During the Energy Capital launch event, on 15th February, 2017, Matthew Rhodes, Chair of Energy Capital, revealed Energy Capital’s bold, new vision. Here is his speech in full:
‘Energy Capital is all about economic development – creating opportunities for the people and businesses of the West Midlands.
There is both a significant economic opportunity and need for change in the energy sector across this region at the moment. A large part of the need for change has been outlined very clearly by Mike (Mike Crone – Director of Purchasing and Property, Jaguar Landrover, and Director of Coventry and Warwickshire Local Enterprise Partnership) in his talk. Over the next few years our manufacturing businesses – particularly in Coventry and Warwickshire and the Black Country – will need up to four times their current energy demand and they will need this supplied in completely new ways and at different times of day. This will present significant technical challenges to our existing energy infrastructure, and we must overcome these if we are going to continue to attract global investors and maintain the competitiveness of our manufacturing base.
At the same time, we have people in both social and private housing across the region who cannot afford to heat their homes, and need civilised levels of comfort delivered four times more efficiently than it is at the moment. This is a technical challenge, but also often a case where we already have the technologies and companies locally able to meet the need economically, but lack the financial and regulatory environment to make investment viable.
So these are complex and systemic challenges, but also ones which touch everyone across the region and should be accessible and meaningful to many existing businesses. Energy Capital is about making sure that happens.
Energy Capital is about much more than just meeting an immediate need, though. As Petteri’s (Petteri Huusko – Energy Expert from Environmental Department Helsinki) talk illustrated, a global transition is underway in the energy sector – driven not only by economic needs, but also technical change and the imperative to reduce carbon emissions. This is creating massive new opportunities specifically for local regions and cities, and for innovation. There is a three trillion dollar global market for energy systems technologies, and we should be winning our share of that.
We have some inbuilt advantages in achieving this kind of ambition.
The West Midlands has been at the heart of energy systems innovation for over 200 years, particularly in the Black Country, which was built on cheap, accessible energy; and more recently through the investments in the Energy Research Accelerator and Energy Systems Catapult made by the government in Birmingham.
We’re also at a significant turning point in our local history, with the election in May of the first mayor of the new combined West Midlands Authority. This creates opportunities for new partnerships to tackle challenges and opportunities more broadly and to bring the best out of the complementary and diverse strengths across our region.
So I believe we have an opportunity unique to this region, and the time is right for a partnership like Energy Capital.
But this won’t be easy, because we also have some significant inbuilt national challenges to overcome. One is a deep-seated national failure to successfully convert the knowledge and expertise of our great academic institutions into sustainable local economic wealth – a lot of our innovation investment fails to get beyond the labs, IP or demonstrators at best. Another is a tendency to centralisation, which in an age of cheap information technology and energy storage technologies increasingly goes against the grain of the way distributed energy markets are evolving.
Energy Capital aims to overcome these challenges by taking a new approach – and one which is only possible because of the wide public-private partnership supporting us; particularly the three LEPs and councils through the WMCA; the regional universities through the ERA; the Energy Systems Catapult; Climate KIC; the infrastructure providers and system operators through National Grid and Western Power; and industry including JLR, Severn Trent, Webster and Horsfall and Westley Group represented here today.
So Energy Capital is first and foremost a uniquely powerful geographical partnership, aiming to make an economic difference for the people and businesses specifically of this region.
By acting regionally and as a partnership, we can provide systemic support for energy innovations with a level of focus and with a level of public support that is not possible at more diffuse geographical levels.
By systemic I mean paying attention to political and regulatory factors that make investments more or less attractive; I mean being able to think about energy infrastructure investments within the same process and framework as major demand side investments like HS2, new factories and housing; I mean thinking about individual energy technologies in the wider context of the infrastructure and systems that will make or break their viability; and I mean working with local people so that they feel in control of their local economies and energy supplies.
Energy Capital is also a demand-led and market-pull initiative. The traditional UK innovation model tends to see new technologies flowing through a pipe from universities into the market, and public interventions generally try to push ideas through this tunnel faster and more efficiently, often – in the best cases – ending up with demonstrators and SME engagement programmes. This is all good stuff, but it isn’t enough of itself to build a sustainable industrial base – because too often the gap between the demonstrator and the local industrial base is too wide, or the demonstrator addresses a problem or solution that is of interest to the global knowledge community but of limited or no relevance to the local community and their needs.
So our intention is instead to start by thinking about opportunities to develop and support entire energy market eco-systems at commercial scale. We will do this by establishing a number of Energy Innovation Zones, which are large enough to contain whole communities (i.e., of the scale of large parts of Wolverhampton or Coventry or the whole of Digbeth). This is big enough to provide a commercial market for innovative SMEs who need a platform for taking commercial products and services to the world; but small enough to secure the consent of local people and stakeholders for innovative energy systems. EIZs are also small enough to consider experimenting with energy market regulation in a way that doesn’t trouble the national regulator too much but which significantly reduces investment risk for new technologies, and these discussions are already underway with Whitehall.
This approach is designed to complement national, academic and corporate investments in R&D and demonstrators, including activities funded by emerging organisations like the Midlands Engine. The distinction is the focus on local leadership and market-pull, and a shift away from emphasis on intellectual property to one that focuses on customer and public benefit.
Finally, Energy Capital is about facilitation and support, it is not about managing projects. We already have multiple funding bodies and project delivery agencies across the region, and we aren’t trying to compete with any of these. So public funding will continue to flow directly to projects through the LEPs and WMCA. Energy Capital will simply focus on making the West Midlands the most attractive context in the world for making appropriate energy systems investments and the easiest place to grow innovative energy systems companies.
We have defined five initial workstreams to deliver this objective, each led by a different Energy Capital partner. We’ll also take advice from an Industrial Advisory Board, chaired by Tom Westley from Westley Group in the Black Country. The overall Energy Capital governance structure fits into the LEPs and WMCA, so it’s formally controlled through the existing democratic regional political framework.
The five workstreams are:
• Political and Regulatory Support, led by me in my GBSLEP role and supported by the WMCA and three LEPs, which is about establishing the ground rules for Energy Innovation Zones;
• Marketing the region as Energy Capital, led by the University of Birmingham and Marketing Birmingham;
• Investment and funding, led by the Black Country LEP’s inward investment team, led by Wayne Langford, who’ll be aiming to set up easier access to finance for energy projects and innovative energy companies across the region;
• SME Engagement, led by Aston University and Tim Miller and supported by Climate KIC, who are already operating around £5m worth of incubation and low carbon energy entrepreneurship and business support schemes in our region;
• Investment opportunity mapping and technology foresight, led by the Energy Systems Catapult, which is about making it easy for innovators and communities to see where the most viable opportunities are for investments in energy systems that make sense for them.
In the spirit of partnership, we are very much open to working with others in all of these areas, and if you’d like to get involved please make us aware of your interest by signing up with James (James Laidler – Encraft) – who is standing by the door with a box for each workstream for you to leave contact details.
Any other questions or ideas, please speak to Catherine Shelley, who’s agreed to be the main person and secretariat for Energy Capital for at least the next year.
It’s time now for me to handover to a selection of the Energy Capital partners, who’ve nobly volunteered to provide a panel to provide their perspectives on how Energy Capital supports what they are doing and to help answer any questions you may have.
We’re going to split the panel into two halves to keep things simple, and I’ll hand back to Kate (Kate Ashworth – Practice Head of Distributed Energy Projects at Encraft and Energy Capital launch event M.C.) at this point to tell you how she’ll be running the session.
If you missed the exciting video that began the launch of Energy Capital, please click here.