Memorandum 66
Submission from the Energy Technologies
Institute
1. INTRODUCTION
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.
2. ORIGINS AND
DEVELOPMENT
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.
3. HOST LOCATION
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.
4. OBJECTIVES
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.
5. TECHNOLOGY
PROGRAMMES
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.
6. COLLABORATING
ACROSS THE
ENERGY LANDSCAPE
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.
7. KEY CHALLENGES
AHEAD
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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