scaling clean energy innovation: clean technology is one of the great global opportunities of the...
TRANSCRIPT
56 May/June 2011 | Renewable Energy Focus
As part of this fl ux, an increasing
number of energy clusters and hubs are
evolving throughout the world, their
stated aim being to provide a solution
to the challenges of scaling up clean-
and renewable energy technologies.
There is a growing perception that
renewable energy technologies off er
an economic growth opportunity. In
a speech in 2010 for example, Chris
Huhne, the UK’s Energy and Climate
Change Secretary said the value of
the global low-carbon goods and envi-
ronmental services market is expected
to reach £4 trillion by the end of this
Parliament. It is growing at 4% per
year, faster than world’s GDP.
In many countries, an increas-
ing number of national, regional and
municipal bodies are exploring cluster
models which could stimulate economic
growth, provide a solution to the chal-
lenges of scaling up clean and renew-
able energy technologies, as well as
address the growing challenges of the
twenty-fi rst century resource crunch.
Challenges for renewable energy
In the renewable energy arena, dif-
ferent types of companies face varying
challenges. Take energy technology
companies, those creating and devel-
oping new technologies and/or new
processes in the laboratory. Or project development companies, which are
looking to deploy new energy technol-
ogies in order to generate power.
While these company types address
the same global markets, they face
very diff erent challenges and require
diff erent solutions. One of the key
challenges they share lies in raising
fi nance. Whether to fi nance the move
from laboratory to the trial stage, or to
fi nance project deployment.
There are many pitfalls and hurdles
for companies to overcome if they are
to achieve their full market potential.
Billions in investment are required to
fund growth, and most investors are
averse to risk. This means that the
risks associated with renewable energy
technology, project deployment, and
fi nancing must be minimised in order
to achieve the necessary growth for
scale.
Fundamentally, investment in either
‘technology’ or ‘renewable energy
projects’ remain two options among
many for global investment funds, and
key to encouraging such investment is
to change the economics for the better,
and eliminate risk for the investor. An
understanding of this has resulted in
an increase in supportive domestic and
regional policies, from the EU’s Emis-sions Trading Scheme, to renewable
energy quotas and national feed-in tariff s (FiTs) across Europe.
These have provided the frame-
work and impetus for investment to
date in clean energy projects and new
technologies. Clean energy invest-
ments have increased 300% globally
since 2004. Between 2008 and 2010
an average of US$32bn was invested
globally each quarter in the sector.
But there is a great deal further
to go. The investment required for
the full development of renewable
energy in the mainstream market is
immense, with hundreds of billions of
dollars required.
Ryan Law, managing director of
Geothermal Engineering and chair-
man of the Deep Geothermal Group
in the UK’s Renewable Energy Association believes that “if the
resource and the economics are right
the investment will follow.” But these
factors are not the only requirement
for success. In the UK, Cornwall’s
Wave Hub has been set up as a centre
to pilot a range of marine technologies
– yet the FiT in Scotland is twice that
of England. So the question remains,
what else helps a company to grow,
and what structures, scenarios and
support networks need to be put in
place to make companies thrive. As
Law points out, “the game changer
for renewable energy will be when it
About: Felicia Jackson is an editor and freelance journalist specialising in issues surrounding industry and environment, on topics ranging from technology, policy, investment and sustainability. Author of ‘Conquering Carbon’, she writes for a number of specialist business magazines on issues surrounding the transition to a low carbon economy.
THE NEED for accessible clean technologies
is accelerating, and Governments, investors
and industry continue to drive a tidal wave
of technological innovation.
Scaling clean energy innovationClean technology is one of the great global opportunities of the 21st century, but how is technology innovation being harnessed?
Cover story
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57May/June 2011 | Renewable Energy Focus
becomes commercially viable – where
do the companies go and why?”
The success of an investment (or
a company), is dependent on a broad
range of measures. The question is not
simply whether the technology works,
but also whether customers can be
found, whether skilled employees can
be found, and whether the right part-
ners can be found. With this in mind,
technology ecosystems which have
evolved organically can provide a model
for how to address the challenge.
Renewable utopia – the search for ‘Silicon Valley’
Silicon Valley, and its concentration
of high-tech companies, is the model
to which many hubs aspire to but
which has proved hard to replicate. It
combines:
• R&D and training of large campus
universities;
• Large scale venture capital funds;
• Large scale corporates focused on
technology; and
• An entrepreneurial culture focused
on scalable growth.
Germany’s Solar Valley has perhaps
come closest in the renewable energy
sector. The area encompasses the for-
mer communist East German states of
Saxony, Thuringia and Saxony-Anhalt.
In 2009 Solar Valley accounted for 43%
of total German photovoltaic revenue,
65% of total German photovoltaic cell
production, and 14.5% of global solar
cell production. It is also home to
three of the world’s 10 largest solar cell
companies; Q-cells, Schott Solar and
SolarWorld.
The area’s organic growth in solar
was due to the regions existing exper-
tise in the chemical and semiconduc-
tor industries, both of which are key
in the development of Photovoltaics.
There are more than 60 research
groups with a base in the region, and
it is this ability to concentrate exper-
tise, supply chains and co-operation
within an industry that new cleantech
clusters and energy hubs are trying to
emulate.
But there is no such thing as a ‘typi-
cal’ clean energy hub or cluster. Some
grow up organically around existing
industries – such as PV around semi-
conductors, or EVs around automotive.
Some are created by the public sector,
and they can operate on very diff er-
ent scales. They can be as macro as
attempting to create an entirely zero-
carbon community, such as in Malmo
in Sweden, or as small scale as a local
energy park, as created by Evoco Energy in Yorkshire.
Ryan Gill, managing director at
Evoco points out that “combining our
experience, knowledge and passion for
renewable energy and clean technology,
with that of other renewable pioneers,
not only supports our ongoing cam-
paign to raise awareness of alternative
There are more than 60 research groups with a base in [Germany’s
Solar Valley], and it is this ability to concentrate expertise, supply
chains and co-operation within an industry that the cleantech clusters and
energy hubs are trying to emulate
Helping new products on their journey to commercial success: ISIS Innovation (Oxford, UK) acts as a technology incubator and creates new companies based upon University of Oxford research. The solid state thin fi lm solar cells pictured are being developed by ISIS spinout Oxford PV. They are made from cheap, non-toxic materials which can be printed onto glass or walls. Oxford PV says it can now create manufacturable solid-state dye sensitised solar cells.
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58 May/June 2011 | Renewable Energy Focus
Cover story
Isis Innovation - incubatorOxford Innovation - incubator
Imperial Innovations- incubatorNYC ACRE - incubator
Austin Technology - incubator
ACTION Network - incubator
New England Clean Energy Council - cleantech cluster
NREL - energy hub
Environmental Business Cluster - cleantech cluster
MaRS - cleantech cluster
CENER - energy hub
NAREC – energy hub:Narec is dedicated to advancing the development, demonstration, deployment and grid integration of renewable energy and low carbon generation technologies. Narec has begun constructing a 100m off shore wind turbine blade facility, extending its current capability to test the largest of the new generation of off shore blades.
Quebec City - cleantech cluster: An eco-city - Cité Verte - is currently being developed within Québec City. Financed by insurance group SSQ, Cité Verte has launched a development centre using local Government money for seed and business development plans.
Lyon - energy hub:Only Lyon, the region’s development marketing group, targets a range of technology companies, one of their strongest growth being cleantech. The city has one of Europe’s largest city centre urban planning projects, Confl uence. This will see the regeneration of old SNCF land, where 80% of the energy will be renewable.
Innovation around the world: A small selection of the Energy Incubators, Hubs and Clusters that exist today to drive the scale up of energy innovation.
NAREC (Energy Hub)
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59May/June 2011 | Renewable Energy Focus
NUPHARO PARK - incubator
Stockholms’ Miljoteknikcenter - cleantech cluster
Finnish Cleantech Cluster - cleantech cluster
EcoWorld Styria - cleantech cluster
GrandLyon - cleantech cluster
Fraunhofer ISE - energy hub and research centre
Singapore - energy hub:Singapore is being positioned as a ‘living laboratory’
where companies can co-create, test-bed and
commercialise future-oriented urban solutions through
Singapore’s large-scale infrastructure platforms.
Norway’s REC has invested US$2.6bn to develop one
of the world’s largest integrated solar manufacturing
facilities; Bosch has established a solar R&D centre;
Vestas a global wind energy R&D centre and Asia-Pacifi c
headquarters in the country. DNV has established a
new clean technology centre to off er technology
qualifi cation, certifi cation and risk assessment services
in clean energy, green shipping, sustainable buildings
and urban solutions. In tidal power, Singapore is home to
Atlantis Resources Corporation’s global
headquarters and innovation hub.
Masdar - cleantech cluster and energy hub: MASDAR’s overall initiative encompasses Masdar City; R&D through the Masdar Institute of Science & Technology (a joint venture with MIT); capital investment through the near half billion dollar funds of Masdar Capital; energy project development through
Masdar Power (focusing on solar and wind and including a joint venture with DONG and E.ON in the
London Array); and the exploration of CCS and CDM through Masdar Carbon.
RISO - energy hub
Copenhagen Cleantech Cluster - cleantech cluster
Bremerhaven - energy hub
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60 May/June 2011 | Renewable Energy Focus
energy solutions both locally and
nationally, but strengthens the overall
competitiveness of the renewables and
the clean tech industry.”
There are many diff erent models
that have been used to accelerate the
growth of renewable energy and other
clean technologies but perhaps the best
known are incubators, cleantech clus-ters and clean energy hubs. While the
line between them can be blurred, they
are in eff ect attempting to do the same
thing, which is bring policies, technol-
ogy, people, fi nance and markets into
alignment in order to accelerate the
development of clean power.
The incubator modelPerhaps the best known is the
incubator model. New technologies
come from those performing R&D and
research. These are likely to be in the
R&D labs of the world’s multinationals,
dedicated R&D companies such as the
AIM-listed IP Group, state-supported
research laboratories such as NREL in
the U.S. or the Fraunhofer Institutes in Germany and, of course, universities.
Universities have experience in
transferring technologies to the cor-
porate market, where they take ideas
from the lab and ready them for invest-
ment, as Imperial Innovations and Isis Innovations in the UK have shown.
The public sector also supports the
incubator approach. In the UK, from
April 2009 to March 2010 for example,
the UK’s Carbon Trust incubated
24 companies, and 10 of the portfolio
went on to leverage private fi nance, a
great success in a very diffi cult funding
climate.
Incubators vary widely in the way
they deliver services, how they are
organised and the types of clients they
serve. Typically, an incubator will pro-
vide management guidance, technical
assistance and consulting tailored to
young companies. They will also pro-
vide access to rental space and fl exible
leases; shared basic business service
and equipment; technology support
services; and assistance in obtaining
the fi nancing necessary for company
growth.
In return, they may take an equity
stake in the start-up company, charge
a fi xed fee for services, as well as
charge rent for offi ce space. While the
model has proved successful, there
is a great deal more to a successful
industrial ecosystem than the incuba-
tion of ideas.
Cleantech clustersFor this reason clusters – or
groups of interconnected companies and related institutions in a particu-lar fi eld - have become a focal point of
many new policy initiatives in recent
While the line between incubators, cleantech clusters and clean
energy hubs can be blurred, they are all...bringing policies, technology, people, fi nance and markets into
alignment in order to accelerate the development of clean power
Narec is the national centre
for the UK dedicated to advancing
the development, demonstration,
deployment and grid integration of
renewable energy and low carbon
generation technologies. It was set up
in 2003/2004 by the Regional Devel-
opment Agency, One North East, as
a centre of excellence for the develop-
ment of New and Renewable Energy
Technologies, and received around
£30 million in funding for new facili-
ties and programmes to stimulate
business growth in the sector.
Established on a former shipbuild-
ing site on the River Blyth, Narec
used additional funding to progress
its plans to deliver a 100MW grid
connected off shore demonstra-
tion platform, with the capacity to
accommodate up to 20 large-scale
prototypes at an off shore wind test
site off Blyth, Northumberland.
Narec has also begun constructing
a 100m off shore wind turbine blade
facility, extending its current capabil-
ity to test the largest off shore blades.
The new blade and drive training
testing facilities will be operational
in early 2012 and the installation of
foundations for the fi rst prototypes
on the off shore demonstration could
be installed in Spring 2013 with tur-
bines to follow from 2014.
The idea behind Narec is for com-
panies to cluster their R&D teams
around our full scale testing and
demonstration facilities. It’s facili-
ties provide a cost eff ective solution to
help mitigate the risks of deployment
(usually in the harsh off shore environ-
ment) and are attracting companies
to locate into the UK.
It provides incubation space,
networks and forums, delivers R&D
programmes and works with com-
panies on a one to one or consortium
basis on new market and product
development / certifi cation / invest-
ment programmes.
Case study: Narec advances renewable technology in the UK
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61May/June 2011 | Renewable Energy Focus
years, with the goal of creating com-
petitive and dynamic knowledge-based
economies. The nature and impact of
such eff orts vary enormously, making
it diffi cult for decision makers to fi nd
the right combination of tools that
most eff ectively support clusters.
Shawn Lesser, of the Global Clean-tech Cluster Association, defi nes
a cleantech cluster as an economic
development organisation aimed at
growing jobs in a specifi c geographic
region, with the intention of promot-
ing innovation and investment. There
are challenges in creating eff ective
clusters. He believes that there are a
number of requirements for eff ective
growth of a cluster. These include a
thriving technology base; abundant
entrepreneurial and management
talent; access to capital; and proactive
environmental public policy.
Of course, the development of a
cleantech cluster can provide support
and facilitate growth for a technol-
ogy company, but what role can it
play in the deployment of renewable
energy when it has moved beyond the
lab, where there is a requirement for
extensive and expensive fi eld testing
and trial installations before being
deployed at scale?
Energy hubsFor project development compa-
nies the risk of using what investors
view as relatively untried technology
remains. The problem is that for clean
energy technologies to really have
impact, they must fi rst be proven at
commercial scale. One option is to
go the route of shared resource, and
access to high-cost energy infrastruc-
ture, such as a grid connection.
According to Steve Abbot at Narec,
an energy hub based in the North East
of the UK, the concept was for renew-
able energy companies to cluster their
R&D teams around Narec’s full scale
testing and demonstration facilities.
He says, “our facilities provide a cost
eff ective solution to help mitigate the
risks of deployment (usually in the
harsh off shore environment) and are
attracting companies to locate into the
UK.”
According to Steve McNab, Part-
ner, Environment & Climate Change,
Simmons & Simmons, energy parks
or hubs are about multiple renewable
energy technology companies taking
advantage of shared, expensive infra-
structure. Alternatively there can
be a clustering of technology around
specifi c large energy-intensive opera-
tions – from manufacturing to urban
developments.
At a regional or a municipal level,
a clean energy hub can provide
an opportunity to trial and test a
range of technologies at a pilot level,
learning from deployment. This is
increasingly the role that cities and
municipalities are playing in encour-
aging the situation of cleantech com-
panies and clean energy technologies
in areas of regeneration.
In the U.S. the Department of
Energy has announced plans for the
launch of three Energy Innovation Hubs as a critical part of its US$29.5 billion
budget. US Secretary of Energy Steven
Chu said it was part of an Adminis-
tration-wide plan to “win the future
by out-innovating, out-educating and
out-building the rest of the world.
“The United States faces a choice
today: will we lead in innovation and
out-compete the rest of the world
or will we fall behind? To lead the
world in clean energy, we must act
now. We can’t aff ord not to. Through
our investments, we are laying the
groundwork for the nation’s future
prosperity and security,” said Secre-
tary Chu.
One thing that all these approaches
share is the need to gain the engage-
ment of all the stakeholders. Nina
Harjula of the Finnish Cleantech Cluster, believes that “most critical
is to engage all actors in the region.
These range from city planning,
city strategy, local-to-Government
policies. It’s important to encourage
development and local targets.”
Nicholas Sonntagg, executive vice
president at Westport Innovations adds that a key part of his com-
pany’s decision to set up an offi ce
in Lyon was not just that there was
an EV ecosystem in the region, but
that it was clear that national and
local Governments, as well as uni-
versities (which provide training
and R&D) were all putting in time
and resources: “Clusters lead to a
1+1=3 outcome,” he says, “by sharing
resources and access to capital, we
have shared outcomes.”
Whatever approach is taken, the
key is to help clean energy compa-
nies overcome barriers to success.
Whether that assistance includes
incubation space, early stage fi nance,
R&D support, supporting co-oper-
ation within sectors or within the
supply chain, in the end the success-
ful deployment of renewable energy
on a global scale requires minimising
investment and company risk wher-
ever possible. Only by doing this can
we galvanise the billions in investment
required for the low carbon transition.
Clearly, that means that we need
to see stable long-term policy frame-
works that support the economics of
renewable energy projects. Yet given
the constraints in public fi nance, policy
support cannot always be fi scal. We
must therefore fi nd whatever leverage
we need. Bringing together the neces-
sary fi nance, skills, expertise, corpora-
tions and policy makers is critical in
creating frameworks for accelerating
renewable power. Working in coopera-
tion could transform the sector and
clusters clearly have a signifi cant role
to play – success lies in ensuring that
a total ecosystem is in place to help
companies to achieve scalable, long
term growth.
“Clusters lead to a 1+1=3 outcome...by sharing resources and access to capital, we have shared outcomes.”Nicholas Sonntagg, Westport Innovations
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