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

Memorandum 66

Submission from the Energy Technologies Institute


  In just a few decades, we must radically transform our energy systems; not only how we produce our energy but also the efficiency with which we manage and use it in all areas including transport and storage.

  The drivers for this are powerful ones, as we strive to ensure the secure and sustainable energy that is fundamental to economic and social prosperity, both now and for the long term. There can be no doubt that the challenge we face is a major one, at both national and global levels. Addressing this magnitude of challenge will require equally large-scale technological and engineering solutions coupled with significant social and behavioural shifts.

  The Energy Technologies Institute (ETI) has been established to spearhead the UK response to this challenge, by developing a focused portfolio of demonstrations of commercially viable, sustainable energy technologies and systems. The ETI brings together the skills, efforts and investments of both the public and private sectors, and by focusing on key energy challenges with a new level of scale and ambition, it has the potential to catalyse step-change advances in deployment of low carbon energy technologies.


  In the 2006 Budget, the Chancellor announced: "After discussions with some of the world's biggest energy companies, they have agreed to work in partnership to create, for Britain, a new energy and environmental research institute, and for it to become, for Britain, at the cutting edge of science and engineering".

  The target in establishing the ETI is to secure 11 private sector investors, each contributing £5 million per year for 10 years, with the UK Government matching these investments to create a potential £1.1 billion investment fund for new energy technologies. The Energy Research Partnership, under the joint chairmanship of Paul Golby, Chief Executive of E.ON UK, and Sir David King, the then Government Chief Scientific Adviser and Head of the Government Office for Science, committed itself to raising the necessary sums of private investment to meet the matching public funding available. BP, E.ON UK, EDF Energy and Shell announced their intention to be involved and they were soon joined by Caterpillar and Rolls-Royce. Discussions continue to recruit other private sector organisations as members, to help realise the Institute's full potential.

  On 20 September 2007, the Secretary of State for DIUS, Rt Hon John Denham MP signed a Heads of Agreement with the six private sector companies, paving the way for the development and finalisation of the full Limited Liability Partnership Agreement, which was signed by all parties on 12 December 2007. This marked the formal establishment of the ETI.


  The process to find a suitable host location for the Energy Technologies Institute started in January 2007 with a letter to UK universities from Sir David King and Sir Keith O'Nions. This resulted in 23 different consortia submitting expressions of interest in February 2007.

  A Selection Committee, comprising six representatives from the private sector funding organisations, three from the public sector sponsoring organizations and an independent member from Ofgem, was established to evaluate these expressions of interest. Following a two-stage evaluation process by the Host Selection Committee, (which agreed an initial shortlist of five, then a final shortlist of three consortia), the final three were invited to present and discuss their detailed proposals with the Host Selection Committee on 6 September 2007. Their proposals were assessed against a range of criteria including energy research & innovation capability; reputation and culture; accommodation and facilities; site and accessibility; and commitment to the ETI. The three final bids were all of an exceptionally high standard, but the Host Selection Committee reached a majority decision to recommend the bid of the Midlands consortium—comprising Birmingham, Loughborough and Nottingham Universities and with the ETI based at Loughborough—to the ETI Board, which it approved on 20 September 2007.


Our vision

  Secure, sustainable and affordable energy supplies for the present and future generations.

Our mission

  To accelerate the development, demonstration and eventual commercial deployment of a focused portfolio of energy technologies, which will increase energy efficiency, reduce greenhouse gas emissions and help achieve energy and climate change goals.

Our values

    —  Collaboration—creating a community of common purpose and mutual trust.

    —  Ambition—setting new benchmarks in energy science and technology.

    —  Innovation—discovering and demonstrating new and more efficient technologies and processes.

    —  Focus—concentrating on delivering solutions that will make a real difference.

    —  Accountability—delivering on our commitments to all our stakeholders.

Target outcomes

  ETI's programmes over the next 10 years will contribute to:

    —  Reducing greenhouse gas emissions (UK target—60% CO2 reduction by 2050).

    —  Accelerating development and deployment of affordable low carbon technology solutions.

    —  Increasing security of energy supply in conjunction with greenhouse gas mitigation.

    —  Increasing the level and capacity of the low carbon skills pool—both in the UK and internationally.

First year priorities

  ETI's goals for 2008 include:

    —  Building and establishing a new organisation to deliver a step change in energy research and technology.

    —  Launching new technology programmes in offshore wind and marine technology.

    —  Creating strategic roadmaps for low carbon technology demonstration in areas such as distributed energy, building efficiency, transport and biofuels.

    —  Creating new collaborative partnerships for innovative energy technology demonstrations.

Technology focus

  The ETI will focus on the critical area of integrating and demonstrating novel technologies into whole system solutions. Much of the UK government investment emphasis to date has been on either the initiation of novel technologies at the fundamental science level or the validation of systems at full-scale ahead of commercial deployment. The de-risking stage between these two activities—technology integration and system demonstration—has been less well supported to date and yet is perhaps the most important in developing commercial investor confidence. ETI will focus on this area providing the opportunity to de-risk new technologies by demonstration at full energy system level in relevant environments.

  The ETI will follow the system of Technology Readiness Levels (TRLs) developed by NASA for major system development projects. This approach is now widely used by complex systems engineering industries and defines a series of steps from 1 (the identification of a novel idea) through to 9 (the successful operation of the technology in a full commercial system). The technology demonstration area that ETI will address spans TRLs 3-6.

  Within this area, the ETI will support demonstration of those technologies and systems that best align with the target outcomes identified above.


  On 17 December 2007, the ETI published its first Invitation for Expressions of Interest to participate in programmes to develop new technologies for Offshore Wind and for Marine, Tidal & Wave energy.

  For Offshore Wind, the ETI joined forces with the Carbon Trust, reflecting our commitment to work with those organisations which share a common vision of a low carbon energy landscape. By pooling resources and expertise in this way, the Carbon Trust and the ETI are offering a very significant and attractive funding opportunity, which in turn should lead to greater progress in developing and demonstrating new technologies.

  Offshore Wind has huge potential to reduce carbon emissions and create economic prosperity, as well as increasing energy security of supply. The government recently announced plans to open up the UK's seas to up to 33 GW of capacity (subject to the outcome of a Strategic Environmental Assessment), which could mean that by 2020, enough electricity is generated offshore to power the equivalent of all the UK's homes. This could be a major contribution towards meeting the EU's target of 20% of energy from renewable sources by 2020.

  At present, however, offshore wind is at an early stage compared to other renewable technologies (including onshore wind) and contributes only a small fraction of UK electricity needs. While commercial interest is growing—particularly since the UK Government announced proposals to increase subsidies through banding the Renewables Obligation—costs are continuing to rise and this threatens to delay progress. Cost reduction is essential to provide the necessary confidence for large-scale investments and to ensure the Government's carbon reduction and renewables targets are met. Consequently, our initiative will ensure a strong focus on cost reduction.

  Marine energy could supply up to 2GW of UK electricity demand by 2020 and significantly more than this by 2050. However, progress towards commercial devices has been slower than predicted. ETI funding is well placed to accelerate the development and small demonstration phases by the commercial and end-user focus brought by ETI's industrial membership.

  The UK is leading internationally in the development of marine energy but further development investment is needed to move the technology forward. We aim to bring together UK and international expertise to support and to accelerate the realisation of marine energy as a major contributor to energy provision.

  ETI is now looking at additional future investment opportunities including low carbon technologies supporting Carbon Capture and Storage, Transport, Building Efficiency and Energy networks.


  The ETI, the Engineering and Physical Sciences Research Council (EPSRC), the Technology Strategy Board (TSB) and theBERR Energy Group are already working in close collaboration in support of ensuring the UK develops a coordinated research, development and demonstration portfolio of projects across the energy sector. Other groups such as the Carbon Trust and the UK Green Building Council are being involved in this where appropriate. This approach will also help maximise all Government investments in developing sustainable energy technologies. TSB and EPSRC are providing the delivery routes for public sector funds to ETI, further strengthening this collaboration.


Securing State Aid clearance

  Formal notification of the ETI was submitted by BERR to the European Commission, DG Competition, early in October 2007. In accordance with their statutory obligations the Commission responded just before Christmas, with a set of questions primarily focussed on understanding better the various modes of operation that the ETI might adopt with its contractors from straight procurement through to fully collaborative R&D. The emphasis of the Commission's questioning is ensuring that the ETI understands and will therefore apply properly the European Framework for State Aid for R&D&I under the different contract conditions.

  DIUS and BERR officials will continue to liaise with UKRep and the EU Commission as consideration of the notification proceeds. The ETI continues to anticipate keeping to its timetable to achieving State Aid clearance before the summer.

Recruiting additional member organisations

  To maximise the available Government matched funding, the ETI continues its campaign to recruit a further five private sector companies to reach the target of 11 members. As it currently has significant strength and expertise in energy generation/production through companies such as BP, Shell, EDF and E.ON, and in high performance technology and systems through Caterpillar and Roll-Royce, the focus is on companies who bring expertise and experience to address the full range of challenges, including areas such as transmission and distribution, building efficiency, transport and end user energy management. The ability to recruit such companies as members will have a bearing on the prioritisation of the ETI's future research and technology programmes and so its ability to achieve the stated target outcomes.

January 2008

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