South West companies are leading the global push to develop commercially viable energy from wave and tidal power.
IN ATTENDANCE
Rob Rawlinson-Smith leader of marine renewables group,
Garrad Hassan
Simon Tucker group managing director, Software Radio
Technology
Jonny Boston energy manager, South West Regional Development
Agency
Jeremy Thake engineering director, Tidal Generation
Johnny Gowdy
head of business support, Regen SW
Richard Parkinson managing director,
Mojo Maritime
John Houghton partner, Bond Pearce
Stephen Machin head of
power and utilities, KPMG
Simon Taylor ocean group senior engineer, IT
Power
Ken Street business development director, Orecon
Christian
Annesley editor, Insider
What is the attraction of the South West for marine technologies businesses?
Rob Rawlinson-Smith Garrad Hassan moved to Bristol in the late 1980s. At the time we expected wind farms to take off commercially in the South West. In practice that didn’t happen, but these days being here to serve the marine technologies sector is very convenient, with big projects such as Wave Hub coming through. Bristol is also good for attracting people to come and work as they want to move here for lifestyle reasons.
Simon Taylor IT Power’s headquarters is in Hampshire but we opened in Bristol four or five years ago.
It is a good location to attract graduates with the right skills. And we have strong relations with the universities of Bristol and Southampton.
Are relations across the business community and with the universities strong enough here?
Rawlinson-Smith It is only recently that academia has recognised the importance of renewable energy and the significance of the opportunity. I think there is still a certain resistance in the universities.
They don’t necessarily recognise the engineering challenges in technology such as windmills and in wave and tidal devices, where cost-sensitivity is so fundamental.
John Houghton The professional support for the marine technology sector has evolved in Bristol and beyond. Among professionals, the South West has a strong association with this sector.
Johnny Gowdy The universities are starting to take more notice and specific postgraduate courses are starting to appear.
Richard Parkinson So far you can’t find people fresh out of universities with the right skills. We tend to find people from the oil and gas sector.
Stephen Machin It is only in the past ten years that the marine technologies sector has become a serious force.
Simon Tucker But universities have an important role to play. They offer a context where individuals can undertake exploratory research without any commercial end. People can play around with ideas inside a university and see where it takes them. That is something to foster.
Jeremy Thake For sure. This industry is only just starting. There aren’t any commercial machines out there, only prototypes. But we need engineers who are willing to get involved, rather than university-trained renewable energy specialists.
Ken Street Financial services is now far less attractive, given the global financial crisis, and that might present an opportunity for the marine technologies sector to pull in more talent and address the Europe-wide shortage of engineers. Marine technology companies are mostly start-ups now. Once we grow we will need to see the talent and skills coming through from the universities.
Is central government doing enough to support marine technology businesses?
Street Not enough, no. Other countries, such as Portugal, are backing local companies in the sector with a feed-in tariff to make producing energy viable.
Machin The Labour Party has taken a small lead. But you need to do more than encourage. The government should be providing practical and financial assistance to keep up with activities elsewhere.
Street Where money is available from government, such as the Marine Renewables Deployment Fund, there is an expectation that in return you should give up your intellectual property. That is problematic.
Jonny Boston The Marine Renewables Deployment Fund is a £50m fund that can provide substantial grants and deliver significant uplift in income. There are issues, though. The first is the running time you have to demonstrate to access the money. The second is that the size of the fund is not that big in an investment-intensive sector.
What about venture capital money or other sources?
Street It is not a good market for venture capital. In February 2008 we got £12m, which was the largest sum that had come from that source into the industry. There is nothing around like that now because of the economic climate.
Tucker What about government helping to mobilise private individuals to make investments, say through tax breaks?
Machin The problem with government schemes is that they tend to be either so tightly regulated that nothing ever happens, or so loosely regulated that the money finds its way elsewhere.
So what is the likeliest source of substantial, long-term investment?
Street Companies like Orecon need strong industrial partners, or a power company prepared to bankroll work for the long term. Some companies have invested like this, but they are more wary about these projects. They want more certainty that they will see a return on their investment.
And what are the commercial realities for a project such as Wave Hub?
Street We are putting a device into Wave Hub. But the wave energy is less than half what it is in Spain and Portugal, and there is a substantial berth fee. It means we are unlikely to see any revenue out of the project. But the point of Wave Hub is that it is a flagship site in the UK for wave renewables and companies will benefit from having their devices in the water.
Rawlinson-Smith The main point of Wave Hub is to demonstrate that the devices work. The resource is not particularly good. But it is a demonstration site that reduces some of the capital costs of the project. It is a place for learning, rather than a commercial project. The objective is to find out whether the devices that get plugged in can: a) stay in the same place; b) survive; and c) produce some electricity. It should also establish a critical mass of expertise in one place, which is often what makes projects happen and succeed.
Parkinson Wave Hub is a good concept but perhaps a bit premature in that many of the devices aren’t effective enough yet. We have a 20-megawatt cable planned for devices that may only be producing a few kilowatts.
Boston The concept for Wave Hub came from industry and there was agreement that a proving ground for commercial prototypes was needed in the UK. At the RDA we want it to help generate a pool of expertise in one place. And it is a project for the long term.
Tucker Conceptually, this kind of investment is a proven model, if you look at similar types of investments to encourage clustering of expertise across the world. But surely if industry got involved and were shamed or pushed into investing in renewables, progress could happen more quickly.
Houghton The problem is the huge gap between this testing phase and the move into mainstream commercial activity. There is potentially a big gap where financial support will be needed.
What more needs to be done by government? Is there still a big opportunity to be grasped?
Rawlinson-Smith Somebody in government has to take ministerial responsibility and drive this agenda. It is of national importance and the targets are national. The regions are doing their best, but central government has to get involved.
Tucker There is a huge opportunity for the region and the UK. Countries such as China and Japan are still desperate for energy. We could lead the global industry in this market.
Thake Large-scale manufacture of wave devices has not yet happened. There is an opportunity to get there first.
Taylor There are the skills in the UK to push this, partly because of our expertise in oil and gas.
Gowdy We have the expertise, we have the offshore skills, we have the consultancy base and we have the support of the professionals. There is every reason to be optimistic.
Parkinson Wind is still being neglected. There should still be a big focus there, and marine and tidal will follow.
Houghton The government can learn from what is happening in Scotland, where a strategic environmental assessment (SEA) for marine technology has been undertaken off the north west coast of the country. The South West is the next most obvious marine resource, but no SEA is planned here.
Boston The South West RDA has been lobbying the Department for Energy and Climate Change quite hard on that. The lack of an SEA in the South West is holding the industry back.
What about the Severn Barrage? How important a project is it to the marine technologies sector in the South West?
Boston The Severn is a huge tidal resource that cannot be ignored. At the South West RDA we support a major cross-government study. This is potentially a significant international project. But there is a big question mark about whether a big barrage can go ahead because of the European Habitats Directive.
Tucker One positive is that it plants in people’s minds the notion that water can be used to generate electricity without building a dam.
Street The danger is that it will divert attention and funds so other projects won’t get as much of a look-in.
Are there opportunities for wave and tidal developers?
Boston There is a fund to support companies to develop alternative ideas.
Parkinson But the technology is different to what we are talking about. And whatever decision is taken, if it does go ahead it would be a major civil engineering project.
Is it fair to say there are grounds for optimism in the marine technologies sector?
Street We have the facilities. We need the political will to make it happen.
Tucker You need to foster research in the universities. And you need industry, with their money and power, to deploy this in the real world. There is a world-class industry in the making in the South West.
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