Energy Generation Supply Innovation in Energy Derek Allen Wave Tidal Stream Event, Manchester March 29th 2010

2. By 2020 Government estimates over �100bn will be invested from both private and public sector sources in the renewable� energy sector alone in tackling CO2 reduction. This will trigger significant employment in the renewable sector (where we are targeting 15% of our energy supply by 2020) and in the Carbon Capture and Storage sectors (we we will be building up to 4 full scale demonstrators in the next decade By 2020 Government estimates over �100bn will be invested from both private and public sector sources in the renewable� energy sector alone in tackling CO2 reduction. This will trigger significant employment in the renewable sector (where we are targeting 15% of our energy supply by 2020) and in the Carbon Capture and Storage sectors (we we will be building up to 4 full scale demonstrators in the next decade

3. Decarbonising our society The major challenge facing Energy Generation and Supply is how we decarbonise our supply Electricity generation is the major CO2 emitter and is responsible for around 30% of the total CO2 emissions in the UK. This challenge will create significant opportunities for innovative solutions in numerous low Carbon technologies including technologies such as offshore wind, marine, CCSThe major challenge facing Energy Generation and Supply is how we decarbonise our supply Electricity generation is the major CO2 emitter and is responsible for around 30% of the total CO2 emissions in the UK. This challenge will create significant opportunities for innovative solutions in numerous low Carbon technologies including technologies such as offshore wind, marine, CCS

4. >20GW of new generation capacity by 2020 15% of energy from renewable sources by 2020 (>30% of electricity supply) 34%** reduction in emissions by 2020 80%** reduction in emissions by 2050 ����.driving a new low carbon market The Government have taken this challenge seriously and responded by putting specific targets in place. Some of which are legally binding They have published strategies around these figures to show how they will be achieved including the ��UK low carbon transition plan�� and the ��Renewable Energy Strategy�� According to this strategy, achieving our renewable energy targets could provide �100 billion worth of investment opportunities and up to half a million jobs in the renewable energy sector by 2020. To achieve this transformation we will need for example to produce enough energy from renewable sources by 2020 to supply the equivalent of nearly all 26 million homes in the UK with their current electricity needs, and 4 million homes with their current heating needs. The Government have taken this challenge seriously and responded by putting specific targets in place. Some of which are legally binding They have published strategies around these figures to show how they will be achieved including the ��UK low carbon transition plan�� and the ��Renewable Energy Strategy�� According to this strategy, achieving our renewable energy targets could provide �100 billion worth of investment opportunities and up to half a million jobs in the renewable energy sector by 2020. To achieve this transformation we will need for example to produce enough energy from renewable sources by 2020 to supply the equivalent of nearly all 26 million homes in the UK with their current electricity needs, and 4 million homes with their current heating needs.

5. Microgeneration Solar Oil & Gas CAT Fuel cells Hydrogen Grid Bioenergy Wind Wave & tidal Since inheriting the technology programme in 2007, The TSB has focussed its support where its investment criteria are satisfied, and the UK has the capability to develop and exploit the technology. Our focus at the moment is therefore on Carbon Abatement (including CCS), Fuel cells and hydrogen, Marine renewables and Maximising Oil & Gas recovery. We do not have the resource to cover all of the technology areas and therefore we work closely with other funding bodies such as the Research Councils, Carbon Trust , ETI and RDAs to ensure we do not duplicate effort or investment. A formal body the Low Carbon Innovation Group has been set up specifically to deal with this coordination. As an example, we believe that innovation in offshore wind is best delivered through our contribution to the ETI and we need to review the UK capabilities in areas such as bioenergy and intelligent grid in order to understand the opportunities for us to add value� Technology challenges and opportunities for microgeneration lie in their integration into buildings and will be covered by our LIB IP Since inheriting the technology programme in 2007, The TSB has focussed its support where its investment criteria are satisfied, and the UK has the capability to develop and exploit the technology. Our focus at the moment is therefore on Carbon Abatement (including CCS), Fuel cells and hydrogen, Marine renewables and Maximising Oil & Gas recovery. We do not have the resource to cover all of the technology areas and therefore we work closely with other funding bodies such as the Research Councils, Carbon Trust , ETI and RDAs to ensure we do not duplicate effort or investment. A formal body the Low Carbon Innovation Group has been set up specifically to deal with this coordination. As an example, we believe that innovation in offshore wind is best delivered through our contribution to the ETI and we need to review the UK capabilities in areas such as bioenergy and intelligent grid in order to understand the opportunities for us to add value� Technology challenges and opportunities for microgeneration lie in their integration into buildings and will be covered by our LIB IP

6. This shows our delivery programme in 2009 and emphasises how we have created additionality by working with other funding agencies in areas such as CATs and Fuel Cells, encouraging new industrial R&D commitments to create a programme of almost �100m in 2009 In addition to direct investment; We also want to understand the UK potential in emerging areas. In such cases we have commissioned reviews of the UK capabilities and business opportunities, such as those we have recently commisiioned on nuclear R&D and hydrogen. Also, to inform our strategy and engage with the community, in 2009 we launched the EGS knowledge transfer network This shows our delivery programme in 2009 and emphasises how we have created additionality by working with other funding agencies in areas such as CATs and Fuel Cells, encouraging new industrial R&D commitments to create a programme of almost �100m in 2009 In addition to direct investment; We also want to understand the UK potential in emerging areas. In such cases we have commissioned reviews of the UK capabilities and business opportunities, such as those we have recently commisiioned on nuclear R&D and hydrogen. Also, to inform our strategy and engage with the community, in 2009 we launched the EGS knowledge transfer network

7. We already have a number of examples where our investments which started in the last 2-3 years are coming to fruition and starting to deliver results that will soon lead to commercialisation. Many of these are UK or European �firsts� 2nd Bullet We have asked to be delivery partner for the public sectors contribution to MHI�s recently proposed investment in offshore wind R&D and supply chain development in the UK 3rd bullet This is an example of collaboration along the supply chain. With the help of a TSB grant, the fuel cell developer Ceres Power worked with the utility British Gas to use fuel cell technology for domestic boilers. With this solution, Each UK household could reduce CO2 emissions by up to 2.5 tonnes per year...and save 25% of current energy use. Last bullet We have also made much progress in working closely and developing joint programmes with other agencies eg DECC and the RDAs, this enabled to do things differently and do new things: For example in our Carbon abatement competition in 2009: we worked with DECC and the Northern Way to deliver feasibility studies, CR&D projects and pilot demonstration projects- And on fuel cells with DECC to deliver a Fuel Cells and Hydrogen demo enabled a critical mass demonstration programme. We already have a number of examples where our investments which started in the last 2-3 years are coming to fruition and starting to deliver results that will soon lead to commercialisation. Many of these are UK or European �firsts� 2nd Bullet We have asked to be delivery partner for the public sectors contribution to MHI�s recently proposed investment in offshore wind R&D and supply chain development in the UK 3rd bullet This is an example of collaboration along the supply chain. With the help of a TSB grant, the fuel cell developer Ceres Power worked with the utility British Gas to use fuel cell technology for domestic boilers. With this solution, Each UK household could reduce CO2 emissions by up to 2.5 tonnes per year...and save 25% of current energy use. Last bullet We have also made much progress in working closely and developing joint programmes with other agencies eg DECC and the RDAs, this enabled to do things differently and do new things: For example in our Carbon abatement competition in 2009: we worked with DECC and the Northern Way to deliver feasibility studies, CR&D projects and pilot demonstration projects- And on fuel cells with DECC to deliver a Fuel Cells and Hydrogen demo enabled a critical mass demonstration programme.

8. Energy Generation and Supply is a Key part of TSBs support of innovation in driving a low carbon economy We will focus on a long term programme of delivery with continuity and visibility to overcome the �stop-start� R&D ethos that has been a problem in the past. The next decade is crucial for the UK Energy Market and there will never be a better time to take advantage of this opportunity. We will therefore focus on delivering business benefit to the UK through innovation against our key criteria for investment We will do this by working closely with other funders in the area and ensure we all �learn by doing�; and learn lessons by gathering feedback from historic and new programmes going forward Energy Generation and Supply is a Key part of TSBs support of innovation in driving a low carbon economy We will focus on a long term programme of delivery with continuity and visibility to overcome the �stop-start� R&D ethos that has been a problem in the past. The next decade is crucial for the UK Energy Market and there will never be a better time to take advantage of this opportunity. We will therefore focus on delivering business benefit to the UK through innovation against our key criteria for investment We will do this by working closely with other funders in the area and ensure we all �learn by doing�; and learn lessons by gathering feedback from historic and new programmes going forward

9. To keep us on the straight and narrow, the activities of EGS will be overseen by an Industrial Steering Group of senior business people engaged in the energy sector, whose role will be to advise and challenge the EGS programme going forward To keep us on the straight and narrow, the activities of EGS will be overseen by an Industrial Steering Group of senior business people engaged in the energy sector, whose role will be to advise and challenge the EGS programme going forward

10. In my presentation, I have alluded to a numbers of major activities we have or will be undertaking in the Energy sector. I am therefore delighted to formally make 3 major announcements around these activities at today�s KTN eventIn my presentation, I have alluded to a numbers of major activities we have or will be undertaking in the Energy sector. I am therefore delighted to formally make 3 major announcements around these activities at today�s KTN event

11. Wave & Tidal Competitions 2010 And finally, last week we launched our wave and tidal competition which will be in 2 phases. The first phase for �9m has just opened and is a joint competition with SWRDA looking at improving the performance and reducing cost of existing marine devices with a small allocation of funding to novel concept devices. The second phase will open in September and will support getting important performance data from devices that are already in the water. In order that we can gain knowledge, feedback and learn lessons from operating in these aggressive environmentsAnd finally, last week we launched our wave and tidal competition which will be in 2 phases. The first phase for �9m has just opened and is a joint competition with SWRDA looking at improving the performance and reducing cost of existing marine devices with a small allocation of funding to novel concept devices. The second phase will open in September and will support getting important performance data from devices that are already in the water. In order that we can gain knowledge, feedback and learn lessons from operating in these aggressive environments

12. Contents What we would like to achieve Scope Additional information required

13. How will we do it? As an example. We see marine as a key area for investment where we can add value and work with other agencies such as the Carbon Trust, ETI and DECC to deliver technologies along the innovation chain towards commercialisation and contributing to the medium and long term CO2 reduction targets It is a programme that will help place the UK in a world leading position in the marine renewables technologies, embracing device developers, its supply chain and other offshore sectors such as oil & gas and offshore windHow will we do it? As an example. We see marine as a key area for investment where we can add value and work with other agencies such as the Carbon Trust, ETI and DECC to deliver technologies along the innovation chain towards commercialisation and contributing to the medium and long term CO2 reduction targets It is a programme that will help place the UK in a world leading position in the marine renewables technologies, embracing device developers, its supply chain and other offshore sectors such as oil & gas and offshore wind

14. Context

15. What we would like to achieve Reducing costs and improving performance Move forward to realise business opportunities Build collaboration along the supply chain Future needs

16. March 2010: Scope: up to �9m Strand 1: Existing devices Full scale Second generation � scale or larger Strand 2: Novel concepts � up to �1m (in total) Initial desk based evaluation Long term commercial prospect Budget balance determined by quality

17. Existing devices: additional information  � To enable consistent assessment, applicants must use the headings: Quantified expected contribution of this project to the UK renewable energy targets Evidence of expected energy cost reduction compared to existing solution Summary of methodology used and references For cost of energy estimate applicants may use own models or reputable publicly available models such as the Carbon Trust�s Marine Energy Challenge methodology. Evidence of expected improved performance compared to existing solution

18. To enable consistent assessment, applicants must use the headings as per Strand 1, plus: Initial desk-based study and validation evidence Evidence of initial desk-based study Results of independent validation which as a minimum must address: Is this truly a novel concept compared to existing devices? Is the methodology used to undertake the initial desk-based assessment sound? Does the desk-based assessment contain sufficient quantified information to enable assessors to make an independent judgement as to its accuracy? Summary of methodology used for validation and names of individuals and or organisations that carried out the independent valuation Novel concept devices: additional information 

19. Novel concept devices: additional information  Organisations able to carry out an independent validation might be consultancy, Government sponsored test facilities etc. Trade Associations might be able to provide a list of these organisations. Costs incurred for independent validation undertaken between opening of this competition and submission date can be considered eligible costs and included in the costing of the project. For successful projects, TSB will contribute up to 50% of these costing, up to a maximum of �2.5k.

20. The Energy Generation and Supply KTN can help organisations form new links, across sectors and disciplines Project partners identification service

21. I hope this gives you a feel for the activities we are carrying out but also the commitment TSB has in positioning UK�s Energy Generation & Supply business to take advantage of both the national & global low carbon market opportunities. Please engage with us either directly or through the KTN Thank youI hope this gives you a feel for the activities we are carrying out but also the commitment TSB has in positioning UK�s Energy Generation & Supply business to take advantage of both the national & global low carbon market opportunities. Please engage with us either directly or through the KTN Thank you