Innovation & Delivery of Energy Technologies - Westminster Energy Forum

Friday, 27 March 2009

Innovation & Delivery of Energy Technologies

Event report from London, March 25th 2009

Session 1 : Policy, Innovation & Funding

Introducing the event, held for the first time at the new parliamentary buildings in Westminster, London, Chris Lambert said that it was time to look at the policies and technologies which would actually help deliver a low carbon energy industry.

First speaker was Dean Cooper, Head of Cleantech Energy Investments at Ambrian Partners, to talk about the availability of funding for research and development across the ‘clean tech’ spectrum.

Cooper said that we were now on the threshold of the ‘sixth industrial revolution’, one of a series of ‘disruptive technology changes’ which had begun in 1771.

This latest green technology revolution was, he suggested, a defensive asset investment and one which offered job growth and a stimulus engine – obviously welcome in the current economic climate.

He backed this up with evidence of the recent G7 stimulus package for clean energy which contained US$66 billion of investment in the US and US$nearly 1 billion in Britain.

He said the current funding environment would see large utilities with strong balance sheets acquiring smaller assets against a background of strong growth in clean energy, rising from $35 billion in 2004 to $155 billion in 2008 – a five-fold surge.

He said that clean energy investment had remained fairly robust through the credit crunch so far.

Funding in the current climate, though, saw ‘money being pretty impatient’– whether from corporates, private equity, venture capital or developers.

Key issues for the ‘low carbon energy transition’ were, he said, the ‘cleantech nexus’ – namely legislative, technology, supply chain and resource challenges. Against this, Cooper thought that the carbon price, currently languishing at 6 euros a tonne, was not a significant factor for investors.

Looking ahead at the next six months, he said saw both feed-in tariffs and the US loan guarantee scheme as economic development tools for clean energy  and that funding was available for ‘cleantech’ as part of a global energy sector relaunch. And for UK he said it was time to join the party.

If the picture for green energy funding was, despite the economic downturn, reasonably optimistic, then the message from Professor Paul Elkins, co-director of the UK Energy Research Centre at Kings College, London, was, in terms of the 2020 environmental targets and their attainability, far less so.

He described  the news coming out of the recent Copenhagen summit from climate change scientists as ‘simply dreadful’, saying that the world was ‘sleepwalking to disaster’ a prospect that he found ‘very scary indeed’.CO2 emissions had risen from 280ppm in the pre-industrial era to 380ppm today and Professor Elkins said there wasn’t ‘a cat’s chance in hell’ of those levels coming down soon.

The Stern review had set out clear policy principles to address carbon missions and climate change – namely carbon taxes and trading, technology, behavioural change and underpinning these the need for a carbon price with a possible floor of 40 euros a tonne.

The aspiration was for the 100 per cent decarbonisation of UK electricity by 2050 with ambitious interim targets for 2020. But professor Elkins said that by 2020 low carbon new nuclear and carbon capture would only be ready to make a minimal contribution, while the 15 per cent contribution of renewables was looking ‘extremely unlikely’. To achieve the renewables target Britain would need to install five 5MW turbines in the North Sea every week between now and 2020.

He said the UK had the best renewables potential in Europe, but very low deployment – ‘the UK so far has not got it right’ – and there was little evidence that the UK government was able to implement the necessary policies to make renewable energy happen quickly enough.

Optimists believed the costs of climate change mitigation were really investments which could spur innovation and growth. Pessimists saw alternative energy as more expensive. But in the end there was no choice but to change lifestyles, improve energy efficiency and deploy renewables – the effect on the economy would only be to put back economic growth levels for 2030 to 2031 – a price worth paying.

The role of technology to make these aspirations a reality was outlined by Robert Sansom,
Director of Strategy and Sustainable Development at EDF Energy.  He began with the caveat that a fully decarbonised electricity sector alone will not allow us to meet carbon and emissions targets – other sectors will have to be decarbonised as well. These were transport, heating and industry. And carbon reduction was not just about energy supply, but about energy demand reduction too.

In terms of technology Sansom highlighted heat pumps, which he said provided an opportunity to decarbonise heat, providing barriers such as affordability, consumer awareness and installability could be overcome. Heat pumps, already in use in markets such as Canada and Japan, had the potential to replace gas boilers.

Electric vehicles were an opportunity to decarbonise transport, again if barriers could be overcome – in this case, technology (specifically batteries), costs, consumer confidence and appropriate business models. There was a need for long term incentive benefits, to raise public awareness, for more R & D, for strategic investment In key infrastructure including electricity grids and for large scale trials..

In an additional presentation, Michael Liebreich, Chairman and CEO of New Energy Finance, painted a realistic picture of the current economic position for energy technologies. He said that this financial quarter asset financing had ‘collapsed’ with the recession now having a tangible and significant impact. It had not, however, had a corresponding impact on energy consumption or carbon emissions.

He said that on the positive side volumes of activity in the new energy technology area in the US were ‘remarkable’, and that other countries were also moving forward in this space, notably Spain, Italy, France and China. But he cautioned that ‘my clients are not queuing up to invest in the UK’. A massive industrial scale up was needed in new green energy technology, he said, comparable to the 1936-44 ramp up of aircraft production just before and during the Second World War.

 Session 2 - Commercialisation & Deployment of Core Technologies

Next WEF meeting – Linklaters, London on 19 May