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

REF12_3p56_61.indd 56 5/24/2011 5:45:01 PM

Cover story

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.

REF12_3p56_61.indd 57 5/24/2011 5:45:03 PM

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.

e: Felicia.Jackson@REF.contributor.com

“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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