Innovation in UK Energy Technologies

1. Innovation in UK Energy Technologies An introduction to the Carbon Trust’s innovation activities David Sanders, 9 October 2014

2. The Carbon Trust - Our mission is to accelerate the move to a sustainable, low carbon economy • Created in 2001 by the UK government; now a fully independent private company • We are an independent, expert partner of leading organisations internationally • We help develop and deploy low carbon technologies and solutions, from energy efficiency to renewable power • We advise businesses, governments and the public sector • We measure and certify environmental footprints • Team of 180 experts including scientists, entrepreneurs, financiers, consultants, policy specialists, and project managers • Offices in the UK, Beijing and Mexico. Particularly active in the EU, Japan, South Korea, China, South Africa, Mexico and Brazil

3. Our innovation activities uniquely combine technical, commercial and public sector expertise in energy and resource efficiency Carbon Trust Innovation

4. 1. Innovators We identify, incubate and invest in early stage companies to fast track their commercialisation Business Incubation Venture Capital • Supported more than 300 low carbon technologies and projects • Support is customised to address gaps in the venture in 3 core areas: • commercial advice • networking support • tech development funding • 16 energy technology companies in our incubator today • Since 2001, we have invested around £60m in innovative cleantechcompanies • Created our own businesses, invested in 26 technology businesses • Today we have 15 active investments and joint ventures

5. We supported Artemis when it was a start-up, prior to its acquisition by Mitsubishi Heavy Industries Artemis started out developing hydraulic transmission system for automotive applications at University of Edinburgh We worked with Artemis to identify a quicker, lower risk route to market in stationary applications (wind power) Carbon Trust support helped to develop the product for the wind market Acquired by Mitsubishi Heavy Industries in November 2010 Innovators Example: Artemis • “The Carbon Trust really helped to show that we as a company and our technology are credible … The projects made us focus and set clear milestones to report against … The Carbon Trust is very important to a small early stage company, particularly considering the risks associated with introducing a new technology into wind turbines” • Win Rampen • Managing Director, Artemis Source: Artemis

6. Innovators Example: Amantys AmantysBringing electrical power switching technology to market Opportunity • Established by former ARM executives in 2010 building on world leading research at Cambridge University • Innovative power switching technology enabling efficient switching between medium and high voltages Carbon Trust support • Market analysis and marketing collateral • Independent validation of key technical claims • Created a compelling presentation to investors and targeted suitable investor groups Outcomes • $7m investment in July 2011 from Moonray Investors and ARM and a further $8m in November 2012 • Successful launch of multiple disruptive products into the power switching market • Member of Global Cleantech 100 in 2012 and 2013 “We have specified a package of work which has greatly helped us to refine our story and put us into contact with companies who are working in the field” Bryn Parry Managing Director of Amantys

7. Innovators Example: Heliex Heliex PowerNovel rotary screw expander for waste heat recovery Opportunity • An estimated 40,000GWh of energy is lost in the form of waste steam worldwide • Heliex Power’s innovative steam screw expander technology, developed at City University London, converts this waste heat into electricity • Needed to accelerate product development and raise significant funding to support commercialisation Carbon Trust support • IP review and strategy • Risk analysis and business planning • Helped secure corporate investment Outcomes • Raised £2m from BP in late 2010 and subsequently £5m in a round led by ESB Novusmodusin 2012 • Opened the Heliex Test Facility based at the Energy Technology Centre, Scottish Technology Park • "We prepared the business proposal to enter the Carbon Trust incubator, and we hit that important target… Afew months later we secured a large investment in the project from a corporate investor!“ • Marco IezziChief Technical Officer of Heliex Power

8. Innovators Example: Lontra LontraDelivering step change improvements in wastewater aeration Opportunity • Roughly 10% of electricity consumption in Europe is used to compress air • Lontra'sBlade Compressor increases energy efficiency of air compression by around 20% Carbon Trust support • Provided funding to prove concept and demonstrate their energy efficient compressor at scale • Advised on fundraising and paid for interim management to build customer traction • Provided PR and awareness raising support Outcomes • Partnership with Severn Trent Water to demonstrate Blade Compressor technology at scale and initial orders for 10 units • Secured global license deal from Sulzer, a major compressor manufacturer • “The Carbon Trust is not just about money; it’s about skills, it’s about connections. Working with the Carbon Trust is a very valuable to us in terms of credibility as a small company” • Simon Hombersley • Business Development Director, Lontra • “It would have been difficult to do this without the Carbon Trust. A new technology like this is hard to sell to people before it reaches a level where it has proved itself. That’s where The Carbon Trust came in to develop the initial idea to a functioning prototype” • Clive Hudson • Chief Development Engineer, Lontra

9. 2. Governments We engage governments and funding bodies around the world to realise entrepreneurial approaches • The Carbon Trust supports development of UK low carbon innovation strategy to co-ordinate and guide future public sector funding across low carbon technologies • Develop policy solutions for the governments of China, South Korea, Mexico, Brazil and South Africa. Delivered projects for the World Bank and International Climate Fund

10. 3. Joint industry projects We manage many projects which support collaborative technology development We have also run similar research accelerators and technology demonstration projects in other areas of energy and resource efficiency including micro CHP, advanced metering, next generation PV and buildings energy efficiency

11. Example: Offshore Wind Offshore Wind AcceleratorObjective: Reduce cost of energy by 10% in time for Round 3 Offshore Wind Accelerator • Joint industry project involving 9 developers + Carbon Trust • Only developers are members • Aligned interests • Commercially-focused • Preferential access to new technology • £45-60m programme (7.8b – 10b yen) • 2/3 industry, 1/3 public (government) • Focus on overcoming near-term technical challenges 72% (31GW) of licensed capacity in UK waters

12. Example: Offshore Wind Offshore Wind Accelerator (OWA) focuses targets areas where it can have the largest impactAccess systems, cable installation, electrical, foundations, wakes, environment Levelised Cost of Energy Breakdown Cost Focusing on everything but the turbine, representing roughly 70% of offshore wind costs Source: Navigant (offshore)

13. Foundations Foundation CompetitionObjective: Reduce lifecycle costs by 30% in 30-60m depths • Competition for novel foundations in 2009 • 104 entries • 7 shortlisted • 4 finalists • 2 demonstrated with met masts • Next step • £18m fund to incentivise demonstration of three novel foundations with turbines • Universal Foundation • Dogger Bank 2013, 150km offshore, 25m depth • Keystone ‘twisted jacket’ • Hornsea 2011, 100km, 30m Image: Universal Foundation 2013, Mainstream Renewable Power 2011

14. 4. Corporate customers We work with corporates providing a range of services to meet their innovation needs Strategy Delivery SELECTED EXAMPLES • Assessed and prioritised opportunitiesin low carbon technologies • Developed options for low carbon market entry strategies • Strategies and business cases for operational resource efficiency and low-carbon growth • Developed strategies to address supply chain risks SELECTED EXAMPLES • Set up an incubator and identified innovative companies across Europe • Set up and ran competitions, pilots and technology demonstrations • Supported development of resource-efficient product design innovations • Implemented supply chain engagement and collaborative procurement processes • Innovation partner for large corporates

15. Example: GE Our partnership with General Electric leveraged complementary strengths of start-ups and corporates • We launched $5 million pilot partnership with General Electric to find, assess and incubate start-ups across Europe in infrastructure application areas1 in 2012 • Partnership launched at a time when low carbon technology start-ups in Europe are finding it increasingly difficult to raise early stage funding • Incubation partnership has potential to accelerate development and deployment of novel low carbon technologies by leveraging complementary strengths of start-ups and corporates $5m GE-CT Partnership1 3,500 Start-ups assessed €130m Invested within a year of our support 13 to 1 Private investment leveraged Sources: 1 http://www.gereports.com/carbon-trust-and-ge-partner-to-pump-up-europes-clean-tech-sector/

16. Thank You!