives to tackle climate change and to improve energy security the pace at which new energy technologies are reaching the market is too slow. With a low carbon price and no further market internalisation of environmental costs, the commercial viability of a new energy technology will be slower to achieve.

  5.2  The RDAs are able to assist in several ways:

    (i)  supporting collaborative R&D where a technology is near to market;

    (ii)  supporting demonstration;

    (iii)  helping to develop market pull through procurement and specification; and

    (iv)  raising awareness and using its influence to promote take-up.

  5.3  At the same time, this is not just about the technologies, but how we integrate them into closed-cycle, zero carbon systems. As part of the Thames Gateway Institute for Sustainability, SEEDA is developing a Science and Innovation Campus, specialising in integrated resource management, in order to inform the development of Eco-Cities around the world.

  5.4  We recommend that the Committee should support a focus on community-led technology integration, alongside the development of renewable energy and low-carbon technologies.

6.  Intermittency of supply and connection with the national grid

  6.1  RDAs support the UK having a mixed portfolio of energy supply technologies, with each technology delivering benefit in terms of reduction in greenhouse gases (largely CO2), contribution to energy security and cost-effectiveness. This portfolio approach can possibly help to reduce the impacts of intermittency, although clearly the latter is a problem in terms of balancing supply and demand.

  6.2  While investing in back-up plant can offer a limited interim solution, energy storage would appear to be key to a solution, offering the prospect of smoothing peaks and troughs in supply and demand. We recommend that priority is given to developing effective and efficient means of energy storage to overcome the problems associated with intermittency.

  6.3  Network connections are critical to the deployment of renewable energy technologies, and the lack of connection capacity has inhibited development in some areas.

  6.4  Several RDAs are looking to develop decentralised energy systems. London is leading the way here in seeking to deliver the Mayor's commitment to achieving 25% of London's energy supply via decentralised sources by 2025. To achieve this, Government needs to do more; we recommend that Government should be encouraged to remove regulatory barriers to decentralised energy systems in order to assist their commercial viability—this includes fair pricing of electricity exported from decentralised energy sites (or imported to them, as back-up supplies) and exempting smaller schemes from the need to be licensed.

7.  Government policy towards enabling existing technologies to meet targets

  7.1  Much of the technology needed to deliver a low-carbon economy is already available, with, in many cases, a considerable body of good practice to draw upon (eg continental experience of anaerobic digestion, CHP/District heating, "zero carbon" buildings). Again, however, with a low carbon price, insufficient market valuation of other environmental impacts, and the absence of any other support—or regulation—there is little incentive to employ these solutions. We recommend that the Committee should endorse the urgent need for a system of incentives to encourage large-scale deployment of proven renewable energy technologies; this could have particular importance in retrofitting technology to improve the carbon performance of the country's existing housing stock.

  7.2  While Government supports a robust mixed portfolio of energy supply technologies, the emphasis remains very much with electricity. Given that a significant element of energy demand is for heat., this clearly needs to be addressed separately, within an overall energy strategy.

  7.3  All renewable sources of energy do not offer the same carbon performance; for this reason we would suggest that, as London has done, building-related targets which specify a certain percentage of onsite renewable energy are replaced with targets for carbon performance.

  7.4  We recommend that building-related targets for renewables and CO2 should be expressed in terms of carbon performance.

8.  Whether the UK has the skills base to underpin the development of renewables technology

  8.1  The UK does not currently have the skills base necessary to deliver the development— and, importantly, the deployment—of renewable energy technology. Many studies have pointed out the likely skills requirements and potential skills gaps; and while some initiatives to address energy-related skills needs are underway (eg East of England Energy Skills Network), there is a feeling that the skills problems are recognised, but not entirely owned.

  8.2  The lack of long-term continuity of renewables development (not helped by the "stop-start" nature of some funding programmes) will clearly inhibit both demand for, and provision of, skills training, although this should be improved as a result of the improving climate for renewables and the growing confidence that they will play a key role to 2020 and beyond.

  8.3  In the 2007 Energy White Paper the RDAs committed to working with the Sector Skills Councils and Regional Skills Partnerships to develop programmes to support the development of key energy skills, and this work is underway.

  8.4  To tackle the development of skills to support renewables technology, we recommend that consideration be given to setting up a National Academy for Environmental Technology Skills.

January 2008

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