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Innovation: the key to transforming the UK’s energy systems

The increasing reliance of all modern societies on plentiful supplies of energy – and particularly electricity – poses significant challenges to governments, business and indeed the individual consumer. Not only are traditional fossil-based fuels becoming more difficult to extract, their impact on the environment is now better understood and mitigation measures are constraining previously untrammelled exploitation. The strain on our existing network due to growth in demand is threatening security of supply. Meanwhile, the economics of supply and demand – along with geo-political issues – are pushing prices ever upward.

In the UK, there is a recognition that the nation’s energy systems need to provide affordable, low carbon energy supplies that are flexible and resilient: in short, appropriate for a high-tech 21st century economy. At the same time, more efficient use of energy by end users is needed if demand is not to place unacceptable strains on the supply network.

The urgency of this challenge is increasingly clear. This week, the energy regulator Ofgem noted that 10% of our current electricity generation capacity is likely to go offline in the coming months. It forecasts that the UK is likely to become much more dependent on imports with all the uncertainties and price volatility that entails for UK energy users.

Yet as in nearly all instances of looming crisis, the imperative to find another solution is driving ingenuity and innovation. New ways of doing things, new avenues of research and novel implementation technologies are starting to transform the energy landscape. And the Technology Strategy Board, the UK’s innovation agency, is at the heart of efforts to transform both supply and demand.

A great deal of work in our businesses, our universities and other research facilities is focussed on solving the energy challenge. However, ideas have to be transformed into hard commercial propositions and this is where TSB comes in. We build partnerships between stakeholders from a diversity of interests, from business, academia and local communities. By facilitating these interactions, and providing co-funding where appropriate, we can help join up the innovation pipeline, bridging the so-called ‘valley of death’, that gap between ideas and commercial reality that bedevils the process of successful development.

It is worth noting that the process of commercialisation can be particularly long and difficult in the energy sector. New technologies can take many years to become embedded and this makes business investment in energy innovation especially tortuous and complicated. It can be difficult to produce a robust business plan looking five years into the future – so when the timescale is 20 years or more and the business and political landscape is not fixed, the equation becomes very complex. Here, the ability of the Technology Strategy Board to provide support (in various ways including co-funding) helps to reduce the risk that organisations face when they embark on a process of innovation, and accelerates the best products to market.

For example, innovation will play a major role is in delivering the smart, flexible energy systems of the (increasingly near) future. By using energy more efficiently, and managing it better (so not so many peaks and troughs) this country can provide a more stable demand profile which will reduce peak load and back-up generation requirements.

Community-led initiatives, which avoid some of the infrastructure costs and power losses associated with long distance delivery networks, give consumers ownership of their energy and encourage them to take responsibility for using it wisely. The TSB is actively supporting projects at this level together with partners such as local and regional governments. For example, in Aberdeen, zero carbon wind power will be used to produce hydrogen. This will then be used for running fuel-cell powered buses or, in times of peak demand, the hydrogen will be used to produce electricity and fed into the grid. In this way, resources are used efficiently and effectively.

Improving energy efficiency in the built environment is also a key objective. The Government has repeatedly stated its belief that the cheapest way to cut the national energy bill is to use it more efficiently and to cut out waste. In homes for example, around 70% of energy consumption goes on space heating and hot water. In one recent programme, TSB funding was used to refurbish over 100 homes in such a way that carbon emissions were reduced by up to 80% - the target set by law in the Climate Change Act. New homes are extremely energy efficient and by 2016 all new homes will have to be built to a ‘zero carbon’ standard. Since the UK building stock is only replaced at about 1% a year, many existing structures will still be around in 2050 so it is vital that the issues affecting these properties are effectively addressed. I am pleased to say that the results of the Retrofit for the Future project demonstrated both real potential for savings as well as great interest in novel refurbishment technologies.

While community projects can make a contribution to the country’s energy needs, a fleet of dedicated power stations, based on a mix of technologies, will be essential for the foreseeable future. And as Ofgem has pointed out, the existing fleet is reaching the end of its working life.

This presents the UK with a huge opportunity to build a generating capability that is fit for the needs of the 21st century. This needs to be flexible, sustainable and predominantly low carbon. But as I have mentioned, timescales in energy are long term and so the need for support will remain. One area ripe for such development is that of offshore renewable energy, not solely offshore wind power but also wave and tidal energy. Britain is an island, a “precious stone set in the silver sea” as Shakespeare so eloquently put it. There are huge reserves of energy bound up in the seas that surround us and the winds that blow across them. But unlocking those resources is not simple: the very energy we seek to recover also presents a threat to the structures we place in the water. Storms and corrosion provide stern tests of our engineering. The result is that it is currently expensive to capture this energy.

Bringing down the cost of exploiting these resources is one of the primary goals of the new Offshore Renewable Energy Catapult Centre the TSB is establishing in Glasgow. ‘Catapult Centres’ are a new network of technology and innovation centres, strategically located across the UK, that bring together the best of the UK’s scientific and business expertise in a particular area.

The Centre has been set up to accelerate innovation in technologies which can reduce the cost of these renewable energy systems, and so ensure that UK business can extract maximum value from the supply chain in this emerging sector. It is sometimes forgotten that this country has decades of experience in constructing and maintaining complex structures in the North Sea. One of the aims of the TSB’s work in offshore renewables is to leverage these technologies in a new but related field.

Supply and demand are two major parts of the overall picture. Joining the two is the distribution grid. But this is far more than just a system of cabling and switching. The TSB is working on a wide range of projects to establish a truly ‘smart grid’ which can meet the needs of suppliers and consumers alike. Our focus is on helping to develop products and services across the future grid, including: hardware, such as energy storage facilities, sensor technologies and power electronics; software, such as virtual power plants, automation and demand-side response measures; and network infrastructure such as security, data storage and communications. Transforming our energy system is a big challenge, but the opportunities are there to deliver a network that is truly fit for purpose and relatively future-proof.

The UK is not unique in the challenges it faces in ensuring a robust but flexible energy system for its people. For that reason, many of the innovations we develop will be relevant to other locations across the globe. If we can solve our own energy issues, these technologies may well find a welcome in a variety of other markets. That will mean this country receives a double benefit, stabilising its own energy supply and generating exports too.  Our energy systems will undergo a transformation in the coming years and the Technology Strategy Board intends to ensure that innovative UK businesses are at the heart of that change.

Chief Executive, Technology Strategy Board