IPPR calls for greater support for offshore wind if jobs are to be created in the UK

A report published by the Institute for Public Policy and Research (IPPR) on 14th April 2009 warned that without rapid expansion of offshore wind capacity and greater government support the UK risks missing legally binding targets and the potential to secure up to 70,000 long-term job opportunities.

UK government is legally bound to produce 15% of the nation's energy from renewable sources by 2020: 'The governments pledge to achieve ambitious renewable energy targets by 2020 shows it is serious about its potential but we need to follow through with concrete policies to create greater certainty for industry, maximise the potential for the UK economy and realise our environmental goals,' states IPPR senior research fellow, Matthew Lockwood.

The report calls for greater support from government to increase confidence in the offshore wind industry in the UK during the recession. It advises UK government to learn from the examples of Denmark, Spain and Germany who have all developed successful local onshore wind industries and argues that an 'offshore wind investment programme' would achieve this.

Brendan Barber, Trade Union Congress (TUC) General Secretary, comments, 'The offshore wind industry could create tens of thousands of good, green jobs in the UK, but the recession has shaken the industry's confidence and exposed the need for government support in green infrastructure investment.'

The report also warns of the need to be strategic. In order for efforts not to be made in vain government needs to ensure the provision of a skilled workforce by addressing current shortages in the engineers and manufacturers.

Barber continues, 'The IPPR's excellent analysis shows how this can be done through and offshore wind investment programme, but this has to be matched by developing workforce skills - shortages of engineering and manufacturing skills must be addressed now as a green answer to the recession.'

Global legislative uncertainty is causing a decline in low carbon investment

Global investment in carbon-offset projects has declined over the past year, and is likely to continue to do so until the next International Climate Agreement, due to be made in Copenhagen this December, it was reported by the World watch Institute on 13th April.

The decline was attributed to the uncertainty surrounding how the UN will regulate Carbon Offsets in developing countries. The Clean Development Mechanism (CDM) is a current method of carbon offsetting between industrialised and developing countries; the system enhances both sustainable development and emission reductions by allowing developing countries to earn Certified Emission Reduction Credits and trading them with industrialised nations. However uncertainties and changes in global legislation have increased insecurities in the reliability of new projects causing a decline in the investment needed to continue the progress of these schemes.

Whilst projects that have already secured financial support are expected to carry on as usual, there seems to be hesitance in the level of investment in new projects. This is due to uncertainties and changes in UN legislation that are increasing the risks involved in investment. In the article, Granville Martin, Vice President of JP Morgan gives the example, 'A plant in Kenya invested [in carbon reduction technologies] thinking that they could get credit from the CDM. One executive order changed all that. Becoming an investor has become a much more challenging task.'

The Worldwatch Institute state that CDM is not the only method of offsetting that has been affected. At this time there is already great economic uncertainty brought about by the recession and the risks are being made greater by uncertainty in legislation. All in all a real need for clarity and agreement in Copenhagen this December has been highlighted.

The full article can be viewed at www.worldwatch.org/node/6061

New legislation set in incentives Northern Ireland's renewable energy generation

On the 1st April 2009 a new banding system was introduced to Northern Ireland's Renewables Obligation (NIRO) Scheme. The banding creates variation between the methods of generating energy encouraging support for the installation and investment in a greater variation of renewable sources. Support has been especially increased for offshore developments, certain non-wind technologies and for micro-generation.

NIRO is supported by tradable Renewable Obligation Certificates; in October 2007 the Low Carbon Innovation Bulletin reported how the United Hospital Trust in Antrim had benefited from these via the installation of an onsite wind turbine.

The original system, introduced in 2005, worked by awarding generators with certificates for the amount of energy they generate. These certificates are then sold to energy generators who need them in order to meet their renewable targets. A statement from the Northern Ireland Executive values each megawatt-hour unit generated at between £40 and £50.

The adjustments mean that there is now a differentiation in the number of certificates awarded per megawatt-hour depending on the source of the renewable energy. On-shore wind will continue to receive one Northern Ireland Renewable Obligation Certificate (NIROC) per megawatt-hour of energy generated, where as offshore wind will receive one and a half for the same amount of energy and wave and tidal projects will effectively receive two. Domestic installations are also set to receive the maximum two NIROC banding, regardless of the technology used.

Energy Minister, Arlene Foster, comments, 'Since its introduction in 2005, support under the NIRO has allowed Northern Ireland to double its renewable generation to the extent that it now represents 7% of our total consumption and we are confident that we can meet our 12% target for 2012. However, we need to continue our efforts to reduce Northern Ireland's over-dependence on imported fossil-fuels; in particular, we must seek to incentivise offshore generation and those less developed non-wind technologies. That is what the banded NIRO is designed to do'.

 

London Business Angels has now been active in facilitating investment into early stage businesses for 25 years, with over £44.6 million being invested in more than 145 companies in the last nine years alone. The network is comprised of 130 influential business leaders in Southeast England, with membership being offered exclusively to only the most experienced individuals. Investment is targeted at early growth, small and medium sized enterprises that are seeking between £100,000 and £750,000 growth capital. Annually the network raises around £4 million in new equity for this purpose, with further funding often coming from sister company, London Seed Capital. London Seed Capital was established as a co-investment fund, and as such only invests in projects where funding is at least matched by business angels. An additional requirement for investment is that there is a lead business angel with relevant skills and experience to head up the business angel syndicate. This individual would then be required to join the board post-completion. London Seed Capital appreciates the value of experience, and through its network London Business Angels are able to provide this. We speak to London Business Angels' investment manager Chris Padfield about the organisation's current involvement in the sector, the areas where he sees the greatest potential and the processes that new investments move through. Can you briefly outline the function of London Business Angels? London Business Angels is a network, or club, of angel investors looking to invest into early stage companies. The network is professionally run; providing members with access to extremely high quality, pre-screened companies and allowing members to make investments into those firms on their own basis. The network helps those 42 annually selected companies to prepare their presentation to the investor network and also helps educate them on the investment process. The network also works on investor readiness, helping to educate new members on angel investment. Is the network currently involved in any CleanTech investments? The angel network has previously invested into a number of cleantech companies. Investments over the last couple of years include Bac2 a polymer company whose initial market is in the fuel cell industry. Wheelright, a company that measures the pressure of tyres (under inflated tyres are a significant component of fuel wastage), TwentyNinety, a company involved in the management and control of solar arrays, Lontra working on more efficient internal combustion engines and Intec - a wind turbine technology. How are new investments funded? Individual angels make their own investment decisions and in all our cleantech investments, a number of angels have syndicated together to complete the deal - as is normal for angel investment. London Seed Capital, our angel co-investment fund also invested into Bac2 and Intec. You typically invest in enterprises seeking growth capital, why is this level of business targeted? The term growth capital can mean a number of things depending on the type of investment. Essentially what we are looking for are early stage companies that are post proof of concept (i.e., this is not start-up capital). Companies at this stage are highly risky but the potential returns are enormous. Our investors also generally enjoy working with new and exciting companies and technologies and dynamic management teams. How do you seek new companies in which there may be the potential to invest? The network has been operating for 27 years so we have a large deal flow based on that reputation. Our members also recommend a number of opportunities that they might be aware of or involved with. We source our own deal flow exhibitions, events, other venture capital colleagues for whom the deal may not suitable and a few select intermediaries. What key factors influence your decision of whether to invest in a company or not? Each investor makes their own investment decision. Naturally they are looking for the potential for a big return on their investment (min 10x) so a high growth, scalable opportunity that solves a real problem is a must. As any investor will say, and it applies even more at this stage in the market, the team is crucial. Each type of opportunity will require certain fundamentals that can include early commercial traction that validates a business model or a strong patent portfolio. Are you able to describe the general process new investments go through? An introduction to myself, either receiving the business plan via email or through an intermediary is the first step. We receive about 1,000 of these per year. I will complete a business plan review at which point if I think there is potential interest to the network I will invite the company for a 2 hour interview. About 150 companies will get to this stage. The 2 hour interview will determine the 42 companies (7 events, 6 companies at each) that are put forward to the network. Each of these companies will undergo the training programme prior to presenting for 12 minutes to our members. From this point it generally takes about 3 months to close an investment through the standard steps: syndicate meetings, term sheets, due diligence, legal and completion. We expect to close 15-20 of the 42 deals per year. How does The London Business Angels network set itself apart from other angel networks? The most important determination of success for any angel network is its deal flow. We pride ourselves on the quality of opportunities we put forward to our members. This is supported by the high quality investor members (all our members are paid members of the network actively looking to invest) and naturally you need both to have a successful network. Our investor readiness, our angel deal platform, the training programme the companies go through and our EIS funds all add to the strong proposition to both companies and angels. You work closely with your sister organisation, London Seed Capital. What differentiates you from them? London Seed Capital is a £5m venture capital fund set up by the DTI (now BERR) that co-invests with London Business Angels. So far London Seed Capital has invested £3.6m into early stage companies - alongside £15.3m of investments from London Business Angels. What would you consider as being the biggest success story in the history of London Business Angels investments? The name possibly the most familiar would be an investment into Cobra Beer. More recently an investment into Vibrant Media which gave a partial exit of 18x. What would you advise as the next step to anyone reading this article and wanting to explore in more detail the possibility of working with London Business Angels? You can learn more about how we operate at www.lbangels.co.uk but I would be happy to hear from anyone on 020 7089 2309 or chris@lbangels.co.uk

R&D Tax Credits

All companies spending at least £10,000 a year on qualifying R&D are entitled to a deduction when calculating their taxable profits of

- 150% of qualifying expenditure for SMEs (increasing to 175% in respect of expenditure incurred on or after 1 August 2008) or
- 125% of qualifying expenditure for larger companies until 31 March 2008 and 130% in respect of expenditure incurred on or after 1 April 2008

More Information can be found at http://www.hmrc.gov.uk/research/vrr-tax-relief-rules.htm.

UKTI

The UKTI has recognised an opportunity for UK environmental technology companies in Hong Kong. Hong Kong is familiar with UK trading practices making it ideally suited to SME's. The UKTI label it a substantial and growing market as well as a springboard for development of trade into main land China. A trade mission will be going out to Hong Kong between 15th and 19th September.

To become involved or to learn more please call Louise Colwell on 02072154479

Technology Strategy Board

Energy Generation and Supply: Fuel Cells and Hydrogen Technologies will close to expressions of interest on 23rd April. TSB have allocated up to £10 million pound of funding for innovative and collaborative research that will help meet UK and EU targets as well as improve energy security. Funds will be awarded to projects that demonstrate improvements in lowering costs, deploying technology on the markets and addressing the difficulties of hydrogen generation, storage and utilisation. More information can be found at http://www.innovateuk.org/_assets/pdf/competition-documents/fuel%20cells%20and%20hydrogen%20technologies_071008.pdf

Energy Generation and Supply: Carbon Abatement Technologies will close to expressions of interest in 23rd July. Funding of up to £15 million has been jointly allocated by TSB, Department for Energy and Climate Change (DECC) and Northern Way for the area of Carbon Abatement Technologies. Funding will be awarded for collaborative innovative research, development, component and pilot scale demonstration. These technologies will play a big part in helping the UK meet its carbon reduction targets and as such offers a large customer base to those able to develop the innovative technology required. More information can be found at http://www.innovateuk.org/