Briefing on Innovation

Introduction
Our energy landscape is fundamentally changing as we create a low-carbon, affordable and
secure energy system.
Already we are seeing a shift in how we generate and consume power. Our network is infused
with more distributed generation, renewable sources account for 15 per cent of UK electricity 1, the
toolkit used to manage our grid infrastructure is expanding, and we are increasingly looking to
decarbonise our heat and transport sectors.
If we are to provide secure, low-carbon, energy supplies at a reasonable cost to the consumer, we
will have to deploy advanced technologies and continue to develop innovative solutions. New
methods of generating, managing and storing energy will be essential.
While the scale of change required is challenging, tackling this complex landscape is crucial, not
just to secure a fit-for-purpose energy system for the country, but to put our entrepreneurs and
businesses at the forefront of what will be an international paradigm shift.
We therefore welcome the UK Governments commitment to double its spending on energy
innovation2.
In this briefing we call on the UK Government to develop an Energy Innovation Strategy, to guide
that funding commitment. We set out areas where we believe this innovation spend should be
focused to help deliver a secure, low-cost, low-carbon energy system. We also outline actions
which government can take to unleash the innovation that we need.

The Need for an Energy Innovation Strategy

Innovation is already occurring throughout our energy system, but its pace can be accelerated and
its direction better-guided. As Secretary of State for Energy and Climate Change, Amber Rudd,
noted in her energy policy speech, Governments first job is to create the environment for new
ideas to flourish3.
We agree that Government has a central role in fostering innovation and believe developing
an Energy Innovation Strategy is key to this.
This strategy should work to enable and guide the direction of technology development, put our
businesses at the front of this global shift in our energy landscape, and help create a secure, lowcost, low-carbon energy system.

http://visual.ons.gov.uk/uk-perspectives-energy-and-emissions/
https://www.gov.uk/government/news/deccs-settlement-at-the-spending-review-2015
3
https://www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy
2

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Government can ensure a holistic strategy by mobilising a variety of resources and agencies to
create an innovation ecosystem4. It can actively shape and participate in the market, committing
investment, taking on risk, and championing enabling structures and systems to encourage
innovation5. An innovation strategy would provide clear direction from government and, backed by
the right policy and regulatory landscape, would indeed allow for new ideas to flourish.

Key Innovation Sectors

The areas below present particular opportunities for the UK and allow us to build on our existing
strengths in these fields.
Driving transformational change in these areas can ensure we are at the forefront of international
efforts to implement clean, secure and cost-effective energy systems.
A successful Energy Innovation Strategy should encompass the following areas:

Wave and Tidal: The UK already sits at the helm of the progression of wave and tidal
technologies. 1,700 people work in these sectors in the UK and this could grow to more
than 20,000 in the next decade6. With world-leading test and demonstration facilities, and
newly formed initiatives (such as Wave Energy Scotland) to drive technology development,
the UK is well placed to continue to progress the sector and lead internationally.

Storage: Storage technologies enable increased renewables capacity (storing their output
at times of low demand), prevent or delay the need for costly network upgrades, and
provide a number of ancillary services to the grid such as frequency response. Small-scale
devices empower communities and consumers, and deploying energy storage delivers
security of supply. The global market for large-scale energy storage has been estimated at
almost 20 billion by 20227 and the UK could be a major player in this.

Low-Carbon Heat: Heat accounts for 46 per cent of UK energy demand8, supports 32,600
jobs and had a turnover of 4.9bn in 2013 alone9. However, only 4.9 per cent of total heat
demand was renewable in 201410. Decarbonising the sector will mean fully developing new
technologies, supporting their large-scale deployment and integrating them into our wider
energy system.

Floating Offshore Wind: Floating offshore wind affords access to deep-water resources,
while aiming to reduce costs associated with construction and installation. Utilising the UKs

A system that embod[ies] dynamic links between the different innovation actors and institutions, as described in
http://marianamazzucato.com/wp-content/uploads/2014/11/MAZZUCATO-INNOVATE-UK.pdf
5
http://marianamazzucato.com/wp-content/uploads/2014/11/MAZZUCATO-INNOVATE-UK.pdf
6
http://www.renewableuk.com/en/publications/reports.cfm/Wave-and-Tidal-Energy-UK-Capitalising-on-Capability
7
http://www.reportlinker.com/p02855276-summary/Global-Market-for-Energy-Storage-Forecast-Opportunities-Trendsand-Challenges.html
8
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48574/4805-future-heating-strategicframework.pdf p.10
9
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/416240/bis-15-206-size-andperformance-of-uk-low-carbon-economy.pdf
10
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/437953/Renewable_energy_in_2014.
pdf
www.scottishrenewables.com

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offshore wind expertise to commercialise floating offshore wind will present opportunities to
further exploit our offshore wind resources and to export know-how overseas.

Systems Integration: Bringing together different elements of our energy system will allow
us to be smarter and drive efficiencies, increase security and reduce costs. Integrating our
heat, transport and electricity sectors will be fundamental to tackling the energy trilemma,
and developing new technologies and methods will be essential.

Network development: The Committee on Climate Change states that achieving our
carbon budgets with a more flexible power system has the potential to save consumers
3bn-3.5bn per year11. Securing this flexibility will require a range of new technologies such
as Active Network Management (ANM) systems, demand side response, storage and
increasing interconnection using HVDC technology. While some progress has been made
across these areas, additional work is still required to see these innovations delivered at
scale.

Innovation Catalysts
A UK Energy Innovation Strategy can facilitate technology innovation, put our businesses at the
front of this internationally important arena and helps us to create a secure, low-cost and lowcarbon energy-system.
We outline some actions below, in no particular order, which we believe catalyse innovation and
therefore merit consideration as part of an Energy Innovation Strategy.
Finance and markets:

Commit long-term funding to the Catapult Network, in recognition of the expertise brought
to the renewable/low-carbon sectors. Support inter-Catapult coordination and further
collaboration with industry.
Conduct a review of fiscal instruments, including Research & Development Tax Credits, to
ensure they are being leveraged to maximum effect to encourage investment.
Establish an innovation fund offering support to pilot, test and demonstration scale
projects and providing route to market support12.
Develop appropriate long-term revenue support structures that enable innovative
technologies to scale-up and operate commercially.
Review the opportunities to establish public-private partnerships in the areas outlined
above.

Enabling structures:

11

https://documents.theccc.org.uk/wp-content/uploads/2015/10/Power-sector-scenarios-for-the-fifth-carbonbudget.pdf
12
https://www.sussex.ac.uk/webteam/gateway/file.php?name=what-will-it-take-to-get-us-a-greenrevolution.pdf&site=264 see pg. 13, 7.1 and page 14, 7.4, 7.6 and 7.7
www.scottishrenewables.com

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Conduct a Strategic Review which sets clear objectives for energy innovation priorities.
Ensure that the UK Funding Council, the Knowledge Transfer Network, Innovate UK and
Enterprise Agencies are aligned13.
Ensure the Department of Energy and Climate Change and the Department for Business,
Innovation and Skills work alongside Ofgem to facilitate the transition to a more flexible
system14.

We welcome the UK Governments commitment to double its spending on energy

innovation.
A strategy focussed on the areas we outline above would provide more secure, low-cost
and low-carbon energy, but will give British businesses the competitive edge required to
provide solutions to these challenges internationally.

For further information, please contact:

Hannah Smith
Policy Officer Markets & Systems
Scottish Renewables
T. +44 (0) 141 353 4980
E. hsmith@scottishrenewables.com
www.scottishrenewables.com

13

The Scottish Government is committed to exactly this sort of alignment, as indicated in its Draft Budget 2016-17
http://www.gov.scot/Resource/0049/00491140.pdf
14
https://www.ofgem.gov.uk/publications-and-updates/position-paper-making-electricity-system-more-flexible-anddelivering-benefits-consumers
www.scottishrenewables.com

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