To be published as HC 1642-ii

House of COMMONS



Energy and Climate Change Committee

The Future of Marine Renewables in the UK

Tuesday 22 November 2011

Dr Stephen Wyatt, Dr Jason Green, Rob Saunders and Dr David Clarke

Evidence heard in Public Questions 75 - 116



This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.


The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Energy and Climate Change Committee

on Tuesday 22 November 2011

Members present:

Mr Tim Yeo (Chair)

Dr Phillip Lee

Albert Owen

Christopher Pincher

John Robertson

Sir Robert Smith


Examination of Witnesses

Witnesses: Dr Stephen Wyatt, Carbon Trust, Dr Jason Green, Research Councils UK, Rob Saunders, Technology Strategy Board, and Dr David Clarke, Energy Technologies Institute, gave evidence.

Q75 Chair: Good morning. Thank you for coming in. Sorry we are running slightly behind time. We are quite tight for time this morning, if you could bear that in mind in assessing the length of your responses. Perhaps we can kick off. We know who you are and you know who we are, so we will dispense with any more detailed introductions, but would you like just to tell us briefly how each of your organisations is supporting wave and tidal energy development?

Dr Clarke: David Clarke, Chief Executive of the ETI. We do strategic analysis and modelling of the UK energy system across heat, power, transport and infrastructure, and then, where we see an opportunity, we invest in major engineering and technology projects that will help us on the pathway towards delivering some of that overall system design.

In the marine piece, we do exactly those two things. We carry out analysis in the UK. We can see where marine is likely to fit into the UK system in the future and the value of that, and we will talk about that perhaps, and then we invest in major projects, and we have currently got around £21 million of marine energy projects across tidal and wave in development and demonstration, so it is technology development and technology demonstration. They are running at the moment, and we have about another £20 million of projects in contracting right now. They are fairly big projects. The smallest one is very small; it is about £1.5 million. The biggest one is £15 million.

Rob Saunders: Hello, I am Rob Saunders, and I lead on offshore renewables at the Technology Strategy Board. The Technology Strategy Board is the nation’s innovation agency. We are an NDPB sponsored by BIS, and our goal is to accelerate economic growth by stimulating and supporting business-led innovation. We operate across a number of sectors, of which energy is one, and we view marine energy as a priority. Since 2007, we have provided grants to fund a number of projects that total about £22 million. We have supported cost reduction in marine devices, and we have supported underpinning technologies, in particular to help to develop the technologies that go around the devices as well, in a couple of calls last year especially.

Dr Green: Morning. My name is Jason Green and I am the Head of the Research Councils’ Energy Programme. The Energy Programme covers the remit of five Research Councils, and part of our remit is marine and tidal. We have a current portfolio of around £550 million of projects, and around £20 million of those are in marine and tidal research. We support early stage research and postgraduate training.

Dr Wyatt: I am Stephen Wyatt. I head up an area called technology acceleration at the Carbon Trust, which is about commercialising promising low-carbon technologies. We have been active in wave and tidal energy since 2003, and we offer a joined-up range of support from backing early-stage promising technologies through business incubation and technology verification, support and grants through to full-scale prototype support, most recently through the MRPF programme that saw £22 million to six concepts.

Q76 Chair: Okay, that is helpful. Can you throw some light on how you ensure that this is co-ordinated? You are all members of the Low Carbon Innovation Group, but that does not include the Scottish Government or Highlands and Islands Enterprise. Can you avoid duplication and can you co-ordinate effectively, given you are all working in somewhat overlapping fields?

Dr Green: I say that yes we can. The Low Carbon Innovation Group has the Research Councils, TSB, ETI, BIS and DECC represented and also the Carbon Trust, and really within the landscape that moves through the TRL levels-the Technology Readiness Levels-we all have certain areas where we predominantly fund, but then, as you would expect, things would overlap. For example, early-stage research will then move on to early-stage demonstrations, where we will link together.

The Low Carbon Innovation Group at a recent meeting has rebranded as the Low Carbon Innovation Co-ordination Group, and that is what we are there for. We are there to co-ordinate research across the sector, in marine and tidal, for example. We meet every six to eight weeks at an operational level where we share information and plan strategy, twice a year at CEO level, and then once a year where we will look at forward planning and sign off with Ministers. That is how we co-ordinate across the sector.

Dr Wyatt: I could perhaps add to that by saying the co-ordination works on two levels, first considering which technology challenges the group are focusing on, in what areas, but also the mode of intervention, if you like, so the style of unlocking and breaking down those technology barriers. Those two things are what are discussed at the group meetings, and we make sure that our activity is co-ordinated accordingly.

Q77 Sir Robert Smith: In that co-ordination, though, given that so much of the potential renewable resource is in Scotland, do you have any links to the Scottish Government or Highlands and Islands Enterprise for co-ordinating?

Dr Wyatt: I can probably start on that one. At a Carbon Trust level, yes, absolutely. It is ingrained in EMEC in terms of a board member, but also we have officers in Scotland and a strong working relationship with both organisations. From our perspective, we are able to feed that into the group meetings to make sure we stay co-ordinated.

Rob Saunders: From a Technology Strategy Board point of view, we are working very closely with Scottish Enterprise on our marine portfolio at the moment and we are expecting to co-fund our future call in 2012 with Scottish Enterprise. At a working group level, it is very closely aligned, and even within the LCIG at working group level, they are involved. I think we are well aligned with Scotland at the moment.

Dr Clarke: Similarly, we work directly with most of the major Scottish groups, whether that is the technology providers, Scottish Enterprise, Department for Energy and Climate Change in Scotland and the test sign groups. On the whole, it is pretty well co-ordinated with them, albeit-at this stage, anyway-not directly through the LCIG explicitly.

Dr Green: DECC now has an actual specific resource to manage LCIG as the secretariat, and it is in discussion with the Scottish Government to bring them in as a full core member of LCIG.

Q78 Sir Robert Smith: On the Government’s £200 million innovation budget, how do you feel about the way in which they have split it between the different low-carbon technologies? Do you think they have got it about right-anyone?

Rob Saunders: From our perspective, we see the marine energy industry at the moment as characterised by being one of great potential, but one of also quite high uncertainty at the moment-in particular, the uncertainty of the future cost of energy from wave and tidal devices-so we feel that it needs to be supported until we have better certainty about its future cost. We feel that it is a good part of the portfolio approach of the Government at the moment and, therefore, that it is right that it should be funded as part of the £200 million. When you look at the level, at the £20 million that has been proposed for this, verses the £30 million for offshore wind innovation, which will be a much bigger market. It is probably about the right level.

Dr Clarke: If we look at the modelling work we do at ETI, which is very rigorous-it has been very heavily peer-reviewed by international groups-if you look at what we see through that, looking out to 2050, we see the key challenges for the UK in the energy space across that whole spectrum of heat, power, transport and infrastructure, CCS, nuclear, bio-energy, energy efficiency. Those are your top four, and will explain why. Those are the things that have the greatest option value. That is, if we don’t do them between now and 2050, those are the ones where there is the greatest cost increase as a consequence, because we have to do something else that is more expensive, and we are always searching for the lowest-cost solution.

After those four, if you have any challenge or any problem in delivering those four effectively, we see offshore wind as the next major item, and that is all about cost reduction, clearly. Just below that, you start to then find the marine renewables, the marine energy systems. I think that is absolutely right, what was just said from the Technology Strategy Board, which is, if you look in that context, where Government would be best placed to put innovation money is in those lower areas, where the technology needs to be developed and, to an extent, risk taken out before the commercial market would be prepared to look at it.

Dr Green: I think we are all in agreement on that.

Q79 Sir Robert Smith: On that ETI analysis, because it is less optimistic than some of the other witnesses we have had, what has driven that caution?

Dr Clarke: All the modelling work we do is searching for the lowest-cost design for a future UK energy system across our transport and infrastructure, and I stress that piece because the system integration-how does heat play out versus power generation? Can we use waste heat from power stations effectively, for instance?-is crucial. One reason why we may come out with a slightly different answer from some other views is because we are looking across the entire system, not just power, for a start.

The second piece is to say that we look very hard, as I have said, for the lowest-cost solution. In terms of looking out to 2050, you find two things drive your design options. One is time, in terms of development time for technology and the asset life of particular systems once they are deployed, whether that is offshore wind or marine or coal-fired power plant or whatever it is. Time is crucial. The other piece is risk, and all the work we do suggests very clearly that, on marine, unless we can demonstrate a pathway to reducing the cost quite aggressively, which means over the next five to eight years, then the chances are that the market is likely to start to build other technologies as alternatives, because they will feel more assurance in those and more opportunity for return. Basically, the message, as we see it, is that there is a five to eight year window to demonstrate the opportunity. We don’t have to get right to the bottom but we need the opportunity to significantly reduce costs on marine, and if we can’t in that period, the chances are the market will build other assets that will have very long lives-20 or 25 years-that will take us out towards 2050.

Q80 Sir Robert Smith: From the ETI perspective, if it is fall-back technology, should we be letting other countries develop it and import it rather than-

Dr Clarke: The question that I would raise-I think it is for the manufacturers and the technology developers probably to answer this question-is, where is the opportunity for development, and is another country going to develop it first in the timescale that we are talking about? We have some of the best resources in the world; we have got some of the best technology development companies already. If we don’t do it here, will it get done somewhere else? I don’t know, but that is the question I would be asking the developers around the world.

Rob Saunders: From our perspective, coming from the point of view of the businesses, we completely agree with the ETI’s analysis for the UK energy system, but there are opportunities for UK business outside of the UK energy system as well, and it may be that some countries won’t be able to do CCS or choose not to do nuclear, and we will have wave and tidal resources that they will want to take advantage of in the future. There are opportunities for export if they can get the cost of energy down to a reasonable level where it becomes viable in an export market as well.

Sir Robert Smith: Given the sites we have, it is worth our trying to develop the technology here, because it is-

Rob Saunders: Yes, we have the sites, but we have the research and we have the capability in the UK at the moment, so it seems like we are best placed to make those cost of energy reductions that need to happen.

Dr Clarke: Can I comment very quickly on the point made earlier? You say our views are perhaps more conservative than some of the others. I would go back to what I said. If the industry can demonstrate significant cost reduction, and in the event that we have any problems in delivering at scale those other things of CCS, bio-energy and nuclear energy efficiency, we almost certainly will need marine in the UK.

Q81 Sir Robert Smith: Yes, so it is worth it. I have just one final thing. Given that tidal is very predictable, should that be the one that we are aiming at more than wave?

Dr Wyatt: We probably talked about it a little bit. If you consider the UK’s resource, we have more wave than we do tidal. It is probably true to say that tidal is perhaps more certain than wave in terms of the technology situation at the moment, but as a longer-term play, wave has a lot going for it. Some of our work around cost reduction indicates that because of the global potential to roll out wave energy technology, it may well be that the cost for wave ultimately comes down to a level that is perhaps below tidal.

Sir Robert Smith: Thanks very much.

Q82 Christopher Pincher: Can I just pick up a point Dr Clarke made? You said that in order for marine to be truly marketable-let us put it in those terms-then costs need to be aggressively reduced over the next seven to eight years, but even if they are reduced, the Carbon Trust has done some analysis to suggest that tidal and wave technology will still be 3p to 6p per kWh more expensive than offshore wind, for example. Is that a significant difference, and do you anticipate that that extra cost is either going to be picked up by the companies in terms of reduced profits, or will it be passed on to the consumer, or do you expect the taxpayer will have to pick up that difference?

Dr Clarke: It depends on the time frame that you are on. If you are looking at the very long term, you can see the potential for tidal. As Stephen just said, with wave, partly because of the global market scale, you can see the potential for it to become cost competitive with other forms of generation by 2050. In the nearer term-2020 or 2030-I think those numbers feel about right, from my point of view, but clearly you would need some form of financial incentive to persuade the developers to invest at that level. You are talking about long-term sustained support to make that happen, but clearly at a reducing level through time.

Q83 Dr Lee: The 2020 target on sourcing 15% of energy from renewables is a bit soon for marine. Would adopting one for 2030 now help with technology development in marine?

Dr Wyatt: In terms of timing, it is obviously still very uncertain. We are still at the proving stage for the industry. We are still demonstrating an understanding of exactly what we can achieve in terms of power performance and cost reduction. Our analysis suggests that there is the potential to get wave and tidal energy by 2020 to the point that offshore wind is now-that is, the point where it is possible to deploy in large scale-so that is the ultimate position where we consider we can get to, and that will be around 2020, 2025.

Q84 Dr Lee: Again, if there were a more explicit target for marine energy deployment, would that help with market confidence and investment?

Dr Wyatt: If there were a specific target for marine renewables?

Dr Lee: Yes.

Dr Wyatt: Absolutely, yes.

Q85 Dr Lee: What should that target be?

Dr Wyatt: It is very hard to say at this stage. I would say that good targets are ones that are stretch targets and slightly above what the industry is likely to achieve, but I think any target would give certainty to the industry, which can only help the investment case for the industry.

Q86 Dr Lee: Are there any disadvantages for having these targets, do you think?

Rob Saunders: Maybe I could comment. We need to be slightly careful with targets, because the main aim of the first arrays we deploy are to learn rather than to deploy huge amounts. We need to make sure that we are deploying at a rate that is suitable for that learning, rather than trying to deploy too fast too soon. Maybe setting very ambitious targets now, before we have deployed a single array, can get in the way of our learning process. If you deploy a 100 MW array and you find a problem, you have a lot of things to fix in very difficult conditions. There is probably a staged targeting process where we make some learning targets and then some full deployment targets in a few years’ time, once we have learnt a bit from our first array deployment.

Dr Clarke: I support that quite strongly because, at the end of the day, a target around level of deployment is one story. It is all about cost. Why is the market going to bother chasing that target if it can deploy something else that is cheaper and that it can get a greater return on? From my point of view, you can have a deployment target, but ahead of that, taking a staged target view, I would be saying, "I want a cost target and I want to see it demonstrated." If you can hit that, then you can start to set deployment targets, if you wanted to, which would have a big incentive effect by having already demonstrated a path that is going to take you down a cost-effective deployment opportunity route.

Dr Lee: So ultimately it comes down to the technology paying?

Dr Clarke: Yes.

Q87 Dr Lee: That is what I have just said to the previous panel. Is there anything more we could be doing in this area? I am quite a big supporter of marine. I think it is something that Britain could lead on, and we have missed the boat with all the others, it seems. Is there anything more that you would say that we could be doing in order that, come 2030, say, marine energy is a viable technology for us to export from this country?

Dr Wyatt: I suppose the target point is that anything that gives clarity over the ultimate size of the market is important to inform investment decisions, and ultimately, if there is a recognition that there will be Government support in the longer term, and there is talk of a vision where significant proportions of the industry can be delivered, then that gives certainty around investment. I absolutely agree with the point that cost is key, of course, and this is not going to happen if the economics don’t stack up.

Q88 Dr Lee: Okay. I have one final question, and this is the difficulty of coming in, the electoral cycles and the politics of this. I am getting a bit of grief, and I am sure others are, about the feed-in tariffs and reducing on solar. Personally, I don’t want to make any more solar power billionaires in China, so I am quite happy to not be subsidising an industry that we don’t make any money out of. Should we perhaps take a more strategic view and say, "Right, we are removing all the subsidies from everything, except that area where we may make money for UK plc over the next 20, 30 years"?

Dr Clarke: That is a fair point, and it is very important to look at the subsidy effect in the round-what is the total economic effect?-which we possibly haven’t done previously. You are quite right in the sense that this is an opportunity for the UK, and taking the point that was raised about wave earlier, the market for wave in the big sense is probably outside the UK in terms of the resource availability, so there is a real export opportunity in this for UK engineering companies.

Dr Lee: So the answer is yes. We seem to be chasing targets on CO2 emissions and things that we are not going to meet and, in a sort of a futile attempt to meet them, we are subsidising technology and industry that is based outside this country, so not only are we paying it twice over, we are not going to get anything in return, other than feeling good about ourselves every time we look at Bangladesh. I wonder whether strategically we would just be able to say, "Right, forget all of this. We are going to subsidise something that may give us an economic return," and you are saying, "Possibly, yes."

Dr Clarke: I am saying subsidise things that are going to give you the best overall economic return for the country, which has to include a manufacturing base and export opportunities from the UK.

Dr Lee: Good. Thanks.

Q89 John Robertson: Obviously everything depends on how much money you have got. We have had people who have given evidence to us, and they would like to see a co-ordination between DECC’s £20 million innovation funding and the Scottish Government’s recently announced £18 million. Do you think it is feasible, and if it is, how do you think it would work in practice?

Rob Saunders: I will kick off. I am certainly not entirely clear what the detail of the Scottish funding is, other than it is for marine arrays. As a concept, absolutely it will be great to join those funds up and to ensure that they are dealt with in some consistent manner in terms of the technologies or the companies that can access them. Clearly, Scotland will want to see some additionality to their funding over what would come from central Government anyway, but it would be a good thing to connect those up, yes.

Q90 John Robertson: Can I maybe add something? Maybe this will help. According to the notes I have here, it says that the £18 million from the Scottish Government was to support marine energy commercialisation, whereas the £20 million is for innovation. Is that different? It strikes me that commercialisation comes after innovation.

Dr Green: They will overlap in some way. They should complement each other, ideally. DECC is currently working with the UK Marine Energy Programme, its finance working group, and the Scottish sector is involved in that as well, so they are discussing both axes, the £18 million and the £20 million and how they complement each other, but as far as how that works in practice, that is still open for discussion.

Q91 John Robertson: So should we have a sort of English and Wales equivalent for the commercialisation part? Would that help?

Dr Wyatt: I think it is true to say that there are several challenges to get to the first array stage. Innovation challenges still need to be solved, so the £20 million that provides capital support to physically build an array out is one thing. There will be additional R and D and innovation that is required to make sure that you are in the position to do that, and so there is perhaps an argument to, I suppose, de-risk the £20 million DECC innovation money for first-array deployment up front. I can see there is some mileage in doing that.

Q92 John Robertson: Having thought about it a bit more, I am looking at the fact that one is innovating and they will do all the hard R and D work, and then the other one cashes in and takes them all up to Scotland. I don’t have a problem with that, of course, but I would think there might be some workers in some companies in England who might be a bit upset if, once something has been invented, it is developed somewhere else. We have had this problem, of course, as we have said already, where the idea starts here and it is taken up somewhere else, and other people make the money on it. Do we have a problem with that, that we really do have to look at our innovation, look at our development and keep it in house?

Rob Saunders: Given the stage of the industry, commercialisation inherently has to include innovation because, as Steve has said, deploying these first arrays will involve a huge amount of innovation and doing things for the first time. The DECC funding is at a very late innovation stage, so it is almost on the boundaries of innovation and commercialisation anyway, because it is a demonstration stage, so I suspect they are probably going to be compatible.

Q93 John Robertson: Should we set really strong criteria lines governing this money that we are giving out?

Rob Saunders: That is being done certainly on the DECC money by the Marine Energy Programme Board at the moment. It is working very closely with industry to set those criteria.

Q94 Sir Robert Smith: The Carbon Trust recommended that we maybe take the same approach as offshore wind in terms of trying to get collaborative research on reducing costs where there may be a common R and D. Do any of the organisations have plans to implement such a programme?

Dr Wyatt: I can perhaps discuss the thinking behind that suggestion, and that is that we look at the industry and it is reaching the stage where there are a number of utilities which are committed to developing the first generation of farms, if you like. They will have a number of common challenges and barriers. We also have to remember that we are at an earlier stage here, so the level of innovation in IP creation is going to be higher than for offshore wind, so that has to be managed, and that is often one of the barriers to collaborative working.

Sir Robert Smith: But you can still see an advantage in unique-

Dr Wyatt: Yes, I do, and I think there are two flavours of it. One is to get engineers, OEMs and technology developers collaborating around a common challenge, and the other one is to get utilities as the end market to collaborate and try to pull through solutions, and there is space for both of those things to happen in this industry right now.

Q95 Sir Robert Smith: Are any of you funding anything in that?

Rob Saunders: We are in the process of developing something that we hope will take the best elements of a true joint innovation programme and integrate that into one of our collaborative R and D competitions. As I think I mentioned earlier, we are working with Scottish Enterprise and the Research Councils to co-fund a competition that will, exactly as Steve mentioned, target the common challenges to first array deployment. We are just in the final stages of developing that at the moment. We have been working with a cross-industry group, including the utilities and the OEMs, to develop the themes or the challenges that we are trying to solve, and we want to make sure that we continue that collaborative working by making sure that there is regular dissemination events as the projects progress.

Dr Clarke: ETI is more focused on taking the outputs from some of those projects than integrating those into full system demonstration.

Q96 Sir Robert Smith: Another thing the Carbon Trust has come forward with is-I suppose it is fairly obvious-tidal, installation and the structure are where the greatest potential is for cost reductions, and for wave it is operation and maintenance. Is that something you all agree with?

Dr Wyatt: Just to elaborate on that a little bit, I think, with tidal, we understand the physics, so it is possible to predict to a certain degree what your energy generation is likely to be from a tidal device and, therefore, the challenge is more and more around cost reduction in the capital sense; that is, get that structure in at a lower cost and ultimately use less materials. For wave, we are still in the phase where we are truly trying to understand the interaction with waves and ultimately how much power we are going to generate, so for wave it is a question of operations and maintenance, but it is also one of control and making sure we improve our energy yield from our wave energy converters.

Dr Clarke: It may sound like a kind of fiddling detail, but in addition to those points, particularly around tidal but wave as well, all machines to date have been single devices in the water. They have been designed to be connected to the electricity grid with a single piece of wire, so point to point. We don’t yet have a technology demonstrated for underwater integration of the electrical systems. At the moment, if we put out 30 devices in the water, they will be designed to have 30 wires going back to the shore. There is a piece about how we integrate those effectively from an electricity point of view, particularly given the cost of electricity infrastructure and so on at the moment. That is the other important cost piece for the future, but I agree, the installation piece is absolutely key at the moment. That is the next hurdle we are going to hit.

The offshore wind industry handled that by putting a surface-piercing platform in with a substation on it. Nobody is particularly worried about one extra platform in an offshore wind array, because there are potentially 100 turbines or whatever already piercing the surface. In this case, if everything is subsurface for tidal particularly, we may have a challenge about putting in a surface-piercing substation or whatever, so it most probably will have to be underwater. Again, that technology is just not quite ready at the cost this industry can afford. Oil and gas have it, but they pay a high price for it.

Q97 Chair: The Government is proposing to offer five ROCs now for wave and tidal energy, and that is based on a fairly cautious assessment of how much this is going to contribute. I have the impression that parts of the industry are much more optimistic about the size of the contribution. If the industry turn out to be right and the Government are wrong-and perhaps not for the first time-is there a danger we get another situation as we did with solar recently, where take-up vastly exceeds expectations and, therefore, we can’t afford to do this?

Rob Saunders: I suppose there is a possibility, but we are talking about a fairly short timescale in the life of the ROCs now. There are plenty of other barriers other than finance that will limit how much deployment gets done by 2016-17, so even if the industry is right, it might be right by a small amount. I don’t think we see gigawatts of this stuff going in by 2016.

Dr Clarke: If you go back to my last comment, there are an awful lot of technological barriers still to be overcome and, while we may be able to get equipment in the water, there are then some other issues such as grid connection, onshore and planning concepts and environmental permitting and all these kind of things for sites, all of which take considerable time. Yes, there is a risk. Does it appear unacceptable? I would have thought not.

Dr Green: It is very unlikely that you will have a repeat of the solar.

Q98 Chair: Fine, okay. Looking ahead, as ROCs are going to be replaced by feed-in tariffs relatively soon, do you have any views about what the Government should decide for the level of support going beyond 2017?

Rob Saunders: I know there is lots of nervousness in the industry about what happens post-RO, so they are incredibly happy that they have five ROCs at the moment, but especially some of the big players, it is great to see some of the big OEMs getting involved in the sector like Rolls-Royce and Siemens, who are all kind of buying into device developers but I know that they are there for the 100 MW arrays, the gigawatt scale deployment, not for the first 5 MW. But at the moment, that is all they can see in terms of revenue support. Some continuity in terms of the view forward on revenue support would really help the industry to plan longer term. Without that, there is kind of a risk that we do the first arrays, but then there is a hiatus when everybody waits to see what happens with the contract for difference, feed-in tariff or whatever comes next. Some idea of what is going to come next I think is really important, even if it is an estimate of return rate, given a cost of energy of X or something along those lines, would help the industry.

Dr Wyatt: Just to add, while it is difficult to predict what costs are likely to be or indeed what rate of return will be proportionate to the risk that the developers are taking, building on Rob’s point, clarity on how that will be determined now or in the near future would be helpful to the industry, if not being able to anchor a particular figure at this stage.

Q99 John Robertson: The Select Committee visited Orkney and had a look at the innovations that they are doing up there, and we noticed that TSB is currently in the process of establishing an Offshore Renewable Technology and Innovation Centre. Can you tell us a bit more detail about it and specifically how it will contribute towards wave and tidal technologies?

Rob Saunders: Yes. So the Offshore Renewable Energy Technology Innovation Centre was announced in May as the third Technology and Innovation Centre in a series of probably six initially-high-value manufacturing and cell therapies were the first two. Since then, we have been running an open competition for the leadership of that TIC and development of it into an operating entity, and we are coming to the end of that process now. We are expecting bids in at the end of this week, and we hope to announce the winner of that competition, the people that will lead that Technology and Innovation Centre, around the end of the year sometime and have the actual centre operating middle of next year.

The aim of Technology and Innovation Centres in general is to be a strategic long-term investment that will help generate growth in the UK by filling critical gaps in the innovative landscape. The idea is that they will stimulate innovation and growth, that they will anchor high-value development in the UK and that they will build bridges between our world-leading research and industry, and that means companies large and small in particular who are keen to grow. It will be a physical location bringing together the multiple capabilities of the UK. We hope that it will also have global reach and impact. It will interact with the other European centres operating in this area and it will be able to sell the UK research base and its broader capabilities on that front.

Specifically, the offshore renewable energy one we see as being a single front door for business to be able to access the best research, to be able to build a critical mass of activity in wave and tidal and offshore wind-so it covers offshore wind as well as wave and tidal-that companies should be able to access expertise on a systems level, but also a few very deep expertise areas.

Q100 John Robertson: This allows small companies to get involved that normally wouldn’t be able to afford to. How does that work?

Rob Saunders: Yes. One thing that we will ensure is that SMEs have a route to access the best facilities and testing facilities around the country, so if you are an SME with a great potential tidal device, we hope the TIC will offer you support and access to some of the facilities that might be in the universities or in Orkney, for example, or at Narec or at Wave Hub, some of the great facilities that we have in the UK that can help to develop this.

Q101 John Robertson: The Government were talking about "parks" as in plural, so they see this as the start and they want to grow. Is there a danger that we may have an overlap in technologies and research that could have been, shall I say, better harnessed in one area rather than split into different parts?

Rob Saunders: Are you referring to the Marine Energy Parks?

John Robertson: Yes.

Rob Saunders: Yes. I think these are separate things. The Technology and Innovation Centre will be a national body. My understanding of the Marine Energy Parks is that these are more likely to be local clusters based in particular geographies-I know the South West is leading the thinking on marine energy parks-and that these will be co-ordinating areas for local industry as well as research, potentially with better planning regulation or Enterprise Zone status. I don’t know what the plans are for that, but that would be a good ambition for them, I think. We certainly see there being a lot of interaction between the TICs and Marine Energy Parks, but I don’t think those are going to overlap in a very heavy way. We would see that the TIC could provide the Marine Energy Parks with access to the best research, which may not be in their geographical area.

Q102 John Robertson: But they will share, working on the theory that one park could have an invention of great magnitude that would help the other five?

Rob Saunders: Indeed.

John Robertson: Would that be shared among them or would the person that has developed it own it?

Rob Saunders: The person who develops it will own the IP. I am sure-

John Robertson: But are they committed to have to share it?

Rob Saunders: The Technology and Innovation Centre will, I am sure, be wanting to make sure that the best ideas are shared and are used and commercialised in the best possible way, and that may not be in that individual Marine Energy Park, should a number of these spring up. So yes, the information sharing will be a key role of the TIC.

Q103 Chair: It is quite common for new energy developments to attract local opposition. Have any of you encountered that and, if so, have you done any research on why the public have concerns about either tidal or wave energy?

Dr Green: The Research Councils have looked into this, and they have carried out some public understanding research on perceptions around marine energy. I think marine energy has the environmental issues associated with it, which DECC have looked at quite closely, and also, in the communities where things are based, they have tried to work alongside communities, looking at marine energy and where the first arrays have been, and deployed the first tests to look at the public acceptability in this area.

Q104 Chair: What are the outcomes of that? Are the attitudes similar to those towards wind turbines, for example?

Dr Green: I think that they found that the attitudes are more positive where the actual community feels it has buy-in and some stake in what is being undertaken. They are looking at developing some tests at the moment, some case studies in marine energy. Because of the amount of deployment has been so low to date, there has not been a wide opportunity to do this. In offshore wind, for example, they have had areas where communities have owned maybe a number of the wind turbines that have been deployed, and the public acceptability has been looked at there and it has been much better than where that has not taken place. NERC started an initiative in April that is going to look at that with marine as part of the Research Councils’ Energy Programme, so that will be studied.

Q105 Chair: Looking at good practice, I believe the RCUK have mentioned the Islay Energy Trust as a good example.

Dr Green: Yes.

Chair: What were the lessons out of that, or indeed any others?

Dr Green: I think they feel the same way, as having community involvement is important, and that is the vital thing that has come forward from the Research Councils’ Energy Programme studies in this area.

Chair: All right.

Q106 Sir Robert Smith: Where is it at in terms of the development? Everything has an impact on its environment where you put it. Where are we at with concerns about the kind of environmental impacts that tidal and wave could have?

Dr Green: There are two impacts. There are studies, for example, involving the Marine Animal Centre in Oban that are looking at the impacts that it has on the marine life, so that is one part of it, and then also for local communities for deploying the arrays and the associated infrastructure and how that impacts. It is really a two-pronged approach that is being looked at and is planned more widely.

Dr Clarke: If you look at certainly one of our major programmes on tidal turbine deployment, where we are putting a 1 MW machine up at EMEC in the Orkneys, then a major part of that project is a £15 million project, of which about £5 million is going purely into environmental assessment and environmental monitoring. We have been assessing the site for the last 18 months in terms of mammal life, water flows and so on and then, once the turbines go in, we will be carrying on that assessment for a period of up to two years. That project is very much about trying to acquire some of that local environmental data, including the effect on marine mammals and so on.

Then we are also looking at perhaps a more macro level, which is what, from a modelling point of view around the UK in terms of tidal flows, is likely to be the overall impact on flow of water right around the UK and the west coast in particular if we put in very large quantities of tidal developments? It is not insignificant. The north coast of Scotland is not too dramatic, but you can imagine the Irish Sea, where you have got relatively constrained in and out, could be slightly more important. Yes, it is fair to say there is quite a lot of work going into this at the moment, but from my point of view, we are focusing on what I would call the technological end of environmental performance and environmental assessment. The public acceptability piece is exactly as has been said. In local communities, with community engagement, it tends to be very strongly supported, on the whole, from what we see certainly.

Dr Green: There is a lot of work going on with the fisheries sector as well, because they have concerns about the impact that marine will have on the fishing grounds around the coastline, so there is work going on with them on public acceptability and the actual impact that that will have in the marine habitat.

Dr Wyatt: It is probably worth saying that the type of macro effect that David was saying was referring to where we start to influence the nature of the tide is related to very, very large levels of deployment, so it is not a problem that we are staring down the barrel of, as it were, and it is something that can be understood and managed. It is not a showstopper in that sense.

Sir Robert Smith: It is not a problem we aspire to.

Dr Wyatt: Indeed.

Dr Clarke: It would be another problem to have to handle seriously, but we are getting the tools ready in case the industry can go that fast.

Dr Wyatt: On the environmental point, the industry has adopted an approach to deploy and monitor, and it has been very mature in its approach to that. The first device has gone in the water. The MCT device in Strangford Lough has been a case study in many examples where very, very rigorous environmental monitoring has been undertaken and that data has been disseminated.

Q107 Christopher Pincher: The Technology and Innovation Centre concept clearly provides an excellent opportunity to provide a centre of excellence, but that can only surely be successful if you have the right engineers, scientists and technologists to fill the roles in those centres and in the marine parks you described. Some respondents in this inquiry have said that there is a skills gap in the UK with respect to marine technology. Do you think that is the case, and if you do, what do you think are the specific gap areas?

Dr Green: That is something that we have recently recognised. The Research Councils funded a number of doctoral training centres that will train scientists and engineers across the energy sector, and one of the areas that we hadn’t managed to fund was in marine energy, so recently we have established an industrial doctorate centre working with ETI, which will provide quite a large number of doctorally trained students in the future.

Q108 Christopher Pincher: So that is in higher education?

Dr Green: That is in higher education.

Q109 Christopher Pincher: What about in further education? In further education, EMEC has suggested that there is a gap in the further education set of skills.

Dr Green: That is probably a consequence of stem subjects being unpopular in schools and people then not going on to take up science-based degrees, so I don’t think that is specific just to marine energy. If people train as engineers at university or in further education take science subjects, they can then move on to be trained at a Masters or Doctoral level in the courses that are applicable to working in wave and tidal.

Q110 Christopher Pincher: In terms of the elapsed time to build these skills and have these PhD-grade doctors ready versus the aggressive timescale that you need to drive down costs and build this industry, is there a mismatch there? Do you think we are going to have to import people?

Dr Green: I don’t think we are going to have to import people, but I think there are already examples of people, for example, that have been trained in oil and gas that are using their transferrable skills to move and work in marine. A lot of people have trained in oil and gas through Cranfield University in the past, and a number of those are now moving to work with industry on these early-stage deployments. I think we have the skills within the UK at the moment where they can transfer across and then, through the new doctoral training, we will have people for the future.

Q111 Christopher Pincher: Is there sufficient encouragement to transfer those skills from oil and gas into marine, do you think, enough to make it attractive?

Dr Green: Yes, there are, and it is certainly something that the Research Councils would encourage and provide funding for if it was required for people. We call it discipline hopping, so retraining in certain areas. We would support that.

Dr Clarke: I would say there is real evidence that it is starting. Let’s put it that way. It is interesting, if you look at what is happening up at EMEC, for instance, in terms of device development and device testing up there. Three years ago, there wouldn’t have been a great degree of oil and gas skills involvement. It was mostly what I would call local guys in local boats, whereas we are now seeing, because of the scale of activity up there and the sophistication of what people are trying to do and in terms of trying to drive costs down, people using much more sophisticated vessels, some of which are coming in from the oil and gas industry, that the oil and gas guys are having to meet them halfway in terms of the technology and the cost, which has been to reskill their people to operate in a slightly different way. Certainly, I would say, on an average month on Orkney, you see it happening, yes.

Q112 Christopher Pincher: This just passed through my mind. It may be wholly off-beam, but given that shale gas has become a much more interesting concept of late, does shale present another alternative and attractive opportunity for those individuals in oil and gas, and that may discourage them from moving into the marine renewable field?

Dr Clarke: If you are looking over the next 10 to 15 years, we need a lot of engineers. Let us just put it that way. Part of what we try to do is to train as many as we can through our projects, as well as through things like the Industrial Doctorate Centre. Will there be competition for these guys? Yes, there will, and it will be a global competition. It won’t just be a UK competition. We have to fight to get these guys in.

Q113 Christopher Pincher: So I am in the wrong job?

Dr Clarke: Depends what your background is.

Dr Green: It is definitely an area to move into and, certainly in wave and tidal, the UK research base is world-leading. We had an international review of the whole energy programme and it came out as being world-leading, so the research is there to train the people and to get out and deploy marine and tidal and to get a UK lead in that area. There is the potential there.

Rob Saunders: With the key skills of offshore engineering, essentially I think the UK is second to none, and it is often said that we know our seabed better than any country in the world. Yes, it is a matter of trying to transfer some of those skills into the marine energy industry, and there are challenges to it, largely in the kind of cost structures and cost of oil and gas versus marine energy at the moment, but as David said, it is starting to happen and we are seeing it happen.

Dr Clarke: There is maybe an anecdotal-type comment though, just to say, from the point of view of exciting young people to go into this industry, if you want an engineering challenge, if you can convey this to people, this is about as difficult as it gets. It might not look it, but purely from an engineering and science point of view, this is pretty much it. If you can do this, you can crack virtually anything, because it is a combination of difficult materials and a difficult environment. It is quite literally a hostile and dangerous environment. If you can engineer a system that will go into there and operate reliably at low cost and so on, this is pretty difficult to put in the hardware. If you want an exciting challenge for young engineers, this is good.

Dr Wyatt: If you also look at the profile of deployment for offshore wind and think about the skills that are going to be required to meet that deployment level and then look at when the deployment for wave and tidal is likely to happen, you begin to see that a lot of the skills that will be needed at the peak time for insulation and fabrication around offshore wind could be redeployed as well as that peak comes down, because it has met with another one from wave and tidal.

Q114 Chair: Just finally, on the TSB idea about having a roadmap to show how the costs are going to fall, are there specifics in mind already for how those cost reduction targets could be set up?

Rob Saunders: Acknowledging the cost of energy is the critical thing, and across all the public funders it is the critical thing, irrespective of our overall aims. There are already roadmaps developed. I see David is holding one in his hand. The ETI and UKERC developed a marine energy roadmap earlier last year that sets out against deployment what the cost of energy might be or perhaps some targets that we should aim at. I know that the technology and innovation needs assessment-that has been done by the Carbon Trust-has a similar kind of cost reduction curve against time, which ends up at pretty much the same place. There are two examples of cost-of-energy road maps that we could use to track our progress as the marine energy sector evolves. The point I was trying to make was that we perhaps ought to do that a little bit more formally so that we know what progress we have made in five or 10 years’ time and we are not sitting here again asking the same questions as to whether we should be funding it into the next 30 years, and we can demonstrate the progress that we have made against cost of energy.

Q115 Chair: Those are public documents, are they?

Dr Clarke: The ETI UKERC roadmap is a public document, published October 2010 last year.

Rob Saunders: The technology and innovation needs assessment has yet to be published, but should be published shortly.

Q116 Chair: Would you like to let us to have sight of that? We will not publish our report for a little while yet.

Rob Saunders: Yes. It is not my document to give, but I am sure that the LCIG can give you a summary of that.

Chair: If it is restricted, you can let us know, but it would be useful for us to have sight of it. Okay, thank you very much for coming in. That has been a useful session. Thank you.

Prepared 15th February 2012