Memorandum 65
Submission from SEEDA
INTRODUCTION
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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