The best place in the world for energy network innovation?
Five reasons why the UK is one of the best places globally for innovation in the energy sector
By David Richardson, Head of Innovation, Ofgem Strategic Innovation Fund, Innovate UK
As someone who wants to make a difference, I consider myself very fortunate to be helping to foster energy innovation in a place like the UK, at such a crucial time.
Some important advantages are increasingly making this one of the most attractive places for businesses to develop and grow energy sector innovations. In my view, these are five of the most prominent reasons why this is the place to be turning ideas into reality.
1. UK emissions have fallen faster than any other G20 nation
UK greenhouse gas emissions are now half of the levels in 1990[1]. Decarbonisation of our energy system has been at the forefront of this, driven by the collective work of energy networks, generators, technology developers, and Government.
Good news, but what’s the relevance of this in future? It means we have organisations who are experienced at shifting operations to new technologies, but also that we have significant periods where a large proportion of our energy consumption is met by low-carbon and renewable sources.
In fact some areas, like the Orkney Islands, now generate more electricity from intermittent renewables than the local population consumes across the entire year. These are ideal test sites for technologies which maximise efficient use of these low-cost, low-carbon sources of energy.
2. We have a wealth of diverse energy markets to enable technology commercialisation
Rather than take my word for it, this is what Jay Zoellner, CEO of Kiwi Power had to say in the Energy Unplugged podcast, on his decision to move to work in the UK developing novel energy services…
“The UK has arguably one of the most advanced electrical power systems in the world and probably the largest variability in programmes; in ancillary services, real time trading, balancing mechanisms. All of that is up and operating here.”
What’s more, Government departments and regulators are actively looking at how alternative energy markets can be developed which will improve access to new innovations, whilst protecting the interests of energy users. See, for example, the proposed BEIS Alternative Energy Markets Programme, and Electricity North West’s BiTrader project which has just been awarded funding by Ofgem.
3. Our regulatory environment proactively encourages innovation
Overseas, our energy regulator, Ofgem, is widely viewed as one of the world’s most progressive. It has led in implementing frameworks such as the Innovation Link, that supports innovators with guidance, interpretation of regulation, and where necessary the opportunity to develop regulatory ‘sandboxes’ or derogations to allow trialling of new technologies.
And now Ofgem has established the world’s largest energy network innovation funding mechanism, to encourage the regulated gas and electricity energy networks in Great Britain, with other innovative businesses, to develop and test new approaches, products and services. This is the Strategic Innovation Fund, delivered in partnership with Innovate UK.
The Fund will support the most ambitious ideas, which have the potential to shape the future of the gas and electricity networks and to achieve commercial success nationally and internationally.
4. We have strong sectors to support energy transformation
At Innovate UK, through long experience of delivering innovation programmes, we’ve learnt that successful development and scaling-up of technologies isn’t driven from the energy sector alone. Business need access to high-value skills, capability, finance and investment so they can scale up and grow.
The UK has thriving financial services and tech sectors. In 2020 £15 billion was invested in UK tech companies; the third highest amount in the world, after only the USA and China.
The British Business Bank, and more recently the UK Infrastructure Bank, are public institutions with a mandate to support business and economic growth, providing finance that helps to bridge the gap between start-ups and large-scale private financing of infrastructure projects.
5. The population favours accelerating the fight against climate change.
Polls and studies consistently show that there is strong public support for net-zero policies. The UK is leading the way in engaging everyday people in the discussion about how to achieve net zero in a way that works for them, for instance through establishing a citizens’ assembly.
As a result, there is broad cross-party political support for policies that support the move to net zero. With the Climate Change Act in 2008, this was the first country to establish long-term, legally binding targets to cut carbon emissions — and in 2019 the UK was the first major economy to pass net zero legislation.
In October the Government published the Net Zero Research and Innovation framework, outlining priority areas for net zero innovation in the UK. UKRI is working with Government departments, regulators, and industry on how to coordinate funding and activities in pursuit of these opportunities.
A long but rewarding journey ahead
We must acknowledge that we still have a long way to go on our journey to full decarbonisation of our energy system, and many of the most difficult challenges lie ahead.
But with these powerful advantages paving the way, the UK is well-placed to be at the forefront of developing, testing, and scaling the innovative energy technologies that the world needs.
The first competitions for new energy network ideas under the Ofgem Strategic Innovation Fund closed in November; the winning projects will be announced in February. Through further challenge competitions, the SIF is expected to invest up to £450m in energy network innovation over the next five years.
To innovators in the UK and across the world, this is an open invitation to bring your best ideas for energy network innovation forward and explore the opportunities to develop them in the UK.
To overseas utilities and public bodies involved in energy and innovation, we welcome the opportunity to learn from each other, collaborate, and accelerate progress towards net zero energy systems globally.
Find out more:
More about on the Ofgem SIF, and sign up for future updates about the Ofgem SIF
David Richardson is Head of Innovation for the Ofgem Strategic Innovation Fund at Innovate UK. His work focuses on the development of innovations that will unlock net zero energy systems in the UK and internationally.
He has particular interests in taking whole system approaches to solving complex challenges, harnessing the power of data and digitalisation for the energy sector, and the role of energy utilities in creating a cleaner, fairer and more resilient future for people and society.
[1] https://www.carbonbrief.org/analysis-uk-is-now-halfway-to-meeting-its-net-zero-emissions-target
