2014

Tender Reference: TEN331

EVIDENCE BASE

LOW CARBON ENVIRONMENTAL GOODS & SERVICES

A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014

Community Energy Plus 3-4 East Pool Tolvaddon Energy Park Camborne TR14 0HX

Tel: 01209 614975

Web: www.cep.org.uk

Study Authors: Dr Tim Jones (Chief Executive, Community Energy Plus), Dionne Jones (Funding and Development Manager, Community Energy Plus), Nicola McCheyne (Delivery Manager, Community Energy Plus), Ian Smith (CEP Associate/IS Consultancy), Nigel Tremlett (CEP Associate/Transform Research), Lucy Cornes (Communications Assistant, Community Energy Plus), Anthony Weight (CEP Associate).

With the assistance of the Community Energy Plus team

Published: March 2014

Produced for the Cornwall Development Company, Tender Reference TEN331

Lead contact for Cornwall Development Company:

Nich Thomas, Business Skills Lead.

Lead contact for Community Energy Plus:

Dionne Jones, [email protected], 01209 614975

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014

CONTENTS

1. Executive Summary ...... 11

2. Evidence Base Report A – LCEGS Sector Overview ...... 34

2.2.1. Defining the Low Carbon Environmental Goods and Services Sector ...... 35

2.2.2. Background and History ...... 38

2.2.3. Strategic Landscape and Policy Drivers ...... 76

2.2.4. Policy Contrasts in other EU Regions ...... 90

2.3.1. Current and Potential GVA Value ...... 94

2.3.2. Current and Potential Employment ...... 98

2.3.3. Investment Required ...... 100

2.4.1. Cornwall’s Unique Selling Points (USP) ...... 104

2.4.2. Sales and Growth in the Global and UK Market ...... 106

2.4.3. Local Enterprise Partnership Collaboration ...... 114

2.4.4. Market Distortion ...... 117

2.4.5. SMART Specialisation ...... 124

2.4.6. Routes to Market ...... 127

2.4.7. Barriers to Entry into the market ...... 132

2.4.8. Consumer Benefits ...... 133

2.5.1. Business Analysis For Cornwall and Isles of Scilly ...... 137

2.5.2. National and International Comparisons ...... 143

2.5.3. Clustering and Collaboration ...... 150

2.5.4. The Role of Accreditation Schemes ...... 153

2.5.5. The No Subsidy Scenario ...... 155

2.5.6. Affordability to Consumers and Businesses...... 160

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2.5.7. Investment Funding ...... 162

3. Evidence Base Report B – Sector Skills Requirements ...... 172

3.1.1. Demographics in Cornwall and the Isles of Scilly ...... 173

3.1.2. UK Employment Patterns to 2020 ...... 176

3.1.3. Employment Patterns in C&IoS LCEGS ...... 178

3.1.4. Types of Employment in the Sector ...... 179

3.2.1. Sub-Sector Skills Analysis ...... 184

3.2.2. Demand Led (bottom-up) Skills Requirements ...... 186

3.2.3. Policy Led (top-down) Skills Requirements and Future Skills Needs ...... 199

3.2.4. Local Context: Cornwall and Isles of Scilly LEP ...... 206

3.2.5. Skills Level Analysis and Transferability ...... 208

3.3.1. Training ...... 212

3.3.2. Employers Views on Skills Provision ...... 214

3.3.3. Public Sector Support, Skills and Growth ...... 215

3.3.4. Accreditation and Industry Standards ...... 218

3.3.5. Other Skills Needs ...... 219

3.5.1. Employment Route Maps ...... 224

3.5.2. Reasons for Working in the Sector ...... 227

3.5.3. Apprenticeships ...... 228

3.5.4. Graduate Placements ...... 230

3.5.5. Vocational and Academic routes ...... 232

4. Bibliography ...... 236

5. Appendices ...... 242

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5.1.1. Priority Sub Sectors ...... 242

5.1.2. Cornwall Priority Sub Sectors, from full BIS data ...... 245

5.1.3. Full BIS data for Level 2 sub-sectors ...... 246

5.1.4. Background & History ...... 248

5.1.5. Policy Drivers ...... 276

5.1.6. Collaboration Responses ...... 278

5.1.7. SMART Specialisation ...... 278

5.1.8. Consumer Benefits ...... 280

5.1.9. Clustering and Collaboration ...... 284

5.1.10. Affordability to Consumers and Businesses ...... 288

5.2.1. Employment Patterns ...... 296

5.2.2. Market Topic Guide ...... 297

5.2.3. Business Topic Guide ...... 299

5.2.4. Smart Topic Guide ...... 302

5.2.5. National Skills Academy Footprint Guide ...... 306

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LIST OF ABBREVIATIONS

AEBIOM – European Biomass Association AMI – Advanced Metering Infrastructure BEMS – Business Energy Management Systems CBI – Confederation of British Industry CCS – Carbon Capture and Storage CERT – Carbon Emissions Reductions Target CESP – Community Energy Saving Programme CfD – Contracts for Difference CHAS - Contractors Health and Safety Accreditation Scheme CHP – Combined Heat and Power CHIC – Clean Hydrogen in European Cities CLLD – Community Led Local Development CMN – Cornwall Marine Network COAST – Coastal, Ocean and Sediment Transport (Laboratory) CSEP – Cornwall Sustainable Energy Partnership CSM – Camborne School of Mines CUTE – Cleaner Urban Transport for Europe DECC – Department of Energy and Climate Change DSR – Demand Side Response DTI – Department of Trade and Industry EBIA – European Biomass Industry Association ECO – Energy Company Obligation ECU – Environmental Change Unit (Oxford University) EEC – Energy Efficiency Commitment EERA – European Energy Research Alliance EGS – Enhanced Geothermal Systems EIA – Environmental Impact Assessment EMEC – European Marine Energy Centre EMR – Electricity Market Reform ERDF – European Regional Development Fund ESF – European Social Fund ESN – Environmental Skills Network ETI – Energy Technology Institute EU ETS – European Union Emissions Trading Scheme FIs – Financial Instruments FiT – Feed in Tariff GDA – Green Deal Assessor

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GDAO – Green Deal Advice Organisation GDP – Green Deal Provider GIB – Green Investment Bank HEME – High Efficiency Marine Energy ISO – International Organisation for Standards IPCC – Intergovernmental Panel on Climate Change LCEGS – Low Carbon Environmental Goods and Services LCNF – Low Carbon Network Fund LEAP – Leadership for Energy Action and Planning LECs – Levy Exemption Certificates LEM – Local Energy Market LEP – Local Enterprise Partnership LNG – Liquefied Natural Gas LNP – Local Nature Partnership LPG – Liquefied Petroleum Gas LUC – Land Use Change MCS – Microgeneration Certification Scheme MEAD - Marine Energy Array Demonstrator NAREC – National Renewable Energy Centre OEM – Original Equipment Manufacturer OLEV - Office for Low Emission Vehicles ONS – Office for national Statistics PRIMaRE –Peninsula Research Institute for Marine Renewable Energy PV – Photovoltaic (solar panels) RHI – Renewable Heat Incentive RO – Renewables Obligation SEAP – Sustainable Energy Partnership SIF – Structural Investment Fund SROI – Social Return on Investment SSBs – Sector Skills Bodies SSCs – Sector Skills Councils SWRDA – South West Regional Development Agency TSB – Technology Strategy Board WRAP - Waste and Resources Action Programme UKAS - United Kingdom Accreditation Service UKERC - UK Energy Research Council ULEV – Ultra Low Emissions Vehicles ZED – Zero Emissions Development

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LIST OF TABLES

Table 1 - Top twelve priority sub-sectors for C&IoS ...... 12

Table 2 - LCEGS Levels 1&2, BIS 2012 ...... 35

Table 3 - Top twelve priority sub-sectors for C&IoS ...... 37

Table 4- UK Carbon Budgets ...... 78

Table 5 - Key Strategy & Targets, Whole LCEGS – Global, EU, UK & Cornwall ...... 88

Table 6 - Top twelve priority sub-sectors for C&IoS ...... Error! Bookmark not defined.

Table 7 - LCEGS export sales in C&IoS ...... 113

Table 8 - Marine - Market Failures & Public Sector Intervention ...... 118

Table 9 - Electricity Networks & Storage (inc Smart) - Market Failures & Public Sector Intervention ...... 119

Table 10 - Bioenergy - Market Failures & Public Sector Intervention ...... 120

Table 11 - Heat - Market Failures & Public Sector Intervention ...... 121

Table 12 - Industrial sector - Market Failures & Public Sector Intervention ...... 121

Table 13 - Domestic Buildings - Market Failures & Public Intervention ...... 122

Table 14 - Offshore Wind - Market Failures & Public Sector Intervention ...... 123

Table 15 - SMART specialisation and priority sub-sectors ...... 126

Table 16 - Barriers to businesses purchasing from the LCEGS sector ...... 130

Table 17 - LCEGS Levels 1&2, BIS 2012 ...... 137

Table 18 - CEP/BIS data comparison ...... 138

Table 19 - Level 1 sub-sector comparison ...... 139

Table 20 - No. of businesses in C&IoS active in one or more level 2 sub-sectors...... 140

Table 21 - Comparing C&IoS with the South West and UK ...... 143

Table 22 - C&Ios LCEGS sector as a percentage of SW & UK ...... 143

Table 23 - Largest markets for LCEGS ...... 145

Table 24 - SWOT Analysis ...... 148

Table 25 - Affordability to Consumers & Businesses ...... 160

Table 26 - Investment Opportunities ...... 162

Table 27 - People leaving and joining the workforce, C&IoS ...... 173

Table 28 - Working age population of C&IoS ...... 173

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Table 29 - Employment in C&IoS ...... 174

Table 30 - Employment in percentages ...... 174

Table 31 - Private Sector Employment in C&IoS ...... 175

Table 32 - Company size by employee number ...... 179

Table 33 - Employee survey categories ...... 180

Table 34 – Employee areas of qualification ...... 181

Table 35 -Employee support schemes ...... 181

Table 36 - Reasons for working in the sector ...... 181

Table 37 - Employees - reasons for staying in the sector ...... 182

Table 38 - National qualification credit framework ...... 199

Table 39 - The work of the sector skills councils ...... 204

Table 40 - Skills Breakdown ...... 209

Table 41 - New entrants careers map ...... 225

Table 42 - Uncertainty in solar energy sector ...... 268

Table 43 - WREN survey on Smart pay-back timescale ...... 290

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LIST OF FIGURES

Figure 1 - Cumulative total no. of geothermal businesses ...... 46

Figure 2- Cumulative total no. of biomass businesses...... 54

Figure 3 - Cumulative total no. of wind businesses ...... 62

Figure 4 - Cumulative total no. of solar businesses ...... 65

Figure 5 - Cumulative total no. of renewable businesses over time ...... 66

Figure 6 - Progress on Carbon Budgets ...... 79

Figure 7 - C&IoS LCEGS GVA by Level 1 sub-sector (£ million) ...... 96

Figure 8 - C&IoS LCEGS Employment by Level 1 sub-sector (no.s full and part-time) ...... 98

Figure 9 - Global Sales...... 106

Figure 10 - Global Sales by Country ...... 107

Figure 11 - Markets for UK exports...... 107

Figure 12 - Global sales by sector ...... 108

Figure 13 - Global sales by level 2 sub-sector ...... 109

Figure 14 - UK growth by sector ...... 110

Figure 15–UK LCEGS Growth projections ...... 111

Figure 16 - Sales Volume and Growth Potential ...... 112

Figure 17 - Online Survey: Sales...... 127

Figure 18 - Sales per level 1 sub-sector ...... 139

Figure 19 - Sub-sectors with highest number of active businesses ...... 141

Figure 20 - Sub-sectors with lowest numbers of active businesses ...... 141

Figure 21 - Customer Base ...... 144

Figure 22 - Sales by Territory ...... 144

Figure 23 – Technology subsidy mechanisms & strike prices ...... 156

Figure 24 - Future sources of electricity ...... 157

Figure 25 - Investing in Renewable Technologies – CfD contract terms and strike prices ...... 159

Figure 26 - Energy efficiency sector priority clusters, GIB ...... 165

Figure 27 - Highest level qualifications of LCEGS employees ...... 184

Figure 28 - No. of identified skills needs by occupation ...... 186

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Figure 29 - Number of identified skills needs by type ...... 187

Figure 30 - No. of skills needs by occupation ...... 188

Figure 31 - No. of identified skills needs by type: Environmental ...... 190

Figure 32 - No. of each type of identified skills need by occupation: Environmental ...... 191

Figure 33 - No. of identified skills needs: Renewable businesses...... 192

Figure 34 - No. of each type of identified skills need by occupation: Renewable ...... 193

Figure 35 - No. of identified skills needs by type of need: Biomass ...... 194

Figure 36 No. of each type of identified skills need by occupation: Biomass ...... 195

Figure 37 - No. of identified skills needs by type of need: Geothermal/heat pump ...... 196

Figure 38 - No. of identified skills need by occupation: Geothermal/Heat Pumps ...... 196

Figure 39 - No. of identified skills need by type: Smart ...... 197

Figure 40 - No. of each type of identified skills need by occupation: Smart ...... 198

Figure 41 - Types of training attended by LCEGS staff in last 12 months ...... 213

Figure 42 - Public sector support required to help LCGES businesses gain skills to grow ...... 215

Figure 43 - Reasons for working in the sector ...... 226

Figure 44 - Use of employee support schemes ...... 227

Figure 45 - A multi-level perspective for addressing the factors that affect energy consumption ...... 289

Figure 46- Reported IRR requirements and reported payback requirements ...... 291

Figure 47 - Implementation rate and IRR by payback period ...... 292

Figure 48 - The challenge of persuading businesses to take up LCEGS ...... 293

Figure 49 - NSA: Environmental Technologies Sector Footprint ...... 306

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1. EXECUTIVE SUMMARY

This evidence base is divided into a sector overview and a review of skills requirements in the Low Carbon Environmental Goods and Services (LCEGS) sector in Cornwall. It provides a deep and thorough understanding of the background, history and current state of the sector, market growth potential, occupational diversity, and the skills requirements of the sector, both from a local and a global perspective.

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SECTOR DEFINITION, STRATEGIC LANDSCAPE AND POLICY DRIVERS

DEFINING THE SECTOR

This study utilises the BIS definition of the LCEGS sector with three notable adaptations.

 The creation of a Smart energy sub-sector  Photovoltaic has been relabelled ‘Solar’, to include Solar Thermal.  We have combined Energy Management and Building Technology.

The definition is flexible and acts as an ‘umbrella’ term for a wide range of activities, all of which aim to reduce environmental impact.

The economy as a whole will see a shift to greener business practices, therefore the implications of this study are wide-reaching.

We have excluded climate change adaptation and mitigation, but would recommend further research in these areas.

Priority sub-sectors for Cornwall have been identified. The criteria for prioritising the sub- sectors were:

 Emerging sub-sector in need of support to get established.  Sub-sectors demonstrating above average growth or plans for growth.  Sectors where there are significant funding drivers.

The priority sub-sectors are:

Table 1 - Top twelve priority sub-sectors for C&IoS

Sector Score Wave and Tidal Energy 14.0 Geothermal Energy 13.0 Smart Energy 13.0 Biomass 10.0 Alternative Fuel Vehicles 10.0 Alternative Fuels 9.0 Wind 8.0 Additional Energy Sources 8.0 Building Technologies 7.0 Energy Management 6.0 Solar Energy 5.0 Carbon Finance 5.0

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BACKGROUND AND HISTORY

Cornwall has the lowest LCEGS sales, number of companies (366 were identified during the course of this study) and employees of all the LEP regions, yet also is home to the best renewable resources and has a track record of innovation in the sector.

Wave and Tidal and Geothermal Energy are sectors where several catalysts are in place in Cornwall to drive commercialisation, including natural and technological resources, leading- edge businesses and supportive national and local governance.

Cornwall has the potential to create a cohesive Smart Energy system, integrating renewable sources of energy on a greater scale than previously possible. However the small number of businesses engaged with Smart energy emphasises the emerging nature of the sector.

The availability of land in the South West for Biomass fuels, the Renewable Heat Incentive, and the development of efficient boiler technology is expected to drive significant growth in this sector. The market and supply chain in Cornwall is well-placed to take advantage of this.

There are significant incentives and infrastructure programmes to facilitate increased take- up of electric vehicles.

Onshore wind remains the most commercial form of renewable energy, with Cornwall’s resources and community energy culture combining to promise future growth both onshore and offshore.

The market for Solar PV has been, and will continue to be, driven by the Feed in Tariff.

In C&IoS where renewable energy and electric vehicles will put increasing pressure on the electricity grid, energy storage will become increasingly important. It is potentially the next big growth area.

Fluctuating government policies and energy supplier obligations have caused significant uncertainty and stop-start growth in the Building Technologies and Energy Management sub-sector. Despite the difficult climate, Cornwall has a strong base of businesses and expertise and there is enormous potential for this industry to provide both economic growth and carbon reductions.

Cornwall benefits from a wealth of partnerships and initiatives which cut across the private, public, voluntary and social enterprise sectors, forming the basis of a support network for the LCEGS sector which has yet to be maximised.

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STRATEGIC LANDSCAPE AND POLICY DRIVERS

Significant policy drivers affect the LCEGS sector both nationally and locally. At an international level, instability and a lack of consensus are having a direct impact on businesses looking to derive benefit from the sector. A lack of international recognition of the need for climate change adaptation, and lack of agreement on post 2012 Kyoto targets are just two examples of this.

Despite this, long term policy direction, particularly in the European market for the sector is clear. The EU recognises that the shift to a low carbon economy will have multiple benefits and reducing our impact on the climate forms a major part of the strategic landscape.

The challenge for the market is that the strategy for delivery is not clear, i.e. the future shape of the LCEGS sector is still being debated, and which sub-sectors will emerge as commercially viable remains uncertain. A new generation of renewable solutions and ‘big ticket’ projects requires concerted investment in order for targets to be met.

Through the analysis provided for each sub-sector, there has been intermittent public sector support for different industries. This instability both undermines and threatens the sector. It has hindered growth and resulted in a multitude of market failures across several sub- sectors under the LCEGS ‘umbrella’.

Cornwall has enormous resources for generating renewable energy and is a region which benefits from an overarching programme to develop a low carbon economy. The strategic vision is of a ‘living laboratory’ incubating leading-edge knowledge and skills, and of a ‘green and marine’ centre of international importance.

Key drivers for Cornwall include EU spending, the UK governments drive to commercialize renewable technologies, and a community energy culture. The sub-sectors identified as a priority all possess significant growth drivers at several levels, and both reflect and seek to extend Cornwall’s Unique Selling Point.

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SECTOR VALUE

CURRENT AND POTENTIAL GVA

The current value of the LCEGS Sector in C&IoS is in the order of £533.2m. This represents 7.1% of total GVA, a figure which is in line with the sector across the whole of the UK.

The top ten businesses (mainly utility companies) account for 75% of GVA. Overall the Environmental sector represents the largest contribution to the economy (81%) over Low Carbon (11%) and Renewable Energy (8%).

Potential GVA is estimated as an increase of £90.3m over the next 1-2 years.

CURRENT AND POTENTIAL EMPLOYMENT

3,905 full and part time employees are estimated to work in the LCEGS sector in C&IoS, making up 2% of the total workforce.

The majority of these are employed in the Environmental sector.

Planned increases in staff levels would equate to a total increase of approximately 750 employees over the next 1-2 years.

INVESTMENT REQUIRED

Businesses are predicting strong growth. Most acknowledge the need for financial support and investment, and acknowledge that growth will not be solely driven by market demand.

A raft of investment options is being considered.

Potential barriers to growth into new markets include lack of access to finance, instability of government policy and a shortage of appropriate skills.

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NEW MARKETS AND OPPORTUNITIES

CORNWALL’S USP:

Cornwall can be described as a living laboratory for a low carbon and environmentally sustainable economy.

The region has the highest solar insolation rates in the UK, wind speeds in excess of 7 metres a second, geological profile suitable for deep hot rock energy, and an abundant wave resource.

The county has a strong entrepreneurial and engineering base thanks to its mining and marine heritage and world class higher education establishments at Penryn and Falmouth.

Cornwall also has a strong track record of partnership working between the private, public and voluntary sectors.

It is the combination of natural resources, enterprise and research capability that creates Cornwall’s USP.

SALES AND GROWTH IN THE UK MARKET

Asia is the largest market for LCEGS, followed by the Americas and Europe. The US is the largest single market, although the combined opportunities in Europe outweigh this.

There is a strong correlation between total growth and ‘green’ growth in the top performing economies.

Correlating global sales against the priority sub-sectors we propose in this report, a good spread of risk between large and established markets, and emerging markets, is evident.

However Cornwall’s LCEGS businesses are highly insular, with only 1.7% of goods and services exported. This is something which should be addressed given Cornwall’s ambitions in this sector.

In the UK, the Low Carbon and Renewable Energy sectors are predicting above average growth, with the Environmental sector expected to achieve more modest growth.

Sub-sectors with both high sales value and high growth potential are Wind, Alternative Fuels, Geothermal, Building Technologies and Alternatively Fuelled Vehicles.

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LEP COLLABORATION & BUSINESS CLUSTERING

In general, our neighbours in the South West offer the most scope for collaborating on the priority sub-sectors identified and skills initiatives.

The South West Marine Park already provides a model for LEP collaboration in the LCEGS sector. Marine is the only priority sub-sector where meaningful collaboration appears realistic at this time.

Scotland offers very positive opportunities to collaborate, both in the Marine sector specifically and on the skills agenda as a whole.

Sharing best practice in relation to skills with those LEPs engaged in this sector should be nurtured at every opportunity.

The Heart of the South West and Oxfordshire LEPs offer the most potential for smart energy systems collaboration. Lessons learnt from early roll out can provide the basis for collaboration and joint working in future deployment of Smart energy systems in more rural locations.

As Micro and SMEs dominate the sector, the benefits of collaboration and clustering could be significant for Cornish businesses.

Existing clusters:

 Falmouth already exists as a marine cluster with many well established businesses and the Falmouth Marine School, supported by an engineering cluster in Camborne-Pool-Redruth.  St Austell and the Clay Country is an emerging geographic cluster for building technologies.  The Wheal Jane complex near Truro, which has a cluster of earth sciences and environmental businesses, presents an opportunity for a land based renewable energy and smart grid learning resource.  The Newquay Aerohub has already acquired enterprise zone status, and could also be a suitable area for clustering of green engineering businesses.

MARKET DISTORTION

Government subsidy focuses support on research and technology push in the LCEGS sector.

Alternative support is sourced through energy bills and taxation.

The Carbon Strike Rate hinders the development of low carbon technologies, as these cannot compete with fossil fuel prices.

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Electricity Market Reform further distorts the sector. EMR seeks to allow competition between the various low carbon technologies by making allowance for variables such as capital cost and operational risk.

Successive public interventions in various sub-sectors across the LCEGS show the challenge of integrating the sector into the wider energy market.

SMART SPECIALISATION

If Cornwall aspires to secure EU SIF money for research and innovation it has to do so via a SMART Specialisation process, so prospective priority sub-sectors would have to show they meet all the criteria to do so.

SMART Specialisation criteria indicate a good match exists between Cornwall’s USP and the priority sub-sectors we have identified.

However for all the priority sub-sectors, we question if they are a delivery fit, that is, will innovation lead to commercialisation?

ROUTES TO MARKET

20% of LCEGS sales are to the public sector, where various mechanisms exist to encourage green compliance.

However compliance in general is considered by businesses to be a poor driver for creating demand due to uncertainty and shifting government policy.

Outside of compliance, reasons for purchasing from the LCEGS include cost and efficiency savings, carbon and environmental savings (which could be from conviction or compliance), and marketing or branding considerations.

Buying local is considered more important than buying green, although clearly the two are interlinked.

Barriers to purchasing from the LCEGS include shifting government policy, lack of understanding or flexibility in larger organisations, a slow return on investment, and technical issues or conflicting advice.

Barriers to entry into the sector include a lack of appropriate skills and access to training, difficulty in financing start-ups or growth, access to working capital, inconsistent government policy and practical barriers, including the problems associated with a peripheral location, transport and premises constraints.

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CONSUMER BENEFITS

Consumer benefits reflect reasons for purchasing, i.e. can generally be divided into financial savings and ethical conviction.

The monetisation and commodification of social value is a developing area which could drive growth in the LCEGS sector.

Consumer benefits for the up-take of Smart Energy Systems remain speculative. Government estimates energy savings from better management, greater energy awareness, more accurate bills and the encouragement of microgeneration installation.

There needs to be more learning from the consumer’s perspective of the impact of Smart meter usage elsewhere – for example concerns surrounding data management has caused delays in other countries.

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BUSINESS ANALYSIS

BUSINESS ANALYSIS FOR CORNWALL

Figures for the number of companies, employment and the contribution of the sector to the C&IoS economy can be found in section 1.3 – Sector Value.

In the Environmental sector, large companies dominate and account for the majority of LCEGS turnover.

The Low Carbon and Renewable Energy Sectors are predominantly made up of SMEs. This has implications for the sector’s skills and marketing needs.

There is a large degree of horizontal integration across the sector, i.e. businesses mix and match their skills to provide a blend of LCEGS goods and services.

Level 2 sub-sectors in which the largest number of businesses are active are Solar, Energy Management and Wave and Tidal.

NATIONAL AND INTERNATIONAL COMPARISONS

Analysis shows that the LCEGS sector in Cornwall is underperforming, both by sales per head of population and by the percentage of the population employed in the sector, compared to the South West and the UK as a whole. Cornwall is not fulfilling its potential in light of its USP.

Of the sub-sectors given priority status in this report, Marine, including offshore renewables and vessel efficiency, stands out as having the best development and export potential.

Despite underperformance, business leaders are positive about future growth in the sector, but concerned about inconsistent government policy undermining potential.

THE ROLE OF ACCREDITATION SCHEMES

There is a need for an accreditation programme that meets the skills need of the LCEGS.

ISO 9001, Quality Management and ISO 14001 Environmental Management Systems are internationally recognised standards that are becoming increasingly important criteria in procurement processes for public sector and blue chip clients.

The Contractors Health and Safety Accreditation Scheme (CHAS), the Microgeneration Certification Scheme (MCS), and Green Deal are sector specific requirements within the UK.

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In general LCEGS businesses in Cornwall are receptive to accreditation schemes and active in meeting industry standards. For many, this is essential in conducting business and planning for growth.

THE NO SUBSIDY SCENARIO

For renewable energy and low carbon technologies to be viable on the open market without subsidy, they need to be able to produce electricity at or around the wholesale market price.

At today’s prices of about £50MWh, wholesale electricity prices would have to increase by 8% per annum for 9 years before the cheapest renewable energy technology, onshore wind, becomes viable without subsidy.

There is increasing public and political resistance to so called ‘green taxes’ that form the defacto public subsidy for low carbon and renewable energy technologies.

However, for renewable energy generation and building fabric insulation, without public subsidy the industry in the UK is not viable now or up to 2020.

AFFORDABILITY TO CONSUMERS

Expectation on behalf of the public and businesses is that the cost of LCEGS should be subsidised.

The policies and messages required to affect the uptake of carbon saving measures are complex and remain very poorly understood. Consumers are not responding to government sponsored marketing messages in the numbers required to meet carbon saving commitments.

Within the energy efficiency industry anything longer than a 3 year payback is considered a hard sell.

Domestic appliances is one area where market transformation has taken place, and energy efficiency is a major factor in decision making.

This is not the case for other sectors, for example energy efficient housing, insulation and housing refurbishment, which are still only considered affordable if they are subsidised.

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INVESTMENT FUNDING

Outside EU SIF funding for research and innovation, several investment opportunities exist, for example Horizon 2020 and The Energy Challenge.

The Green Investment Bank has £3.8b to invest, 80% of which is earmarked for offshore wind, energy efficiency and waste.

74% of businesses who expect to grow in the next 6-7 years said they will require financial support or investment.

To enable growth, businesses want to see better coordination and consistency in Government support and related initiatives.

Our findings indicate a considerable interest in, and demand for, investment funding among LCEGS business across C&IoS. However some sectors of the investment community remain cautious, and many projects are too small to meet minimum investment levels.

Community-led investment and niche finance offers provide some of the most positive opportunities for grass-roots projects and business start-ups.

Generally speaking, Smart Energy systems are not dependent on public subsidy. However emerging ‘smart interventions’, like energy storage, are likely to require some level of public intervention. This could provide the basis for a potential market failure, especially in peripheral locations like Cornwall, if not effectively addressed at an early stage.

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EMPLOYMENT PROFILE

EMPLOYMENT PATTERNS IN C&IOS LCEGS

There are a total of 3,905 full and part time employees working in the 366 LCEGS businesses in C&IoS, indicating that each LCEGS businesses has an average of 10.6 full time and part time employees.

The size and structure of LCEGS companies in Cornwall and the Isles of Scilly seems to conform to the predominantly SME base that typifies the businesses sector as a whole.

The LCEGS sector contributes nearly 2% of the total c.248,000 employees in C&IoS.

The market value of £136,000 per employee is significantly higher than the C&IoS average of £30,000 per employee.

83% of respondents to the survey worked full time and 17% worked part time, with average hours of 25 per week.

QUALIFICATIONS AND PAY

Staff in the sector are very highly qualified reflecting the specialist nature of much of the work in this sector. Our survey suggests that about 60% of the qualifications held are in STEM subjects or are directly relevant to the sector.

As you would expect for such a highly qualified workforce, the mean average pay is greater than the full time average for Cornwall as a whole. The mode average of £30-39k is probably the best guide as to what the majority of well qualified staff in the sector are earning.

EMPLOYMENT MOVEMENT & GROWTH

A 19% growth rate in the local LCEGS workforce is anticipated over the next 1-2 years. Renewable Energy businesses have the biggest plans for growth.

The C&IoS LCEGS sector is projected to employ an additional 750 people over the next 1-2 years.

Our limited evidence suggests that people move into the sector from a variety of routes both formal and informal. Many senior and skilled staff come from similar businesses. For younger staff, Cornwall College and Unlocking Potential have a significant role.

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The sector has a high rate of retention, with just 6% of employees considering leaving in the near future.

THE GENDER IMBALANCE

Of 59 LCEGS employees in C&IoS who responded to an online survey, 36% of respondents were female and 64% were male. This gender imbalance is prevalent in respondents over the age of 30 - there is some suggestion that the gender imbalance is reducing for the younger generation. The Gender Balance matches the UK industry current climate for major group industries for UK STEM (science, technology, engineering and maths).

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SKILLS REQUIREMENTS

DEMAND-LED SKILLS NEEDS

The bottom-up skills needs identified were spread across the various types. Most commonly mentioned were job specific skills (76) and industry-wide skills (73), followed by sector specific (62) and generic skills (62).

Managers, directors and senior staff were most likely to have industry wide skills needs (27), while the sector specific and job specific skills needs tended to be grouped among the senior staff, professional, associate professional and skilled trades staff. The admin and secretarial staff were more likely to have generic or industry-wide skills needs while elementary occupations had mostly job specific skills needs.

Several businesses highlighted the need for specific skills related to Smart Energy.

POLICY-LED SKILLS REQUIREMENTS AND FUTURE SKILLS NEEDS

The UK is lacking the necessary skills to compete successfully in an increasingly globalised market – this is the case for the LCEGS sector as for many others.

The Leitch Review recognised that “low carbon skills” should be at the centre of the overall drive to improve skills. Just as all businesses will need to take part in the transition to a green economy, all workers need to have skill sets that will enable businesses to achieve their environmental and sustainability goals.

Skills study relevant to the LCEGS acknowledge that:

 Future skills needs are unknown  Future skills demand levels are unknown  Most future skills needs will not be new  Main skills gaps will be for key generic skills

LOCAL CONTEXT: CORNWALL AND ISLES OF SCILLY LEP

The LEP’s Economic Growth Strategy 2012-2020 goes some way to addressing the issues identified at a national and regional level regarding stimulating latent demand for LCEGS products and services, and hence will drive up skills demand.

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SKILLS SHORTFALL & SOURCING

TRAINING

Half of the 80 LCEGS businesses who responded to the survey had a training plan in place.

A very high percentage of LCEGS businesses (69 out of the 80 or 86%) said their staff had undertaken training in the last 12 months. This is above national figures and particularly positive considering the number of Micro and SMEs which make up the sector.

Businesses in Cornwall were also more likely to undertake accredited training.

The most common reason for not undertaking training for staff was lack of funds.

Employers were generally very positive about the value of training staff received, though some concern was expressed about future training provision.

There is evidence that young people are not being given enough advice or training about green skills.

PUBLIC SECTOR SUPPORT, SKILLS AND GROWTH

The most common request for support from the public sector was funding for training.

Other needs identified include marketing, PR, sales and the funding or structuring of apprenticeships.

OTHER SKILLS NEEDS

Business in the LCEGS sector identified very specific skills needs which are as yet unavailable in C&IoS.

A number of factors are likely to combine over the next 10 years to produce a substantial skills and employee deficit that could greatly limit the sectors ability to grow and develop successfully.

SKILLS PROVISION

There are a wide and growing range of LCEGS skills provision across C&IoS. Many of the providers are currently expanding or investing more in the relevant LCEGS provision.

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While current skills training provision is broadly comprehensive in terms of both sector specific and industry wide skills coverage and content, there are some issues with the cost, emphasis, length and timing of courses.

Businesses reported that the process of finding the “right” training for a particular individual or a business can be complex and time consuming with providers often in competition with one another to fill courses.

Six recommendations have emerged from the research as follows:

 Address issues with current skills provision,  Coordinate available skills provision,  Raise awareness of available skills provision,  Extend the current business mentoring system,  Work with pioneering businesses to assess potential longer term skills needs,  Develop a green Apprenticeship framework.

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SKILLS, SERVICES AND SUPPORT

EMPLOYMENT ROUTE MAPS

The National Skills Academy for Environmental Technologies has produced the only route or skills maps relevant to the LCEGS sector.

None of the businesses questioned said that they had a skills map for their employees - every business felt that its situation was unique and was unlikely to be fully covered by a generic sector-wide “map”.

Nonetheless some businesses did see the value of such a map for potential entrants to the sector as a whole, particularly those with only limited background or knowledge of the subjects.

Employees in the sector are keen to stay and progress, therefore a route map which reflects this would be a positive step.

REASONS FOR WORKING IN THE SECTOR

The most common routes into the sector were:

 Degree or relevant training – 15.1%  Graduate placement including UCP – 11.3%  Job application – 17%

30% of respondents identified an opportunity through an employee support scheme, i.e. an apprenticeship, graduate placement, work experience or a training programme, whilst 7.5% identified a business opportunity in the sector.

APPRENTICESHIPS

For the LCEGS sector, apprenticeships can be split into generic business skills and sector specific skills.

While generic business apprenticeships are available, sector specific apprenticeships generally meet the needs of traditional industries, and there are very few apprenticeships that would meet the technical needs of the LCEGS sector.

Possible apprenticeships which cross into the sector include those which come under the Engineering and Manufacturing Technologies, and Construction Planning and The Built Environment categories.

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The only apprenticeship that meets the needs of the renewable sector is the newly produced wind turbine apprentice technician.

The role of apprenticeships in offering routes to employment is currently being prioritised through new funding packages to encourage take up amongst small businesses. Apprenticeships will be available alongside degree and postgraduate courses, providing a comparable higher level alternative route from the traditional academic route through education into employment.

GRADUATE PLACEMENTS

The main provider of graduate level support for entry into the LCEGS sector is currently Unlocking Potential (UP). Their role is varied and includes employability training courses, graduate level work experience and graduate level placements within businesses in Cornwall.

Over the last three years, businesses in the LCEGS sector have accounted for around 15% of those supported by UP (65-70 graduate placements).

From a UP perspective, the renewable energy sector is an anomaly within Cornwall, and outside of these placements there are very few opportunities for graduates. This is due to the high number of micro businesses in the sector in Cornwall. Many graduates continue in education often completing Masters level degrees and specialise in subjects which require moving out of Cornwall.

Many graduates have the right skill set to work within the sector, however the main barrier is graduates with the experience that employers are looking for.

VOCATIONAL AND ACADEMIC ROUTES

A Knowledge Transfer Partnership (KTP) is a collaborative research project between a business and an academic institution which facilitates the transfer of knowledge, technology and skills. A KTP can provide real benefits to all partners.

The ESI also has a knowledge exchange programme which brings together creative practitioners and research academics who share an interest in issues of environment and sustainability.

MOOCs are online university courses delivered at no charge. This American model is just one of a suite of online teaching methods that are being utilised to reach a broader range of students.

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STEM is most commonly associated with campaigns to increase the number of young people that study and work in science, engineering and mathematics. Opportunities to inspire young people in STEM are facilitated through three core programmes - STEM Ambassadors, STEM Clubs Programme, Schools STEM Advisory Network.

Women in Science and Engineering (WISE) helps organisations to inspire women and girls to pursue STEM subjects as pathways to exciting and fulfilling careers. The objective of STEM is to push the presence of female employees from 13% to 30% by 2020, boosting the talent pool to drive economic growth.

This Evidence Base forms the background for a Skills Action Plan for the LCEGS Sector, laying a framework for focused activity, enabling the public sector to support growth in this area and maximising the opportunities for the region and its inhabitants in the future low carbon economy.

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THE STORY BY NUMBERS

COMPANIES

 366 Businesses trading in LCEGS in Cornwall  126 Companies primarily in the Environment sub-sector  135 Companies primarily trading in the Renewable Energy sub-sector  105 Companies primarily trading in the Low Carbon sub-sector

SALES AND MARKETS

 £533m Sales per annum  75% Proportion of £533m sales accounted for by top ten LCEGS businesses  £1.4m Mean average sales per company  £0.14m Median average sales per company  7.1% Percentage contribution to Cornwall GVA  17% Predicted percentage increase in sales over next 2 years  36.5% The percentage of Cornwall’s LCEGS business sales in Cornwall  61.8% The percentage of Cornwall’s LCEGS sales in the UK  1.7% The percentage of Cornwall’s LCEGS sales that are from exports  £122b UK LCEGS sales in 2011/12  £954b EU LCEGS sales in 2011/12  £3,442b Global LCEGS sales in 2011/12

EMPLOYMENT AND SKILLS

 3900 Full and part time staff  1500 Estimate of sub contract and associate staff  19% Predicted percentage increase in employment in LCEGS over next 2 years  2% Percentage of Cornwall working population employed by the sector  10.7 Mean average LCEGS staff per company  2 Median average LCEGS staff per company  27% Percentage of LCEGS staff with degree level or above qualification  61% % of LCEGS businesses with at least one employee with a degree/MA/PhD  3-4 Average number of current skills needs per LCEGS business  9 The number of skills councils that include LCEGS in their remit Minus the top ten Companies (As a proxy for the SME base) Note: The figures above are indicative and should be treated with some caution  356 Number of companies  £207m Sales  39% Percentage of current total sales  £80m Predicted increase in sales over next two years  89% Predicted percentage of increase in total sales growth over next 2 years  1869 Full and part time Staff  48% Percentage of current full and part time staff  91% Predicted percentage of increase in employment in LCEGS over next 2 years

THE NUMBERS FOR THE LEVEL 2 SUB SECTORS

33% Companies trading in one sub-sector only 20% Companies trading in two sub-sectors 47% Companies trading in three or more sub-sectors

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INTRODUCTION

Community Energy Plus was commissioned by Cornwall Development Company (CDC) to produce a detailed research document which would form the basis for an effective Skills Action Plan for the Low Carbon Environmental Goods and Services Sector in Cornwall and The Isles of Scilly.

Community Energy Plus is an award-winning charity and social enterprise which has been delivering low carbon consultancy, products and services in Cornwall for 15 years. The experienced team have a long history of working with, and championing, the LCEGS sector in Cornwall and The Isles of Scilly. Community Energy Plus is a passionate supporter of local enterprise, helping individuals to progress careers in the sector and encouraging the retention of benefits of the low carbon technology revolution in the local economy.

For this commission a unique team was assembled, which drew on skills and knowledge within management at Community Energy Plus, and key associate consultants with specialist insight in the skills landscape and low carbon business sector.

THE BRIEF

This was the fourth sector-specific Skills Action Plan study to be commissioned by Cornwall Development Company in 2013-14. The primary purpose of the research was to inform the Local Enterprise Partnership’s (LEP) funding priorities and strategies for enabling growth in the local LCEGS sector by improving skills. CDC also wished to understand the composition of the sector in Cornwall and the Isles of Scilly. Our brief was to focus on sector-based activity rather than the whole low carbon economy.

Key questions that we were asked to explore included:

• What the sector can bring to Cornwall and Isles of Scilly (C&IoS), • What the C&IoS unique selling points are, • What is happening in the sector now, • Which local companies are working in the C&IoS sector, • Where there are plans for growth, • What skills are required to grow the sector, • How people move in and out of the sector (routes to employment).

The resultant action plan sets the blueprint for the next ten years, outlining how the public sector should respond to the skills needs of the LCEGS sector in C&IoS.

An additional piece of work for CDC’s Smart Cornwall team has been integrated with this study to establish market and investment baselines for the smart energy systems sector and explore cross-sector adoption of smart energy solutions.

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METHODOLOGY

The approach focused on detailed analysis of the Low Carbon Environmental Goods and Services in Cornwall and The Isles of Scilly through the compilation of a bespoke database, online surveys, focus groups and telephone interviews. Desk research sought to reveal a snapshot of the sector on a global and local scale, unearthing opportunities for this unique region to fulfil its potential in the low carbon economy of the future.

CAVEAT

At the time of writing, the policy and funding landscape for much of the LCEGS sector was still developing and a General Election loomed on the horizon in 2015. This piece of research gives a snapshot in time of the current status of a disparate sector, which includes several emerging technology areas, during a period of rapid change.

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2. EVIDENCE BASE REPORT A – LCEGS SECTOR OVERVIEW

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SECTOR DEFINITION, STRATEGIC LANDSCAPE AND POLICY DRIVERS

2.1.1. DEFINING THE LOW CARBON ENVIRONMENTAL GOODS AND SERVICES SECTOR

This chapter provides an up to date definition of Low Carbon Environmental Good and Services (LCEGS), and describes the sectors and sub-sectors that are likely to feature strongly in Cornwall and the Isles of Scilly (C&IoS) over the next 15 years.

Within the scope of this research, analysis of LCEGS activity in C&IoS utilises the accepted national and international definition of the sector. The Department for Business Innovation and Skills (BIS) categorises LCEGS as follows, (Department for Business, Innovation and Skills (BIS), 2013) with three ‘Level 1’ activity blocks (1. Environmental, 2. Renewable Energy and 3. Low Carbon) divided into 24 ‘Level 2’ sub-sectors:

Table 2 - LCEGS Levels 1&2, BIS 2012

Level 1 Environmental Renewable Energy Low Carbon Level 2 Air Pollution Biomass Additional Energy Sources Contaminated Land Geothermal Alternative Fuel/ Vehicle Environmental Consultancy Hydro Alternative Fuels Environmental Monitoring Photovoltaic Building Technologies Marine Pollution Control Wave & Tidal Energy Management Noise & Vibration Control Wind Carbon Capture & Storage Recovery and Recycling Renewable Consulting Carbon Finance Waste Management Nuclear Power Water Supply and Waste Water Treatment

BIS divides the 24 Level 2 markets into 119 further areas of activity (Level 3), which in turn have been sub-divided into 791 discrete economic activities (level 4 markets) that are sub- divided into 2800 activities.

This research provides data up to level 2, which is the point for national comparison.

Some emerging sectors such as SMART energy, Green Deal Advice services and solar thermal are not specifically listed in the Level 3 sub-sectors. SMART energy cuts across several categories and for the purpose of this study has been allocated its own level 2 sub-sector under low carbon. Green Deal Advice Organisations and Domestic Energy Assessors have been included in the Low Carbon – Energy Management level 2 sub-sector. We have included solar thermal under the BIS Photovoltaic Energy sub-sector and have re-labelled it ‘Solar Energy’. The geothermal sub-sector includes heat pumps.

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For a business to be considered part of the sector, a minimum of 20% of estimated sales activity must be attributed to LCEGS. BIS makes an exception for larger companies (greater than £50m turnover), where a small proportion of overall sales is a significant contribution to the UK LCEGS sector. In our research we have not found any companies in Cornwall to which this applies (the highest turnover given in the online survey responses was £27m).

DEFINING THE SECTOR – ISSUES TO CONSIDER

 It should be noted that the BIS LCEGS Report 2011/12 states that: “In the strictest sense (LCEGS) is not a “sector” but a flexible construct or “umbrella” term for capturing a range of activities spread across many existing sectors like transport, construction, energy etc., but with a common purpose - to reduce environmental impact” (Department for Business, Innovation and Skills (BIS), 2013, p. 7).

 Following the BIS lead, our definition excludes climate change adaptation and resilience as a specific area for analysis. We would strongly recommend further research into this growing sector, and the opportunities for C&IoS businesses to develop products and services which respond to the needs created by a rapidly changing climate.

 Although the BIS definition is a useful one, analysis does not take into account the significant effects of taxes and subsidies on the sector.

 The transition to a green economy will affect all businesses, not just those in the LCEGS sector, as noted in the Government’s Skills for a Green Economy report (HM Government, 2011):

“Above all, all businesses will need to respond to the transition to a green economy, as they consider the impact on their goods and services and how they produce these. Increased resource efficiency can increase profits and competitiveness, making UK industries stronger and more resilient. All workers will need the abilities and knowledge to respond effectively to the shift to greener business practices. Further Education and Higher Education both have a role in embedding skills for a green economy in their courses and ensuring teachers, trainers, lecturers and assessors have the necessary capabilities to undertake this widening role.”

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IDENTIFYING PRIORITY SUB-SECTORS FOR C&IOS

LCEGS businesses in C&IoS were invited to complete an on-line survey designed to gather quantitative data about the overall sector and, in conjunction with the global, national and local data, to help identify priority sub-sectors for future funding and support. The detailed prioritisation matrix and scoring system is attached as Appendix 1 (10.1). Criteria for prioritising the sub-sectors were:

 Emerging sub-sector in need of support to get established.  Sub-sectors demonstrating above average growth or plans for growth.  Sectors where there are significant funding drivers.

The top twelve priority sub-sectors are:

Table 3 - Top twelve priority sub-sectors for C&IoS

Sector Score Wave and Tidal Energy 14.0 Geothermal Energy 13.0 Smart Energy 13.0 Biomass 10.0 Alternative Fuel Vehicles 10.0 Alternative Fuels 9.0 Wind 8.0 Additional Energy Sources 8.0 Building Technologies 7.0 Energy Management 6.0 Solar Energy 5.0 Carbon Finance 5.0

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2.1.2. BACKGROUND AND HISTORY

This chapter charts the background and history of the emergence of the LCEGS sector in Cornwall and Isles of Scilly within a UK and European context. We look specifically at sub- sectors which have been identified as a priority for C&IoS.

In 2011-12 in Cornwall and the Isles of Scilly (C&IoS) BIS reported that LCEGS sales totalled £732.54m. There were 304 companies and 5605 employees working in the sector. C&IoS had the lowest LCEGS sales, number of companies and employees of all the LEP regions and per head of population is below average. This reflects C&IoS’s economic status as a Less Developed Area. Yet C&IoS has the UK’s broadest combination of renewable energy sources and an impressive track record of innovation in the sector.

Given the time restraints in producing this report, we have focused in detail below on the top three priority sub-sectors and have given an overview for the remaining priority sub- sectors.

WAVE AND TIDAL ENERGY

The BIS definition of the wave and tidal energy sub-sector includes the manufacture, supply, installation and maintenance of turbines, generators, ebb and flow systems, pumps and pump equipment, structural engineering, field maintenance, assessment and measurement and other general services like financial planning, operational and maintenance services.

For in-depth information on European and UK Context, existing generators, Cornwall’s resources and Cornwall businesses, please see Appendix 5.1.4.

In 2011-12, the UK was ranked in fifth place for global sales of wave and tidal power out of the top fifty countries. The forecast global growth rate from 2011/12 to 2012-13 for the wave and tidal sub-sector was 3.9%.

BIS estimated that there were 33 wave and tidal companies in the UK in 2011-12, none of which had their main office registered in the South West region. However, Invest in Cornwall reports that Cornwall already has around 100 companies in the marine energy sector, many of which are clustered around the deep natural harbour at Falmouth. In 2014, with the help of CDC and Cornwall Marine Network, we identified 58 businesses in Cornwall that currently operate within, or could form part of the supply chain, for the wave and tidal power industry.

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EUROPEAN AND UK CONTEXT

Nationally, there are several marine energy testing facilities for wave and tidal power. Key facilities are:

 The National Renewable Energy Centre - Northumberland  The European Marine Energy Centre – Orkneys  The University of Edinburgh wide tank testing facility  COAST – Coastal, Ocean and Sediment Transport laboratory, Plymouth  Wave Hub (see below)

WAVE HUB

The idea for a pre-commercial wave power testing facility emerged in 2003, when a panel of industry experts convened by RegenSW, advised the South West Regional Development Agency that the natural resources, existing skills and research capabilities in the region made it a good base for developing a marine energy industry. At the time, individual prototypes could be tested at the sites mentioned above, but there was no facility to test multiple wave energy converters at the pre-commercial stage.

In March 2004, Cornwall Sustainable Energy Partnership (CSEP) launched a Marine Renewables Working Group to facilitate and support the development of the emerging sector. The group was formed as a result of a CSEP, RegenSW and Penwith District Council “Wave Power Seminar” held in October 2003. Members included CoaST, Cornwall Enterprise, Ocean Prospect, Offshore Wave Energy Ltd., Orecon, OWEL, local and statutory authorities, Rubicon Marine, Surfers Against Sewage and Wardell Armstrong. The group acted as a knowledge exchange forum and lobbied the Department of Trade and Industry (DTI) to bring forward the proposed date for a Strategic Environmental Assessment for the region’s waters to enable the Wave Hub proposal to progress (the region had been placed last in line in the DTI’s schedule).

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A scoping and technical feasibility study followed and Hayle, with its strong grid connection and good wave resource, was chosen as the most promising location for the off-shore facility. Consents were secured in 2007 and in 2010 the £30m Wave Hub, was installed 16km off the coast of Hayle. It is essentially a giant ‘socket’ on the seabed connected to the grid network onshore by an underwater cable. It has consent for wave energy devices to be ‘plugged in’ and tested on a scale not seen anywhere before. The project has four berths available and a capacity of 30MW. It is the world’s largest and first grid-connected wave energy test site.

In December 2013, leading UK-based wave energy company Seatricity announced plans to develop a 10MW array over the next two years at Wave Hub (enough to power up to 10,000 homes). Seatricity has designed, developed and patented what they believe to be the first economically viable, practical and reliable wave energy plant in the world. The company, which was established in 2008, has bases in Orkney, Kent and Antigua. The device was initially tested in Scotland. The company will also shortly be locating its custom-built workboat Ocean Enterprise in the port of Hayle. Seatricity plans to deploy its second generation device at Wave Hub during 2014 before building out to a full scale grid- connected array in 2015.

In February 2014, Finnish multi-national utilities firm Fortum signed an agreement to secure a berth at Wave Hub.

The Energy Technologies Institute (ETI) is investing in a demonstration project to manufacture and test a floating foundation that is integrated with an existing full scale, state of the art wind turbine. The aim of the project is to accelerate the market introduction of floating foundations for offshore wind turbines so that they can be quickly deployed in areas that are unsuitable for conventional offshore wind farms. In March 2013 the ETI selected Wave Hub as the preferred site to test the technology. US-based marine engineering firm Glosten Associates is designing the platform prototype in partnership with Alstom. In June 2013 the ETI and Glosten Associates confirmed the appointment of two Cornish companies, marine contractor and vessel owner Keynvor Morlift Ltd. (KLM) and offshore drilling specialists LDD, to work on an installation study for the project. The study is part of a £4.5m front end engineering study which was due to be completed by the end of 2013. In September 2013, Wave Hub applied for consent to install and operate a floating wind platform demonstrator. Once the study is complete, the ETI will decide in 2014 whether to invest £21m in the construction and deployment of the demonstrator project. They are looking to demonstrate the 6MW floating platform for up to 10 years at the Wave Hub test facility in Cornwall. Mooring installation work is expected to take place in the summer of 2015 and the installation of the platform during the summer of 2016.

Wave Hub was funded by the UK Government and the ERDF Convergence Programme. It is owned by BIS and operated by Wave Hub Ltd, a not for profit company.

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EXISTING GENERATORS

Existing generators include:

 Marine Current Turbines Ltd (MCT) – installed the world’s first offshore tidal turbine near Lynmouth in Devon. MCT now operates within the Hydro & Ocean Business in Siemens Energy.  Companhia da Energia Oceânica SA (Energis & Pelamis Wave Power) – shut down in 2008. Phase Two currently in development.  Lewis, Scotland – plan approved for the world’s largest commercial wave farm, with work expected to start on site after 2017.  Atlantis Resources Corporation - An engineering hub is being planned in Edinburgh.

In July 2012 Scotland’s first marine energy park was announced. The Pentland Firth and Orkney Waters Marine Energy Park will link up university researchers and private companies working on marine energy (BBC Scotland Business, 2012).

SOUTH WEST MARINE ENERGY PARK

In January 2012, the Government designated the South West region as the UK’s first ‘Marine Energy Park’ (SWMEP). It covers an area from the Isles of Scilly and Cornwall on the north coast up to and including the Severn Estuary and on the south coast east to the Isle of Wight. It represents a partnership of over 80 organisations in the private, research and public sectors. The geographic designation brings together marine energy resources (wind, wave, tidal) with relevant infrastructure and supply chain capabilities. The SWMEP partnership is committed to supporting early commercial project developers to meet its target to deploy at least 50 MW by 2017.

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CORNWALL’S RESOURCES

 C&IoS are well positioned to be at the forefront of this emerging technology sector.  Cornwall has the second highest wave resource in the UK.

The SW Marine Energy Park prospectus (RegenSW, 2012) identifies the region’s main tidal resource in the Bristol channel, but also indicates that “there are a number of other potential tidal stream development areas including a further 200 MW in the outer Bristol Channel, as well as the areas around Land’s End, the Isles of Scilly and in the English Channel off Portland Bill.1

The idea of harnessing Cornwall’s tidal stream resource has been around for a long time.2 Recently the communities of Looe, Truro, Wadebridge and Hayle have identified potential tidal power sites. Whilst the tidal stream resource in C&IoS is not generally considered to be commercially viable, there are opportunities for small scale tidal power projects that could provide valuable experience for marine companies as well as benefits to local communities.

There are a number of unique resources and support structures available to marine energy device developers considering operating in Cornwall. These are:

 Falmouth Bay Test Site (FaB Test)  Peninsula Research Institute for Marine Renewable Energy (PRIMaRE)  Marine Renewables Business Park (MRBP)  Marine Offshore Renewables group (MOR)  Offshore Renewables Delivery Programme (ORDP)

CORNWALL BUSINESSES

Some key local companies that are active in the emerging wave and tidal sector include:

 Mojo Maritime Ltd. Providing specialist project management, engineering and consultancy services to the marine renewable energy sector. Mojo Maritime Ltd. has

1 In total the ORRAD analysis identified over 1 GW of potential tidal stream resource with flow speeds greater than 2 m/s” (South West Regional Development Agency (SWRDA), 2010).

2 The Cornwall Electric Power Syndicate Ltd. considered tidal generation at Hayle before applying for the Cornwall Electric Power Act, 1902, but decided against it. In 1931 Tidal Energy Ltd. applied for approval of a scheme to use the River Gannel at Newquay for tidal generation, by means of a dam across it, but this application was refused by the Board of Trade.

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recently secured ERDF funding to develop, build and test a low motion floating platform for commercialisation around 2015.  A&P Falmouth. A major shipbuilder based in Falmouth. In February 2014, they were awarded a landmark contract by leading wave energy firm Seatricity to build a wave energy device to be deployed at Wave Hub.  Fugro Seacore. Fugro Seacore is a specialist marine drilling contractor involved in various renewable projects.

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GEOTHERMAL

The BIS definition of the geothermal sub-sector includes all activities relating to the extraction and use of heat generated from the earth. It includes the manufacture and supply of whole systems and equipment (e.g. heat pumps, pipes, flow control valves, drilling equipment, and installation rigs), component design and research, consulting and related services.

Geothermal is the fifth largest LCEGS sub-sector in the UK. BIS estimated that there are 4462 geothermal companies in the UK in 2011-12, of which 1933 are whole systems manufacture, 932 manufacturers/ specialist equipment suppliers, 873 system suppliers and 680 consulting and related services.

For in-depth information on European and UK Context, existing geothermal projects, Cornwall’s resources and Cornwall businesses, please see Appendix 5.1.4.

EUROPEAN AND UK CONTEXT

The UK has been lagging behind other parts of Europe on geothermal energy policy and funding drivers. That situation has recently changed with the announcement of more supportive UK policies and funding calls, including DECC’s allocation of £6 million funding in 2009 for geothermal plants generating between 5-10MW. The first round of Deep Geothermal Challenge funding, some £4 million, supported two Cornwall-based projects: £1.475m for a project at United Downs near Redruth and £2.011m for the Eden Project near St Austell.

Engineering consultancy, Atkins, has identified that the most promising geothermal resources in the UK are in Cornwall, the Lake District and Weardale, with smaller scale opportunities possible in Cheshire and Wessex.

Key geothermal European projects include:

 Hot Dry Rocks Project, Cornwall  Geothermal district energy scheme, Southampton  Enhanced Geothermal System (EGS) Pilot Plant, France  Germany - Newstadt Glewe, Unterhaching Power Plant, Bruchsal  Iceland - In 2011, roughly 84% of primary energy use in Iceland came from indigenous renewable resources, of which 66% was from geothermal.

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HOT DRY ROCKS PROJECT, CORNWALL

The UK’s first experimental geothermal project was sponsored by the DoE and the European Commission from 1977 to 1994. It was led by a research group at Camborne School of Mines at the Rosemanowes facility in Longdowns near Falmouth. The project succeeded in demonstrating the feasibility of pumping water through natural fractures, but did not reach sufficient depths to access enough heat to generate power. It was estimated that drilling would need to reach a depth of 6000m, which at that time was uneconomic. Seeing that the Cornwall project had a number of technical issues still to address, the DoE focused instead on the European Commission’s joint European geothermal project in Strasbourg, France. Rosemanowes is still in use today as a R&D facility for large diameter drilling, and wireline instrument testing, as well as for offices.

There were several spins off from Cornwall’s Hot Rocks project. Knowledge gained on the behaviour of rocks at significant depths has been applied by geothermal experts across the globe. Members of the team moved on to apply their knowledge in other companies and initiatives including: Altcom (Penzance), Atlantic Energy (Truro), BSA Consultancy (London/ Aberdeen), Calidus Engineering (Redruth), Cundall Consulting (London/ global), ECO Heat Pumps (dissolved), EGS Ltd. (Penzance), Enterprise Oil (London), Fracture Systems Ltd. (St Ives), Imerys (St Austell), NeoPartners (Falmouth), ICE Energy (Oxon), Liberty Resource (US), Marriott Drilling (Chesterfield), Princess Yachts (Plymouth), Reflex Marine (Truro), University of Minnesota and Wardell Armstrong (Truro). Some of the Hot Rocks team became involved in the European Enhanced Geothermal Systems Project (EGS) which integrated all research activity in this area and established a pilot EGS plant at Soultz-sur-Forêts in France.

RESEARCH AND COLLABORATION

Cornwall Council has expressed an interest in participating in BritGeothermal3 and a think tank has been set up with the University of Exeter on geothermal, heat networks and supporting policy.

Deep Geothermal is taught as a module at the Renewable Energy degree course at the University of Exeter Penryn Campus and there is a geothermal module on the FdSC Renewable Energy Technologies course at the University of Plymouth, Cornwall College Campus.

3 BritGeothermal is a new consortium for technical collaboration and cooperation in geothermal research within the UK. The initial partners are the University of Glasgow, the British Geological Survey, the University of Durham and the University of Newcastle. It is hoped new partners will join as research projects develop.

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GEOTHERMAL RESOURCES IN CORNWALL AND ISLES OF SCILLY

The South West region has 300MW of potential geothermal energy to be exploited, enough for half a million homes. Cornwall’s geothermal gradient (the temperature increase with depth) is significantly higher than elsewhere in the UK. Cornwall is also the first region in the UK to approve planning permission for deep geothermal plants.

Cornwall’s high proportion of off-gas homes means that there is a large potential market for heat pump systems. The Isles of Scilly has no mains gas at all, which should make the islands an attractive market for heat pumps, but there are additional costs in transporting equipment and installers to the islands. The use of heat pumps in social housing and in combination with other renewable technologies was pioneered in Cornwall.

CORNWALL AND ISLES OF SCILLY’S GEOTHERMAL SECTOR

BIS estimated that there were 326 geothermal companies in the South West region in 2011- 12. In 2014 the study has identified 56 geothermal businesses in Cornwall, most of which are supplying/ installing heat pumps. The chart below tracks the growth of specialist geothermal energy companies in Cornwall.

Figure 1 - Cumulative total no. of geothermal businesses

Cumulative total no. of geothermal businesses against time 30 25 20 15 10 5

0

1994 2000 1984 1986 1988 1990 1992 1996 1998 2002 2004 2006 2008 2010 2012 2014

Year Cumulativetotal no. of businesses

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The heat pump sector started to grow after the Government’s Clear Skies grant scheme was introduced in 2003. Several steps then led to the launch of the domestic Renewable Heat Incentive (RHI) in April 2014:

 Clear Skies ran until March 2006, after which it was replaced by the Low Carbon Buildings Programme (LCBP).  The LCBP ran until 24 May 2010, but grants for ground source heat pumps were closed in 2009 because the funding pot for that technology had been exhausted.  A long gap between 2009 and the launch of the commercial RHI (covering business, industry, public sector, not for profit and heat networks) in November 2011 caused much uncertainty for the heat pump sector.  The Renewable Heat Premium Payment (RHPP) scheme (one off grants to householders) was introduced in August 2011 and was extended to March 2014. This has now closed.  After considerable delay, the domestic RHI scheme launched in April 2014. This has the potential to encourage large-scale roll-out of renewable heat installations, particularly in off-gas grid households in Cornwall. However a Green Deal Assessment (GDA) is needed for households to be eligible for an RHI grant and the difficulties in the roll-out of the government’s flagship Green Deal Programme have led to the very slow uptake of training by individuals willing to become Green Deal Assessors.

The announcement of the RHI prompted a lot of new entrants to join the heat pump sector, in particular electrical and plumbing companies which up-skilled their employees to install systems (some of this was subsidised locally through the Environmental Skills Network). It is hoped that, with the scheme finally launched as this study was compiled, the optimism of these early movers will pay off.

While private sales exist, some 17 years after the first ground source heat pump installation in the Isles of Scilly, the sector is still reliant upon subsidies to make the technology attractive and affordable to customers.

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GEOTHERMAL PIONEERS IN CORNWALL AND ISLES OF SCILLY

A number of innovative geothermal and heat pump initiatives have been pioneered in C&IoS. These are:

 Camborne School of Mines  EarthEnergy Ltd.  Kensa Engineering/ Kensa Heat Pumps  Wardell Armstrong International Ltd.  EGS Energy

GEOSCIENCE LTD

Falmouth-based Geosocience Ltd. was established in 1984. The company provides consultancy specialising in deep underground investigations for the oil and gas, nuclear and geothermal industries. It became a significant player in the NIREX deep exploration programme at Dounreay and Sellafield - due to expertise in deep underground investigations in hard rock acquired at the Hot Dry Rocks project (an unforeseen outcome).

GeoScience Ltd. promotes itself as having more than 30 years’ experience in research, demonstration and commercial exploitation of geothermal resources of all types. The company conducted a mine water heat pump geothermal assessment in the CPR Energy Feasibility Study in 2006. Working in partnership with London-based Geothermal Engineering Ltd. (GEL), they have plans to construct a £50m power plant at United Downs near Redruth. The plant has planning permission from Cornwall Council and will supply 10MW of base load electricity to the National Grid and up to 55MW of renewable heat for local use. It will involve drilling to approximately 5km depth in a region of high heat flow and natural fracture permeability, to develop a reservoir system and recover hot water to surface for electricity generation. GeoScience conducted the feasibility and design for GEL and a drilling site is in preparation. Managing Director Tony Batchelor is Geothermal Adviser to the Commission of the European Communities, DGXII and a member of the Geothermal Resources Council as well as other geothermal forums. Operations Director, Peter Ledingham, was an engineer on the Hot Dry Rocks project and is a Director of GEL.

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SMART ENERGY

Smart energy doesn’t fit neatly into any one BIS category, so for the purposes of this study we placed it into its own sub-sector. The smart energy definition we used includes: Home energy management systems, building energy management systems, smart data storage and analytics, smart appliances, smart metering and advanced metering infrastructure (AMI), real time dynamic pricing infrastructure, microgeneration management and smart grid technology at the distribution scale (DA: Distribution Automation, DMS: Distribution Management Systems).

With Smart Cornwall’s help we have identified 130 relevant businesses in Cornwall, 26 of which are currently offering smart energy services and 104 that have potential to enter the sector. Smart Cornwall estimates that over 10% of businesses in C&IoS have the potential to move into the smart energy supply chain and over 2000 jobs could be created by the end of the decade (RegenSW, 2013).

For in-depth information on European and UK Context, existing Smart Energy initiatives, Cornwall’s resources and Cornwall businesses, please see Appendix 5.1.4.

EUROPEAN AND UK CONTEXT

Due to EU legislation, for example the Energy Services Directive and the 3rd Energy Package, the majority of countries in Europe already have or are about to implement some form of legal framework for the installation of smart meters.4

In December, 2009, the UK Government set a target for smart meters to be rolled out to 28 million households and 2 million non-domestic sites by the end of 2020. This will be done in two phases: The Foundation Stage, which began in March 2011 and Mass Rollout which is expected to begin by autumn 2015. By the end of quarter 3, 2013, DECC reported that 200,400 smart meters had been installed in domestic properties across the UK and 508,500 smart and advanced meters are now operating in smaller non-domestic sites (Department of Energy and Climate Change (DECC), 2013). The size of the market for smart energy meters is considerable.5

4 The European Landscape Report 2012 identifies Estonia, Finland, France, Ireland, Italy, Malta, Netherlands, Norway, Portugal, Spain, Sweden and the UK as ‘dynamic movers’ in this technology area (SmartRegions Project, 2012)

5 Navigant and Bloomberg estimate that the market for smart energy systems to UK companies will be worth £3-5bn by 2020 and that the growth rate in the UK is 10% and 30% in the EU.

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To give an idea of the scale of the local market: In 2011, Cornwall had 185,450 ordinary domestic electricity meters, 73,760 Economy 7 domestic electricity meters and 124,958 domestic gas meters. The Isles of Scilly had 675 ordinary domestic electricity meters and 483 Economy 7 domestic electricity meters (Department of Energy and Climate Change (DECC), 2013). However, since national energy suppliers will be responsible for implementing the smart meter roll out there is a risk that the supply and installation of meters will be procured through national rather than local supply chains. Cornwall Council could play a role in influencing the biggest player, British Gas, to support local businesses through their smart meter roll out programme.

Current projects include:

 Energy Demand Research Project – trial and research project across the UK.  Energy Technologies Institute (ETI) Smart Systems and Heat Programme – aims to design a ground-breaking smart energy systems in the UK.  Technology Strategy Board (TSB) – various awards to smart energy projects and the creation of Knowledge Transfer Networks.

SCENARIOS FOR THE DEVELOPMENT OF SMART GRIDS IN THE UK

This multi-institutional, inter disciplinary project is supported by the UK Energy Research Centre (UKERC). The project aims to advance understanding of smart grid deployment and utilisation up to 2050. The research team includes Dr. Peter Connor Senior Lecturer in Renewable Energy Policy at the University of Exeter (University of Exeter, 2013). The concept of a ‘smart campus’ is also being explored at the University’s Cornwall campus in Penryn.

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SMART ENERGY RESOURCES IN CORNWALL AND ISLES OF SCILLY

In 2013 Cornwall Council started developing the Smart Cornwall Programme, an ambitious initiative to develop the UK’s first fully integrated smart energy system. The programme is being developed under the governance of the Smart Cornwall Steering Group which includes representatives from public, private and academic organisations. Key developments to date include:

 February to March 2013: Cornwall Council ran a consultation to help inform the objectives in a Smart Cornwall Routemap up to 2020.  Oct 2013: Smart Cornwall Evidence Base was published.  Feb 2014: The Smart Cornwall Routemap is complete and is currently waiting on an approved PR strategy to support its official launch.  Feb 2014: A scoping workshop was held to obtain feedback from the private sector to inform the final development of the Smart Cornwall Business Forum, which the steering group aims to officially launch at the Royal Cornwall Show 2014.  Aug 2014: This is the target launch date for the Smart Cornwall Programme.

Cornwall’s 252 MWe of renewable electricity installed capacity is putting pressure on the local electricity grid, presenting a local driver for smart energy solutions to reduce peak demand. (RegenSW, 2013)

Cornwall’s Superfast Broadband connectivity makes the county a favourable place for smart energy systems to be enabled. Cornwall Smart Homes has reported increased demand for their technologies since Superfast Broadband was introduced to Cornwall (Superfast Cornwall, n.d.).

SMART ENERGY PIONEERS IN CORNWALL AND ISLES OF SCILLY

The few local companies that currently specialise in providing smart energy products were mainly established in the last decade, reflecting the emerging nature of this technology sector. They are:

 Enigin Plc  Carnego Systems  Natural Generation Ltd  Cornwall Smart Homes  Kernow Controls Ltd  ZLC Energy Ltd  Wattstor Ltd  British Gas

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NETWORK MANAGEMENT ON THE ISLES OF SCILLY

The Isles of Scilly have a stated intention of becoming energy self-sufficient, an aspiration which is supported by the islands location and climate, which provides significant potential for the use of renewable low carbon technology. The islands communities are very engaged in understanding the need for effective energy management as demonstrated during the islands 2009 ‘e-day’ initiative which received national BBC TV coverage. However, to reach this aspiration a principle challenge the islands face is the need to maximise the islands existing electricity distribution infrastructure.

Consequently in November 2013 Western Power Distribution’s ‘Network management on the Isles of Scilly’ project which was finalised, one of the UK’s largest Low Carbon Network Funded trials. Project activity focused around the deployment of advanced technological solutions which included low voltage monitoring, high voltage automation and advanced communication to form an overarching smart grid.

The outcome of the project has helped ensure local residents are enabled to increasingly adopt low carbon technologies such as solar PV and heat pumps whilst deferring potentially costly reinforcement of the islands existing 33KV submarine cable and 11KV ring main. In addition the new Smart platform will help support the effective integration of backup energy generation and ensure greater reliability of consistent electricity supply across the Isles of Scilly.

Western Power Distribution successfully delivered the project in partnership with GE Digital Energy, Power Electrics, Power Plus Communications, Duchy of Cornwall, Council of the Isles of Scilly, Transition Scilly and Smart Cornwall.

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BIOMASS

The BIS definition includes all activities that convert biomass into energy, but excludes biomass fuels – which are included under the alternative fuels sub-sector. The biomass definition includes the manufacture, supply, consulting, design, installation, engineering of biomass furnace and biomass energy systems, biomass boilers and related systems.

BIS estimate that there were 2339 biomass businesses in the UK in 2011-12, of which 995 were biomass energy system companies and 745 boiler and related system companies. BIS further estimated that there were 190 biomass businesses in the South West region in 2011- 12. In 2014, we identified 33 businesses in Cornwall providing biomass products and services.

For in-depth information on European and UK Context, existing generators, Cornwall’s resources and Cornwall businesses, please see Appendix 5.1.4.

THE EUROPEAN AND UK CONTEXT

The European Biomass Industry Association (EBIA) was established in Brussels in 1996. It groups together market forces, technology providers and knowledge centres active in the field of biomass. In Sustainable Bioenergy in the EU27 by 2030: The Biomass Futures Scenario, bioenergy only contributes to 3.7% of total primary energy supply (International Institute for Sustainability Analysis and Strategy, 2013).6

Employment potential in the UK’s bioenergy sector is expected to exceed that in other renewable energy technologies due to the additional element of feedstock production, supply, handling and logistics. In 2012, the National Non-Food Crops Centre estimated that if bioenergy deployment reaches the levels predicted in the Renewables Roadmap, then there may be somewhere in the region of 35-50,000 UK jobs in bioenergy by 2020 (NNFCC, The Bioeconomy Consultants, 2012).

However, in the UK a lack of confidence in a reliable fuel supply chain is a significant barrier to the widespread uptake of biomass (Paul Arwas Associates for the Carbon Trust, 2005). The South West, having the second highest area of woodland in England, has seen the establishment of significant wood fuel supply infrastructure offering security of quality logs, chips and pellets. This, together with highly efficient biomass boiler technology, has increased confidence in biomass space and water heating, resulting in 324 biomass

6 Pioneering countries are Finland and Sweden, where bioenergy contributes 20% and 16% respectively of gross inland consumption (European Biomass Industry Association, n.d.).

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BIOMASS PIONEERS IN CORNWALL AND THE ISLES OF SCILLY

The chart below tracks the growth of specialist biomass companies in Cornwall, demonstrating growth in the local sector just before and after the commercial RHI was launched in 2011.

Figure 2- Cumulative total no. of biomass businesses

Cumulative total no. of biomass businesses against time 20

15

10

5

0

2014 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Cumulativetotal no. of businesses Year

Several sites have established Biomass systems. These include:

 Lanhydrock House  Duchy College, Camborne  Trelowarren, Helston  Jubilee Wharf, Penryn  Kernock Plants, Saltash  Forest Fuels

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ALTERNATIVE FUELS AND VEHICLES

In this section we have brought together two BIS categories. Alternative Fuel and Vehicles includes low carbon fuel and technology activities that relate to (predominantly) automotive transport. It includes the production, supply and distribution of alternative fuels (e.g. LNG, LPG), early stage vehicle technologies and R&D for hydrogen fuel cells, electric and hybrid electric vehicles and other emerging technologies. The Alternative Fuels sub-sector includes the manufacture, production, supply and distribution of batteries, biofuels for vehicles, non- transport biofuels, biomass (including wood) and hydrogen (Department for Business, Innovation and Skills (BIS), 2013, p. 59).

BIS estimated that there were 6078 alternative fuel vehicle companies in the UK in 2011-12, of which 540 companies were in the South West region. We identified 5 alternative fuel vehicle companies in Cornwall. BIS reported 7769 alternative fuel companies in the UK, of which 813 are in South West region in 2011-12. We identified 12 alternative fuel companies in Cornwall.

For in-depth information on European and UK Context, existing initiatives, Cornwall’s resources and Cornwall businesses, please see Appendix 5.1.4.

ELECTRIC VEHICLES

“Electric cars are one of the most promising of our green industries and we want to secure the UK’s position as a global leader in both the production and adoption of these vehicles.”

(Deputy Prime Minister Nick Clegg)

 There are more than 6,000 public charge-points for electric vehicles across the UK.  In July 2013, the UK Government announced a £37 million budget for electric vehicle infrastructure.  The Government has also committed to invest £5 million to introduce electric vehicles across government and wider public sector fleets this year.  In January 2014 the UK’s Deputy Prime Minister announced that the Government will invest more than £9 million to boost the number of charging points for electric cars (HM Government, 2014).

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ELECTRIC VEHICLES PIONEERS IN CORNWALL AND THE ISLES OF SCILLY

ECO DRIVE

Eco Drive is based at the Pool Innovation Centre. The company was established in 2005 by Matt Trevaskis, who was inspired by his positive experience of using a 50cc type moto- scooter 12 years ago. Matt has been active in local forums and networks since the days of the CSEP to the current Business Leaders for Low Carbon group. Since 2005 Eco Drive has operated a fleet of production Peugeot and Citroen electric vehicles for the public sector, businesses and individuals. In August 2011, Eco Drive hosted the Sexy Green Car show at the Eden Project. They are now working closely with vehicle manufacturers and dealers across the UK and Europe to develop, market and support the new generation of electric vehicles. The company also designs and supplies charging stations for home charging, fleets and public infrastructure (Eco Drive, n.d.).

ELECTRIC CAR CHARGING POINTS

In August 2013, Cornwall Council’s Green Cornwall team announced that they had secured £1m from the Office for Low Emission vehicles to install 51 electric vehicle charging points across the South West, of which 39 will be in Cornwall. The bid includes funding for a network of 29 ‘rapid chargers’ in Cornwall, Devon and Dorset, which charge a vehicle in around 20 to 30 minutes, as well as 22 ‘fast chargers’ which charge vehicles in around two hours. This initiative will give Cornwall one of the most comprehensive rapid charging networks in Europe. Roll out was expected to start from September 2013 (Cornwall Council, 2013).

In early 2014 the Government announced that 44 railway stations in England will get special electrical sockets for charging electric cars. The list includes Bodmin Parkway, Liskeard, Looe, Newquay, St Austell, Truro and Redruth.

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RESEARCH

In December 2013 the Environment and Sustainability Institute at Tremough announced a new research project to assess the costs and benefits of integrating electric vehicles into the Cornish energy system. The research aims to identify ways to develop an integrated electric vehicle and renewable energy system. Dr Xiaoyu Yan is leading the research. Dr Yan is currently seeking collaborators with an interest, and/or expertise, in electric vehicles or renewable energy systems (Environmental and Sustainability Institute , 2013).

ALTERNATIVE FUELS

BIODIESEL

Companies in Cornwall who have trialled Biodiesel include:

 Truronian Coaches.7  Travel Cornwall, a bus and taxi company in Newquay, operates all of its buses on varying blends of Biodiesel from B5 - B100.  All of Duchy College’s vehicles run on biodiesel (Farmers Weekly, 2006).

BIOMASS FUELS

In the UK woodfuel demand for electricity has been increasing over the last two years. However, the demand for wood from UK sources has remained stable over this period (at approximately 1.4-1.5 million tonnes) and the increased demand has been met by increased imports. There are four key biomass fuels available in the UK:

 Forestry crops,  Dry agricultural residue,  Waste wood,

7 In 2003, bus company Truronian, announced that it had signed a contract with Mitchell and Webber to provide 1.2m litres of biodiesel per year. In April 2008 Truronian was taken over by First Group Plc. and its local bus service was merged with First Devon and Cornwall's bus operations. Biodiesel doesn’t feature in First Group’s corporate social responsibility policy. As part of First Group’s Climate Change Strategy they are involved in research and trials into new technologies aimed at reducing their emissions and reliance on diesel. They operate over 100 hybrid buses in the UK and are currently trialling hydrogen fuel cells in UK bus. All of First Group’s UK franchises and operating companies have achieved ISO5001, the international standard for energy management. Mitchell and Webber no longer appear to be offering biodiesel.

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 Woody energy crops.

Currently they have the potential to supply up to an additional 41TWh/yr or about 1.5% of UK energy supply. In the future this could rise to c.80TWh/yr, mainly through expansion in the supply of woody energy crops and/or dry agricultural residue (Department of Energy and Climate Change (DECC), 2013).

The UK does not have a dedicated trade association for biomass. The European Biomass Association (AEBIOM) offers information and guidance from across Europe.8

Some of the wood fuel developments in Cornwall have already been covered under the biomass heading. The combined woodland area across Cornwall and Devon currently totals 103,300 ha and makes up 10% of the land cover. This resource could theoretically provide a sustainable yield of 206,000 oven dry tonnes (odt) per year, given 2 odt/year can be generated from broadleaf woodlands under sustainable management, or wood fuelled heating for 60,000 homes (CEP - Braun K. , 2013).

As part of the development of its Community Energy Club, which has over 2,200 members collectively buying heating oil, Community Energy Plus is exploring options to develop bulk wood fuel and biomass purchasing. The motivation is to strengthen the supply chain in order to increase demand and to help heating oil user find pathways to alternatives fuels. CEP has done some initial exploratory work with a land owner who wants to develop a wood fuel hub site in central Cornwall. The heavily wooded site could be developed into a hub which would process dry, A1 grade, wood chip as well as potentially sourcing waste wood from sawmills, then supply the processed wood chips to customers (CEP - Braun K. , 2013).

HYDROGEN

It is estimated that the global fuel cell market could be worth over $26bn in 2020 and over $180bn in 2050. The UK share of this market could be $1bn in 2020 rising to $19bn in 2050. Currently, over 100 UK companies, as well as over 35 academic and contract research groups are highly active in fuel cells and hydrogen.

8 AEBIOM is a non-profit Brussels based international organisation founded in 1990 and brings together 30 national associations and around 70 companies from all over Europe representing more than 4000 indirect members including mainly companies and research centers (European Biomass Association (AEBIOM)).

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There has been very little activity in Cornwall and the Isles of Scilly regarding the deployment of hydrogen vehicles or hydrogen fuels. The main example is for a hydrogen bus project that was developed in Camelford, but failed to complete its funding package. For more information please see Appendix 5.1.4.

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WIND

The BIS Wind Energy sub-sector includes all activities that convert wind power into usable energy. It includes the manufacture, supply, installation, operation and maintenance of wind farm systems (including power plant, power control, electrical), large and small wind turbines for onshore and offshore applications. It includes research, but not consultancy, which is covered under renewable energy consulting.

BIS estimated that in 2011-12 there were 5481 wind energy companies in the UK, of which 317 were in the South West region (this had fallen from 340 in 2007-08). In 2008, RegenSW estimated that there were 35 companies operating in the wind (onshore and offshore) sector with an average of 6 employees per company and an average turnover per employee of £75,000 (RegenSW/DTZ, 2008). We identified 22 wind energy companies in Cornwall in 2014.

For in-depth information on European and UK Context, existing initiatives, Cornwall’s resources and Cornwall businesses, please see Appendix 5.1.4.

CORNWALL’S RESOURCES

Cornwall has average wind speeds of 7M+ per second, providing some of the best wind resource in Western Europe. The main opportunity in Cornwall is for onshore wind and as a learning base for floating offshore wind platforms.

Whilst wind power is well established as a technology, there are new models of community ownership emerging that will address planning barriers and ensure that a greater proportion of the lucrative income generated benefits local communities. One of these models has been developed in Cornwall.

A sample of pioneering wind energy initiatives in Cornwall and Isles of Scilly includes:

 Redruth Generator  Delabole Wind Farm  South Wheatley Renewable Energy Trust  Low Carbon Living  Spinetic Energy – Wind Fences

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COMMUNITY POWER CORNWALL

Community Energy Plus and Kabin (Cornwall’s cooperative development organisation) commissioned Cornwall’s first genuinely community-owned wind project in 2011. Two 80kW Endurance E3120 turbines were installed on land at Gorran Highlanes near St Austell. Cornwall’s first community share issue for renewable energy was launched in 2011 as part of the project, raising £80,000 and gaining 100 members. The Low Carbon Society, a Community Development Finance Institution (CDFI) was established which uses the principles of peer reviewed lending to help de-risk new projects. The project has also created a fund for the benefit of the local community in Gorran. Co-funding for development costs came from Cornwall Strategic Partnership via a Local Area Agreement outcome to reduce carbon emissions. Additional gap finance came from Community Energy Plus and Cornwall Council; since that initial phase the partnership of the Council, the Low Carbon Society, Kabin and Community Energy Plus have established a revolving loan fund for the support of further community energy projects (see Section 5.7.6 – Community-Led Investment for more details.) Community Power Cornwall has used its revenue income from Gorran to develop a broader portfolio of projects including new community projects at BF Adventure (installation achieved March 2014) and at Pengelly Farm in Wadebridge, and is in process of securing consents for projects during 2014 in Launceston, Summercourt, and on the Rame Peninsula.

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The chart below tracks the growth of specialist wind energy companies in Cornwall. A big increase in the emergence of new companies can be seen following the introduction of the FiT in 2010.

Figure 3 - Cumulative total no. of wind businesses

Cumulative total no. of wind businesses against time 16 14 12 10 8 6 4 2

0

1990 2010 1980 1982 1984 1986 1988 1992 1994 1996 1998 2000 2002 2004 2006 2008 2012 2014 Cumulativetotal no. of businesses Year

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SOLAR ENERGY

The BIS definition of the Photovoltaic energy sub-sector includes all activities that help to convert solar radiation into useable energy. It includes production and supply of solar chemicals and solar pond salt; manufacture, supply, installation and maintenance of active and batch systems, clerestory windows, light shelves and tubes, solar box cookers, solar combi systems, solar lighting design, photovoltaic cells and ancillary equipment, glass houses, convection towers, heliostats, parabolic collectors, turbines, trough collectors, towers, solar trackers and R&D. We have referred to this sub sector as ‘Solar Energy’.

In 2011-12 BIS estimated that there were 2084 photovoltaic companies in the UK, of which 120 were in the South West region. In 2014, we identified 92 solar energy companies in Cornwall, most of which were solar PV installers.

Cornwall is in a good position as a location for solar energy suppliers, having the highest solar level of gain per square metre of land in the UK.

SOLAR PV

Solar PV currently accounts for 12 per cent of renewable electricity capacity in the UK and 2.9 per cent of renewable electricity generation (HM Government, 2013). DECC report that the UK is an increasingly important player in the European market for solar PV. In May 2013, the European Photovoltaic Industry Association report indicated that the UK has a 6 per cent share of deployed capacity across Europe (in comparison to Germany with 44 per cent and Italy with 20 per cent). Although the UK has less sunshine than other countries, our climate - in southern England in particular – is similar to that in Germany, where deployment of solar PV is considerably higher. The UK solar PV sector has experienced rapid growth in recent years, with installed capacity increasing from 94 MW at the end of 2010 to 2,413 MW at the end of June 2013. At the same time over last two years the costs of solar PV have fallen by almost 50% (Department of Energy and Climate Change (DECC), 2013).

In 2012/2013 RegenSW reported a 20 % increase in the number of solar PV installations in the South West and an 80% increase in the capacity provided by PV. This represents a growth of 250.9 MW. The South West now has over 65,000 installed and generating solar PV projects, providing 565 MW of installed capacity (66% of the region’s renewable energy generating capacity). Over 95% of all solar PV installations in the south west are less than 4 kW, providing one third of the PV capacity (188 MW).

There were four peaks in the number of monthly installations from mid. 2011 as the industry responded to changes in the FiT rate. Despite fluctuations over the last year, RegenSW report that the overall trend has been a significant decrease in the number of

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 monthly solar PV installations. In early 2013 the number of new projects appeared to have levelled out at similar rates to those seen in 2010 (RegenSW, 2013).

By March 2013, Cornwall had 9256 solar PV installations, totalling 173 MW installed capacity.

SOLAR THERMAL

Over the same period there were over 4000 solar thermal installations in the South West region, totalling 12 MWth of renewable heat. This is an increase on previous years, but is a small compared to the increase seen for solar PV.

By March 2013, Cornwall had 741 solar thermal installations, totalling 2 MW installed capacity.

A sample of pioneering solar energy initiatives in Cornwall and Isles of Scillies follows.

 Plug into the Sun  Kernow Solar Park  The National Solar Centre

WHEAL JANE

In July 2011, the South West’s first solar farm was connected to the grid at the Wheal Jane Group’s site near Truro. The 1.4 MW, 7.2 acre development was the first commercial scale solar farm to gain planning consent in the UK. It was implemented by Lightsource Renewable Energy Ltd. and Solarcentury, utlising funding by Octopus Investments. Shortly afterwards the Government announced 70% cuts in the FiT.

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The chart below tracks the growth of specialist solar energy companies in Cornwall9.

Figure 4 - Cumulative total no. of solar businesses

Cumulative total no. of solar businesses against time 40 35 30 25 20 15 10 5

0

2004 2011 2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2012 2013 2014 Cumulativetotal no. of businesses Year

The solar PV sector has been affected multiple times by changes in Government policy. Frequent changes in the FiT caused continual uncertainty for businesses that had to rapidly adapt their business plans to the new conditions. In the run up to each FiT degression deadline, activity peaked as businesses rushed to install before the rate dropped. This prompted a solar gold rush in Cornwall, with solar farm developers trying to install before the rate for large solar dropped in August 2011. This put tremendous pressure on Cornwall Council’s planning department. Degressions in the FiT rate were partly linked to reductions in the cost of equipment and despite the uncertainties, over the whole period the local sector and numbers of installations has steadily grown, with the biggest growth rates occurring once the FiT was introduced. The chart above does not include the large number of electricians and plumbers that upskilled to enter the sector in the 2009 run up to the introduction of the FiT. For more information on policy drivers in respect of the Solar sector, see the Strategic Landscape section (Chapter 2.2.3)

The following chart compares the growth of specialist Microgeneration companies in Cornwall since 1980.

9 Companies with wider core services like electricians and plumbers have not been included in these figures because their incorporation date doesn’t reflect when they started providing solar energy products.

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Figure 5 - Cumulative total no. of renewable businesses over time

Cumulative total no. of renewable businesses against time 40

35

30

25 Wind 20 Geothermal 15 Biomass

10 Solar

5 Cumulativetotal no. of renewable businesses

0

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year

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ADDITIONAL ENERGY SOURCES

The BIS definition of Additional Energy Sources includes R&D, design and prototyping activities relating to a range of new low carbon energy sources: fuel cells, hydraulic accumulators, hydrogen, molten salt, thermal mass, compressed air, superconducting magnets and more general energy storage research.

For information regarding the European and UK context, please see Appendix 5.1.4.

In 2011-12, BIS estimated that there were 1400 additional sources companies in the UK, of which 34 were in the South West region. In 2014, we identified 7 relevant companies in Cornwall, of which PV3 and Wattstor are probably the most active in this technology area.

In Cornwall and Isles of Scilly where renewable energy and electric vehicles will put increasing pressure on the local electricity grid, energy storage will become an increasingly important technology to support the viability of other priority sub-sectors. It is potentially the next big growth area.

In 2014, the TSB awarded funding to Pendennis Shipyard for a hybrid energy system for marine vessels. The High Efficiency Marine Energy (HEME) Project will develop a highly optimised hybrid energy system for marine vessels utilising innovative high capacity energy storage to reduce fuel consumption. Partners include Energy Solutions, Bruntons Propellors and Triskel Marine Ltd (Business Cornwall, 2014).

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NEDAP SOLAR BATTERY SOFTWARE, REDRUTH

In 2013, Cornwall Council’s Green Cornwall team awarded a grant to Redruth Community Centre to enhance its existing solar PV system by supporting a pilot project for an off grid electricity storage system. The solar PV array was installed prior to the introduction of the FiT so does not receive any ongoing revenue. The energy storage system will enable the building to retain more or all of the electricity produced by the panels, which will be stored on site for use at the times of requirement outside of the generation periods, during daylight hours, and the technology used will integrate with the grid via the Nedap Solar battery system software. This has been calculated to potentially increase the effectiveness of solar PV installations by up to 300%. As a result, this will minimise or negate the requirement for imported electricity with the added benefit that up to 4kWh2 of stored electricity will provide protection against the building being left without electricity in the event of power cuts.

The Nedap installation is a pilot scheme which uses the system software to monitor the effectiveness of onsite electricity storage through collection of real-time data of all electricity flows to and from the grid and buildings (reported at 3, 6, 9 and 12 month periods) to assess viability of future larger installation programmes across groups of buildings. The pilot will provide data that will facilitate cost comparisons between energy storage technology installations and provision of further transmission cables, of which the lifetime costs of installing and maintaining is estimated to vary from £10.2m to £24.1m per kilometre and involves significant disruption, excavation and long lead times. The pilot will also aim to inform further research considering if energy storage can be used for voltage support by allowing greater flexibility in the grid as greater amounts of intermittent renewables come online, increasing pressures on the grid. Community Energy Plus is managing and monitoring the project.

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BUILDING TECHNOLOGIES AND ENERGY MANAGEMENT

The BIS definition of the building technologies sub-sector includes main stream building materials and systems that contribute to reduced energy use and to lowering the carbon footprint of buildings. It includes the manufacture, supply, distribution, installation and development of windows (double glazed, electro chromatic, insulated alloy, honeycomb, triple glazed), doors (insulated alloy and plastic), insulation, heat retention materials, electronic control systems, controlled venting and ducting systems.

More information on the background and history in the Building Technologies and Energy Management sub-sector, and relevant activity in Cornwall, can be found in Appendix 5.1.4.

We have merged these two sub-sectors together for this section because there is a lot of overlap between the technologies and services covered by the definition.

We have placed smart energy technologies under its own sub-sector; hence our count of Building Technologies businesses is lower than the BIS estimate.

The BIS definition of the energy management sub-sector includes energy saving and power management activities for industrial and domestic use. It includes:

 R&D into high efficiency lighting, heating, ventilation, power, equipment and pumps and advance management systems;  Gas Supply - monitoring, meterage, leak detection and maintenance, gas supply control and manufacture of high efficiency consumer equipment and devices;  Manufacture, supply, distribution and installation of: Energy saving light bulbs and tubes; lighting and control systems; energy saving heating and ventilation equipment and systems; energy saving power control, building control, power control, power consumption control and monitoring systems; consulting and other services (advice, publication, training, design of management systems). Again smart energy systems have been placed under their own category.

BIS estimated that there were 6321 building technology companies in the UK in 2011-12, of which 2347 were window companies, 1919 insulation and heat retention materials, 1451 doors and 598 monitoring and control systems. In 2011-12, 34,871 people were employed in the insulation and heat retention materials sub-sector in the UK.

BIS estimated that there were 1239 building technology businesses in the South West region in 2011-12. In 2014, we identified 25 building technology businesses in Cornwall.

BIS estimated that there were 330 energy management businesses in the South West region in 2011-12. In 2014, we identified 76 energy management businesses in Cornwall.

Much of the building technologies and energy management sector is established. Given the time restraints for this study, we have focused below on the context for the insulation

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CARBON OBLIGATIONS

As part of national efforts to tackle fuel poverty and mitigate climate change, the UK Government has set obligations on energy suppliers to enable their customers to save carbon since 1994 when the Energy Efficiency Standard of Performance (EESoP) was introduced. A brief history of the UK’s Carbon Obligations follows, with further detail in Appendix 5.1.4.

 EESoP ran from 1994 to 2002. The majority of measures were for disadvantaged customers.  EESoP was followed by the Energy Efficiency Commitment (EEC) in 2002, which had a similar methodology.  In phase 2 of EEC, which ran from 2005 to 2008, the targets were doubled and applied to suppliers with over 50,000 customers.  From 2008 to 2011, EEC was replaced by the Carbon Emission Reduction Target (CERT).10 Energy suppliers implemented their EEC and CERT targets primarily by fully funding or partly subsidising loft and cavity wall insulation.  Another supplier obligation, the Community Energy Saving Programme (CESP) was launched in 2009 and ran until December 2012. It required certain gas and electricity suppliers and electricity generators to deliver energy saving measures to homes in specified low income areas of Great Britain. In Cornwall the few eligible CESP areas tended to be IMD deprived urban areas with mass social housing that had already been insulated (Ofgem, 2013).

Energy supplier obligations have caused work flows in the insulation and heating industry to fluctuate. Typically when a new scheme was introduced there would be a slow start and in the year before a scheme ended a peak in activity and higher carbon price as suppliers rushed to meet their targets.

10 Extended to the end of 2012 to help fill the gap between CERT ending and the new Energy Company Obligation (ECO) starting.

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GREEN DEAL AND ECO

ECO was officially launched in January 2013, with targets to be met by 31 March 2015. However, in practice many companies did not start delivering ECO schemes until much later in 2013 because energy suppliers would not negotiate contracts until Ofgem had finalised the ECO guidance in March and there were long timescales involved in gaining the relevant accreditations. This left a long gap which impacted negatively upon businesses, especially early movers that had recruited and trained staff in anticipation of an earlier start date.

A new financing measure called Green Deal was launched alongside ECO in January 2013. The Green Deal enables householders and businesses to make energy saving improvements to their properties without paying upfront for the measures. The costs are repaid over time through the electricity bill and are not expected to exceed the financial savings achieved by the measures. Green Deal and ECO are designed to work together, with Green Deal finance gap funding costs that ECO does not fully subsidise. The availability of Green Deal was delayed by a lack of finance and the long accreditation processes involved in becoming a Green Deal Participant. The Green Deal Finance company didn’t open until April 2013, three months after Green Deal was launched. A cashback scheme was launched in 2013 to kick start Green Deal, but has had very low levels of take up.

There are three kinds of Green Deal Participant, all of whom must hold the relevant accreditations in order to make a Green Deal offer eligible:

 Green Deal Provider –provides the finance to cover the upfront costs of the measures.  Green Deal Advice Organisation (GDAO) – the organisation that provides a survey and advice by an accredited Green Deal Assessor leading to a Green Deal Advice Report that identifies suitable measures.  Green Deal Installer – installs the measures.

In its original form, ECO presented a promising support mechanism to help grow demand for the emerging solid wall insulation industry. Then, just as the industry was getting going in autumn 2013, Labour Party leader, Ed Milliband, pledged to freeze energy bills for two years if Labour was elected at the next General Election in 2015. This (and pressure from the Big Six energy suppliers) provoked the Prime Minister into announcing a series of cuts to ‘green levies’ (ECO) in order to reduce energy bills. Since then there has been great uncertainty in the sector about the future of ECO and energy suppliers were already implementing deep cuts (ahead of DECC’s consultation process which closed on 16th April) - in particular to solid wall insulation budgets.

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Since the introduction of Green Deal and Eco, loft insulation installations have fallen by over 90% and cavity wall insulation by 77% (Building.co.uk, 2013). In February 2014, DECC reported that a provisional 540,000 measures were installed in around 457,000 properties through ECO, Cashback and Green Deal to the end of December. The vast majority of installed measures (98 per cent) were delivered through the Energy Company Obligation. The most prevalent measures were cavity wall insulation, boilers and loft insulation (Department of Energy and Climate Change (DECC), 2014).

The Committee on Climate Change’s trajectory for solid wall insulation to make its contribution to meeting carbon budgets envisaged 130,000 installations during 2013. DECC’s final impact assessment envisaged approximately 42,000 solid wall jobs being undertaken. Approximately 24,700 solid wall installations were undertaken during 2013, under ECO, Green Deal finance and the cashback incentive. Most of these were undertaken through ECO, with just 260 jobs being undertaken via Green Deal. Loft and cavity wall insulation installs are also way below target. With the proposed changes to ECO, take up in 2014 is anticipated to be lower than 2013.

In July 2012, the Association for the Conservation of Energy (ACE) estimated that 33,000 people would be employed in 2013 on delivering insulation under the Energy Company Obligation. This compares with 57,000 people who were employed in 2012 on delivering insulation under CERT and CESP. ECO was expected to ramp up gradually, employing 46,000 FTE’s by 2015 (DECC’s estimate was up to 60,000 FTE’s by 2015). In practice, the gap between CERT and CESP ending and ECO schemes starting, as well as new policy uncertainty, has led to job losses and a dramatic drop in insulation rates. In June 2013, Andrew Warren, director of the UK Association for the Conservation of Energy, said that around 5,500 direct jobs had been lost in the insulation industry since late 2012. In February 2014, ACE estimated that 1800 to 5000 direct installer jobs could be lost in 2014.

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THE INSULATION AND ENERGY ADVICE SECTOR IN CORNWALL

In Cornwall and the Isles of Scilly where 46% of homes have solid walls, there has been a lack of energy supplier subsidy for solid wall insulation in private homes until now. This has disadvantaged the owners of such properties who have been paying for EEC and CERT via their energy bills, but haven’t been able to benefit from measures relevant to them. Solid wall insulation has historically been an expensive measure to install because a lack of demand and no subsidy has prevented the industry from developing. Also in Cornwall and Isles of Scilly, the distance from national supply chains, higher prevalence of detached homes and a historic lack of qualified local installers increases costs. There is a huge potential market for solid wall insulation, but the sector needs support (and buffering from Government policy uncertainty) in order to grow. As the sector grows, it will present a new opportunity for builders, decorators and construction professionals to up-skill as installers and expand their existing services.

 On 18th December 2013, 21 accredited Green Deal Providers were offering finance in Cornwall. This figure had dropped to 18 by 19th March 2014 (Green Deal Orb Participant Register, n.d.).  On 18th December 2013, 52 accredited Green Deal Assessors were offering their service in Cornwall. This figure had risen to 61 by 19th March 2014.  The Green Deal Participant register listed 253 Green Deal Installers offering measures in Cornwall on 19th March 2014.

A sample of local companies working in the industry includes:

 Enact Energy (1996-2013)  Community Energy Plus (1998+)  Mark Insulation  Happy Energy (2011)  Glow Cornwall (2013)

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COMMUNITY ENERGY PLUS (1998+)

Community Energy Plus (CEP) is a registered charity, SME and social enterprise based at Tolvaddon Energy Park in Camborne. It was established in 1998 with financial support from Carrick District Council, Cornwall and the Isles of Scilly Health Authority and the Energy Saving Trust (EST). CEP initially provided EST’s Energy Efficiency Advice Centre (EEAC) service for Carrick, then for the whole of Cornwall and in 2011 for an extended south west region which went up to Milton Keynes, as part of the Energy Advice South West consortium. In 2012 the Government tendered for and awarded the advice contract on a national basis to the Energy Saving Trust. Since then CEP has operated as an Independent Advice Centre. CEP has also delivered many award-winning initiatives including the Cornwall Sustainable Energy Partnership, Home Health, Environmental Skills Network and Community Power Cornwall. CEP is an ECO managing agent and Green Deal Advice Organisation. The company has installed energy saving and heating measures in over 26,400 homes in Cornwall and has advised over 158,000 people. It currently employs 22 staff.

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PARTNERSHIPS AND SKILLS RELATED INITIATIVES

Partnerships and initiatives include (in order of the earliest start date):

 Cornwall Sustainable Energy Partnership (CSEP) 2001-2009  Combined Universities in Cornwall  Envision Programme 2005-2010  REALISE: Renewable Energy Local Industry Enterprise, 2006-2009  Kyoto in the Home (KITH) (2006-2008)  Environmental Skills Network (ESN), 2008-2011  Schools for Intelligent Energy Use (2009-2012)  Clear About Carbon, 2009-2013

CORNWALL COUNCIL, 2009+

Cornwall’s unitary authority was established in 2009, replacing the former county council and six district/ borough councils. The commitment of the new Council to being a champion of environmental and low carbon matters was confirmed with the creation of the Green Cornwall programme; with three aspects of the programme, Green Council, Green Economy and Green Communities the Council is seeking to both set a high environmental standard for its own activities and encourage the wider Cornish community to adopt a low carbon lifestyle. In September 2011 the Council became signatories to the Covenant of Mayors, committing to meet and exceed the European Union 20% CO2 reduction objective by 2020.

In 2013 Cornwall Council’s ‘Sustainable Energy Action Plan for a Green Cornwall’ (SEAP) was published. It sets a 30% energy reduction target from the SEAP sectors by 2020 on 2009 levels.

For more information see on partnerships and initiatives, see Appendix 5.1.4.

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2.1.3. STRATEGIC LANDSCAPE AND POLICY DRIVERS

A summary of the strategic landscape, key current and anticipated future policy drivers, including targets for carbon reduction/greenhouse gas emissions, and renewable energy at the global, European, national and local levels.

STRATEGIC LANDSCAPE

GLOBAL

The Kyoto Protocol and the work of the Intergovernmental Panel on Climate Change (IPCC) form the global background to climate and energy policy, strategy and associated targets. The Kyoto agreement was established in 1997 and came to force in 2005. This created legally binding targets for reducing Greenhouse Gas (GHG) emissions, with the aim of preventing global temperature rises above 2⁰.

The first commitment period under the Kyoto agreement came to an end in 2012, and a second period was hastily agreed to cover the years 2013-2020.11 An international conference is planned for 2015, when it is hoped new post-2020 targets will be agreed. Barriers to concerted action include varying degrees of commitment (in some cases as the result of climate change scepticism) concerns around affordability and competitiveness with emerging economies, and general economic uncertainty.

Meanwhile in 2013 the IPCC published the fifth Assessment Report (AR5), which “considers new evidence of climate change based on many independent scientific analyses from observations of the climate system, paleoclimate archives, theoretical studies of climate processes and simulations using climate models” (IPCC, 2013).This report, the combined work of 209 lead authors, included new estimates for the scale of global warming and its impact on sea levels, glaciers and ice sheets. The report underlines with greater certainty than ever before that human activity is the main cause of rising global temperatures, with far-reaching consequences. During 2014, the AR5 group will publish reports on Impacts, Adaptation and Vulnerability and Mitigation of Climate Change, which are likely to set the policy agenda in these areas.

11 The second commitment period was agreed at The United Nations Climate Summit in Doha, 2012

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EU

The EU’s overarching environmental strategy is the 7th Environmental Action Plan, which runs to 2020 but visualizes society beyond that:

"In 2050, we [will] live well, within the planet’s ecological limits. Our prosperity and healthy environment stem from an innovative, circular economy where nothing is wasted and where natural resources are managed sustainably, and biodiversity is protected, valued and restored in ways that enhance our society’s resilience. Our low-carbon growth has long been decoupled from resource use, setting the pace for a safe and sustainable global society" (European Commission, 2013).

It identifies three key objectives:

 to protect, conserve and enhance the Union’s natural capital  to turn the Union into a resource-efficient, green, and competitive low-carbon economy  to safeguard the Union's citizens from environment-related pressures and risks to health and wellbeing

Overlapping with this environmental plan is the EU Low Carbon Economy Roadmap 2050. The aspiration is to reduce Greenhouse Gases (GHG) by 80-95% by 2050.

Suggested interim targets and a policy framework were established in the EU Green Paper – A 2030 Framework for Climate & Energy Policies. The EU recognises that a shift to a low carbon economy will have multiple benefits, including reducing Europe’s energy bill and its dependency on fossil fuel imports, creating new jobs and improving air quality and health (European Commission, 2011).

However a draft package published by the European Commission on the 22nd January 2014 appeared to signal wavering ambitions. Lobbying prior to the statement highlighted differences of opinion regarding the extent and nature of both targets, revealing deep- seated national preoccupations with energy issues. Competitiveness, the place of nuclear and the question of fracking were also prevalent concerns.

Climate change constitutes a major part of the strategic landscape within the EU and is a major factor in shaping policy, despite the challenges caused by the economic crisis. The latest statement reiterated the need “to build a job-rich economy that is less dependent on imported energy through increased efficiency and greater reliance on domestically produced clean energy" (European Commission, 2014).

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UK

The UK draws on the National Ecosystem Assessment (UK NEA), which forms the strategic background for environmental policy. The assessment “provides a comprehensive overview of the state of the natural environment in the UK and a new way of estimating our national wealth” (UK NEA, 2011). England’s Biodiversity Strategy “sets out the strategic direction for biodiversity policy for the next decade on land (including rivers and lakes) and at sea,” with a mission to “to halt overall biodiversity loss, support healthy well-functioning ecosystems and establish coherent ecological networks, with more and better places for nature for the benefit of wildlife and people” (DEFRA, 2011).

Low Carbon strategy in the UK is in line with global aspirations and those of the EU. The UK implemented the Climate Change Act in 2008, which established legally binding targets to reduce GHG emissions. These targets are illustrated in Table 4. The UK also has emission reduction targets for 2020 and 2050 as shown in the Whole LCEGS Targets (Table 5). The UK Committee on Climate Change oversees carbon budgets and targets.

The UK has demonstrated its commitment to reducing emissions by campaigning for a high EU target for 2030, emphasising that this would “lead to massive investment in low carbon energy, including many more renewables.”

Table 4- UK Carbon Budgets

1st Carbon Budget 2nd Carbon Budget 3rd Carbon Budget 4thCarbon Budget 2008-12 2013-17 2018 – 2022 2023-2027

Carbon budget 3,018 2,782 2,544 1,950 level (million tonnes carbon dioxide equivalent (MtCO2e)) Percentage 23% 29% 35% 50% reduction below base year levels

The following chart shows actual and anticipated progress against these targets.

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Figure 6 - Progress on Carbon Budgets

Despite reactive policy shifts in the energy arena, the UK government believes that a low carbon economy is achievable, and will contribute to our energy security. The transition will necessitate investment in new low carbon infrastructure, industries and jobs (HM Government, 2011).

Strong progress has been made towards reducing emissions, however the 2020s onward will require renewed impetus and targets will only be reached by dramatically increasing the energy efficiency of homes, industry and transport. The government believes that electricity must be decarbonised through renewables, nuclear power and Carbon Capture and Storage (CCS), replacing oil and gas currently used to heat buildings, power cars and drive industry. The grid must also become smarter at balancing supply and demand.

By playing to our strengths in terms of geography and skills, for example utilising offshore wind and managing smart grids, the UK is aiming to become a world leader in industries with a big future (HM Government, 2011, p. 4/5).

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CORNWALL

“Perhaps more than at any time in our history, technology and global trends are conspiring to make our natural assets a source of real competitive advantage” (Local Enterprise Partnership, Cornwall, 2012, p. 5).

Cornwall and the Isles of Scilly is the best endowed region in Europe when it comes to renewable energy potential. The Local Enterprise Partnership (LEP) Economic Growth Strategy for C&IoS highlights the opportunities for generating energy and exporting goods and services in the growing market for renewable technology.

Cornwall benefits from an overarching programme to develop a low carbon economy, driven by Cornwall Council through the Green Cornwall Programme and The Sustainable Energy Action Plan (SEAP), and embedded in the values of the LEP. Alongside this, CDC provides support to ensure that the economic benefits and opportunities to businesses are maximised. Ambitious targets on emissions have been set (shown in Table 5), which reflect Cornwall’s commitment to a sustainable future.

LEPs are a new approach to economic development launched by the coalition government as a collaborative effort between public and private enterprise to drive economic strategy. C&IoS’s LEP has submitted its final EU Structural and Investment Fund Strategy (SIF) to the UK government in March 2014. This strategy seeks to “bring all of the EU structural and investment funds together at a local level” in order to target key areas of potential growth. The SIF strategy forms a major driver for Cornwall, informing the future of the entire LCEGS (Local Enterprise Partnership (LEP), Cornwall).

The strategic vision is of a ‘living laboratory’, incubating leading-edge knowledge and skills and exporting these via world-class connectivity. The region is setting out to consolidate its reputation nationally and internationally as a ‘green and marine’ centre, delivering resource-efficient low carbon solutions whilst preserving Cornwall’s precious natural environment and nurturing resilient communities.

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POLICY DRIVERS

For more information on Policy drivers, please see Appendix 5.1.5.

GLOBAL

The overarching global drivers can be summarised as follows:

 International and national targets to reduce emissions at all levels, facilitating growth across many of the sub-sectors identified by BIS.12  Growth in the LCEGS sector is predicted to continue at a slow and steady pace in the year 2014/15. If this continues, external demand for goods and services will act as a natural driver for regions specialising in the sector. The highest global growth is currently being seen in the Additional Energy Sources and Carbon Finance sectors, and in Wind (Department for Business, Innovation and Skills (BIS), 2013).

EU

As well as strategic leadership, the EU provides a monetary driver:

 Climate action will represent at least 20% of EU spending in the period 2014-2020, with funding streams benefitting Cornwall directly and indirectly through consolidating the export market for goods and services. This looks likely to increase beyond 2020: “Access to finance for investments, be it through direct funding or smart finance, is already part of the toolbox of EU policies but may have to be enhanced in a 2030 perspective” (European Commission, 2013).

UK

The UK government plans to facilitate a competitive marketplace through funding and investment, developing a portfolio of technologies for each sub-sector. This approach will reduce the risk of dependency or ‘technology lock’, and drive competition. The least cost and most efficient solutions will ultimately emerge dominant (HM Government, 2011).

Level 2 sub-sector drivers relevant to Cornwall are discussed below, however there are some key national policies to consider which affect the sector as a whole:

 12 These targets are enshrined in law and in financial systems such as the Emissions Trading System (EU ETS).

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 Large scale renewable energy generation is currently supported by the Renewables Obligation (RO). In 2017 the RO will be replaced by Contracts for Difference (CfD).13  Grants and occasionally prizes are available from public sector stakeholders to kick- start large renewable energy projects.  The Feed in Tariff and Renewable Heat Incentive. The framework of these financial instruments is fundamental to growth in the LCEGS, and for meeting the UK’s carbon targets. The price of carbon and the oscillations of the energy market can provide financial drivers or disincentives. Government influence on these factors (and a consistently applied policy) is therefore key, and could help to bring peripheral technology into the mainstream.  The government released its first ever Community Energy Strategy in January 2014, which effectively sets out plans to grow renewables, particularly in the wind and solar PV sectors, using the vehicle of community energy projects. DECC is seeking to remove barriers to such projects, and the government is working with the European Commission to include small scale projects within the scope of the Green Investment Bank (GIB), providing a useful source of funding to fledgling projects. Estimates suggest that community schemes could power 1 million homes by 2020 (Department of Energy and Climate Change (DECC), 2014, p. 3), a major contributor to the UKs renewables target and helping to drive growth in the LCEGS sector.  The Public Services (Social Value) Act of 2012 requires all public bodies to consider how the services they commission and procure might improve the “economic, social and environmental well-being of the area” (HM Government, Cabinet Office, 2012). Social value is considered to be a collective benefit to the community, directing tax payer’s money towards improving people’s lives, opportunities and environment.14

An analysis of the UK skills policy landscape and drivers can be found in Evidence Base B.

13 CfDs are part of the Electricity Market Reform programme and “provide long-term revenue stabilisation to low-carbon Generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers” (Department of Energy and Climate Change (DECC), 2013).

14 Cornwall Voluntary Sector Forum is currently developing standard metrics for measuring social value that could be included in public sector procurement team’s scoring criteria. One of the metrics being considered is a company/organisational carbon footprint.

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PRIORITY SUB-SECTORS FOR CORNWALL – KEY DRIVERS

WAVE AND TIDAL

Wave and tidal energy has huge potential, with a key role to play in the decarbonisation of the UK economy. The UK Renewable Energy Roadmap is seeking 27 GW from wave and tidal devices by 2050. The UK government is currently driving the sector to commercialise through public funding support (Marine Energy in Far Peripheral and Island Communities, 2012, p. 21).

This support has reached a crucial stage, with projects now entering the expensive implementation phase where the commitment of stakeholders is all-important. In Cornwall, significant European funding must act as the main driver to bring ‘big ticket’ projects to fruition, with a view to creating a South West Marine Energy Park of international significance. Cornwall’s demonstrator and test facilities, academic expertise and emerging cluster of supply chain businesses provide an opportunity to capitalise in this growing sector. Scotland may well prove fertile ground for cross-collaboration, particularly with the European Marine Energy Centre in Orkney.

‘Green and Marine’, including wave and tidal, is a key element of Cornwall’s strategic vision. “We will encourage the sector by facilitating access to the local market, utilising existing assets such as Wave Hub and Fab Test, but we will also provide Green Investment Bank (GIB) support, invest in research and development and support inward investment,” states the EU SIF.

Marine Renewables, which includes offshore wind in this strategy document, is earmarked for £20m ERDF funding with match-funding of £20m for supporting projects from conception through to installation.

Details of current marine businesses and projects can be found in Chapter 1.2.2.

GEOTHERMAL

Cornwall is amongst the areas in the UK which is most suitable for the deployment of deep geothermal power generation, with recent estimates indicating that “the temperature resource in Cornwall could produce as much as 4GW of electricity, 5% of the total UK average electricity demand.” (Local Enterprise Partnership (LEP), Cornwall, p. 11) Deep Geothermal projects are eligible for ROCs and RHI.

The EU SIF indicates £10m ERDF matched with £2.5m will be made available for investing in geothermal energy RD&D and deployment.

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DECC has provided more than £4.5 million to support two projects in Cornwall through the Deep Geothermal Challenge Fund. As a result EGS Energy plan to build the UK’s a geothermal power plant generating both heat and electricity at the Eden Project. The second project is at United Downs, where Geothermal Engineering anticipates building its flagship UK project. The company is also hoping to develop a geothermal Centre of Excellence in conjunction with Exeter University (Cornwall Council, 2013). This substantial investment in Cornwall’s geothermal resources is likely to drive further projects.

Details of current geothermal businesses and projects can be found in Chapter 1.2.2.

SMART ENERGY

The EU considers investment in smart grids to be a key enabler for a low carbon electricity system and states that future policy must foster investment at all levels (European Commission, 2011, p. 7). In many UK policy outlines, for example micro-generation and geothermal, a smart grid is considered a key driver alongside technology development. Cornwall is ready to exploit the opportunities provided by early take-up of smart energy, and the aim of The Smart Cornwall Programme is to “develop the U.K.’s first fully integrated Smart energy network, providing new high value jobs, creating wealth and opportunities for future generations and leading the way into a prosperous, resource efficient future.” Cornwall’s Superfast Broadband Programme has established the infrastructural framework upon which this development can build (RegenSW, 2013, p. 54).

Key drivers include:

 EU Structural and Investment Funding, with indicative inputs of £10m ERDF funding matched with £2.5m from local government.  DECCs roll-out of smart meters across the UK by 2020 is a driver for innovative smart energy solutions delivered under an umbrella of raised awareness.  The physical resources of Cornwall coupled with grid capacity issues create the ideal environment for innovative Smart grid solutions.  Market forces in relation to the up-take of technology and a committed local authority will also drive innovation.

BIOMASS

Energy from biomass can make an important contribution to decarbonisation of the UK economy and could generate 8-11% of our energy needs by 2020 (HM Government, 2012, p. 38). The issue of sustainable biomass is intimately linked with the development of CCS technology, and the government is committed to commercial development in this area. The

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UK Bioenergy Strategy acknowledges the need for support in the sector as a whole: “this innovation support should aim to sustainably increase feedstock energy yields and develop cost effective process and conversion technologies to optimise energy efficiency and minimise carbon emissions” (HM Government, 2012, p. 9). Current barriers to growth include Land Use Change (LUC) issues, food security and environmental concerns. Uncertainty at a policy level could lead to a lack of growth in the sector.

ALTERNATIVE FUELS AND VEHICLES

The UK government are currently providing £400m funding to support the early uptake of Ultra Low Emissions Vehicles (ULEVs) until 2015, with a further £500m to follow, with the aim of prompting inward investment.

Cornwall Council’s Local Transport Plan ‘Connecting Cornwall 2030’ includes in its aims to support the delivery of electric vehicle infrastructure and investigation into the fuels of the future (Cornwall Council, 2013, p. 28). The C&IoS economy is well-placed to benefit from the transition to more efficient and ULEVs, reducing exposure to increasing fossil fuel prices. This is therefore a goal of the EU SIF, potentially triggering investment in sustainable transport (Local Enterprise Partnership (LEP), Cornwall, p. 28).

In advance, Green Cornwall has taken a major step towards providing one of the most comprehensive rapid charging networks in Europe. 39 charging points will be installed across Cornwall, acting as a driver towards increased ownership of electric vehicles. First Great Western have also been awarded £315,000 to install charging points at 44 stations across the South West, including in Cornwall, as part of a £9m scheme aimed at cementing “the UK’s position as one of the best for electric vehicle recharging networks in Europe” (Department of Energy and Climate Change (DECC), 2014).

WIND

The UK government plans to remain a world leader in offshore wind, with up to 41GW installed by 2030 (Department of Energy and Climate Change (DECC), 2014). “Offshore wind can play a vital role in driving growth - adding billions of pounds of value to the UK economy and supporting thousands of jobs,” said Energy Minister Michael Fallon in February 2014. Offshore wind is highlighted as a key area for investment in Cornwall’s EU SIF under the category of Marine Renewables.

Onshore wind continues to be the most commercial renewable technology, and support for Community Energy projects may drive growth (see Community Energy Strategy above).

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Wind is now a major source of the UK’s energy needs, providing 10% of total electricity demand in December 2013 (Business Green, 2014). Barriers to continued growth in the sector include the centralised nature of the electricity grid and the difficulties of connecting peripheral generators of varying scale, and a small but vocal section of public opinion which opposes both onshore and offshore wind projects. Energy storage and innovative finance models, which open projects to share offers and create community funds, will be instrumental in overcoming some of these barriers.

BUILDING TECHNOLOGY

Cornwall has set a target of 47,500 new homes to be built by 2030. In the future new buildings will be influenced by both climate mitigation and adaptation.

In mitigating their influence on the climate, new buildings will need to become more energy efficient and reduce emissions. “Significant new markets will be generated by the upcoming changes in regulations,” argues the TSB (Technology Strategy Board (TSB), p. 8). Small-scale renewable energy installations will become more widespread, and carbon- efficient cooling technologies and passive design skills will become international growth opportunities.

Adaptation will involve finding ways to cope with warmer, wetter winters, hot, dry summers, more frequent extreme weather events especially flooding, and rising sea levels. It is likely that adaptation will be a major driver for growth in the sustainable building and supply sectors. “There is significant potential for innovation in developing new materials, products and services to address aspects of climate change.” (Technology Strategy Board (TSB), p. 8)

However the real challenge is in finding an effective driver to address the existing housing stock. Currently measures for hard to treat properties are on hold and rates of loft and cavity wall insulation have plummeted since the introduction of Green Deal and Eco. The TSB states that even with warmer temperatures, high levels of insulation will still be essential and without these efficiency improvements, the UK is unlikely to achieve its carbon budgets in the future.

It is clear that Green Deal and ECO (see Chapter 1.2.2) must undergo something of a revolution in order to play a major role in driving the take-up of energy efficiency measures in the current housing stock. Introduced in January 2013 alongside ECO, the Green Deal was intended to encourage householders to insulate their homes, upgrade their heating systems and install renewable technologies by removing upfront costs.

In April 2014 the Renewable Heat Incentive (RHI) was extended to householders, enabling them to benefit from this financial incentive and potentially driving growth in biomass as

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SOLAR ENERGY

Solar Photovoltaic (PV) and solar thermal are referred to jointly as ‘Solar Energy’ level 2 sub- sector in this study. Solar thermal installations benefit from the RHI, whereas Solar PV is eligible for FiTs. Despite a difficult introductory period, and the peaks and troughs in up- take rates caused by changes to the level of the FiT and serious delays in the introduction of RHI, (see Chapter 1.2.2) this is a sector which has been successfully driven to commercialise through subsidisation. ‘Solar Energy’ can be considered to be an established sub-sector, particularly where the installation costs of PV have consistently fallen as the subsidies have encouraged a greater adoption of the technology and it has become better understood by the mass market. However, further investment by businesses and/or the public sector may be needed in order to introduce the next generation of products onto the market.

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Table 5 - Key Strategy & Targets, Whole LCEGS – Global, EU, UK & Cornwall

Whole LCEGS Strategy – Key Points Targets International Kyoto Protocol – legally binding targets for the reduction of emissions aim to To keep global temperatures rises under 2⁰C (against what level?) stabilize concentrations at levels which would not interfere with the global climate. International Panel on Climate Change – AR5 Report. EU Current strategic LCEGS priorities within the EU include: 2020 Targets  Integrating renewable electricity generation into the grid. 20% reduction on GHG emissions compared to 1990 levels.  Dealing with intermittency and cross border infrastructure. 20% of energy from renewable sources  Introduction of smart grids and smart cities. 20% saving in energy consumption compared to projections  Ensuring the cost-efficiency of renewable energy sources so as to limit the amount of economic support required and keep the European 2030 Proposed Interim Targets (22/01/14) marketplace competitive. 40% reduction on GHG emissions  Establishing a zero-energy (or passive housing) culture for all new (NB The binding nature of this target is desired by the commission buildings. but will probably not be ratified until 2015.)  Refurbishing existing housing stock will be more difficult and require substantial investment. 27% share of renewable energy – (NB binding at EU rather than  A shift towards biofuels. national level.)  Carbon capture and storage (CCS).  Next generation nuclear. 2050 Targets Reduce GHG by 80-95%  Renewable heating and cooling.

 Electrification of transport. UK The Carbon Plan The UK has a series of Carbon Budgets, illustrated in the table above.  Tackling twin threats of climate change and energy security 2009 Renewable Energy Directive - 15% of energy from renewable  Cost effective transition to low carbon economy sources by 2020.  Diverse portfolio of technologies competing for market share, driving 34% emissions reduction by 2020 against 1990 base levels. innovation and cost reduction. 2050 Carbon Reduction Target – in line with international targets,  Long-term commitment on regulatory system and funding needed for the UK aims to reduce emissions by 80% by 2050. investment.  Costs fairly distributed to protect vulnerable.  The transition will allow the UK to use natural resources efficiently, reduce exposure to fossil fuel prices, create long-term jobs and growth.

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Cornwall & Isles of  Deliver low carbon economic growth Targets proposed in the SEAP, March 2013 from a 2009 baseline. By Scilly  Sustainably & responsibly increase renewable energy use by 2020: communities & business 40% carbon emissions reduction  Support development of technology and innovations to develop the 34% GHG emissions reduction transition to a low carbon economy 30% Energy savings  Develop renewable energy and environmental technologies and 30% of electricity generated from renewable energy supply chain  Use Smart Energy infrastructure to unlock and drive growth  Encourage the adoption of low carbon transport solutions  Invest in responsible management of our natural environment leading to growth  Implement innovative approaches to maximise sustainable growth for coastal communities and the tourism economy  Implement innovative approach to mitigate harbour developments

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2.1.4. POLICY CONTRASTS IN OTHER EU REGIONS

This section explores any policy contrasts with other countries and/or regions from which the UK might learn.

International energy policy is generally designed to meet several shared objectives, energy security, national and international climate change targets, public health and economic development. As a general rule, there has been a greater drive for energy efficiency (in its broadest sense) from countries that are most exposed to energy market fluctuations.

For Germany in particular, a low carbon energy policy has been a long term strategy. As part of an interwoven policy approach distributing competencies among various ministries, Germany’s energy transition has seen a deliberate move away from fossil fuels and nuclear towards renewable sources. Their ‘Energiewende’ or ‘energy turn’ as it is termed, has made short term changes unlikely and thereby reduced uncertainty in the sector.

This overarching policy strategy has seen Germany increase its renewable electricity generation from 5% to 25% since 1998. The policy is widely embraced by the public, however has been criticised internationally for the high cost and subsidy needed to implement it, and is not seen as sustainable when applied to other markets.

The ‘first mover’ advantage has led to Germany becoming the largest market for Solar PV in the world and has bought multinational companies such as Siemens Energy to establish their base in Germany.

The success of the Feed-in system is largely attributable to the long-term security afforded through guaranteed payments for a period of 20 years. As part of Germany’s Renewable Energy Act (Erneuerbare-Energien-Gesetz EEG), network operators were required to remunerate renewable energy generators at a pre-determined rate, which decreases over time, but is guaranteed for 20 years. Decreasing payments over time can be used to pass on some of the cost-savings resulting from these improvements to those who pay for the feed- in mechanism.

Remuneration payments were also made differential for a range of renewable technologies. Providing all renewables with the same remuneration will only be advantageous for the most cost effective technologies. Regular reviews of technological and market developments were used to recommend reduction rates on a regular basis, allowing for a stepped reduction in tariff payments over time. These reviews and reductions avoid excessive financial support, which can lead to a boom and bust cycle, risking rapid and significant cuts to support and potentially jobs in the sector.

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Success can be explained by the lower risk/higher security it gives to investors, where prices are set to reflect that these technologies may not yet be competitive. This financing is particularly important for the large number of small companies active in the renewable market, as they normally cannot finance their projects. The low risk improves their access to capital markets and reduces the cost of capital. Security or risk is noted as a key factor in determining the success of policy.

Within different framework conditions, a number of comparisons illustrate that the biggest barrier for some renewable energies is the planning and permit procedure. Planning represents the critical ‘at-risk’ stage of any development, where the uncertainty of the outcome can reduce the willingness of developers to invest and increase the capital costs for individuals and communities in particular, looking to invest.

The latter is of particular importance where the total share of electricity not owned by utilities companies has reached 10% in Germany. With 51% of all installed renewable energy capacity owned by citizens, compared to 10% in the UK, this illustrates a niche in the market with huge potential. In countries such as Denmark and Germany, co-operative models have been highly successful in increasing acceptance towards these developments. In Denmark there are more than 3000 co-operative wind turbines and between 100,000 and 150,000 owners. In 2012 Greg Barker, Ministry of State, recognised that “community engagement in the energy sector will be vital to our vision of the development of energy” (Department of Energy and Climate Change (DECC), 2014). However there are a number of policy factors hindering the UKs development in this field.

The FiT has increased the financial viability of community led developments as well as the awareness for opportunities. However, although it provides a worthwhile income, it does not cover the initial capital required. In Germany, regional state-owned banks play an important role in providing loans for community-scale renewable energy developments. The absence of such government backed banks is a major barrier in the UK in achieving loans. There is a question of how replicable Germany’s model is, due to its federal political structure and co-ordinated approach to a banking system developed to support SMEs.

In the UK these barriers are exacerbated by the planning process that is in place for smaller scale renewable energy development. Planning requirements are increasingly demanding full Environmental Impact Assessments, however with the high levels of local resistance (particularly attributable to wind) and the process of consensus-based decision making in relation to planning, many plans do not come to fruition. Comparisons can be drawn with the Netherlands, where the process is also hindered due to the environmental and building permits required. As such, during this process, societal groups are able to exert their influence and create resistance, thus increasing the risk associated with such developments.

Solutions to local opposition have included policy that instructs developers to give a share of their profits derived from FiTs to local communities, however although these have been

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 successful in countries such as Germany and Spain, in the UK these have been equated to “bribes” and the public has yet to fully engage with these payments as a contribution in recognition of the impact on that community. The Spanish feed-in-tariff system did not offer the same investor security, however it achieved results in wind deployment, which can be partially attributable to the special regional investments developers were required to pay towards economic and social welfare, thus reducing local resistance.

Low success rates may also be partially attributable to a fundamental issue with the positioning of renewables with the UK’s planning framework. The long-term policy approach taken by Germany has seen it as a co-evolutional process, which is considered very low risk. For the UK, community energy in particular has been conceptualised as a separate niche and as a result can be considered to be at the tail-end of decision making.

In countries including Sweden, Spain, Portugal, Greece and the UK, the deployment of wind power has been further hindered by local grid systems that need to be reinforced before they can cope with higher levels of generation.

In the UK recent policy innovations, including the Green Deal, the Renewable Heat Incentive and FiTs, are designed to enable public ownership and leadership of renewable energy technologies. However these policies are struggling to fulfil expectations. There has been a missed opportunity; a failure to actively engage the population in technological diffusion of renewable energy technologies. So far, active engagement has often been limited to attending consultation meetings.

Both Germany and Denmark are world leaders in the field of renewable energy development. The FiT in both countries has shown that this can be provided successfully by;

 Employing different feed-in rates to provide adequate compensation for each technology;  Guaranteeing grid access,  Enabling a range of societal players to participate in the market.

Essentially, it needs social acceptance.

The Renewables Obligation in place in the UK operates differently to the feed-in system in Germany and Denmark, where electricity generators have had to reach a quota for green energy and prices and rely on competition between suppliers. As such, the system has not provided the same level of certainty, nor has it differentiated between technological learning curves. As such, deployment has been limited to a small number of technologies by few participants. These previous policy choices have been inherent in the slower pace of renewable energy development in the UK.

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CHAPTER SUMMARY – SECTOR DEFINITION, STRATEGIC LANDSCAPE & POLICY DRIVERS

 The definition of the LCEGS sector is flexible and acts as an ‘umbrella’ term for a wide range of activities, all of which aim to reduce environmental impact.  The economy as a whole will see a shift to greener business practices, therefore the implications of this study are wide-reaching.  The top three priority sub-sectors for C&IoS are Wave and Tidal, Geothermal and Smart Energy.  Cornwall has the lowest LCEGS sales, number of companies and employees of all the LEP regions, yet also is home to the best renewable resources and has a track record of innovation in the sector.  C&IoS benefits from a wealth of partnerships and initiatives which cut across the private, public, voluntary and social enterprise sectors, forming the basis of a support network for the LCEGS sector which has yet to be maximised.  At an international level, instability and a lack of consensus are having a direct impact on businesses looking to derive benefit from the sector.  Despite this, long term European policy direction for the sector is clear. The EU recognises that the shift to a low carbon economy will have multiple benefits and reducing our impact on the climate forms a major part of the strategic landscape.  Through the analysis provided for each sub-sector, there has been intermittent public sector support in the UK for different industries. Comparisons with our EU neighbours illustrates that consistency in policy is essential for creating a robust and commercial LCEGS sector, with a corresponding impact for example, on employment opportunities and emissions.  C&IoS has enormous resources for generating renewable energy and is a region which benefits from an overarching programme to develop a low carbon economy. The strategic vision is of a ‘living laboratory’ incubating leading-edge knowledge and skills, and of a ‘green and marine’ centre of international importance.  Key drivers for C&IoS include EU spending, the UK government’s drive to commercialize renewable technologies, and a community energy culture. The sub- sectors identified as a priority all possess significant growth drivers at several levels and reflect, and seek to extend C&IoS’s Unique Selling Point.

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SECTOR VALUE

2.2.1. CURRENT AND POTENTIAL GVA VALUE

This section explores the current value and potential increase in GVA value to C&IoS economy.

CURRENT GVA VALUE

The Office for National Statistics (ONS) indicate that GVA can be calculated by adding the compensation paid to employees (wages, etc.) to the gross operating surplus (including mixed income and Taxes (less subsidies) on production) of a business (Office for National Statistics (ONS) , 2010). In simplified terms this can be estimated from the turnover figures for a business or at a sector level from the group of businesses within the sector.

The online survey and subsequent research at Companies House and other business databases obtained the annual turnover figures for 179 of the 366 businesses that were identified as being in the C&IoS LCEGS sector. For each of these businesses an assessment was made (either based on their own opinions or if this was not provided from other available evidence such as their published annual financial reports, websites, etc.) on the proportion of their turnover that was accounted for by their activity in the LCEGS sector.

The figures collected were grossed up proportionately to represent all 366 businesses with the following indications:

 The current value of the LCEGS sector in C&IoS is of the order of £533.2 million.  This equates to an average business turnover of over £1.4 million for each of the 366 businesses  However it is important to note that the median turnover figure is just £140,000  Therefore the total GVA figure of £533.2 million is extremely skewed towards the top end: with the “top ten” largest businesses accounting for over 75% of the £533.2 million15. These top ten were mainly the large utility companies associated with water, waste and electricity distribution.

15 If the top ten largest businesses were removed from the calculations above then the average LCEGS business turnover figure would be £328,000, and the median £127,000.

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At BIS LCEGS Level 1

 The Environmental sub-sector accounts for 81% of the £533.2 million, with over £431 million turnover16  The Low Carbon sector accounted for c.£61 million (11%)  Renewable Energy sectors accounted for £41 million (8%)

Figure 7 contains the details.

In terms of the C&IoS economy as a whole, the latest estimates indicate that in 2011, GVA was c.£7.5bn (Cornwall Local Enterprise Partnership (LEP), 2011). This indicates that the LCEGS sector contributes c.7.1% of the total GVA, with the three sub-sectors each accounting for the following proportions:

 Environmental: 5.7%  Low Carbon: 0.8%  Renewable energy: 0.5%

Interestingly the figure of 7.1% corresponds very closely with that reported nationally by Innovas/BIS, who state that:

“The size of the UK economy is £1,600 billion, with an employee base of 29.4 million. The current size of the Low Carbon and Environmental Goods and Services (LCEGS) sector in the UK, as defined in this report, is £106.53 billion, with some 881,000 employees. This represents around 7% of the economy and 3% of the employee base”. (Innovas/BIS, 2009, p. 26)

16 This reflects the fact that most of the “top ten” companies were in this sub-sector, such as SW Water, Eden and Viridor.

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Figure 7 - C&IoS LCEGS GVA by Level 1 sub-sector (£ million)

Renewable Energy, £41.1, 8%

Low Carbon, £60.9, 11%

Environmental, £431.2, 81%

POTENTIAL GVA VALUE

During the online survey the LCEGS businesses were asked: “What level of growth do you plan for your business in Cornwall/ IoS over the next 1-2 years?” 61 businesses answered the question and as a proportion of their current turnover they said that they planned to grow by nearly half, i.e. 48%.

While the numbers for analysis were small, there was evidence that this figure was different across the three Level 1 sectors:

 Renewable Energy businesses were more positive: indicating that they planned to grow by nearly two thirds: 63%.  Low Carbon businesses planned to increase their turnover by around two fifths over the next 1-2 years (39%).

If these increases were achieved, and replicated across the Renewable Energy and Low Carbon sectors in C&IoS, then they would equate to and £23.7 million respectively over the next 1-2 years.

The potential growth picture for the Environmental sector was more complicated. While the many small businesses in the sector were also planning for quite high rates of growth, the large utility companies that dominate the sector have, reflecting their mature status, much lower growth forecasts of between 3-5%. Among the smaller businesses the survey found that planned increases in turnover over the next 1-2 years were around a third: 35%.

Based on a 3% increase on 80% of the Environmental sector’s turnover and 35% on the

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 remaining 20%, we have therefore calculated a total potential increase of £40.7 million over the next 1-2 years, if the planned growth rates were achieved, and replicated across the Environmental sector in C&IoS.

In combination then, if each of the three sectors achieved the planned growth rates described above, it would equate to a total potential increase in GVA for C&IoS of £90.3 million. Clearly this represents an extremely positive finding for the LCEGS sector and the C&IoS economy as a whole. It is worth emphasising that this confidence and ambition was mirrored in the qualitative work, with both the in-depth interviews and focus groups reporting very high levels of business confidence and plans for future development and growth across the sector.

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2.2.2. CURRENT AND POTENTIAL EMPLOYMENT

This section outlines current full time equivalent (FTE) employment and potential future employment levels in the sector.

The online survey and the subsequent research with Companies House and other business databases previously described was also used to obtain the employee figures for 179 of the 366 businesses that were identified as being in the C&IoS LCEGs sector. On the basis of the information obtained about these 179 businesses, we estimate:

 There are a total of 3,905 full and part time employees working in the 366 LCEGS businesses in C&IoS  Each LCEGS businesses has an average of 10.6 full time and part time employees.

Figure 8 shows how the employees are distributed between the three BIS Level 1 sub-sectors.

Figure 8 - C&IoS LCEGS Employment by Level 1 sub-sector (no.s full and part-time)

Renewable Energy, 562 , 14%

Low Carbon, 798 , 21%

Environmental, 2,544 , 65%

In terms of the C&IoS economy as a whole, the latest estimates indicate that in 2012, there were c.248,000 employees. This indicates that the LCEGS sector contributes nearly 2% of the total employees, with the three sub-sectors each accounting for the following proportions:

 Renewable energy: 0.3% of total C&IoS employees;  Low Carbon: 0.4%; and  Environmental: 1.1%.

This proportion of 2% is lower than the 3% reported nationally by Innovas/BIS. However, it is worth noting that Innovas/BIS also reported that “the Market value of £121,000 per employee in the LCEGS sector is well above the national average of £54,400” (Innovas/BIS,

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2009). The comparable figures for the C&IoS LCEGS sector are £136,000 and £30,000 demonstrating the extra “added value” of the sector.

Turning to future increases in jobs, the online survey asked about: “What level of growth do you plan for your business in C&IoS over the next 1-2 years?” in terms of the number of new employees that would be taken on over this period of time. 49 businesses answered the question and saying that they planned to take on 165 more staff between them. The group of 49 businesses currently had a total of 495 employees, so this would represent an increase of around one third (33%) in their current workforce.

Assessing these findings for each of the three Level 1 sectors is again difficult because the numbers for analysis are small. However, there was also some evidence that the figures differed between the three, with Renewable Energy businesses also being most positive.

 Those Renewable Energy businesses that said they were going to take on new employees said that they planned to increase staff numbers by around half: 46%.  Low Carbon businesses planned to increase their staffing by around one third over the next 1-2 years (30%).

As described in the previous section, if these increases were achieved, and replicated across the Renewable Energy and Low Carbon sectors in C&IoS, then they would equate to potential increases in employment of 258 and 239 employees respectively over the next 1- 2 years.

The picture for the Environmental sector was the same as for planned turnover. When this was worked through for a 3% increase on 80% of the Environmental sector’s employees and 35% on the remaining 20%, it produces a total planned increase of staff of 254 over the next 1-2 years, if the planned growth rates were achieved, and replicated across the Environmental sector in C&IoS.

In combination then, if each of the three Level 1 sectors achieved the planned increases in staff levels described above, it would equate to a total increase in employment for C&IoS of approximately 750 employees.

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2.2.3. INVESTMENT REQUIRED

This section explores the levels of investment required to initiate market potential.

The online survey asked: “Do you expect your business in C&IoS to grow over the next 6-7 years up to 2020?” Of the 71 businesses who answered the question:

 61 (86%) said yes they expected it to grow,  1 said no, it would decline (1%)  9 said it would stay the same (13%).

The 61 businesses who said that they expected to grow in the next 6-7 years were then asked: Is this establishment in Cornwall/ IoS likely to require financial support or investment to achieve its plans for growth?

 45 said they would require financial support or investment (74%),  14 said they would not (23%)  2 did not answer the question (3%).

When the 61 were asked: If you plan to expand into new markets: Where will your establishment seek financial support from, the two main groups of replies given by 20 businesses each (33%) were:

 Loan finance (bank lending)  Inward investment (equity)17  Reinvestment/ Retained profits/ The old fashioned way - retaining and investing profit x 3  Research funding  Within the Green Deal Industry

The 61 businesses who said that they expected to grow in the next 6-7 years were also asked if they planned to grow their business in existing markets or new markets.

 Both - 39  New markets - 13  Existing markets – 13

17 A further 26 businesses gave other answers which included: BIG Lottery fund and Superfast Business fund, ESIF-Growth Fund, Partner loans, Directors Guarantees, UK Mainstream funding, Innovation awards from Aid Agencies/ Technology grants and grants to aid development, Investors/private investment, more customers

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The 52 who mentioned new markets were asked if there were any barriers to them entering the new markets.

 Funding and access to finance was identified as being the key issue.  The need for coordination and consistency in government support and related initiatives (including Smart Energy).  Specific skills shortages were also highlighted, along with keeping up to date with training and legislation.

COMMENTS FROM THE SURVEY

Funding and access to finance: “Lack of working capital” “The key barrier to the growth of the sector is access to finance - initial capital for device development” “Start-up funds” “Funding support for attending UK based trade fairs” “Investment constraints; management capacity; training budget” “Investment funding for growth” “(Need for) Working capital” “Indecisive and fluctuating government incentives for small and medium scale energy producers ie RHI and FIT” “Lack of Gov management and marketing and thus interest in the Green Deal / ECO” “Lots of new initiatives to offer support to grow this sub-sector - need to co-ordinate the offer” Smart: “Smart technology is conceptually still emerging as a market - this presents a challenge to identify to real opportunities. Some consistency in Government policy would help, e.g. a fixed date for the roll-out of smart meters.” Specific skills shortages: “Lack of programmers for software” “Lack of skills in addressing overseas markets for biochar and kilns” “Marketing skills” “Our ability to recruit people locally with the right attitude, marketing, and sales ability” “Sales & Marketing skills/finance” Training and coaching: “Failure to keep up with new health and safety legislation and financially being able to keep employees up to date with their training” “Time, people and cash flow, could do with a suite of business coaching activities to help

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 business grow”. Other Barriers: “Public sector PQQs are intrusive cost intensive and appear to be already `sewn' up” “There is no political will to make it work at present this may take another political term or two. Beyond 2020 our targets previously set within the Carbon Reduction Programme shall grow exponentially to the point of acknowledgement that climate change has begun its course and politicians should look back and hang their heads in shame” “Time to address the issues and confidence to tackle issues” “We need permitted development for 20ft high wind-fences” “Yes Research and development”

GROWTH DEAL

The Government is negotiating a Growth Deal with every LEP. Through Growth Deals, LEPs can seek freedoms, flexibilities and influence over resources from government, and a share of the Local Growth Fund to achieve their identified growth priorities. In return, the government expects LEPs to demonstrate that they are committed to the growth agenda, including by developing ambitious, multi-year strategic economic plans. They also expect the local authority members of LEPs to prioritise economic development and work collaboratively across the LEP area. At the time of writing the Growth Deal process in Cornwall and the Isles of Scilly was moving at a rapid pace and the situation was too fluid to make any firm statements.

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CHAPTER SUMMARY – SECTOR VALUE

 The current value of the LCEGS Sector in C&IoS is in the order of £533.2m. This represents 7.1% of total GVA, a figure which is in line with the sector across the whole of the UK.  The top ten businesses (mainly utility companies) account for 75% of GVA. Overall the Environmental sector represents the largest contribution to the economy (81%) over Low Carbon (11%) and Renewable Energy (8%).  Potential GVA is estimated as an increase of £90.3m over the next 1-2 years.  3,905 full and part time employees are estimated to work in the LCEGS sector in C&IoS, making up 2% of the total workforce.  The majority of these are employed in the Environmental sector.  Planned increases in staff levels would equate to a total increase of approximately 750 employees over the next 1-2 years.  LCEGS businesses are predicting strong growth. Most acknowledge the need for financial support and investment, and acknowledge that growth will not be solely driven by market demand.  A raft of investment options is being considered by LCEGS businesses.  Potential barriers to growth into new markets include lack of access to finance, instability of government policy and a shortage of appropriate skills.

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NEW MARKETS AND OPPORTUNITIES

2.3.1. CORNWALL’S UNIQUE SELLING POINTS (USP)

An exploration of the market and export opportunities for C&IoS in light of its USP.

Cornwall can be described as a living laboratory for a low carbon and environmentally sustainable economy. The region has the highest solar insolation rates in the UK, wind speeds in excess of 7 metres a second, geological profile suitable for deep hot rock energy, and an abundant wave resource. The county has a strong entrepreneurial and engineering base thanks to its mining and marine heritage and world class higher education establishments at Penryn and Falmouth. Cornwall also has a strong track record of partnership working between the private, public and voluntary sectors. It is the combination of natural resources, enterprise and research capability that creates the USP.

NATURAL RESOURCES

 Highest solar insolation in the UK  Good on shore wind resource >7ms  Deep Geothermal  Good wave potential – but a deep shelf restricting offshore space available for renewables  Agricultural land good for dairy/beef and horticulture – but poor for cereals

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HIGHER AND FURTHER EDUCATION

 University of Exeter - Environmental and Sustainability Institute (in Cornwall)  University of Exeter - Energy Policy Group (in Cornwall)  University of Exeter - Camborne School of Mines  University of Falmouth – Academy for Innovation and Research  University of Plymouth – Innovation Centres  Cornwall College - Brunel Renewables Demonstration Space  Duchy College – agricultural technology

OVER THE BORDER

 University of Plymouth, including Institute for Sustainability Solutions Research  Somerset College

BUSINESS AND ENGINEERING

 Marine Technology Cluster  Deep Geothermal (including drilling, mining and pumps)  Heat Pumps  Superfast broadband

POLITICAL – STRONG SUPPORT FROM

 2 Unitary Authorities (Cornwall and Isles of Scilly)  1 Local Enterprise Partnership for Cornwall and the Isles of Scilly  1 Local Nature Partnership for Cornwall and the Isles of Scilly  1 Economic Development agency (Cornwall Development Company)  Green Cornwall Team at Cornwall Council  Smart Cornwall Team (at CDC)  Worldwide Diaspora (Cornwall brand)

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2.3.2. SALES AND GROWTH IN THE GLOBAL AND UK MARKET

Global and UK Sales and growth from a C&IoS perspective. Plus an analysis of the future high growth opportunities in the sector.

Please refer to Table 1 for a definition of the Low Carbon and Environmental Goods and Services “umbrella”.

Figure 9 - Global Sales

Global Sales by Sub Region £m 1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0 Africa Americas Asia Europe Oceania

2009/ 10 2010/ 11 2011/ 12

Source: BIS Report, LCEGS 2011/12 Figure 9 shows that Asia is the biggest market for LCEGS, with the Americas second and Europe a close third.

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Figure 10 - Global Sales by Country

Global Sales 2011/12 £m 700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

Source: BIS Report, LCEGS 2011/12 Figure 10 shows the top 15 countries, which account for over 70% of global sales. It is interesting to note that all four of the so called BRIC economies feature, (Brazil, Russia, India and China) and two of the four so called MINT economies, (Mexico and Indonesia). This would seem to indicate a strong correlation between total growth and so called green growth.

Figure 11 - Markets for UK exports

UK Exports £m 900.0 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0

Source: BIS Report, LCEGS 2011/12

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The top 15 export destinations account for 55% of total UK exports. There is a significant variation between the largest global markets for LCEGS and the largest export markets for UK companies trading in LCEGS. The Asian economies are by far the biggest export market, and the role of Hong Kong, presumably as a gateway to China is particularly interesting. Although individual EU countries are less significant they combine to form a much larger export market than the USA.

An alternative analysis would be to compare the relatively modest sales to the post industrialised countries of “the west” with the much larger exports to the newly industrialised and emerging markets in “the east”. Either way it is clear that UK companies are performing badly in the single biggest market for LCEGS, which is the USA. With a strong Cornish diaspora in the US with clear links to our industrial and mining heritage, this would seem to offer great potential to Cornish business. The strong UK presence in Hong Kong could also be exploited.

Figure 12 - Global sales by sector

Global Sales 2011/12 £m 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Low Carbon Renewable Energy Environmental

Source: BIS Report, LCEGS 2011/12 The Low Carbon sector is by far the biggest, accounting for 47.5% of global sales. This may suggest that energy demand reduction has more effective market drivers than energy supply.

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Figure 13 - Global sales by level 2 sub-sector

Global Sales 2011/12 £m 600,000 500,000 400,000 300,000 200,000 100,000

0

Wind

Hydro

Biomass

Geothermal

Photovoltaic

Wave & Tidal Wave&

Environmental… Environmental…

Nuclear Power Nuclear

Carbon Finance Carbon

Alternative Fuels Alternative

Contaminated Land… Contaminated

Waste Management Waste

Energy Management Energy

Building Technologies Building

Renewable consulting Renewable

Recovery and Recycling Recoveryand

Alternative Fuel Vehicle Fuel Alternative

Marine Pollution Control Marine

Water Supply and Supply Waste… Water

Noise & Vibration control Vibration & Noise Additional Energy sources AdditionalEnergy Carbon Capture Carbon Storage & Source: BIS Report, LCEGS 2011/12

The top ten selling sub-sectors shown in Figure 13 above account for 87% of global sales. Of this top ten:

 Three are in the Low Carbon sector, (Alternative Fuels, Building Technologies and Alternative Fuel Vehicles)  Four are in the Renewable Energy sector (Wind, Geothermal, Photovoltaic and Biomass)  Three are in the Environmental sector (Water Supply and Waste Water Treatment, Recovery and Recycling and Waste Management.)

Correlating global sales against the sub-sectors priorities we propose in this report (marine, geothermal, smart energy [using energy management as a proxy] and biomass) a good spread of risk between large/established markets and emerging markets is evident.

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Figure 14 - UK growth by sector

UK LCEGS Growth 8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0 2011/ 12 2012/ 13 2013/ 14 2014/ 15 2015/ 16

Environmental Low Carbon Renewable Energy

Source: BIS Report, LCEGS 2011/12

From BIS data, UK LCEGS companies with the largest growth opportunities are expected to be in the Renewable Energy sector, with up to 7% per annum by 2015/16, and Low Carbon at up to 6% by the same date. The Environmental sector is expected to achieve more modest growth at around 3%. The overall growth in the UK economy is expected to be around 2.5% therefore the Low Carbon and Renewable Energy sectors are predicting higher than average growth.

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Figure 15–UK LCEGS Growth projections

UK LCEGS Growth Projections 2015-16 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0

Source: BIS Report, LCEGS 2011/12

Figure 15 above shows the level 2 sub-sectors with the highest growth projections. Carbon Finance is a significant outlier, and the only sub-sector with double digit growth projections. It is worth noting that the vast majority of this activity occurs in London and the South East.

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Figure 16 - Sales Volume and Growth Potential

Source: BIS Report, LCEGS 2011/12

Figure 16 plots the global sales in 2012 against the growth forecasts in 2015/16. Sub-sectors in the bottom left of the chart have low sales and low growth potential. Sub-sectors in the top right of the chart have high sales and high sales potential. If we exclude Carbon Finance as a significant outlier that is distorting the chart, then the top right of the chart shows sub- sectors with both high sales value and high growth potential are wind, alternative fuels, geothermal, building technologies and alternatively fuelled vehicles. Note that no Environmental sub-sectors feature as having high sales and high growth potential.

CURRENT MARKETS AND EXPORTS FROM CORNWALL AND ISLES OF SCILLY

From the analysis above it is clear that LCEGS enjoys significant sales and growth around the world. However the online survey of LCEGS businesses in C&IoS suggests that our local businesses are highly insular in nature. Of the 58 local companies that completed this part of the survey only 9 companies exported. 36.5% of sales occurred in C&IoS and 61.8% in the rest of the UK. Only 1.7 % was export, of which half was to Europe.

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Of the 9 companies which exported, 5 exported only to Europe. 2 companies exported to Europe and America, 1 company to Europe America and Asia, and 2 companies to Asia and Africa.

For one company exports accounted for 100% of sales and for another company 90%. At the other end of the scale, one company’s exports accounted for just 1% of sales and a second 2%.

Table 6 - LCEGS export sales in C&IoS

Company Sub sector/process Export Sales % Territories A Marine/Engineering 100% Asia, Africa B ICT 90% Asia, Africa C Geoscience/Engineering 80% EU, America, Asia D Wind, Wave/Engineering 50% EU E Marine/Engineering 40% EU F Building Tech/consultancy 25% EU G Alternative Fuel Vehicle/Consultancy 10% EU H Geoscience/Engineering 2% EU I Building Tech/Engineering 1% EU

6 of the businesses could be classified as engineering companies, mostly in geothermal and marine.

This apparent lack of exporting is particularly intriguing since some of our most notable engineering companies who include LCEGS in their portfolios, including Fugro Seacore and Geoscience Ltd, are world leaders in their fields and have global reach.

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2.3.3. LOCAL ENTERPRISE PARTNERSHIP COLLABORATION

A summary of our research into the potential for collaboration with other LEPs and the devolved nations.

Researching the interest of other LEPs in England in collaborating on LCEGS focused on three main overlapping topics:

 Collaboration on specific sub-sectors  Skills, in general and for specific sub-sectors  Smart Energy systems

For more detail on the research process, please see Appendix 5.1.6.

COLLABORATION BY REGION OR AREA

From the consultations a clear pattern emerged with regard to the enthusiasm for collaboration, and enquiries can be categorised into two regional groups:

1. Our neighbours in the South West 2. The rest of the UK

For the South West region, and in particular the Heart of the South West and the West of England LEP’s, the response was positive and enthusiastic. Other than marine, Dorset do not see Low Carbon as a specialism. For the rest of the UK the response was mixed, ranging from enthusiastic (Manchester, Oxfordshire and Scotland) to polite if somewhat bemused at times. The Derby, Derbyshire, Nottingham and Nottinghamshire (D2N2) representative did point out that their area includes the Peak District, which is of course a national park and will therefore share many of the land use issues that are evident in Cornwall’s Areas of Outstanding Natural Beauty (AONB).

COLLABORATION ON SUB-SECTORS

MARINE

Collaboration on the marine sector was taken as a given by Heart of the South West, West of England and Dorset LEP representatives. The SW Marine Energy Park already provides a clear structure for the collaboration to develop. In addition there is already a memorandum of understanding in place with the European Marine Energy Centre in Orkney, with the intention the C&IoS and Scotland emerge as technology leaders in wave and tidal energy.

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The importance of the marine sector is highlighted elsewhere in the report. Marine technologies, including offshore renewable energy and green vessel efficiency, is already being taken forward for SMART Specialisation by Cornwall’s LEP.

DEEP GEOTHERMAL

Collaboration on deep geothermal is more problematic. What is clear is that deep geothermal requires the igneous/highly metamorphic geology found in Cornwall and only in other small pockets in the UK, for example in the Lake District. Due to the isolated nature of suitable geology, collaboration in this sector looks to remain intermittent.

BUILDING TECHNOLOGY/ENERGY MANAGEMENT

All LEPs in the UK highlight the importance of domestic retrofit. However correspondents were well aware of the current difficulties with Green Deal and ECO.

COLLABORATION ON SKILLS AND EMPLOYER ENGAGEMENT

West of England, Manchester (Manchester Low Carbon Hub) and Oxfordshire are three examples of LEPs who are very active in the skills agenda. This includes promoting STEM skills, pathways to professions, and facilitating the process and connections between businesses and training providers. All three LEPs expressed an interest in collaboration in this regard, and it would be our recommendation to share good practice with these and other LEPs on the skills agenda.

The response from Skills Development Scotland was also very positive. They are struggling to clearly articulate the future demand for skills, especially to schools, and would welcome collaboration on this. Scotland identify many of the same issues, especially around leadership and management and have a low carbon skills fund which works well in some sectors, and is worthy of further research.

COLLABORATION ON SMART ENERGY SYSTEMS

The Heart of the South West LEP representative was very aware of the work undertaken by RegenSW and the Wadebridge Renewable Energy Network (WREN) in smart energy systems and local energy markets and was keen to collaborate on community energy initiatives.

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The Oxfordshire representative was also keen to collaborate on smart energy and combine this with Higher Education. However we were unable to secure an interview with anybody who would describe themselves as a smart energy specialist in any of the other LEPs.

Much early stage activity in the emerging smart energy systems sector has been focussed on cities, both nationally and internationally. This is in part due to the concentrated nature of urban areas that present significant economies of scale when working out new integrated solutions to multi-layered challenges. Smart systems have the potential of using ‘big data’, the collection and manipulation of multiple datasets, to inform modelling and forecasting to enable the interaction of telecommunications, public transport, energy and other utilities, health and other services. To illustrate this, the main LEPs initially identified in the study that have an established smart energy focus were:

 London LEP  Liverpool LEP  Greater Manchester LEP

This could present a challenge for Cornwall to collaborate with other LEP’s on the roll out of smart energy systems given our rural setting. However, a truly integrated smart energy system needs to provide solutions in both the urbanised and rural context. There is significant cross-over in the type of technologies and systems necessary to deliver the requisite change in both contexts, and while attention has been given to the idea of smart cities (for example Masdar City in Abu Dhabi) this does not necessarily mean that rural areas by definition are disadvantaged. Lessons learnt from early roll out can provide the basis for collaboration and joint working in future deployment of smart energy systems in more rural locations.

See Appendix 5.1.6 for a table of responses to our collaboration enquiries.

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2.3.4. MARKET DISTORTION

This section considers market distortions caused by the influence of European, national and local policy drivers, policy uncertainty and policy failure.

Section 2.4.5 – The No-Subsidy Scenario - outlines the current position of the UK Government with regard to the LCEGS market. This section emphasises that subsidy focuses on support for research and technology in addition to the development of new products (technology push). In addition, to comply with EU State Aid regulations, alternative subsidy is sourced directly through energy bills or taxation.

The carbon strike rate is an indicator used to determine the development support a particular product or industry can receive. The major challenge of using this metric is the dominating impact of the oil market, which directly impacts the strike rate of fossil fuels alongside the costs of capital used to develop alternative technologies.

Stern’s (see section 4.8) review of the economics of climate change challenges the use of the strike rate as it doesn’t apply the ‘polluter pays’ principle and take into account the cost of climate change. Therefore as a mechanism for decision making the strike rate hinders the development of alternative low carbon technologies - essentially it can’t compete with fossil fuel prices.

Alongside this electricity market reform (EMR) has distorted the sector, whilst the effect of state aid requirements has seen DECC (and more recently TSB) funding research and development in offshore wind.

The following tables analyse the LCEGS sector through several sub-sectors, profiling the challenge associated with integration of the sector into wider industry. Public sector intervention has been broken down into market push, pull, and enablers. In some categories previous funding sources (within the last 18 months) have been included to provide a wider appreciation of the scale of prior investment.

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Table 7 - Marine - Market Failures & Public Sector Intervention

Technology Market Failures Public sector intervention Marine  Uncertain and policy dependent Market Pull: market demand  Marine energy one of the low carbon industry areas singled out for support in Low Carbon  High capital expenditures Industry Strategy requirements  Levy Exemption Certificates (LECs) – As a renewable energy source marine energy qualifies for  Challenges to retaining the LECs intellectural property benefits from  Revenues support through Banded Renewables Obligation – 2009 -2017. Contract for R&D difference FIT expected from 2017  Significant common infrastructure requirements Technology Push  Site planning and approval Research and Development grants: requirements  Supergen 2 – 2009-2012; Research Council led support for marine R&D at academic institutions. (£5.5m)  Technology Strategy Board Marine Energy Programme - £22m grants awarded since 2007 in devide cost reduction and underpinning technologies

Capital grants:  Offshore Renewable Energy Catapult – from summer 2012  Marine Energy Array Demonstrator (MEAD) - £20m from DECC to help fund the first marine arrays in the UK  ETI Marine Programme – 2—8-2-18; research and development in sub-areas with cost reduction potential.

Enablers Testing sites:  NaREC – New and reneable energy centre  EMEC – European Marine Energy Centre, Orkney; full scale open water test centre for marine energy prototypes  Wavehub – from 2010, Offshore electrival grid connection point off North Cornwall coasts to which wave energy devices can connect

Permitting regime:  Crown Estate Pentland Firth and Orkney waters licencing round has provided 1.6GW of wave and tidal sites

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Table 8 - Electricity Networks & Storage (inc Smart) - Market Failures & Public Sector Intervention

Technology Market Failures Public sector intervention Electricity Networks Advanced Transmission: Cross-cutting: and storage (inc  Policy dependent demand  Ofgem’s Low carbon Network Fund (LCNF) Smart)  Lack of clarity for offshore electricity grid  TSB Smart Power Distribution and Demand  Complexity of coordination Programme  UK regulatory framework could dis-incentivise interest Smart distribution: Smart distribution:  Ofgem’s LCNF  Scale of investment  ETI Energy Storage and Distribution Programme  Demand uncertainty  High coordination required Storage:  Infrastructure plans are uncertain  ETI Energy Storage and Distribution Challenge  EPSRC Energy Storage Grand Challenge Storage:  Unsure of the value and extent of the role within the UK energy system Demand Response:  Lack of clarity about infrastructure planning  Ofgem’s LCNF  TSB Smart Power Distribution and Demand Home hub: Programme  Policy dependent demand  Regulation doesn’t allow dynamic tariffs Electric vehicle integration:  Lack of common standards  Ofgem’s LCNF

Demand Response:  Policy dependent demand  High level of coordination

Electric vehicle integration:  Policy dependent demand  High level of coordination  Lack of common standards

 Regulated industry (due to monopoly owner)

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Table 9 - Bioenergy - Market Failures & Public Sector Intervention

Technology Market Failures Public sector intervention Bioenergy  Policy dependent demand and Market Pull: uncertain support levels  Cross cutting: EU Renewable energy directive  Coordination/network failures  New Energy Crops: Renewables Obligation across a diffuse supply chain  Biomethane: Renewable heat incentive, Feed In tariff  Challenges to retaining the IP  Bioheat: Renewable heat incentive. Bioenergy capital grants scheme benefits from early stage research  Biopower: Renewables obligation (RO), Carbon price via the EU Energy Trading Scheme and development (ETS)  Conflicting policy regimes  Advanced biofuels: Renewable transport Fuel Obligation, Preferential tax regime, Fuel quality directive

Technology push:  Cross cutting: University research – primarily funded through the research councils BBSRC,EPSRC, ETI, TSB, TSEC, EU FP7, EIBI, Regional growth fund  New Energy Crops: BBSRC/DEFRA Miscanthus improvement programme  Biomethane: Waste and Resources Action Programme (WRAP)  Bioheat: Carbon Trust Biomass Heat Accelerator  Biopower: ETI waste from energy programme and CCS biopower engineering research  Advanced biofuels: Carbon Trust Pyrolysis Accelerator, CoEBIO3), select project development support

Enablers:  Centre for Process Innovation  Energy Technologies Insitute

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Table 10 - Heat - Market Failures & Public Sector Intervention

Technology Market Failures Public sector intervention Heat  Policy dependent demand, and Heat pumps: uncertain support levels  DECC has an ongoing programme of field trials on domestic heat pumps alongside EST  Barriers to developing  TSB retrofit for the Future programme supported projects related to improved design novel/innovative concepts and installation methods with some relevance to the domestic market  Split incentives  Consumer acceptance Heat Storage:  Health and safety requirements  ETI has led a feasibility study on large-scale thermal storage from waste heat Uncertain environmental impacts  EPSRC has funded a range of R&D projects into advanced thermal storage technologies and planning approval  UKERC has led more overarching research into the potential use of thermal storage in  Coordination failures the energy system at different scales

Table 11 - Industrial sector - Market Failures & Public Sector Intervention

Technology Market Failures Public sector intervention Industrial sector  Low and unstable price for CO2 Market Pull: creating demand uncertainties  Climate Change Levy  Early mover disadvantage – finance,  EU Emissions Trading Scheme risk, R&D investment  Conservatism in the industry Market Push:  Constraint on capital availability  Research, development and business support for the following industries: Chemicals,  Lack of stable policy regime Food and drink, CCS, Cement  Planning approval  Research and Development tax relief (tax credits for smaller organisations)  Climate Change agreements

Enablers:  Funding through TSB (support following closure of regional development agencies)  Knowledge Transfer Partnerships

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Table 12 - Domestic Buildings - Market Failures & Public Intervention

Technology Market Failures Public sector intervention Domestic buildings  Energy costs are seen as immaterial Pre-construction and design:  The landlord-tenant divide  English House Condition Survey  Complex planning requirements surrounding  TSB Retrofit for the future the self-build industry  National Refurbishment centre  Fragmented industry  Lack of regulatory certainty around Build Process: compliance  Social housing retrofit ie Retrofit for the future  Lack of certainty around Government policy  Energy Company Obligation and Green Deal  The building sector is conservative  There is a lack of necessary skills Building Operation:  Existing conventions around contracting  ETI Smart systems and heat programme have a negative impact  Ofgem Low Carbon Networks Fund  CIBSE Intelligent Buildings Group

Materials and Components:  BRE Innovation Park  CIBSE Natural Ventilation Group  Sustainable Building Envelope Centre  Energy company obligation and the Green Deal

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Table 13 - Offshore Wind - Market Failures & Public Sector Intervention

Technology Market Failures Public sector intervention Offshore wind  Uncertain demand Market Pull:  Lack of shared test facilities  Levy Exemption Certificates  Infrastructure  Banded Renewables Obligation (2009-2017) requirements/conditions  Carbon Price through the EU Energy Trading Scheme  Insufficient payback to support early research and development Technology Push:  Insufficient coordination and sharing  Offshore Renewable Energy Catapult of data  Supergen 2  Limited competition in some areas  Carbon Trust Offshore Wind Accelerator  Constraint on capital availability  ETI Offshore Wind Programme

Enablers: Testing sites  National Renewable Energy Centre  Aberdeen Renewable Energy Group

Permitting regime  Crown Estate has released sites

Non-technology bottlenecks  Renewable Energy UK and Scottish Enterprise working on health and safety, and skills shortages  DECC ports and infrastructure funding

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2.3.5. SMART SPECIALISATION

This section outlines the potential for SMART specialisation.

WHAT IS SMART SPECIALISATION?

SMART specialisation means identifying the unique characteristics and assets of a region, highlighting its competitive advantages, and rallying regional stakeholders and resources around an excellence-driven vision of their future.

It also means strengthening regional innovation systems, maximising knowledge flows and spreading the benefits of innovation throughout the entire regional economy. In the European Commission’s proposal for cohesion policy (3) in 2014-2020 it will be a pre- condition for using the European Regional Development Fund (ERDF) in 2014-2020 to support investments.

In summary, SMART Specialisation or RSI3 is a process of ‘entrepreneurial discovery’ involving key innovation stakeholders and business. Thus, rather than being a strategy imposed from above, SMART specialisation involves businesses, research centres and universities working together to identify (not only) a region’s most promising areas of specialisation, but also the weaknesses that hamper innovation.

For more information on the nature of SMART specialisation, please see Appendix 5.1.7.

SMART SPECIALISATION IN CORNWALL AND THE ISLES OF SCILLY

The C&IoS LEP has already undertaken a considerable amount of work in preparing a SMART Specialisation (RIS 3) Framework, including work commissioned from Catalys and Innovative Futures Research (IFR). C&IoS LEP identified four potential SMART Specialisation areas,

1. Information Economy 2. e-health 3. Agri-tech 4. Marine Technology

There is a six step process to develop the Framework

1. Analysis of the regional context and potential for innovation activities undertaken 2. Governance: Ensuring participation and ownership 3. Elaboration of an overall vision for the future of the region 4. Identification of priorities 5. Definition of coherent policy mix, roadmaps and action plan

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6. Integration of monitoring and evaluation mechanisms

Our research into LCEGS can be considered as contributing to part of steps 4 and 5 of this process.

SMART SPECIALISATION AND PRIORITY SUB-SECTORS

We have adopted the 7 broad assessment criteria used by IFR and applied it to selected sub- sectors.

The assessment criteria combines the innovation ecosystem with the EU SMART Specialisation guidance and LEP targets. The assessment also takes a current and a future perspective. The assessment criteria cover:

 Strategic R&D fit - Fit with national/EU priorities  Structural Fund fit - Potential for cross border and trans-regional co-op/have an international dimension (emerging markets) - Potential for linkages across SFs - Potential for Horizon 2020 links  Market fit - Are there potential global market opportunities that C&IoS businesses can supply into  Economic fit - Deliver economic transformation - Support competitiveness (building on competitive strengths) - Deliver economic growth – (jobs and GVA) in the short term and longer term  Place fit - Build on local assets; USPs  Delivery Fit - Are the framework conditions in place to support businesses through the Innovation Value Chain, so that innovation leads to commercialisation and added value?  Progress fit - Be monitorable and evaluated (ie evidence can be revisited against all the above)

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The table below applies the SMART specialisation criteria to our top 5 priority sub-sectors.

Table 14 - SMART specialisation and priority sub-sectors

Strategic Structural Market Economic Place Delivery Progress R&D Fit Fund Fit Fit Fit Fit Fit Fit Marine Current ✔ ✔ ✔ ✔ ✔ ❓ ✔ Energy Future ✔ ✔ ✔ ✔ ✔ ❓ ✔ Deep Current ✔ ✔ ✔ ✔ ✔ ❓ ✔ Geothermal Future ✔ ✔ ✔ ✔ ✔ ❓ ✔ Smart Current ✔ ✔ ❓ ✔ ❓ ❓ ✔ Energy Future ✔ ✔ ❓ ✔ ❓ ❓ ✔ Biomass Current ✔ ✔ ✔ ✔ ✔ ❓ ✔ Future ✔ ✔ ✔ ✔ ✔ ❓ ✔ Alt. Fuel Current ✔ ✔ ❓ ✔ ❓ ❓ ✔ Vehicles Future ✔ ✔ ❓ ✔ ❓ ❓ ✔

This is a clearly subjective, and overall the assessment is very positive. However, for all the priority sub-sectors, we question if they are a Delivery Fit, that is, will innovation lead to commercialisation?

For Smart Energy Systems we question if it is Market Fit, e.g. are there potential global market opportunities that Cornish businesses can supply in to, or is it essentially a local/UK market only. We also question if Smart Energy Systems are Place Fit, or does the rural nature of Cornwall put it at a disadvantage.

The rural nature of Cornwall means that being Place Fit is also a question mark for Alternative Fuelled Vehicles, although we would argue that it is a distinct advantage for the Isles of Scilly. We consider that this sector is not Market Fit, meaning that we view Cornwall as a domestic market for alternative fuelled vehicles, not a base from which to export.

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2.3.6. ROUTES TO MARKET

An outline of the possible routes to market for LCEGS businesses in C&IoS

From the businesses that completed the online survey:

 50% of their sales are to other businesses,  30% to consumer/residential customers and  20% to the public sector.

Figure 17 - Online Survey: Sales

Sales

B2B Public sector Consumer/residential

SECURING CONTRACTS FROM THE PUBLIC SECTOR

The public sector procures goods and services according to what many businesses may perceive as strict and/or bureaucratic rules which may include the following:

 A procurement platform18  Open tender (large value items)  Closed (by invitation) tender (small value items)

18 This enables businesses to register and specify services they are interested in tendering for. This way they can received notification of relevant tenders. Generally speaking the larger the value of the contact the more rigorous the tender process will be.

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 Approved contractor lists.

Four public sector procurement officers undertook the market survey. They all work differently, but all seek to support local suppliers if they can. The requirements for environmental management systems or other forms of green compliance are generally dependant on the size and nature of the tender.

The public sector is very risk adverse so when tendering, businesses should think carefully about everything that could go wrong, and state clearly how they will seek to reduce risks. If the tender documents require policies and procedures to be in place, then businesses need to evidence those policies and procedures. Two correspondents suggested that a consortium of local LCEGS businesses would be helpful in securing contracts.

SECURING CONTRACTS FROM THE PRIVATE SECTOR

Procurement in the private sector is much more varied in form:

 Large, expensive projects are more likely to be tendered.  Personal contacts, reputation and networks are much more important in securing contracts from the private sector.

From the online survey, the majority of companies see most of their sales being achieved through existing contacts and supply chains. Traditional marketing techniques and internet sales also featured.

REASONS FOR PURCHASING FROM THE LCEGS SECTOR

The 20 organisations that undertook the telephone market survey gave the following reasons for wanting to purchase low carbon environmental goods and services:

 Money – this included cost savings through efficiency, buildings, appliances, and reduced mileage, and savings through reduced maintenance (e.g. LED lighting). Also covers income from generation and Feed-in Tariff.  Carbon and environmental saving – this was either due to conviction (sometimes this is deeply embedded within the organisation, sometimes it is due to one or a few key individuals) or due to compliance and supply chain pressures – e.g. ISO 14001 and other procurement specifications in PQQs and ITTs from public sector or large retailers such as M&S.  Part of the marketing image – “we live in a beautiful place and we have to be seen to care”. Or pre-emptative marketing - ‘greening’ the product may not be driven by customer demand, but customers are responding positively.

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IMPORTANT SELLING POINTS

Overall the good news for local LGEGS businesses is that all the businesses and organisations that took part in the market survey stated that they make an effort to buy from local companies. On the other hand, buying local is generally more important than buying green. The public sector has less flexibility in buying local and in some cases in buying green, and has been challenged by the EU for trying to do so. Generally buying green or buying from an accredited green company will only form part of the tender process if it is material to the contract.

Our research suggests that a purchasing hierarchy for most businesses would be:

1. Cost 2. Quality/Risk 3. Time 4. Buy local 5. Green or low carbon

If the business is mission or conviction driven, then green concerns will move up the hierarchy. Many businesses do not set out to buy low carbon goods and services, rather they set out to buy the goods and services that they need, and then assess the potential with regard to saving money, energy, carbon, or water for example. The most important selling points are therefore no different to any other sector, e.g. cost, quality and time.

Most businesses are not looking for accreditation such as ISO 14001 unless they themselves are under supply chain pressure to do so. Correspondents suggested that compliance was regarded as a poor driver for creating demand.

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BARRIERS TO BUSINESSES PURCHASING FROM THE LCEGS SECTOR

Table 15 - Barriers to businesses purchasing from the LCEGS sector

Perceived Barrier Background Comments from the phone survey: People – Government  Frustration with shifting  The political climate is becoming worrying government policies  The concept of the ‘greenest government ever’ has been put to bed  Lack of understanding  Oscillating government policy makes long term planning impossible from colleagues and  Conflicting pressures exist between grant funding and planning or legal issues senior management  Inertia - anything big takes ages  Sustainability Officers in  The senior management are not on board smaller organisations are better able to influence  Staff go off and do things on their own purchasing decisions  If only the captains would drive a knot slower  Existing supply chains don’t know enough about LCEGS. Up-skilling is necessary.

Money  ‘Slow’ return on  Cost, sometime real, sometimes perceived investment (anything  When the costs outweigh the benefits – for example green electricity is simply more over three years) might expensive and provides no additional benefit mean that despite long-  Lack of cash term savings, investing is  The Board will not support anything with a ROI of over 3 years not considered value for  Salix will only allow a payback of 5 years, so renewable energy is out of the question money.  Ownership – all our properties are leased so it’s down to the landlord

Technology & Supply Chain  Technical issues – failed  Information – verified and independent assessment of equipment, plus advice and installations information is difficult to get  Conflicting advice  We have had conflicting advice from companies and consultants, resulting in a lack of confidence  It takes more time and effort  A lot of the relevant goods cannot be sourced to high enough standards in the local supply chain – UK businesses are not working to a high enough specification  Certainly for the higher tech stuff, there aren’t businesses in the SW that meet those standards

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 All the big investment equipment/systems are bought outside Cornwall and often outside the UK  Some warranties insist that maintenance is done by certain contractors, none are local  Being outside our existing skill set, it takes time to research to investigate  Equipment which is poorly specified and doesn’t work properly  Reluctant to install kit if likely to move or resize  Planning restrictions (e.g. listed buildings)  Chicken and egg – lots of local firms don’t have ISO or other EMS so purchasers are reluctant to specify this – buy local is probably seen as more important than buy green.  Purchasers find it hard to follow internal guidelines, often due to cost  There are not the skills in house to sense-check whether something works and delivers  When buying regular machines, purchasers can go out and see the kit and try it out – smart or LCEGS tends to be more prohibitive in this respect.

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2.3.7. BARRIERS TO ENTRY INTO THE MARKET

The online survey identified several recurring barriers to entry.

These can be grouped as follows:

1. Lack of appropriate skills. The most common shortage mentioned in the qualitative comments is in Sales and Marketing, though the quantitative data shows a lack of Leadership and Management. Both are clearly barriers to growth, as is the ability to attract those with high-earning potential to Cornwall. 2. Finance. A lack of investment funding for growth, start-up funds and working capital. 3. Government policy. Inconsistent policy, fluctuating and disjointed financial incentives, poor communication of direction of travel and bureaucracy were all seen as key barriers to growth. 4. Practical barriers. These included Cornwall’s peripheral location and lack of good transport links, the lack of affordable premises, appropriate training and business coaching.

Also identified were a lack of time to investigate new markets and a lack of confidence to tackle the issues.

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2.3.8. CONSUMER BENEFITS

This section considers the motivations for procuring and consuming from the LCEGS sector from a general perspective. We also consider specific issues relating to smart energy as an area of innovation that could change significant aspects of the energy market in the next 5- 10 years.

While the cost of environmental impacts can be relatively easily measured and quantified, following a “the polluter pays” principle, the monetisation or commodification of social value remains a highly contested area.19

The Public Service (Social Value) Act 2012, as highlighted in Section 2.3.3, is a significant contribution to the development of this approach in the context of public sector procurement. In response to the introduction of the act, a number of models attempting to accurately measure social value are being developed; currently the most frequently used approach, Social Return on Investment (SROI) is being used in Cornwall by a number of charities and social enterprises in partnership with the Council, to better understand the limitations and robustness of this approach.20

Please see Appendix 5.1.8 for the background to considering carbon as a metric.

WHY BUY GREEN?

The responses from the businesses who participated in the research surveys identified two main motivations for purchasing low carbon environmental goods and services,

 The ability to make financial savings  The conviction that it is an ethical thing to do.

The majority of low carbon and environmental goods and services that businesses identified as having purchased or were interested in purchasing are predominately energy related – renewably sourced electricity, heating systems and fuel, energy efficiency products, LED

19 John Elkington is credited with originating the term “triple bottom line” in the early 1990’s, and expounded in his book Cannibals with Forks (1994). His formulation sought to understand not just the economic value that a company can create but to also evaluate the environmental and social value that its activities may add or destroy. A subsequent iteration of this approach, the 3Ps, “People, Planet and Profits” has gained widespread recognition as a model that challenges conventional economic measurements. Internationally, in larger organisations the term ‘Corporate Social Responsibility’ (CSR) tends to encompass these issues.

20 Pentreath, the award winning mental health organisation is an acknowledged leader in applying the SROI process; the Cornwall Voluntary Sector Forum is currently leading a Social Value pilot working with a number of organisations to identify a basket of metrics that Commissioners can use.

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Financial savings from energy efficiency technology, and through reduced maintenance (e.g. LED lighting) and income generation thought the FiT or RHI schemes were seen as meaningful and realisable. However, the additional cost of tariffs guaranteeing 100% sourced renewably generated electricity, compared to standard tariffs remains a barrier.

It is perhaps not surprising that several of the survey’s participants cited personal conviction as an influence in purchasing decisions, given that they identify themselves as working within the LCEGS sector. Although some may be concerned with the image of “greenwash” there is a general commitment to buying well.

COMMENTS FROM THE SURVEY

“I’ve been interested in it for years from an environmental perspective, and as an accountant it makes financial sense”

“It is part of the marketing image – we live in a beautiful place and we have to be seen to care”

“Our customers are not creating the demand, we are greening our product and the customers are responding - the ‘Steve Jobs effect’”

More detail on consumer benefits and barriers to purchasing from the LCEGS can be found in Appendix 5.1.8.

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CONSUMER BENEFITS - SMART ENERGY

The Government’s economic impact assessments assumed that non-domestic customers would benefit from electricity usage reductions of 2.8% and gas usage reductions of 4.5% from better management resulting from the information Smart meters provide. They estimate that the smart metering roll-out will deliver a net benefit of around £6.7 billion.

Among other benefits the Government has identified the use of Smart meters provide both domestic and non-domestic consumers accurate meter readings and bills, detailed information about energy use which could lead to improved energy management, easier switching and energy efficiency advice during installation leading to energy efficiency measures and support for microgeneration.

The roll-out of a programme of mass Smart meter installation will provide a platform for a range of as yet untested smart home services. A change in the interactions of consumers with their suppliers is likely, with the introduction of time-of-use tariffs and other competitive energy services. Pre-payment customers may be offered new ways of topping up, e.g. over the phone or on-line and pre-payment smart meters can be set so they don’t run out of credit at night or at times when obtaining credit is not feasible.

It should be noted that a lot of the benefits noted above are highly speculative - the product of parties interested in promoting the adoption of Smart meters - and there needs to be more learning from the consumers perspective of the impact of Smart meter usage elsewhere. There are grave uncertainties about the consumer engagement process, noting the situation in the US and Netherlands where public concerns about data sharing, health impacts and a general wariness of the motivations of big corporate entities has delayed and stopped roll-out programmes.

Non-domestic customers could benefit from time-of-use tariffs if they have the ability to reduce energy usage during discounted tariff periods. If day-time use is discounted, the retail sector would benefit, but businesses that are busiest during the evenings (restaurants, pubs, hotels) may be disadvantaged.

The Government’s Impact Assessment estimated that the average cost of smart electricity and gas meters will be £44.95 and £59 respectively, with respective installation costs of £29 and £49 (or £68 if both meters are installed together). However, when the cost of the smart meter is added to bills, it is unclear whether the net difference in energy bills will be positive, nor whether suppliers will pass on their savings.

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CHAPTER SUMMARY – NEW MARKETS AND OPPORTUNITIES

 It is the combination of natural resources, enterprise and research capability that creates Cornwall’s USP.  Asia is the largest market for LCEGS, followed by the Americas and Europe. There is a strong correlation between total growth and ‘green’ growth in the top performing economies.  The priority sub-sectors represent a good spread of risk between large/established markets and emerging markets.  However Cornwall’s LCEGS businesses are highly insular, with only 1.7% of goods and services exported. This is something which should be addressed given C&IoS’s ambitions in this sector.  Our neighbours in the South West offer the most scope for collaborating on the priority sub-sectors identified and skills initiatives. The South West Marine Park already provides a model for LEP collaboration in the LCEGS sector. Marine is the only priority sub-sector where meaningful collaboration seems realistic at this time.  As Micro and SMEs dominate the sector, the benefits of collaboration and clustering could be significant for Cornish businesses.  SMART Specialisation criteria indicate a good match exists between Cornwall’s USP and the priority sub-sectors we have identified.  Outside of compliance, reasons for purchasing LCEGS include cost and efficiency savings, carbon and environmental savings (which could be from conviction rather than compliance), and marketing or branding consideration.  Barriers to purchasing from the LCEGS include shifting government policy, lack of understanding or flexibility in larger organisations, a slow return on investment, and technical issues or conflicting advice.  Barriers to entry into the sector include a lack of appropriate skills and access to training, difficulty in financing start-ups, growth or access to working capital, inconsistent government policy and practical barriers, including the problems of a peripheral location, transport and premises constraints.  The monetisation and commodification of social value is a developing area which could drive growth in the LCEGS sector.  Consumer benefits for the up-take of Smart Energy Systems remain speculative.

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BUSINESS ANALYSIS

2.4.1. BUSINESS ANALYSIS FOR CORNWALL AND ISLES OF SCILLY

Working from the sector definition, our Business Analysis describes the makeup of each sub- sector operating within the LCEGS, including the number, size and structure of businesses operating within it and the nature of the sub-sector in terms of services provided or LCEGS technology splits.

As already described in this report, BIS define the low carbon and environmental goods and services sector as follows:

Table 16 - LCEGS Levels 1&2, BIS 2012

Level 1 Environmental Renewable Energy Low Carbon Level 2 Air Pollution Biomass Additional Energy Sources Contaminated Land Geothermal Alternative Fuel/ Vehicle Environmental Consultancy Hydro Alternative Fuels Environmental Monitoring Photovoltaic Building Technologies Marine Pollution Control Wave & Tidal Energy Management Noise & Vibration Control Wind Carbon Capture & Storage Recovery and Recycling Renewable Consulting Carbon Finance Waste Management Nuclear Power Water Supply and Waste Water Treatment

THE LCEGS SECTOR IN CORNWALL

Our research has determined that there are 366 companies in Cornwall trading fully or in part in low carbon environmental goods and services. We did not identify any companies in the Isles of Scilly. Of these companies we have sales and employment figures for 179 companies, representing 48.9% of the total. These figures have been grossed up and compared with the BIS data for 2011/12 in the table below.

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Table 17 - CEP/BIS data comparison

CEP data 2014 BIS data 2011/12 Sales £m 533.24 732.54 Companies 366 304 Employment 3905 5606 Sales per employee £136,500 £131,000 Ave employees per 10.7 18.4 company Population 534,000 534,000 Sales per capita £999 £1372 Working age population 301,900 301,900 Percentage employment 1.29 2.16 in sector

The BIS data is from figures reported in 2011/12 where as our data is from figures reported in 2013/14. A full analysis of the likely reasons behind the differences can be found in Section 1.3 - Sector Value.

EMPLOYMENT IN THE SECTOR

The results of our research suggest that the 366 companies active in the LCEGS sector in Cornwall employ 3905 full and part time staff that carry out LCEGS activities. From results to our online survey there is likely to be a further 1500 people engaged in sub contract or an associate basis, but this figure is based on a smaller sample size and so should be treated with some caution.

AVERAGE SIZE OF COMPANIES IN THE SECTOR

Our research suggests that each company has on average 10.7 full or part time employees engaged in providing low carbon environmental goods and services.

The online survey suggests that 69% of businesses are a single entity and 31% are part of a larger group.

SALES IN THE SECTOR

The research suggests that companies that operate in Cornwall have sales that total £533m that can be attributed to low carbon environmental goods and services.

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LEVEL 1 SECTOR ANALYSIS

Table 18 - Level 1 sub-sector comparison

Level 1 Subsector Companies Staff Sales £m Average Average sales Average employees per company sales per per co. £ staff £ Environmental 126 2544 431.17 20.2 3,412,000 169,485 Renewable Energy 135 562 41.11 4.2 304,500 73,149 Low Carbon 105 798 60.95 7.6 580,500 30,780 Total LCEGS 366 3905 533.23 10.67 1,457,000 136,500

Cornwall data CEP 2013/14

The environment sub-sector forms by far the largest part of the LCEGS sector in C&IoS. It is important to note that the environment sector includes water supply and the collection and treatment of waste, as well as services for the natural environment. 35% of sales in the environment sub-sector are attributed to South West Water, which receives an income of roughly £300 per person. However the Low Carbon and Renewable Energy sectors do not include the transmission, distribution and sale of electricity or gas through the national grid networks, which has an estimated cost of £1.2billion per annum. Based on the UK average supply roughly 11% of electricity sold in Cornwall will come from renewable sources and 17% from (low carbon) nuclear. As is discussed elsewhere, the predicted growth in the Environment sector roughly matches that for the UK economy as a whole, whereas the Renewable Energy and Low Carbon sectors are predicting much higher rates of growth.

Figure 18 - Sales per level 1 sub-sector

Sales £m

61 41

431

Environmental Renewable Energy Low Carbon

Companies engaged in Renewable Energy activities tend to be smaller than the Low Carbon, with an average of 4.2 staff, or a team of 4.2 staff based in a broader based organisation. Using average sales per employee as a proxy for added value, Renewable Energy companies would seem to add more value than Low Carbon companies.

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LEVEL 2 SUB-SECTOR ANALYSIS

The table below shows the number of companies that are active in the level 2 sub-sectors. The BIS methodology allocates businesses to a single sub-sector. However it is a noticeable that businesses in Cornwall are active in many sub-sectors, to the extent that it has proved impossible to disaggregate and allocate businesses to a single one, and therefore to allocate sales of employees to these sub-sectors. As a result the total sum of businesses is less than the individual parts.

The table below shows the number of businesses that are based in Cornwall and are active in one or more level 2 sub-sectors.

Table 19 - No. of businesses in C&IoS active in one or more level 2 sub-sectors

Sub-Sector Category CEP 2014 database (Cornwall)

L2: Air Pollution 4 L2: Contaminated Land 17 L2: Environmental Consultancy 60 L2: Environmental Monitoring 14 L2: Marine Pollution Control 6 L2: Noise & Vibration Control 7 L2: Recovery and Recycling 54 L2: Waste Management 17 L2: Water Supply and Waste Water Treatment 18 No. of businesses in Environmental Activity Block 197 L2: Biomass 33 L2: Geothermal (incl. heat pumps) 56 L2: Hydropower 8 L2: Photovoltaic/ Solar 92 L2: Wave and Tidal 58 L2: Wind 22 L2: Renewable Consulting 41 No. of businesses in Renewable Energy Activity Block 310 L2: Additional Energy 7 L2: Alternative Fuel/ Vehicle 4 L2: Alternative Fuels 12 L2: Building Technologies 25 L2: Energy Management 76 L2: Carbon Capture and Storage 4 L2: Carbon Finance 3 L2: Nuclear Power 3 No. of businesses in Low Carbon Activity Block 134 Smart Energy: Current services 26 No. of businesses in Cornwall and Isles of Scilly 366

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The sub-sectors in which the highest number of businesses are active:

Figure 19 - Sub-sectors with highest number of active businesses

Biomass 33

Renewable Consulting 41

Recovery and Recycling 54

Geothermal (incl. heat pumps) 56

Environmental Consultancy 60

Wave and Tital 58

Energy Management 76

Photovoltaic/ solar 92

0 10 20 30 40 50 60 70 80 90 100

Sub Sector

The sub-sectors in which the lowest number of businesses are active:

Figure 20 - Sub-sectors with lowest numbers of active businesses

Hydropower 8

Noise and Vibration Control 7

Additional Energy 7

Marine Pollution Control 6

Alternative Fuel/ Vehicle 4

Air Pollution 4

Carbon Capture and Storage 4

Carbon Finance 4

Nuclear Power 3

0 1 2 3 4 5 6 7 8 9

Sub Sectors

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Overall the C&IoS LCEGS sector would seem to have a high degree of horizontal integration. Only 33% of companies trade in a single sub-sector, 20% of companies trade in 2 sub-sectors and 47% of companies trade in 3 or more sub-sectors. From the online survey, the 32 companies that claim to be active in solar energy also claim to be active in all but 7 of the other 37 categories. The 24 companies that claim to be active in environmental consulting also claim to be active in all but 5 of the other categories. This high level of horizontal integration not only makes it difficult to establish the sales value of a single sub-sector, it also has important implications when considering the skills and marketing needs of the businesses concerned.

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2.4.2. NATIONAL AND INTERNATIONAL COMPARISONS

This section provides quantitative and qualitative comparisons with other regions and nations.

QUANTITATIVE ASSESSMENT

Unfortunately BIS are unable to give a sub-sector breakdown for C&IoS. Our own research is based on different methodology to BIS and it is inadvisable to compare the two. Therefore this section uses exclusively BIS figures to compare the region with the rest of the South West, the UK and internationally.

The BIS figures for the whole sector in C&IoS in 2011/12 compared with the whole of the South West and the UK are as follows:

Table 20 - Comparing C&IoS with the South West and UK

C&IoS SW UK

Sales £m 732.54 10,214.4 121,800

Companies 304 4,237 51,292

Employment 5606 77,688 937,923

Sales per employee £131,000 £131,000 £130,000

Ave employees per 18.4 18.3 18.3 company Total Population 534,000 5,300,000 63,000,000

Sales per capita £1372 £1927 £1933

Working age population 301,900 3,604,000 39,060,000

Percentage of working 1.86 2.16 2.40 age population

From the table it can be inferred that, despite the advantages C&IoS has in terms of natural resources, and a pioneering history, the LCEGS sector is underperforming both by sales per head of population and by the percentage of the population employed in the sector. This is illustrated in the table below:

Table 21 - C&Ios LCEGS sector as a percentage of SW & UK

South West UK Working Population 10% 1% Sales 7.3% 0.6% Employment 7.2% 0.6% Companies 7.2% 0.6%

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CUSTOMER BASE

According to the online survey, residential customers account for well over half of all sales in Cornwall.

Figure 21 - Customer Base

14.7

27.7 57.5

Residential Business Public Sector

GEOGRAPHICAL TRADE

According to the results of the online survey, the Cornwall LCEGS has exports accounting for only 1.7% of sales.

Figure 22 - Sales by Territory

1.7

36.5

61.8

CIoS UK Overseas

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COMPARING THE UK WITH OVERSEES MARKETS

The table below shows the 10 largest markets for LCEGS. The UK is the 6th largest market overall and the 2nd in Europe after Germany.

Table 22 - Largest markets for LCEGS

Country Sales £m Rank % of Total USA 660,760 1 19.2 China 444,324 2 12.9 Japan 213,295 3 6.2 India 210,815 4 6.1 Germany 145,267 5 4.2 UK 128,141 6 3.7 France 104,201 7 3.0 Brazil 103,583 8 3.0 Spain 92,136 9 2.7 Italy 89,485 10 2.6

The European market in total (EU27) was worth £954,353m in 2011/12, being roughly 28% of the global market worth £3,441,782m.

Overall in terms of numbers the LCEGS sector in Cornwall is underperforming compared to the rest of the South West and the UK. The majority of businesses are focused on domestic customers and sales in the UK. The UK market is the second largest in Europe. According to our online survey only 1.7% of sales from our local companies are in exports.

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QUALITATIVE ASSESSMENT - STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS

 The LCEGS sector in C&IoS benefits from a fantastic resource base of sun, wind and waves.  It has a long history of enterprise and engineering with some world class businesses.  The further and higher education sector is strong and collaborative working between the universities and business continues to strengthen.  There is strong political support for the sector and considerable expertise in the public sector.  The sector is well aligned with the EU SIF and other funding sources including Horizon 2020, Interreg and the TSB.  Many personnel working within the sector are highly qualified and highly motivated.  Whilst the local Cornwall market is relatively small, the UK is the 6th largest market internationally and over a quarter of all global sales are within the EU.  Predicted growth for the Renewable Energy and Low Carbon sectors is strong and positive, both from official projections and the online survey of business attitudes.

Of the sub-sectors given priority status in this report, marine, including offshore renewables and vessel efficiency, stands out as having the best development and export potential, all be it from a very low base. It has already been designated as a SMART specialisation and has a defined geographical cluster around Falmouth including knowledge, research and engineering based organisations.

However the LCEGS sector as a whole is small and underperforming compared to the South West and UK as a whole. A third of total sales are to the local market and that market is small, but the UK market is comparatively large. Both domestic and businesses customers are resistant to any technology with a payback or return on investment of more than 3 years. Reported export sales are minimal. Many of the threats to the sector are not unique to Cornwall but rather are shared nationally and internationally. Much of the sector is either directly dependent on subsidy or the subsidy is hidden with regulated market mechanisms. There is strong vocal opposition to so called ‘green taxes’ and to all forms of energy generation.

Business leaders including the CBI are very positive about LCEGS, and sector businesses in Cornwall are optimistic about their growth potential. However businesses in the sector, existing and potential customers and wider stakeholders are all very concerned about inconsistent government policy. The recent history of mismanagement by successive governments of the Feed in Tariff, Renewable Heat Incentive and most recently the Energy Company Obligation and Green Deal, combined with public mistrust of the Big 6 energy

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A SWOT analysis of the sector follows:

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Table 23 - SWOT Analysis

Strengths Weaknesses  Academic expertise  Lack of international political  The integration of the sector across many coordination of the need for climate different industries as a ‘common goal’ to change adaptation and resilience reduce environmental impact (BIS 2013)  Lack of agreement/decision making on  Natural resources – wave, tidal, highest post 2012 Kyoto targets insolation rates in the UK  Local academic expertise linking with  Local policy direction through SEAP, LEP and industry Green Cornwall programmes  Uncertainty at a national policy level  Long term EU policy direction through to 2030 within the biomass sector  Financial instruments such as Feed in tariff  Ability to export to the European market and Renewable Heat Incentive – particularly in engineering  Renewables Obligation  Strategic opportunities for collaboration  Public Services (Social Value) Act 2012 as a across the UK (with minor exceptions) mechanism to ensure environmental  Lack of innovation in generating new consideration in commissioning business – particularly in marketing and  UK government aspirations to become a world using existing supply chains leader on offshore energy  Green or low carbon is a low purchasing  Community energy projects and community consideration in business to business ownership recognised on a national policy procurement front through the community energy strategy  Concept of low carbon within supply  £400m funding for ultra-low emission vehicles chains to LCEGS business hasn’t been  Strong entrepreneurial/engineering base realised  One LEP, two unitary local authorities  Conflicting advice to businesses causes  Programmes such as ‘Partner to succeed’ inertia when attempting to purchase effective in supporting business to business LCEGS sales  Geographical location – ‘Branch Office Syndrome’  Industry-wide skills i.e. strategic planning and leadership are limited, and when found restricted to the ‘boardroom’  IT, software and programming skills  STEM skills  Vulnerability of transport links  Lack of infrastructure Opportunities Threats  Training opportunities for higher education  Affordability of meeting international and training providers to increase abilities and targets (particularly in a global recession) knowledge across different sectors in order to  Climate change scepticism both respond to energy and environmental drivers nationally and globally (potential for increased job growth (EC,2011)  National policy direction supporting  Policy implementation of SMART fracking  Increased resource efficiency has the  EU 2030 framework for climate and potential to increase profits and energy policies have not produced competitiveness legally binding targets  Climate adaptation and resilience  Political instability in energy policy,  Growth areas such as additional energy particularly making long term planning a sources, carbon finance sectors and wind challenge recognised at national policy level (BIS 2013)  Reactive national policy making,  Potential £20m (through ERDF and 50% particularly in the energy market match) to take marine projects from  Limited capacity/structure of the energy conception through to installation grid is a barrier to local electricity generation

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 Deep geothermal power generation has  Business and leadership skills in LCEGS potential to produce 5% of national electricity businesses demand  Sales and marketing skills  Geothermal centre of excellence developed in  Lack of investment for growth, start-ups conjunction with Exeter University and EGS and working capital energy has potential to drive high level jobs  Skills needed in the future haven’t yet  Local policy support (LEP, CC local transport been discovered, certainly not at a plan) for electric vehicle infrastructure business level.  Market opportunity for high efficiency/hybrid  IT, software and programming skills storage solutions for marine vehicles  Smart energy network can build on the work of superfast broadband programme  Smart energy solutions can build on the national roll out of smart meters  Job generation through the integration of low carbon technologies and innovation in building new homes and retrofitting existing properties  Export opportunities to Europe and the South West  Skills collaboration with West of England, Oxfordshire, and Manchester regions through shared objectives with respective LEPs  Smart energy systems collaboration opportunity through LEPs in the West of England and Oxfordshire  Development of a consortia of local businesses to facilitate commissioning within the local supply chain  Develop synergies between different smart applications such as smart homes and the development behind tele-health

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2.4.3. CLUSTERING AND COLLABORATION

This section considers the opportunities and potential advantages and disadvantages of business clustering and collaboration in the sector, including possible effects on the supply chain.

The potential benefits for businesses that are in the same line of industry or trade of “clustering” geographically close together have been well rehearsed. These are primarily considered to relate to the economies of agglomeration that may result from the close proximity of working:

 A local pool of expertise and skilled workers;  Easy access to component suppliers; and  Networking and information channels.

That is, the economies of scale and networking effects resulting from clustering can result in reduced costs of production for the businesses. Indeed many governments have pursued policies supporting clusters, both building on existing businesses and among new business start-ups. These policies have often been targeted on regeneration zones or areas in need of special economic assistance.

For more information on clustering and collaboration, including comments from the survey, please see Appendix 5.1.9.

In this context, the research asked the following set of questions of the LCEGS businesses that were consulted during the study:

- Does this business work with other businesses in the same line of work? - (IF YES) Are these other businesses located in Cornwall and the Isles of Scilly? - (IE YES) What are the benefits of being close? - Would you like to collaborate with other businesses?

Several key points emerged:

 The businesses expressed mixed views about clustering with other businesses in the same line of work as them. Some already did so and were positive about the benefits, whilst others did not for various reservations, most of which related to specific concerns about the USP of their products or services.  In general collaboration was seen more positively, with benefits often linked to specific sets of circumstances and, in particular to the skills and needs of partners with whom they might be able to collaborate.  Other businesses said that they were keen to collaborate but either could not find suitable businesses locally or did not know where to go.  Further to this, some business put forward ideas and suggestions for potential support actions for CDC to assist in business collaborations.

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 A small group of businesses were not keen on collaboration, primarily for the same reasons as those who were not keen on clustering – either because of the level of competition that they faced, their concern over the position of their goods or service in the market place or a perceived threat to their USP.

Finally it is worth noting that in the context of global competition, rapid transport and high- speed telecommunications, using location as a basis for clustering or collaboration should not theoretically be a source of competitive advantage. However this disregards Cornwall’s poor transport links and the currently insular nature of the LCEGS market in the county. With these issues to overcome, it seems likely that the benefits of collaboration could be very significant for Cornish businesses and their desire to pursue it should be supported.

In the sector focus group, participants identified several opportunities for overseas knowledge exchange. Larger organisations with experience of securing and managing European funding (e.g. CDC, Cornwall Council, CUC) could play a positive role in connecting local businesses with overseas contacts through project partnerships. This is a role that we suggest the proposed Research and Innovation Hub could include within its remit (see An Action Plan for Skills).

Some of the countries where knowledge exchange and collaboration would be of particular interest to the top three priority sub-sectors include:

Wave Power – Australia, Belgium, Canada, Denmark, Ireland, Israel, Micronesia, Portugal, Sweden, USA.

Geothermal – Australia, France, Germany, Iceland, Indonesia, Italy, Japan, Mexico, New Zealand, Philippines, Switzerland, USA.

Smart Energy – Australia, Canada, China, Estonia, Finland, France, Ireland, Italy, Japan, Korea, Malta, Netherlands, Norway, Portugal, Spain, Sweden, USA.

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EXISTING GEOGRAPHICAL CLUSTERS IN CORNWALL AND THE ISLES OF SCILLY

 Marine Technologies, including off shore renewable energy and vessel efficiency has already been designated as a Smart Specialisation (RIS 3) and is a priority sub-sector. Falmouth already exists as a marine cluster with many well established businesses and the Falmouth Marine School.

 The National Solar Centre and the Cornwall Sustainable Building Trust are both located at the Eden Project, and Ocean Housing are very active in Domestic Retrofit, so it could be argued that St Austell and the Clay Country is an emerging geographic cluster for building technologies.

 The authors of this report consider that the Wheal Jane complex near Truro, which already brings together earth science, civil engineering and environmental businesses, has the potential for further development as a test bed and learning resource for land-based renewable energy and low carbon technologies.

 The Newquay Aerohub has already acquired enterprise zone status, and could also be a suitable area for clustering of green engineering businesses.

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2.4.4. THE ROLE OF ACCREDITATION SCHEMES

This section includes both the role and the associated cost of accreditation schemes for the LCEGS.

There are no standards or accreditations that are unique to the LCEGS sector. The government response to the consultation paper Meeting the Low Carbon Skills Challenge – a Government response, produced by DECC in 2010, recognises the calls from many different parts of the industry for an accreditation programme that meets the skills need of the LCEGS (Department of Energy and Climate Change (DECC), 2010).

GENERIC ACCREDITATION SCHEMES

The International Organisation for Standards (ISO) provides:

 ISO 9001, Quality Management - standard for ensuring that products and services meet customer’s requirements.

 ISO 14001 Environmental Management Systems - provides practical tools for companies and organisations looking to identify and control their environmental impact and constantly improve their performance in this area.

The United Kingdom Accreditation Service (UKAS) is the sole national accreditation body recognised by government to assess, against internationally agreed standards, organisations that provide certification, testing, inspection and calibration services.21

Typically the external costs of auditing against the standard, and certification by a UKAS accredited body, costs in the region of £1000 a year, per system, for a SME (2 day annual audit). There are additional costs of running the system and staff time associated with ensuring compliance.

There are also industry-wide recognised standards for both carbon and energy management. The ISO 50001 standard for energy management supports organisations in all sectors to use energy more efficiently through the development of an energy management system, whilst the Carbon Trust standard publicly recognises an organisation's efforts in reducing carbon emissions and provides tangible proof to employees and shareholders as

21 Some companies have been sold cheaper off-the shelf ISO systems that don’t meet the UKAS standard. The difference may not be widely understood by procurement officers.

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SECTOR-SPECIFIC ACCREDITATIONS

 The Contractors Health and Safety Accreditation Scheme (CHAS) - commonly used in procurement to inform Health and Safety standards. The cost of the assessment starts from £210 + VAT.  The Microgeneration Certification Scheme (MCS) - overarching accreditation scheme for installers of renewable technologies. Eligibility requirement for the Government's financial incentives, including the FiT and RHI. Installers of renewable technologies pay an annual charge plus £5 per each installation.

To work within the framework of the Green Deal or Energy Company Obligation there are three different routes to accreditation. The Green Deal oversight and registration body (Green Deal ORB) manages the accreditation scheme for Green Deal Installers (GDI’s), Green Deal Assessor Organisations (GDAO’s), Green Deal Providers (GDP’s) and certification bodies. All bodies that wish to operate under the Green Deal must meet the Green Deal Code of Practice, and the framework regulations, in addition a Green Deal Provider must also hold a valid Category A Consumer Credit Licence. A Green Deal Assessment is required for an installation to be eligible for the Renewable Heat incentive (RHI). To become a Green Deal Advice Organisation (GDAO) or installer, the typical cost will be up to £1000, plus costs for each property that is lodged.

For both MCS accreditation and GDAO/GDI accreditation, there is a requirement to use a quality management system within the business, although there is no requirement for it to be UKAS, or otherwise accredited.

22 These schemes do not have the same level of recognition within procurement as the environmental and quality management systems.

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2.4.5. THE NO SUBSIDY SCENARIO

Here we consider the long term viability and sustainability of the LCEGS industry without subsidies, addressing likely scenarios for the future EU and UK funding landscape.

The official government line, especially when in communication with the European Union is that there are no public subsidies for Low Carbon and Renewable Energy technologies (especially nuclear). Rather the additional cost of supporting these technologies is born by the consumer through increased prices. For ease however, we will refer to public subsidy throughout this section of the report.

The general policy of the UK government is that, once past the research and development stage, renewable energy and low carbon technologies do not receive capital grants in order to install plant and equipment. Instead, through the governments Electricity Market Reform (EMR) programme, and via a process of negotiation with the industries involved, the government has agreed Contracts for Difference (CfD) that set a strike price for the various technologies. The intention of EMR is to allow competition between the various low carbon technologies by making allowance for variables such as capital cost and operational risk. The strike prices will be adjusted for inflation.

For renewable energy and low carbon technologies to be viable on the open market without subsidy, they need to be able to produce electricity at or around the wholesale market price. The wholesale price of electricity at the moment is about £45 to £50MWh. By way of illustration the UK government has just agreed a strike price with EDF Energy for the Hinkley C Nuclear Power Station of £92.50 MWh. In other words, the government and EDF agree that nuclear energy will become economically viable on the open market when the wholesale price reaches £92.50.

Figure 23 shows a range of renewable and low carbon technologies that our research has identified as priorities for Cornwall and the Isles of Scilly.

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Figure 23 – Technology subsidy mechanisms & strike prices

Technology Current Subsidy Strike Price Strike Price mechanism 2014/15 2018/19 £MWh £MWh Wave and Tidal ROC 305 305 Geothermal inc Heat pumps RHI - - Deep Geothermal ROC 145 140 Biomass ROC 125 125 Biomass – Anaerobic Digestion ROC 150 140 Wind (small scale) FIT - - Wind (large onshore) ROC 95 90 Solar (small) FIT - - Solar (large) FIT 120 100 Smart - - - Building technology - insulation ECO - - Building technology - microgen FIT - - Alternative fuelled vehicles OLEV grants - -

At today’s prices of about £50MWh, wholesale electricity prices would have to increase by 8% per annum for 9 years before the cheapest renewable energy technology, onshore wind, becomes viable without subsidy.

THE ENERGY MIX

In theory, being more expensive than energy from fossil fuels, as more low carbon and renewable energy contributes to the UK energy mix, the wholesale price of electricity will rise. Combined with a likely increase in fossil fuel prices this will mean that the “public subsidy” for low carbon technologies reduces. In reality, this report is being written in the middle of a policy storm. There is increasing public and political resistance to so called ‘green taxes’ that form the defacto public subsidy for low carbon and renewable energy technologies. Under pressure from the press, public and its own back benchers, the government recently announced a £50 annual rebate on these taxes. In other words, £50 has been deducted from customer’s electricity bills and added to general taxation.

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Figure 24 - Future sources of electricity

The subsidy scenario for energy saving technologies is more complex than that for energy generating technologies, being more concerned with payback and a range of barriers or “hassle factors.” It is covered in some detail in the section on affordability, but in brief; the current debacle over ECO and Green Deal makes it clear that even with significant public subsidy there is no market for internal or external wall insulation under the current Green Deal mechanism.

The message is clear and stark. For renewable energy generation and building fabric insulation, without public subsidy the industry in the UK is not viable now or up to 2020.

The 2006 Stern Review on the economics of climate change estimated that the cost of successfully tackling climate change would be about 1% of global GDP per annum if we acted now (then) The cost of not doing so was estimated at $85 per tonne of CO2 (Stern, 2006). Without making any allowance for inflation, and at today’s carbon intensity of around 500g per KWh of electricity this equates to about £25 per MWh. Using the polluter pays principle this would mean that the true wholesale cost of electricity should be about £75MWh.

Having said at the beginning of this section the government prefers production subsidies to grants, the situation for alternative fuelled vehicles is somewhat different. At present the Office for Low Emission Vehicles (OLEV) provides grants for plug-in cars, plug-in vans, and plug-in infrastructure.

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 The plug-in car grant provides a 25% discount on the retail price up to a maximum of £5000.  The plug-in van grant provides a 20% discount on the retail price up to a maximum of £8000.  The plug-in vehicle infrastructure grant provides 75% discounts for places such as local authority and railway car parks.

Unlike CfDs on renewable energy generation, the future subsidy scenario for alternative fuelled vehicles is less clear, but arguably more positive. Electric vehicles in particular are a simpler technology to petrol and diesel engine cars, so if vehicle sales continue to increase and economies of scale can be achieved they should be cheaper to produce. The additional cost of electric vehicles is in the batteries. Battery prices have dropped by 40% over the last few years and vehicle ranges are increasing. If this trend continues then it seems reasonable to suggest that at some future date, alternative fuelled vehicles will be able to compete on the open market without subsidy.

Generally speaking energy management technologies, including components of Smart Energy systems, are not dependent on public subsidy. Smart Energy systems, by definition, are complex and multifaceted. The cost of the planned roll-out of smart meters will be passed onto consumers via domestic and non-domestic electricity bills. However other elements of energy management and Smart Energy sit entirely outside of government regulation and subsidy. In the USA the Nest smart thermostat is reportedly shipping 40,000 units a month and has recently been acquired by Google. In the UK British Gas has recently entered the market place, as have German manufacturers. All this will have little effect on the Cornish Low Carbon sector however.

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Figure 25 - Investing in Renewable Technologies – CfD contract terms and strike prices

Source: DECC Dec 2013

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2.4.6. AFFORDABILITY TO CONSUMERS AND BUSINESSES

An examination of the issues around demand, affordability and pay-back timescales which may affect uptake of low carbon and environmental goods and services.

Table 24 - Affordability to Consumers & Businesses

Issue Key Points Demand and Affordability  Standard market forces are distorted in the LCEGS sector – market driven demand is nascent at best.  LCEGS demand is partly driven by government policy and regulation.  Expectation on behalf of public and businesses that the cost of LCEGS should be subsidised.  Individuals and businesses are often irrational economic players. Understanding Behavioural Change  The policies and messages required to affect the uptake of carbon saving measures are complex and remain very poorly understood.  Consumers are not responding to government sponsored marketing messages in the numbers required to meet carbon saving commitments. Understanding Attitudes to Energy Saving Payback  Payback in this context is the cost of the measure divided by the annual savings and normally expressed in years.  A recent survey by Wadebridge Renewable Energy Network (WREN) found that 88% of those questioned expected a payback of just one year.23  Within the energy efficiency industry anything longer than a 3 year payback is considered a hard sell (see research by The Carbon Trust, Appendix 5.1.10) Affordability for Businesses  Research states that businesses in general do act rationally in choosing to implement the energy saving measures with the highest IRR and the shortest payback.  Only about half of recommended measures are installed and businesses only choose to implement those with a quick return.  In general these are also the least disruptive technologies to fit.

23 The survey was relatively small with only 107 respondents, and the results should not be regarded as scientific, but even so the result is startling.

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Affordability of Domestic Appliances  Successive governments have enacted an effective policy of market transformation in the area of domestic appliances.  This includes a combination of regulation, rating schemes and promotions and has transformed the market place to the point where no subsidy is required.  When their old appliance needs replacing, the consumer is able to choose from a range of appliances, all of which are, to a greater or lesser extent, low carbon. Affordability and Subsidy of Loft and Cavity Wall  The aggressive marketing and price subsidy Insulation brought about for a succession of energy company obligations, driving installations.  However when schemes such as these stop, as they did in 2013 when the Green Deal started, the volume of sales collapses.  For loft and cavity wall insulation there has been no market transformation, and the market remains entirely dependent not just on subsidy, but on the active promotion of “government backed” schemes. Affordability and Subsidy of Housing  For the refurbishment or retrofit of Refurbishment properties, including external and internal wall insulation, the considerations of demand, affordability and payback are even more complex.  For the Green Deal finance package, the affordability of the refurbishment is determined by the Golden Rule, which states that the customer must be able to recoup the cost of the installation from the resultant saving in energy consumption over the lifetime of the loan.  In other words there is no cost to the householder, so by definition it is affordable, but neither are there any financial savings.  The real benefit to the customer is in greater warmth and comfort, and a reduction in damp and mould. The Market for Green or Energy Efficient Housing  The Market Transformation approach has so far failed to create a market for energy efficient housing.  Research from the CBI in 2011 suggests that only 23% of people consider the energy performance of a property when looking to buy or rent.  From 2018 the Energy Act 2011 requires all rental properties to have a minimum EPC rating of E. There are exceptions and it remains to be seen if these provisions in the Act are implemented and enforced.

For more information on affordability issues across the LCEGS sector, see Appendix 5.1.10.

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2.4.7. INVESTMENT FUNDING

This section describes the current availability, and potential demand, for various types of investment funding.

INWARD INVESTMENT

Whilst EU SIF research and innovation funds will be challenging for sub-sectors that are focused on the home market, there are a broad range of investment opportunities that have a good strategic fit with the low carbon environmental goods and services sector.

Table 25 - Investment Opportunities

Investment Opportunity Key Points

Invest in Cornwall  Single point of contact for inwards investment into Cornwall.  Signposting service to assist overseas investors and businesses.  Arrangement of itineries, tours and meetings.  Assistance securing premisis, staff, financial and legal support, PR and marketing. University of Exeter (Penryn Campus)  Business mentor with a brief to help small firms working in the environmental sector with the transition from grant aided projects to becoming self-sustaining and permanent.  Current work reflects the emphasis in Cornwall on innovation to assist in energy conservation and renewable energy systems. Horizon 2020  Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 7 years (2014 to 2020).  The emphasis on excellent science, industrial leadership and tackling societal challenges.  The goal is to ensure Europe produces world-class science, removes barriers to innovation and makes it easier for the public and private sectors to work together in delivering innovation.24

24 C&IoS LEP EU SIF strategy states:

“Closer integration of Horizon 2020 with the main Structural and Investment Fund Programmes is a key intention of the European Commission in the next programming period. As a minimum it is expected that all Horizon 2020 applications emanating from Cornwall and the Isles of Scilly would show how they align with the SIF Strategy, and demonstrate what actions will be taken to deliver their outcomes whilst adding value to the main ERDF and EAFRD activities”.

Horizon 2020 has 7 programme sections, of which the one most relevant to LCEGS is Societal Challenges, which in turn has 3 relevant subsections, known as Challenges:

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The Energy Challenge  The Challenge is designed to support the transition to a reliable, sustainable and competitive energy system.  A budget of €5 931 million has been allocated to non- nuclear energy research for the period 2014-2020. The Smart Green and Integrated  This Challenge aims to boost the competitiveness of the Transport Challenge European transport industries and achieve a European transport system that is resource-efficient, climate-and- environmentally-friendly, safe and seamless for the benefit of all citizens, the economy and society.  The Transport Challenge is allocated a budget of €6 339 million for the period 2014-2020.  Specific to LCEGS is a funding call on green vehicles - funding for a resource efficient transport that respects the environment. The Climate Action Challenge  Activities in this Challenge will help increase European competitiveness, raw materials security and improve wellbeing.  At the same time they will assure environmental integrity, resilience and sustainability with the aim of keeping average global warming below 2° C and enabling ecosystems and society to adapt to climate change and other environmental changes.25

 Secure, Clean and Efficient Energy (The energy challenge)

 Smart, Green and Integrated Transport (The transport challenge0

 Climate Action, Environment, Resource Efficiency and Raw Materials (The climate challenge)

25 Research and innovation will cover the following broad lines of activities:

 Fighting and adapting to climate change

 Protecting the environment, sustainably managing natural resources, water, biodiversity and ecosystems

 Ensuring the sustainable supply of non-energy and non-agricultural raw materials

 Enabling the transition towards a green economy and society through eco-innovation

 Developing comprehensive and sustained global environmental observation and information systems

 Cultural heritage

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THE GREEN INVESTMENT BANK

The Green Investment Bank is the first bank of its type in the world with investment funds of £3.8 billion available, of which 80% is allocated to three priority sectors – Offshore Wind, Energy Efficiency and Waste.

The overall approach and strategy of the Green Investment Bank is captured in the following statement:

“Our engagement with the market begins at the point at which private sector financial sources are beginning to struggle with the challenge. Our role is to partner with those investors who are committed to the sector, working with them to prove that attractive financial returns can be earned. This is necessary to attract more capital into the sector”.

OFFSHORE WIND

The GIB acknowledges that the scale of investment needed to meet 2020 targets is about £40 billion, dwarfing its own investment funds of £3.8billion. GIB therefore sees its role as trying to mobilise external capital and convince investors that the risks are appropriate to the returns.

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ENERGY EFFICIENCY

The Energy Efficiency sector is focused on 7 priority clusters:

Figure 26 - Energy efficiency sector priority clusters, GIB

Source: GIB

GIB has partnered with three fund managers to finance smaller sized energy efficiency portfolios, SDCL, Equitix and Aviva. The Green Deal Finance Company has £125m of debt funding from GIB.

WASTE AND BIOMASS

The investment focus for waste and biomass is

 The remaining waste Public - Finance Initiative/Public Private Partnership.  Financing the smaller scale ‘merchant’ projects through fund managers.  Direct investment into larger merchant projects.

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TECHNOLOGY STRATEGY BOARD

The Technology Strategy Board (TSB) describe themselves as the UK’s Innovation Agency. They work with SME’s, large business, government and university/business collaborations. The issue a number of funding calls each year in themed areas. Their current priorities include:

 Offshore renewables  Grid Balancing  Energy and low carbon skills  Resource efficiency including waste and pollution management  Energy Efficiency  Water supply and sanitation use.

Examples of funding calls in 2014 include a £3million fund for community energy systems and a £7million fund for offshore energy.

SALIX

Salix is an example of innovative finance in the public sector that could be replicated by EU SIF for the private sector:

Salix Finance Ltd. delivers 100% interest-free capital to the public sector to improve their energy efficiency and reduce their carbon emissions

The Salix Recycling Fund aims to increase capital investment in energy efficient technologies across the public sector. It is a ring-fenced fund with capital provided by Salix, and matched by the partner organisation, to be spent on energy saving projects with paybacks of less than 5 years. The financial savings delivered by the projects are returned to the fund allowing further spending on front line services, hence the term ‘Recycling Fund’.

Salix currently has 138 Recycling Fund partner organisations, including local authorities, higher education institutions, emergency services and the NHS.

The fund has financed over 7,400 projects, worth more than £115 million, and is expected to deliver over £456 million of financial savings and over 2.5 million tonnes of carbon dioxide over the lifetime of the projects.

On average, projects have realised a payback of 3.5 years.

The size of an individual Recycling Fund ranges from £100,000 to £1 million. A typical fund size would be £500,000, with Salix providing £250,000 with and the client match funding the other half.

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DEMAND FOR INWARD INVESTMENT

In the survey of businesses currently identified as working in the LCEGS sector, 71 responses were recorded in answer to the question, “Do you expect your business in Cornwall/ IoS to grow over the next 6-7 years up to 2020?” 86% (61 companies) said that they expected their business to grow, illustrating a high level of confidence and optimism in the future of the sector. Only one business said they anticipated a decline and the assessment of nine businesses (13%) was that they would remain the same size in terms of financial turnover.

In order to enable that growth, we asked those businesses that were planning for growth how this expansion of their activities would be funded.

 Three quarters (45) of the companies that responded said they would require inward financial support or investment;  14 (23%) expected to fund their growth without using external sources of finance.

Two thirds of the businesses said that they would look to the traditional forms of financial support, either loan financing from mainstream banks and equity investment. The current expectation of using these options was split equally between lending and equity, although no comments were made about the difficulty of accessing this support, nor of its availability when required. Most of the additional commentary about future investment plans illustrated that businesses are still wedded to the traditional forms of raising investment to support any planned growth: income generated by securing more customers, raising funds from partner loans, using directors’ guarantees, and retaining and reinvesting profits “in the old fashioned way”.

A range of other options for investment were also suggested, with the most frequently mentioned being:

 Potential opportunities for funding within the EU Structural and Investment Fund programmes or the Regional Growth Fund.  Awareness of the process and the development of the EU SIF appears to be mixed within the wider business community, and more clarity as the programme structure becomes established will assist business planning. The Superfast Business fund was specifically mentioned as a current source of support.  Grant funding and support. The public sector and other national organisation, such as the BIG Lottery fund and the Technology Strategy Board were identified as sources of grants. Some scepticism was expressed about the sustainability of growth based on grant funding; however, within the business community resources such as

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Francis Clark’s funding advice workshops are recognised as clear sources of useful information in keeping up to date with what is currently available.26  A small number of businesses are already active overseas and so indicated that they would look to Innovation Awards and technology grants from the major international aid agencies and donors.  One business mentioned the opportunity of using “peer to peer” (P2P) lending. Although still relatively new to the UK financial services sector, P2P or crowd funding should potentially be of significant interest to businesses in the LCEGS sector, with a notable bias within funding platforms towards investments that are more socially or ethically focussed. Zopa, Funding Circle, and Kickstarter are among the leading generalist crowd funding platforms, but there are also a number of emerging funders looking to support projects that can show strong links with community and environmental benefits.27

These findings indicate a considerable interest in, and demand for, investment funding among LCEGS business across C&IoS. However, there remain major challenges to overcome to realise that potential. Within the renewables sector in Cornwall opportunities for investment have been considerable in recent years and the appearance of large scale solar farms and the ever increasing numbers of wind turbines indicate an appetite for investment; however, the growth of the investment opportunity has proven to be very sensitive to the rapid changes in government policy that have occurred. The consequence of this is that some sectors of the investment community remain cautious.

While most of the mainstream banks now have dedicated teams working on renewable energy projects their attention is primarily focussed on the opportunities within the farming community and their minimum investment levels are too high for many smaller scale projects. Our understanding is that this is a result of the costs of the due diligence process and projects looking for less than £2 million investment can quickly stall.

An illustration of the flux in investment opportunities can be seen in the changes in the solar photovoltaic market. The implications for this sub-sector have been discussed in 1.2.2 –

26 Francis Clark are Chartered Accountants based in Truro.

27 Microgenius (www.microgenius.org.uk) initially established by a Cambridge University graduate, this platform now works closely in partnership with the Community Shares Unit in the Cabinet Office. Early support has included projects using wood fuel for social housing and Sheffield Renewables, funding a community led hydro proposal.

Crowdfunder (www.crowdfunder.co.uk) is run by the Cornwall-based advocates of sustainability and energy awareness Keo Digital energyshare.

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Background and History. Since 2012 the market has been more stable as a clear mechanism of degression of tariffs has been established, and at the same time the production costs of PV panels globally have steadily fallen in response to increased demand, to the extent that again, large scale field mounted solar PV schemes have become commercially viable.

COMMUNITY-LED INVESTMENT

The growth in renewable energy generation is a cause for concern for some people, and proposals for both wind turbines of any scale and field mounted solar PV are routinely contested. As a result of this concern UK Government is putting more emphasis on the development process to include community consultation and preferably a higher level of community ownership. Developers are increasingly looking to involve communities in their plans and so community share offers and joint venture ownership models have been encouraged in the recently published Community Energy Strategy (2014), which is explored in more detail in Section 1.2. Cornwall already has several notable examples of using these alternative models and there is a clear appetite for community involvement in renewable investment. Community Power Cornwall ran the first community renewables share offer in Cornwall in 2011 and is planning a second share offer this year, and it is hoped that at least one of the local community energy groups will also run a share offer to help fund their plans during 2014. Ideally, these models will use a mix of mainstream lending and equity in the form of shares.

The linkage between renewable energy development and community involvement has led to the establishment of a number of niche finance offers primarily to assist both in the high risk, pre-consent stage and in the preparations for construction finance. Nationally, Pure Leapfrog, WRAP’s Rural Community Energy Fund and the FSE Group’s Community Generation Fund all offer packages that provide pre- and post-consent finance. These models recognise that a proportion of community-led renewable energy projects will fail in the consenting process and so their financial models are constructed in a way that communities are not burdened with debt in the event that their proposals cannot move forward; this is a significant difference to commercial developers who cover their risk of pre- construction costs by developing a portfolio of projects. For communities who move beyond feasibility and planning consent an exit premium will be charged on this ‘lending for development’ once construction finance is secured and in place. The premium payment tends to be relatively high, up to 100% of the original loan, as funders cover the costs of the failures from the projects that succeed.

Using funding available through the Local Area Agreement, Cornwall now has its own, bespoke version of these national initiatives in place and operational. The Council’s Green Cornwall programme runs a revolving loan fund to support the development of community led renewable energy projects. The loan fund is managed by the Low Carbon

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Society, a community development finance institution established to facilitate lending to cooperative and community low carbon ventures; the fund currently manages £1.3 million, and the latest round of applications in February 2014 saw bids totalling £2.2 million for an available £800,000 pot. Closely linked with the Low Carbon Society is Community Power Cornwall which was established to assist community proposals both through the planning and consent process and then will work with groups to get them investment ready and able to bid for construction finance.

RENEWABLE HEAT

Significant delays in the introduction of the Renewable Heat Incentive stalled many investment plans and caused the collapse of a number of Cornish companies who were keen to build on their expertise in the sector (as noted in Section 1.2.2). Additionally, concerns about the reliability and effectiveness of heat pumps and biomass boilers have led at times to perverse investment decisions, for instance, installing a new mains gas boiler to act as the back-up system for a biomass heating installation. A number of high profile, early mover biomass projects experienced serious challenges with both the quality and reliability of their fuel supply, and so there remains a degree of caution about the wider scale adoption of renewable heat that clearly will influence the decisions of private investors. The outcome is that currently, most renewable heat schemes in the non-domestic sector rely on specialist loans such as those provided by the Carbon Trust/Seimens Financing and a continued access to Salix funding for public sector installations. Within the domestic sector, FiTs are permitted to be reassigned to a third party which at the height of the pre-degression Solar PV boom led to the emergence of “rent-a-roof” PV schemes; RHI payments cannot be reassigned in the same way, and so it is unclear whether there will be a significant demand for financial investment now the scheme has gone live, beyond the few private homeowners who have available monies to invest in their own properties.

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CHAPTER SUMMARY – BUSINESS ANALYSIS

 The Low Carbon and Renewable Energy Sectors are predominantly made up of SMEs. This has implications for the sector’s skills and marketing needs. There is a large degree of horizontal integration across the sector.  Level 2 sub-sectors in which the largest number of businesses are active are Solar, Energy Management and Wave and Tidal.  Analysis shows that the LCEGS sector in Cornwall is underperforming, both by sales per head of population and by the percentage of the population employed in the sector, compared to the South West and the UK as a whole.  Of the sub-sectors given priority status in this report, marine, including offshore renewables and vessel efficiency, has the best development and export potential.  LCEGS business leaders are positive about future growth, but concerned about inconsistent government policy undermining potential.  For renewable energy and low carbon technologies to be viable on the open market without subsidy, they need to be able to produce electricity at or around the wholesale market price.  There is increasing public and political resistance to so called ‘green taxes’ that form the defacto public subsidy for low carbon and renewable energy technologies.  However, for renewable energy generation and building fabric insulation, without public subsidy the industry in the UK is not viable now or up to 2020.  Expectation on behalf of the public and businesses is that the cost of LCEGS should be subsidised. Consumers are not responding to government sponsored marketing messages in the numbers required to meet carbon saving commitments.  Within the energy efficiency industry anything longer than a 3 year payback is considered a hard sell.  Outside EU SIF funding for research and innovation, several investment opportunities exist, for example Horizon 2020 and The Energy Challenge. The Green Investment Bank has £3.8b to invest, 80% of which is earmarked for offshore wind, energy efficiency and waste.  74% of businesses who expect to grow in the next 6-7 years said they will require financial support or investment. 33% said they planned to use loan finance or inward investment (equity) to expand into new markets.  To enable growth, businesses want to see better coordination and consistency in Government support and related initiatives.  Community-led investment and niche finance offers provide some of the most positive opportunities for grass-roots projects and business start-ups.

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3. EVIDENCE BASE REPORT B – SECTOR SKILLS REQUIREMENTS

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EMPLOYMENT PROFILE

3.1.1. DEMOGRAPHICS IN CORNWALL AND THE ISLES OF SCILLY

An analysis of existing and anticipated demographics in C&IoS and possible implications.

In 2011 in Cornwall there were 61,800 young people between the ages of 15 and 24, compared to 77,800 people aged 60 to 69, so over a 10 year period roughly 78,000 local people (resident in 2011) will retire but only 62,000 young people will join the workforce. This equates to a replacement deficit of 16,000 over a 10 year period of which 6,200 will be male and 8,900 will be female.

PEOPLE LEAVING THE WORKFORCE IN CORNWALL AND ISLES OF SCILLY

Table 26 - People leaving and joining the workforce, C&IoS

Male Female Total Retiring 37,800 40,000 77,800 Joining 31,600 31,100 61,800 Replacement 6,200 8,900 16,000

Source: ONS 2011 census

However this apparent decrease in the working population is predicted to be reversed by net migration into the County, so that the total working population is set to rise by 8100 people by 2021.

THE WORKING AGE POPULATION OF CORNWALL AND ISLES OF SCILLY

Table 27 - Working age population of C&IoS

Age Group 2011 2021 Net difference 15-19 31,200 29,300 -1,900 20-29 57,900 57,800 100 30-39 56,800 68,600 +11,800 40-54 113,700 107,100 -6,600 55-64 79,000 83,900 +4,900 Totals 338,600 346,700 +8,100

Source: Cornwall Council Demographic Evidence Base v1.4

The implications for training, skills and employment would seem to be that the number of young people entering further and higher education, and/or joining the workforce will reduce slightly over the period to 2021. However there will be a large increase of people in

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EMPLOYMENT IN CORNWALL AND ISLES OF SCILLY

Table 28 - Employment in C&IoS

Full Time Part Time Proprietors Total Private 89,400 59,200 15,900 164,500 Public 22,200 20,600 0 42,800 Total 111,600 79,800 15,900 207,300

Source: ONS 2011 census

From the table above, 38% of the workforce in Cornwall and the Isles of Scilly were working part time in 2011 (assuming that all proprietors work full time). The proprietors figure includes sole trader and owners of larger businesses.

Note that the ONS do not include farm agriculture due to a lack of available data.

EMPLOYMENT IN PERCENTAGES IN CORNWALL AND THE ISLES OF SCILLY (2011)

Table 29 - Employment in percentages

Full Time Part Time Proprietors Total Private 54.3 36.0 9.7 100 Public 51.9 48.1 0 100

Source: ONS 2011 census

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PRIVATE SECTOR EMPLOYMENT IN C&IOS

Table 30 - Private Sector Employment in C&IoS

Employment in C&IoS 2011

15,900

59,200 89,400

Full Time Part Time Proprietors

Source: ONS 2011 census

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3.1.2. UK EMPLOYMENT PATTERNS TO 2020

An analysis of employment information taken from UK Commission for Employment and Skills, Working Futures, 2010 – 2020.

For the UK as a whole, the groups that are expected to show the most significant increases in employment over the next decade (2010-2020) are higher level occupations, namely:

 Managers, directors & senior officials - plus 18 per cent  Professional occupations - plus 15 per cent  Associate professional & technical occupations - plus 14 per cent

Declining employment levels are projected for:

 Administrative & secretarial occupations - minus 11 per cent per  Skilled trades occupations - minus 7 per cent  Process & machine operatives - minus 11 per cent

Elementary occupations are now projected to see a slight increase in employment, as the service sector in particular generates more such jobs. This polarisation of demand for skills, with growth at both top and bottom ends of the skills spectrum, appears to be an increasingly common feature across developed economies.

REPLACEMENT DEMAND

Employers also need to replace many of their workers who leave due to mortality, retirement, career moves, or other reasons. This so called replacement demand can easily outweigh any losses resulting from structural changes. For the period up to 2020, the net requirement or total number of job openings, taking replacement demand into account, is expected to be more than 13 million compared with the overall increase in employment levels of around 1½ million.

Replacement needs are crucial. Typically they are equivalent to a third or more of current employment levels over a 10 year period and outweigh any projected employment declines in the industries or occupations concerned. As a result there are often quite good job opportunities for new entrants, in areas where initial impressions, based on projected changes in employment levels, look quite pessimistic.

Retirements are the principal component in this estimate. It excludes job openings created by people transferring from one occupation to another.

At the UK level from 2010 to 2020 no significant changes to the percentages of male/female or full time/part time or employed/self-employed are projected.

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IMPLICATIONS FOR QUALIFICATIONS (DEMAND, SUPPLY AND MISMATCHES)

Skill supply, as measured by the highest formal qualifications held by those economically active, is rising rapidly. Many more young people in particular have been encouraged to stay on in education longer and to acquire more qualifications at a higher level. The recession reinforced this pattern as job opportunities for young people dried up.

The demand for skills as measured by occupation and qualification is also projected to rise. The numbers of jobs in occupations typically requiring a degree continue to grow while the graduate intensity of many other jobs is rising steadily. How much this reflects demand as opposed to supply trends is open to debate.

The latest evidence suggests that the occupational structure of employment is continuing to change in favour of white collar and more skilled occupations, although there will still be a large number of job opportunities for less skilled workers.

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3.1.3. EMPLOYMENT PATTERNS IN C&IOS LCEGS

Using the data gathered in the primary research, this section considers routes into employment in the sector.

For more in-depth information and details of the research regarding employment patterns, please see Appendix B.

In relation to employees joining, several businesses mentioned that their new employees came from other businesses in the same or very closely related sectors. These new employees tended to be in quite senior, technical and/or specialist roles, and had either been recruited using head hunters or through the personal contacts of the business owner themselves. They had been sought because of the highly specific and relevant nature of their skills and expertise.

In relation to recruiting new employees as apprentices or in more junior roles, Camborne College and local secondary schools were mentioned as being the most likely sources by several business who either had, or were considering recruiting an employee at this level in the future. The most common attributes required were “practical skills”, “common sense” together with “basic maths and sciences”.

As mentioned, in terms of employees leaving, hardly any of the businesses consulted had experienced this, either because they were new or very small in size. Several of those that had experienced employees said that theses staff had joined other similar businesses “for more money” while the others gave a variety of answers including.

COMMENTS FROM THE SURVEY

“He went (back) into teaching then set up himself I think”

“They move onto different places…some local businesses, some elsewhere…it’s hard to say really”

“We’ve had people go to all sorts of places. One went to college and another to sell cars...and someone else came back to us after a few months because he couldn’t get another job!”

In summary then it is still very difficult to draw any definite conclusions about the employment routes into and out of the LCEGS sector at present. The sector is populated by many small and/or new businesses that mean that overall routes have not yet been established. Those that are most common appear to relate only to specialist or senior staff moving within the sector itself for whom head hunters or personal contacts are used to conduct the recruitment.

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3.1.4. TYPES OF EMPLOYMENT IN THE SECTOR

This section provides information about the nature of employment in the LCEGS Sector in C&IoS.

The results of our research suggest that the 366 companies active in the LCEGS sector in Cornwall employ 3905 full and part time staff that carry out LCEGS activities.

The online survey did not ask respondents to differentiate between full and part time staff, but from Cornwall wide data we would expect that about one third of staff in the sector, roughly 1290 are working part time.28 The results of our online survey of employees (see below) records much lower part time working at 17%, however it should be noted that a high proportion of the respondents to this survey were in relatively senior positions.

There is some limited evidence to suggest that the recession and public sector outsourcing have led to an increase in small consultancy businesses, but overall we have no substantive evidence to suggest a move away from existing employment patterns consistent with the private sector in Cornwall as a whole.

From results to our online survey there is likely to be a further 1500 people engaged in sub contract or an associate basis, which would increase the numbers employed in the sector as a whole to increase to about 5400.29

COMPANY SIZE (EMPLOYEE NUMBERS)

Table 31 - Company size by employee number

Company 1 2 3 4 5 6-10 11-20 21-50 50+ size (no of employees) No of 42 38 36 30 36 76 44 34 30 companies in LCEGS

The number of employees of companies engaged in LCEGS is shown in the table above. There is some limited evidence to suggest that there has been an increase in small

28 Sub contract and associate working may account for as many as 27% of people who work in the sector at some point in the year, but in terms of hours worked is probably much less, and there is a risk of double counting.

29 This figure is based on a smaller sample size and so should be treated with some caution. Furthermore some of these 1500 people will be seasonal or occasional workers, some may be effectively full time and others may have already been counted as consultants.

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RESULTS OF OUR ONLINE SURVEY TO EMPLOYEES

In addition to finding out what employers thought about employment patterns and structures, the research also asked employees, by means of an online survey.

Of the 76 employees who took part in the survey, 17 responses were not eligible due to either not being resident in Cornwall or not working in the sector, so the following is based on a sample of 59 employees.

35.6% of respondents were female and 64.4% were male. This gender imbalance is prevalent in respondents over the age of 30, however there was a split of male: 37.5%/female: 62.5% from respondents under the age of thirty. So there is some suggestion that the gender imbalance is reducing for the younger generation, but the sample size is too small to draw a firm conclusion.

The 59 respondents stated that they worked in the following categories:

Table 32 - Employee survey categories

Category Number Percentage Administration 7 11.9% Skilled Worker 9 15.3% Unskilled Worker 2 3.4% First level Management 8 13.5% Middle Management 8 13.5% Senior Management 25 42.4%

The average salary levels of the 54 respondents that answered the question were

 Mode: £30,000 - £39,999  Median: £20,000 - £24,999  Mean: £28,333

83% of respondents worked full time and 17% worked part time, with average hours of 25 per week. The average length of employment in the sector was 12 years.

Only 46 respondents provided answers in sufficient detail to assess their main area of qualification, as shown in the table below:

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Table 33 – Employee areas of qualification

Area of Qualification Percentage Arts 8.7% Business 6.5% Catering 4.3% Design 4.3% Energy 4.3% Engineering 10.9% Environmental science 15.2% Geography 6.5% Geology 4.3% Mathematics 4.3% Ocean Science 4.3% Retail 2.2% Science 6.5% Science - not relevant (for example, Sports Science) 6.5% Social Science 4.3% Trade Qualification 6.5%

60% of the qualifications listed above and highlighted could be classed as STEM (science, technology, engineering and maths) and/or specific to the LCEGS sector.

19 respondents, roughly one third, had benefited from an employment support scheme, and 5 had benefited by multiple opportunities.

Table 34 -Employee support schemes

Type of Support Percentage Benefitted Volunteering 15.8% Apprenticeships 26.3% Work Experience 15.8% Mentoring 31.6% Careers Advice 10.5% Graduate Placement 26.3% Unlocking Cornish Potential 5.3%

Roughly half the responses suggest a values-based decision for working in the sector

Table 35 - Reasons for working in the sector

Reason for Working in Sector Percentage Interesting 15.3% Environmental Reasons 28.8% Opportunities in the sector 13.6% Renewable Energy 8.5% Money and Pay 5.1% Skill Set 3.4% It’s just a job 11.9% No information 13.6%

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COMMENTS FROM THE SURVEY

‘We all love renewable energy and its role in the future of energy and in protecting the environment through helping reduce the impacts of carbon on climate change’.

‘I am passionate about the environment, sustainability & climate change’

‘Live in Cornwall, enthusiastic about helping environment, and therefore renewable energy, up and coming technology also interesting’

HOW PEOPLE GOT INTO THE SECTOR:

Overall there is no clear route into the sector; you are just as likely to work in the sector through word of mouth i.e. having contacts in the industry, as you are through work experience. The most common reasons were:

1. Degree or relevant training – 15.1% 2. Graduate placement inc UCP – 11.3% 3. Job application – 17%

30% identified an opportunity through an employee support scheme, i.e. an apprenticeship, graduate placement, work experience or a training programme. 7.5% identified a business opportunity in the sector.

FUTURE EMPLOYMENT IN THE SECTOR

93.2% of respondents expect to stay in the sector and only 6.8% expect to leave. The main reasons for leaving were given as due to low pay levels and instability in the sector. The main reasons for staying in the sector were given as follows:

Table 36 - Employees - reasons for staying in the sector

Reasons for staying in the sector Percentage Pay levels 14.3% Local Opportunities 25% Progression opportunities 25% Despite Instability 1.8% Other: Business owner 3.6% Other: environmental reasons/sustainability 7.1% Other: Experience in the sector 5.4% Job satisfaction/enjoyment 14.3% Other 3.6%

NB: takes into account multiple responses

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CHAPTER SUMMARY – EMPLOYMENT PROFILE

 There are a total of 3,905 full and part time employees working in the 366 LCEGS businesses in C&IoS, indicating that each LCEGS businesses has an average of 10.6 full time and part time employees.  The size and structure of low carbon environmental goods and services companies in Cornwall and the Isles of Scilly seems to conform to the predominantly SME base that typifies the C&IoS businesses sector as a whole.  The LCEGS sector contributes nearly 2% of the total c.248,000 employees in C&IoS.  The market value of £136,000 per employee is significantly higher than the C&IoS average of £30,000 per employee.  83% of respondents worked full time and 17% worked part time, with average hours of 25 per week.  Staff in the sector are very highly qualified and our survey suggests that about 60% of the qualifications held are in STEM subjects or directly relevant to the sector.  The mean average pay is greater than the full time average for Cornwall as a whole, whilst the mode average of £30-39k is probably the best guide as to what the majority of well qualified staff in the sector are earning.  A 19% growth rate in the local LCEGS workforce is anticipated over the next 1-2 years. Renewable Energy businesses have the biggest plans for growth.  The C&IoS LCEGS sector is projected to employ an additional 750 people over the next 1-2 years.  Of 59 LCEGS employees in C&IoS who responded to an online survey, 36% of respondents were female and 64% were male. This gender imbalance is prevalent in respondents over the age of 30. The Gender Balance matches the UK industry current climate for major group industries for UK STEM (science, technology, engineering and maths).

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SKILLS REQUIREMENTS FOR THE LCEGS SECTOR

3.2.1. SUB-SECTOR SKILLS ANALYSIS

An analysis of the skills required and any shortages, taking into account demand-led and policy-led skills requirements.

Before assessing the skills requirements of the businesses in the LCEGS sector, it is worth first considering the qualification levels of their current employees.

Eighty of the 89 businesses who responded to the online survey provided details of the highest level qualifications of their employees. These eighty businesses have 940 full and part-time employees between them, of whom over quarter were qualified to degree level or higher, including masters and/or PhDs (27%). This very high level of qualifications reflects the specialist nature of much of the work in this sector.

Figure 32 below shows the distribution between qualification levels, also revealing that a third of the 940 employees had HND, HNC, BTEC or A/AS levels (37%). A further quarter had GCSEs/O levels (23%), while very few had lower level qualifications (6%) or were not specified (7%).

Figure 27 - Highest level qualifications of LCEGS employees

GCSEs at grade D-G/, NVQ Level 1, etc., 6% Non Masters specified or PhD, , 7% 8% Masters or PhD

Degree or equivalent Degree or equivalent, GCSE/ O Levels, NVQ 19% Level 2, etc., 23% HND, HNC, BTEC professional, Foundation

degree/equiv. HND, HNC, BTEC professional, A/AS Levels, NVQ Level 3, OND / ONC / BTEC A/AS Levels, NVQ Level 3, Foundation awards OND / ONC / BTEC awards, degree/equiv., 12% 25% GCSE/ O Levels, NVQ Level 2, etc.

GCSEs at grade D-G/, NVQ Level 1, etc.

Non specified

Base: 940 employees of 80 LCEGS businesses

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Indeed, it is worth noting that 65 of the 80 businesses (81%) had at least one employee with a degree or higher level qualification, while among the “50 most highly qualified” of the 80 companies, 61% of their 287 employees were qualified to degree level or higher. That is, the larger businesses in the sector tended to have more employees with lower level qualifications while the smaller businesses tended to have fewer, more highly qualified staff.

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3.2.2. DEMAND LED (BOTTOM-UP) SKILLS REQUIREMENTS

What skills needs do business identify in the LCEGS sector? Analysis considers the overall skills landscape, Level 1 sectors and the priority sub-sectors for C&IoS.

The online survey of 89 businesses operating in the LCEGS sector found that they identified 324 skills needs in total, an average of between 3 and 4 per business. To an extent these skills needs reflected the profile of occupations in the businesses, as Figure 33 below shows, being concentrated among managers, directors and senior staff (81) and/or the admin and secretarial (56) roles.

Figure 28 - No. of identified skills needs by occupation

Elementary occupations 16

Process, plant and machine operatives 28

Skilled trades 50

Admin and secretarial 56

Associate professional & technical 46

Professional occupations 47

Managers, Directors and senior staff 81

0 10 20 30 40 50 60 70 80 90

Base: 89 LCEGS businesses

However it was clear that they also reflected the needs of businesses operating in varied market conditions. This is shown in Figure 34 below, which illustrates that the skills needs identified were spread across the various types. Most commonly mentioned were job specific skills (76) and industry-wide skills (73), followed by sector specific (62) and generic skills (62).

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Figure 29 - Number of identified skills needs by type

Job specific or Other skills 76

Sub-sector Skills requiring specialised training 51 (e.g. wind turbine maintenance) Sector-specific Transferable Skills (e.g. electrical 62 engineer) Industry-wide Skills (e.g. management, 73 accountants, HR, marketing) Generic Skills (e.g. time management, team work, 62 literacy, numeracy)

0 10 20 30 40 50 60 70 80

Base: 89 LCEGS businesses

As was to be expected, many of the skills needs identified related to particular occupations. Figure 35 shows that managers, directors and senior staff were most likely to have industry wide skills needs (27), while the sector specific and job specific skills needs tended to be grouped among the senior staff, professional, associate professional and skilled trades staff. The admin and secretarial staff were more likely to have generic or industry-wide skills needs while elementary occupations had mostly job specific skills needs.

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Figure 30 - No. of skills needs by occupation

6 8 15 Job specific or Other skills 11 9 12 15

2 7 10 Sub-sector Skills requiring specialised training 6 8 5 13

2 7 14 Sector-specific Transferable Skills 5 11 11 12

3 3 6 Industry-wide Skills 15 9 10 27

3 3 5 Generic Skills 19 9 9 14

0 5 10 15 20 25 30

Elementary occupations Process, plant and machinery Skilled trades Admin and secretarial Associate professional & technical Professional occupations Managers, Directors and senior staff

Base: 89 LCEGS businesses

These findings were discussed and explored further using qualitative techniques in the focus groups and individual consultations with a wide range of LCEGS businesses. Not surprisingly, the qualitative work found that there was general agreement with the findings relating skills needs to occupations. In particular the groups and one-to-one interviews agreed that the managers, directors and senior staff of LCEGS businesses had “most” skills needs, often resulting from the challenges and requirements of managing and developing a business, such as in leadership, finance and strategic/forward planning.

There was considerable debate around the importance of leadership skills for LCEGS businesses. While it was agreed that good leadership skills were an essential requirement for any managers, directors and senior staff wishing to grow their business, it was also highlighted that these leadership and self-motivation skills needed to permeate through to staff at all levels in the business.

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Other industry–wide skills needs for managers, directors and senior staff were identified by the qualitative work:

 Strategic planning  HR/personnel  Marketing and sales  Work winning/tender writing/EU funding applications /accessing new markets

In addition to these industry-wide issues, the qualitative work also identified many instances of job specific and/or sector specific skills. These included numerous mentions of IT, software and related programming skills needs, such as:

 Geophysicists who can programme - at Masters or PhD level  Software skills (including coding) and relevant applications  Maths literate programmers  IT systems skills and programmers  CADI skills relating to RE

In some instances, the businesses identified specific roles such as process control engineers, power electronics designers and data mining and analyst skills that they needed. Several noted particular Smart related skills needs.

COMMENTS FROM THE SURVEY – SKILLS NEEDS

“It’s logical. People running these types of businesses are in it because they are enthusiasts rather than from a business management background. We have to learn on the job”.

“…With at least three companies (here) that are going to be experiencing very high growth (estimated at 500% in the next 5 years) – it’s (MANAGEMENT AND LEADERSHIP) a daunting prospect.”

“Traditionally leadership is seen as the skills set of senior managers. We need leadership skills at all levels. Leaders are working far ahead, the people carrying out tasks also need leadership skills to look ahead”.

“Nowadays it’s more about self-leadership. We would love to have an apprentice whose role is to find the opportunities in America. We need someone who is self-accountable and responsible. It’s not just about the boardrooms; we need accountability all the way through (the business)”.

“Knowledge relating to smart metering and associated technologies” and “smart grid systems, home smart technology”. Others said: “knowledge of carbon markets, carbon sequestration in UK and abroad” and “solar PV/renewables skills”.

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BIS SUB-SECTOR ANALYSIS

While many of the businesses responding to the online survey indicated that they provided goods and services in a variety of sub-sectors, it was possible to classify them into one of BIS three sub-sectors: environmental, renewable or low carbon, based on a combination of their answers and local sector knowledge. This is useful for analysis, though it should be noted that some of the businesses provide goods/services for more than one BIS sub-sector.

As mentioned, in the online survey the 89 businesses identified 324 skills needs between them. 41 of these businesses were classified (see below) as being in the BIS Environmental sub-sector with 120 skills needs, 37 as in the Renewables sub-sector with 168 skills needs and 11 as being in Low Carbon with 36 skills needs.

ENVIRONMENTAL

The 41 businesses that were providing goods and/or services in the broad “environmental” BIS sub-sector (possibly as well as other BIS sub-sectors) identified 120 skills needs between them, an average of under three per business. This is a comparatively low figure, though as mentioned the sector is already very highly qualified. Figure 36 shows that a quarter of these skills needs were job specific (33), while smaller numbers identified industry–wide (26), generic (22), sector (19) or sub-sector (20) specific skills needs.

Figure 31 - No. of identified skills needs by type: Environmental

Job specific or Other skills 33

Sub-sector Skills requiring specialised training (e.g. wind 20 turbine maintenance)

Sector-specific Transferable Skills (e.g. electrical engineer) 19

Industry-wide Skills (e.g. management, accountants, HR, 26 marketing)

Generic Skills (e.g. time management, team work, literacy, 22 numeracy)

0 5 10 15 20 25 30 35

Base: 41 LCEGS Environmental businesses

Figure 37 shows these numbers in terms of each occupational type in the 41 businesses that were providing environmental goods and/or services. It shows that managers, directors and senior staff of the businesses had most of the industry-wide skills needs (12). Professional staff had mainly job specific needs (8) and associate professionals a mixture of needs.

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Skilled trade staff had mainly job specific needs (7), while those in process, plant and machinery occupations were divided between job, sector and sub-sector specific needs. Those in elementary occupations tended to have skills needs in job, sub-sector or sector specific areas.

Figure 32 - No. of each type of identified skills need by occupation: Environmental

3 4 7 2 Job specific or Other skills 4 8 5 2 3 Sub-sector Skills requiring specialised training (e.g. wind 3 1 3 turbine maintenance) 3 5 2 3 Sector-specific Transferable Skills (e.g. electrical 3 0 4 engineer) 3 4 1 0 Industry-wide Skills (e.g. management, accountants, HR, 1 4 4 marketing) 4 12 2 1 Generic Skills (e.g. time management, team work, 1 9 1 literacy, numeracy) 3 5 0 2 4 6 8 10 12 14

Elemenatary occupation Process, plant and machinery Skilled trades Admin and secretarial Associate professional & technical Professional occupations Managers, Directors and senior staff

Base: 41 LCEGS Environmental businesses

RENEWABLES

The online survey received replies from 34 businesses that were providing goods and/or services in the broad “renewables” BIS sub-sector (possibly as well as other BIS sub-sector) and these 34 businesses identified 168 skills needs between them, an average of nearly five per business. Figure 38 shows that nearly quarter of these skills needs were in job specific skills (40), with a similar number in industry–wide (37) or sector specific skills (35), while slightly smaller numbers mentioned generic (30) or sub-sector (26) specific skills needs.

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Figure 33 - No. of identified skills needs: Renewable businesses

Job specific or Other skills 40

Sub-sector Skills requiring specialised training (e.g. wind 26 turbine maintenance) Sector-specific Transferable Skills (e.g. electrical 35 engineer) Industry-wide Skills (e.g. management, accountants, HR, 37 marketing) Generic Skills (e.g. time management, team work, 30 literacy, numeracy)

0 5 10 15 20 25 30 35 40 45

Base: 34 LCEGS Renewables business

Figure 39 illustrates these numbers in terms of each occupational type in the 34 businesses that were providing renewable goods and/or services. It shows that managers, directors and senior staff of the businesses had most of the industry-wide skills needs (11) followed by admin and secretarial staff (10). Skilled trade staff had job specific (8), sub-sector (6) and/or sector specific skills needs (10). Professionals had mainly sector specific needs (7) and associate professionals mainly generic (6). The skills needs of those in process, plant and machinery occupations were divided between job, sector and sub-sector specific needs, while for those in elementary occupation they tended to focus on job specific skills requirements.

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Figure 34 - No. of each type of identified skills need by occupation: Renewable

4 4 8 Job specific or Other skills 8 3 4 9 1 4 Sub-sector Skills requiring specialised training (e.g. wind 6 4 turbine maintenance) 3 2 6 1 4 Sector-specific Transferable Skills (e.g. electrical 10 4 engineer) 4 7 5 2 3 Industry-wide Skills (e.g. management, accountants, HR, 4 10 marketing) 4 3 11 1 2 Generic Skills (e.g. time management, team work, 3 7 literacy, numeracy) 6 4 7

0 2 4 6 8 10 12

Elemenatary occupation Process, plant and machinery Skilled trades Admin and secretarial Associate professional & technical Professional occupations Managers, Directors and senior staff

Base: 34 LCEGS Renewables business

LOW CARBON

Analysis of the businesses providing goods/service in the BIS Low Carbon sub-sector was very limited because only 11 businesses in this sub-sector responded to the online survey. The answers given by these businesses tended to reflect their occupational profiles. While the 11 only identified 36 skills needs (an average of 3 each), around a half of these were for industry- wide or generic skills and were found among the managers, directors and senior staff, professional or associate professionals. No skills needs were identified among the skilled trades, process, plant and machinery operatives or elementary occupations in this sub-sector.

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PRIORITY SUB-SECTOR ANALYSIS

The results of the online survey also provide the opportunity to examine skills needs in four of the priority LCEGS sub-sectors: Biomass, Geothermal (including heat pumps), Smart Energy and Wave and Tidal.30 Sub-sector analysis found some points of interest that merit further consideration and investigation.

BIOMASS

The online survey received replies from 20 businesses that were providing Biomass goods and/or services (as well as other LCEGS goods/services) and these 20 businesses identified 109 skills needs between them, an average of well over five per business. Figure 40 shows that nearly a third of these skills needs were in job specific skills (30), while smaller numbers identified sector (21) or sub-sector (17) specific skills needs.

Figure 35 - No. of identified skills needs by type of need: Biomass

Job specific or Other skills 30

Sub-sector Skills requiring specialised training (e.g. 17 wind turbine maintenance) Sector-specific Transferable Skills (e.g. electrical 21 engineer) Industry-wide Skills (e.g. management, accountants, 23 HR, marketing) Generic Skills (e.g. time management, team work, 18 literacy, numeracy)

0 5 10 15 20 25 30 35

Base: 20 Biomass LCEGS business

30 Certain caveats apply to this assessment:

 The number of completed online surveys covering services provided in some of the priority sub- sectors were very few (particularly the wave and tidal sub-sector), so caution should be exercised when drawing conclusions from the findings; and

 As described earlier, many LCEGS businesses provide services/goods across numerous sub-sectors (i.e. geothermal, biomass wind and tidal services). This makes their skills needs very difficult to disentangle.

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Figure 41 illustrates these numbers in terms of each occupational type in the 20 businesses that were providing Biomass goods and/or services. It shows that managers, directors and senior staff of the businesses had most of the industry-wide skills needs (8) followed by admin and secretarial staff (5). Professional, associate professional and skilled trade staff had job specific (5, 3 and 6 respectively) and/or sector specific skills needs (3, 3 and 5 respectively). The skills needs of those in process, plant and machinery occupations were divided between job, sector and sub-sector specific needs, while for those in elementary occupation they tended to focus on job specific skills requirements.

Figure 36 No. of each type of identified skills need by occupation: Biomass

3 3 6 Job specific or Other skills 3 4 5 6 Sub-sector Skills requiring specialised training (e.g. 1 3 1 4 wind turbine maintenance) 2 2 4 Sector-specific Transferable Skills (e.g. electrical 1 3 2 5 engineer) 3 3 4 Industry-wide Skills (e.g. management, accountants, 1 2 5 HR, marketing) 4 2 8 Generic Skills (e.g. time management, team work, 1 3 5 literacy, numeracy) 3 2 3 0 1 2 3 4 5 6 7 8 9

Elemenatary occupation Process, plant and machinery Skilled trades Admin and secretarial Associate professional & technical Professional occupations Managers, Directors and senior staff

Base: 20 Biomass LCEGS businesses

GEOTHERMAL (INCLUDING HEAT PUMPS)

The online survey received replies from 31 businesses that were providing geothermal/heat pumps goods and/or services (as well as other LCEGS goods/services) and these 31 businesses identified 85 skills needs between them, an average of under three per business. This average was markedly lower than that found among other LCEGS businesses, some of which averaged over five skills needs per business, though again this could be a reflection of the high level of qualifications among employees in the sector.

Figure 42 shows that over a half of these 85 skills needs were in job specific skills (23) or industry wide skills (22), while smaller numbers identified sector (13), sub-sector (13) or generic (14) skills needs.

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Figure 37 - No. of identified skills needs by type of need: Geothermal/heat pump

Job specific or Other skills 23

Sub-sector Skills requiring specialised training (e.g. 13 wind turbine maintenance) Sector-specific Transferable Skills (e.g. electrical 13 engineer) Industry-wide Skills (e.g. management, accountants, 22 HR, marketing) Generic Skills (e.g. time management, team work, 14 literacy, numeracy)

0 5 10 15 20 25

Base: 31 Geothermal/Heat pump LCEGS businesses

When these needs are examined in terms of occupational role, they show that in common with other LCEGS businesses that managers, directors and senior staff had most industry- wide skills needs, together with some sub-sector and job specific skills needs. However, job specific and sector specific skills needs were more often found among those in skilled trade occupations. Figure 43 contains the details.

Figure 38 - No. of identified skills need by occupation: Geothermal/Heat Pumps

3 6 3 Job specific or Other skills 2 4 5

2 3 Sub-sector Skills requiring specialised training (e.g. 0 2 wind turbine maintenance) 1 5

1 4 Sector-specific Transferable Skills (e.g. electrical 1 3 engineer) 2 2

0 1 Industry-wide Skills (e.g. management, accountants, 6 4 HR, marketing) 3 8

0 2 Generic Skills (e.g. time management, team work, 4 4 literacy, numeracy) 2 2

0 1 2 3 4 5 6 7 8 9

Process, plant and machinery Skilled trades Admin and secretarial Associate professional & technical Professional occupations Managers, Directors and senior staff

Base: 31 Geothermal/Heat pump LCEGS businesses

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WAVE AND TIDAL

Analysis of the wave and tidal sub-sector was very limited because only 7 business providing goods/services in this sub-sector responded to the online survey. The answers that these businesses provided to an extent corresponded with those provided by the sector as a whole. While the seven only identified 23 skills needs (an average of 3 each), around a third of these were for industry-wide skills and were found among the managers, directors and senior staff. However, virtually no skills needs were identified among the professional, associate professional, skilled trades or elementary occupations in this sub-sector.

SMART

The online survey received replies from 20 businesses that were providing Smart goods and/or services (as well as other LCEGS goods/services) and these 20 businesses identified 98 skills needs between them, again an average of around five per business. Figure 44 shows that around a quarter of these skills needs were in job specific (27) or sector specific (24) skills, while smaller numbers identified generic (13) or sub-sector (15) specific skills needs.

Figure 39 - No. of identified skills need by type: Smart

Job specific or Other skills 27

Sub-sector Skills requiring specialised training (e.g. 15 wind turbine maintenance)

Sector-specific Transferable Skills (e.g. electrical 24 engineer)

Industry-wide Skills (e.g. management, accountants, 19 HR, marketing)

Generic Skills (e.g. time management, team work, 13 literacy, numeracy)

0 5 10 15 20 25 30

Base: 20 Smart LCEGS businesses

Looking at these needs by occupation, Figure 44 shows some intriguing findings. The 20 Smart businesses share with other LCEGS businesses the skills need for managers, directors and senior staff to have more industry-wide skills. However, for three of the five skills categories, for professional staff no skills needs were reported. The only areas in which skills were needed by professional staff were job or sector specific. Those in skilled trade occupations also had job and sector specific needs. Figure 45 contains the details.

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Figure 40 - No. of each type of identified skills need by occupation: Smart

3 2 6 Job specific or Other skills 5 2 3 6 0 2 Sub-sector Skills requiring specialised training (e.g. 3 2 2 wind turbine maintenance) 0 6 0 3 Sector-specific Transferable Skills (e.g. electrical 7 2 5 engineer) 3 4 1 0 Industry-wide Skills (e.g. management, accountants, 1 6 2 HR, marketing) 0 9 1 0 Generic Skills (e.g. time management, team work, 2 4 3 literacy, numeracy) 0 3

0 1 2 3 4 5 6 7 8 9 10

Elementary occupations Process, plant and machinery Skilled trades Admin and secretarial Associate professional & technical Professional occupations Managers, Directors and senior staff

Base: 20 Smart LCEGS businesses

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3.2.3. POLICY LED (TOP-DOWN) SKILLS REQUIREMENTS AND FUTURE SKILLS NEEDS

This section reviews the national and local skills and employment policy drivers to inform the Action Plan for the Cornwall and Isles of Scilly LCEGS sector. It summarises and highlights the key elements of the main strategies and policies, as well as drawing on findings from various relevant skills reports and studies to provide background context.

NATIONAL CONTEXT: CURRENT GOVERNMENT POLICY

The following table shows the qualification and credit framework.

Table 37 - National qualification credit framework

Level Exemplar Qualifications

1 GCSEs (Grades D to G); the Diploma for Levels 1 to 3; Apprenticeship; NVQ L1

2 GCSEs (Grades A* to C); the Diploma for Levels 1 to 3; Apprenticeship; NVQ L2

3 A Levels/AS Levels; the Diploma for Levels 1 to 3; Apprenticeship; NVQ3; Advanced Welsh Baccalaureate 4 Higher Apprenticeship; Certificates in Higher Education (eg HNC) The “Certificate Level” 5 Foundation Degrees; HNDs The “Intermediate Level” 6 Bachelor’s Degree The “Honours Level” 7 Master’s Degree The “Master’s Level” 8 Doctorate The “Doctoral Level”

Consecutive UK Governments have highlighted skills and employment as national priorities. This has resulted from widespread recognition that the UK is lacking the necessary skills to compete successfully in an increasingly globalised market; and evidence that some sections of society are being excluded from the labour market. The recent recession has compounded these issues and a series of reforms have been aimed at addressing them.

The reforms have prioritised economic growth with the Government focusing on delivering skills and ensuring that a trained workforce is in place to enable businesses to flourish. Importantly these Government reforms are increasingly placing employers and individuals at the heart of the skills agenda.

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The current Government’s key strategy, Rigour and Responsiveness in Skills (April 2013) identifies six main areas of reform:

• Raising standards

Including providing more information on the quality of provision for individuals and employers and more power to choose training;

• Reforming apprenticeships

Introducing an overall assessment to demonstrate competency and increased employer involvement in setting standards;

• Creating traineeships

This is intended to provide a focused period of work preparation, a high quality work placement and training in English and Maths;

• Meaningful qualifications

Based on strong and demonstrable employer input to ensure the relevance and use of qualifications in the workplace;

• Funding improving responsiveness

Introducing new approaches such as loans for those aged 24 or over and direct employer funding through the Employer Ownership Pilot; and

• Better information and data

Promoting an enhanced role for the National Careers Service in publishing data and connecting employers, education institutions and local partners.

These reforms are, of course, set within the context of a large national financial deficit and substantial public spending cuts with the overall Further Education and skills budget reducing by 25% between 2011/12 and 2014/15, alongside increases in university tuition fees.

Further Education fees/loans have also been introduced for those aged 24 and over meaning that those studying for Level 3 and 4 qualifications (including Apprenticeships) will be expected to take out student loans on a similar basis to those in Higher Education.

On social welfare reforms, the changes that have and will continue to be introduced include real term cuts to benefits levels, tougher tests on ability to work, housing benefit restrictions, stronger promotion of work experience and the introduction of universal credit.

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BACKGROUND CONTEXT: PREVIOUS SKILLS STUDIES

There have been a range of skills studies and reports undertaken at the national level in recent years that are relevant to the LCEGS sector. These date back to the Government’s response to the Leitch Review of 2006, which included a commitment to putting “low carbon skills” at the centre of the overall drive to improve skills. An important distinction made from this point onwards is the difference between:

• Core skills used by those working in the LCEGs sector, such as environmental impact assessments, renewable energy expertise, carbon foot-printing, etc.; and

• More generic skills such as STEM skills and general business skills, such as management and leadership for growth and development.

Indeed the Windsor consultation on Skills for a Sustainable Future in 2008 highlighted that all workers needed to have skill sets that would help to enable businesses to achieve their environmental and sustainability goals. However for the purposes to this exercise, the focus is on skills requirements of the LCEGS sector. The key findings from the skills studies that have been carried out covering the LCGES sector can be summarised as:

• Future skills needs are unknown

The studies all confirm that because of the fact that many LCEGS sub-sectors (and the materials, products and services that they work with) are at an early stage of development their future skills requirements are not yet known;

• Future skills demand levels are unknown

Similarly, because of a range of inhibitors such as perceived cost/value for money, inertia and concern over subsidies combined with a lack of drivers such as legislation and a strong business case, the level of demand for LCGES skills is latent;

• Most future skills needs will not be new

The studies indicated that most of the skills needed will not be “new skills”, rather they will be existing skills supplemented with new concepts and that have been adapted to a low carbon environment; and

• Main skills gaps will be for key generic skills

Should the latent demand for LCEGS products and services be translated into actual demand then the skills gaps faced by the sector will be for key generic skills such as STEM skills and leadership and management skills. The main problem would then be the shortage of training provision/delivery in these areas.

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It is also worth noting that several regional studies of the “Low Carbon” sector, including two in the South West to a large extent reiterate the national findings. These include highlighting the importance of STEM skills, leadership skills, the need for further work to explore future skills needs to inform training provision as well as the need to make a clear(er) business case for driving the development of the sector.

Further to these studies, in 2011 the Coalition Government commissioned Skills for a Green Economy. This aimed to:

“Identify skills needed to support the transition to a strong and sustainable green economy; and to assess evidence of employer demand and potential responses from the skills system which will lead to these skills being delivered… this includes not only skills in the low carbon and environmental goods and services sector, but also those needed to help all businesses use natural resources efficiently and sustainably and to be resilient to climate change” (HM Government, 2011).

This included some specific identified skills needs for various non LCEGS sector including chemicals, transport, construction, food and drink, etc. as well as business generic skills needs. The skills needs of LCEGS sector that were mentioned included:

• Renewables

“There is an overall shortage of STEM in the next ten years at all levels, which is exacerbated by competition from other sectors. In addition, wind energy needs: postgraduate mechanical, electrical and structural engineers; turbine technicians; geologists; civil and aeronautical engineers; and project managers. In offshore wind, new skills are needed for sub-sea high voltage engineering and for coping with harsh marine environments.”

• Biomass/biofuels

“Energy and Utility Skills UK and others produced an occupational and functional map on renewable energy and updated this in 2007. Areas identified as having further skills and training needs included: architects and builders; systems design; supply chain and production of biomass feedstock; planning; mechanical handling; and efficient fuel delivery and storage”.

• Anaerobic digestion

“Energy and Utility Skills UK is identifying the sectors/employers involved and the available job roles, training and standards. An assessment of the requirements for technical competence in this field will also be identified”.

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• Carbon capture and storage

“The evidence is that the skills needed are not new and can be found in the chemicals, oil and gas, process design and engineering construction industries, in all of which the UK already has strengths. But the extent to which these industries could divert resource is uncertain. Today’s operators lack the skills to operate power plant with carbon capture and storage. But overall the industry could build on the chemical process training and qualifications being developed by the National Skills Academy for the Process Industries”.

• Water and waste

“The biggest skills issue in water is probably the replacement of expert engineers as the current workforce ages, but action to lower energy demand and costs will also require major investment in technologies/processes and the skills to deploy them. The waste sector needs technical competence – which changes as new technical processes such as anaerobic digestion emerge. In fact, skills are needed throughout the hierarchy of waste management”.

In summary these findings covered very much the same ground as the previous studies in relation to skills needs, namely:

• A limited need for “new” skills; • The need to adapt existing skills, training and qualifications; • Increased need for generic STEM skills; and • Increasing replacement demand due to the ageing of the workforce

NATIONAL CONTEXT: SECTOR SKILLS COUNCILS

The Sector Skills Councils (SSCs) are independent, employer-led, UK–wide organisations. They work with the UK Commission for Employment and Skills (UKCES) to “create the conditions for increased employer investment in skills which will drive enterprise and create jobs and sustainable economic growth”.

There are 18 licensed Sector Skills Councils and 5 Sector Skills Bodies (SSBs) who work with employers to define skills needs and skills standards in their industry:

• Defining occupational standards and job competencies;

• Defining the qualifications which make up an apprenticeship framework;

• Advising employers about the qualification that are best suited for the apprenticeship and providing lists of suitable training providers; and

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• Responsible for ensuring that the correct evidence for each qualification is verified in order to enable the issue of a valid apprenticeship certificate.

The SSC licence is the unique identifier which signals to employers and government that they are a focal point for raising skills in sectors to drive enterprise, jobs and growth. Through their sectoral position, SSCs are “ideally placed to articulate the voice of employers on skills; to develop innovative skills solutions and to galvanise employer ambition and investment in skills and job creation”.

However for the purposes of this study there are difficulties with the role of SSCs because of the “umbrella” nature of the LCEGs “sector” and the fact that of the 23 SSCs and SSBs, at least eleven of them work with employers who could be considered as being in the LCEGS sector. The Low Carbon Cluster report produced by the eleven SSCs does provide some pointers however, as it maps the “individual aspects” of low carbon themes onto the activities of each SSC/SSB, with lead partners identified in each case. The table below provides a summary of the nine lead partners and their identified aspects of work:

Table 38 - The work of the sector skills councils

Sector Skills Council Aspects of low carbon themes

Asset Skills Retrofitting commercial buildings

Cogent Alternative fuels Low carbon processing

Construction Skills Retrofitting existing buildings Zero carbon homes

Energy & Utility Skills Large scale renewables Carbon capture and retro fitting carbon capture

Lantra Energy from waste Land management and natural environment

Proskills Reduced emissions and wastage

SEMTA Improved energy efficiency Low carbon engines and vehicles

Skills for Logistics Fuel efficiency

Summit Skills Micro renewables

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The key findings of the report, however echo those noted above from the studies conducted at the national level that the six key, and interrelated, factors that will dictate the future skills needs of the Low Carbon sector are:

• The ageing workforce and the need for replacement demand; • The widespread and generic need for greater uptake of STEM subjects; • Improved management and leadership skills; • Low carbon procurement policy; • Whether latent demand “takes off”; and • The ‘greening’ of existing jobs rather than new jobs.

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3.2.4. LOCAL CONTEXT: CORNWALL AND ISLES OF SCILLY LEP

This section looks at the skills agenda for Cornwall and the Isles of Scilly, as outlined by the Local Enterprise Partnership.

These national policies and studies frame the C&IoS LEP’s plans, with skills, business growth, knowledge and the environment seen as the central cornerstones for maximising the potential of businesses and the economy. The LEP’s Economic Growth Strategy 2012-2020 has four priorities:

1. Inspiring businesses to achieve their national and global potential; 2. Creating great careers; 3. Creating value out of knowledge; and 4. Using the natural environment responsibly as an economic asset

Under these broad priorities are a series of actions that the LEP “wants to see happen”. Many of these are directly pertinent to the skills agenda and to the LCEGS sector including:

Under priority 2:

• Demand for skills and the supply of skills brought into sync; • Local talent being retained and nurtured further; and • A new appetite for lifelong learning that means skills are constantly updated and improved to meet changes in demand and emerging opportunities

Under priority 3:

• Businesses taking full advantage of leading edge knowledge and turning it to commercial advantage.

Under priority 4:

• A growing reputation nationally and worldwide as a ‘green and marine’ region which delivers resource-efficient, low carbon solutions; • All businesses reducing their impact on the environment, lowering energy costs and carbon emissions where possible, to the point where we have a reputation as a resource-efficient, low carbon business community and all new building demonstrates best practice in sustainable construction; • More business activity in renewable energy production; • Recognition of the environment, culture and communities as important economic assets in food, fishing, farming, tourism and maritime industries to create growth where feasible and sustainable; and • All new builds, including housing and other major developments to be leading edge environmentally.

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It is particularly worth highlighting the LEP pledges to work with partners to:

• Attract investment to grow renewable and marine sectors; • Support businesses that also contribute towards protecting our environmental assets, for example sustainable construction and the built environment, use of brown-field sites as in the Eco-town, transport and waste management; and • Promote Cornwall & Isles of Scilly as a ‘green exemplar’ developing a concept of ‘environmental growth’, using economic prosperity to enhance the environment.

If these pledges are achieved, then they will go some way to addressing the issues identified at a national and regional level about stimulating latent demand for LCEGs products and services and hence will drive up skills demand. Indeed the LEP sets itself the following targets:

“By 2020, Cornwall and the Isles of Scilly’s GDP per head will be above the 75% average for the European union. By 2020 we will have exceeded the expected growth, in terms of GVA of the overall Cornwall and Isles of Scilly economy by an additional £338 million; per person employed this will be an additional £1,450 per annum.”

Lastly it should also be noted that, alongside this Skills Plan for the LCEGS sector, the C&IoS LEP has already commissioned Skills Action Plans for:

• The Space Sector Skills Action Plan; • The Aerohub Skills Action Plan 2013-2020; and • The Food and Drink Sector.

The recommendations and actions contained in these various plans are referenced in the recommendations section of this report where they overlap and/or correspond with the findings of this study.

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3.2.5. SKILLS LEVEL ANALYSIS AND TRANSFERABILITY

This section asks - what skills exist at the various levels? Are there relevant transferable skills from other sectors?

Transferable skills are generally regarded as being those skills that can be used for a range of different tasks and jobs. The amount to which they are “fully” transferable to another job or sector varies according to a complex mixture of occupational, organisational, economic, legislative, geographic and other factors.

As such there is no single definition of what constitutes a “transferable skill”. While it is usually accepted that “the more general the skill is, the more transferable it is and vice versa” this is not helpful for assessing the transferability of skills between the LCEGS sector and other sectors.

The DfEE (UK Centre for Legal Education, 2011) identified general or generic transferable skills as being:

 Communication: the ability to communicate in written and oral form;  Problem-solving: the ability to identify and analyse practical issues and to offer a practical solution;  Teamwork: the ability to establish working relations with others, to interact effectively, and to promote productive cooperation  Autonomy and personal skills: the ability to act independently, to deal with the unexpected, to reflect on one’s actions and to accept/provide constructive feedback  Information technology: the ability to use IT tools and develop that use by integrating it into one’s own work  Numeracy: the ability to make use of numerical and statistical information as part of an argument or in a report  Intellectual skills: the ability to analyse, think critically, evaluate and synthesise information.

In its recently published report, Transferability of Skills across Economic Sectors (European Commission , 2011), the EU developed this by recognising that employers distinguish between hard skills such as job-specific skills which are closely connected with knowledge and easily observed, measured and trained and soft skills such as non-job specific skills closely connected with attitudes, which are intangible, and difficult to quantify and develop. In contrast, policy-makers, training providers and education institutions, tend to distinguish between general (or generic) and specific skills.

Based on this, and in the absence of an agreed definition, the EU report then distinguished three categories of skills:

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 Soft skills;  Generic hard skills;  Specific hard skills.

These three sets were defined by the report as follows:

Table 39 - Skills Breakdown

Skills Set Description Specific Soft Skills Non-job specific  Personal effectiveness skills: Self-control and stress skills related to resistance; Self-confidence; Flexibility; Creativity; Lifelong individual ability to learning. operate effectively  Relationship and service skills: Interpersonal in the workplace. understanding; Customer orientation; Cooperation with others; Communication.  Impact and influence skills: Impact/Influence; Organisational awareness; Leadership; Development of others. (Managerial competencies are a special subset of this cluster.)  Achievement skills: Achievement orientation, efficiency; Concern for order, quality, accuracy; Initiative, proactive approach; Problem solving; Planning and organisation; Information exploring and managing; Autonomy.  Cognitive skills: Analytical thinking; Conceptual thinking.

Generic Hard Skills Technical and job-  Legislative and regulatory awareness; specific abilities,  Economic awareness; which can be  Basic skills in science and technology; applied effectively  Environmental awareness; in almost all jobs in  ICT skills/E-skills; a majority of  Communication in foreign languages. companies, occupations and

sectors and in personal life. Specific Hard Skills Technical and job-  Describe special attributes for performing an occupation in specific abilities practice. that are applicable  Lower level of transferability. in a small number *For an analysis of the importance of specific hard skills on of companies, the LCEGS sector, see below. occupations and sectors.

It is very difficult to make an assessment of the transferability of LCEGS skills with other sectors. While the LCEGS sector clearly has employees with a very high level of qualifications, these Specific Hard Skills are quite different from the soft and generic hard skills described above and, indeed, may well often be unique to LCEGS in their direct relevance.

Furthermore it should be highlighted that of the 324 skills needs identified by the LCEGS businesses, only 127 were for skills that could be classified as hard skills (i.e. either job

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 specific or requiring specialised training). That is, 197 (or 60%) of the current skills needs identified by LCEGS businesses were for skills that were either soft skills or generic hard skills, i.e. the most transferable skills.

This, to a large extent, is a reflection of the specialist nature of much of the sector. As one LCEGS business owner put it: “People running these types of businesses are in it because they are enthusiasts rather than from a business management background”. Equally it is important to note that in some parts of the sector, especially those connected with renewables, such as heating, plumbing, micro-generation, etc., there is a high degree of horizontal integration with other sectors – with businesses easily moving into (and out of) the LCEGS sector because their skills are so complimentary and transferable.

As such it is a somewhat mixed picture that emerges which cannot be fully clarified without separate skills audits for individual LCEGs businesses. Based on the research evidence about the high level of focussed, sector specific qualifications held by sector employees and the focus of current skills needs for more transferable skills, it would appear that there could be an issue for the sector but the scale of this is impossible to define.

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CHAPTER SUMMARY – SKILLS REQUIREMENTS FOR THE LCEGS SECTOR

 The sector has a very high level of qualifications reflecting the specialist nature of much of the work. 60% of the qualifications held by respondents to the online employee survey could be classed as STEM (science, technology, engineering and maths) and/or specific to the LCEGS sector.  86% of C&IoS LCEGS businesses responding to the online survey said their employees had undertaken skills training in the last 12 months. This is significantly higher than training levels reported nationally for all businesses.  C&IoS LCEGS businesses are more likely to require accredited qualifications, 65% compared to 47% nationally.  The skills needs identified were spread across the various types. Most commonly mentioned were job specific skills (76) and industry-wide skills (73), followed by sector specific (62) and generic skills (62).  Several businesses highlighted the need for specific skills related to Smart Energy.  The UK is lacking the necessary skills to compete successfully in an increasingly globalised market – this is the case for the LCEGS sector as for many others.  The Leitch Review acknowledged that “low carbon skills” should be at the centre of the overall drive to improve skills. Just as all businesses will need to take part in the transition to a green economy, all workers need to have skill sets that will enable businesses to achieve their environmental and sustainability goals.  Skills study relevant to the LCEGS acknowledge that:  Future skills needs are unknown  Future skills demand levels are unknown  Most future skills needs will not be new  Main skills gaps will be for key generic skills  The LEP’s Economic Growth Strategy 2012-2020 goes some way to addressing the issues identified at a national and regional level about stimulating latent demand for LCEGS products and services, and hence will drive up skills demand.  While the LCEGS sector clearly has employees with a very high level of qualifications, these Specific Hard Skills reflect the specialist nature of the sector and may well often be unique to LCEGS in their direct relevance.  Based on the research evidence about the high level of focussed, sector specific qualifications held by sector employees, and current skills needs for more transferable skills, it would appear that there could be an issue for the sector but the scale of this is impossible to define.

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SKILLS SHORTFALL AND SOURCING

This section presents the findings from the research in relation to the LCEGS businesses’ training activity over the last 12 months, plans for training and views on how well the local supply and provision meets employers’ needs.

3.3.1. TRAINING

When asked whether their establishment had a training plan that “specifies the level and type of training employees will need in the coming year”, half of the 80 LCEGS businesses responding said yes (50%) and half said no (50%).

However this did not affect their likelihood of having actually undertaken training. When asked: “Over the past 12 months have any (of your) staff in C&IoS attended any training or development?”, only eleven of the 80 businesses responding said that they had not undertaken any training at all. That is, a very high percentage of LCEGS businesses (69 out of the 80 or 86%) said their staff had undertaken training in the last 12 months.

Even allowing for the different sample sizes and survey methodologies, this figure of 86% was markedly higher than that reported nationally for all businesses by the most recent report from the UK Commission for Employment and Skills (UKCES) which found that; “Most employers fund or arrange training for their staff: two-thirds had done so over the previous 12 months (66 per cent), a figure in line with 2011 (65 per cent)” (UK Commission for Employment and Skills, 2013).

It is also worth noting that the likelihood of providing training for employees increases directly with business size. The national figure of two thirds is based on a proportionate sample that includes many larger, national and chains, of whom virtually all provide training. As noted, the C&IoS LCEGS business sector is made up of disproportionately more Micro and SMEs, among whom training levels are usually lower.

As shown in Figure 46, among the group of 69 C&IoS LCEGS businesses whose staff had attended some training in the last 12 months:

 21 (30%) said that staff had attended both non accredited training (e.g. workshops) and qualification-based/ accredited training;  24 (35%) said that staff had only attended non accredited training; and  24 (35%) said that staff had only attended qualification-based/accredited training.

This indicates that two thirds of the training attended by LCEGS staff was qualification- based/accredited (65%). Nationally, UKCES reports that; “Just under half of employers that trained over the last 12 months had funded or arranged any training intended to lead to a

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 nationally recognised qualification (47%).” The implication of this is that C&IoS LCEGS businesses are more likely to require accredited qualifications.

Figure 41 - Types of training attended by LCEGS staff in last 12 months

30 35

35

Accredited and non-accredited Accredited only Non-accredited only

Base: 69 LCEGS business with staff attending training in last 12 months

When the eleven businesses whose staff had not attended any training in the last 12 months were asked why this was, five said it was because they had “no money available for training / too expensive”, while four said it was because their “staff are fully proficient / no need for training”. The remaining two said it was either because “no training (was) available in relevant subject area” or “the relevant courses are not available locally”.

While the base for this finding relating to cost was small, it was also noticeably different to the national picture, with UKCES reporting: “By far the most common reason that some employers do not provide training is that they believe all their staff to be fully proficient in their roles.” Nationally just one in ten “non-trainers” said cost was the issue.

It is likely that this cost issue is related to the finding above that C&IoS LCEGS businesses are more likely than other businesses to require training leading to accredited qualifications. This will, by definition, tend to be more costly and time consuming than non-accredited training.

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3.3.2. EMPLOYERS VIEWS ON SKILLS PROVISION

As noted above, the majority of the C&IoS LCEGS businesses who participated in the online survey said that their staff members had undertaken some form of training in the last 12 months. They were asked further questions about their views on the training received and the qualitative research explored this further with other LCEGS business, assessing their views on the training that was available, the need for any further accreditation or industry standards and ideas for public sector support with skills acquisition.

The in-depth interviews and focus groups found that the businesses that had sent their staff on training were generally very positive about its value, though some concern was expressed about future training provision.

COMMENTS FROM THE SURVEY

“(It enabled us) to access new markets”

“We have to meet the (legal) requirements, but the (customers) want to see it so it helps our sales team”

“Made us more productive and efficient”

“We can install new products now… (P) … increasing our turnover”

“Businesses want short, sharp, punchy, relevant, focused training - not long winded courses. Attending training during the daytime is often challenging. Training that is available in the evening would help – especially small companies”

“I couldn’t get on to the course that I wanted (P: WHY: It was fully booked)… so I had to go to Crawley to get it instead”

“The timing isn’t always right…we need to jiggle our team around with the workload to fit it in”.

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3.3.3. PUBLIC SECTOR SUPPORT, SKILLS AND GROWTH

The views of C&IoS LCEGS businesses on the kind of public sector support that would most help them to gain the skills needed to grow.

The most common request was for support with funding of training (although it is worth noting that most of the other requests for support also involved assistance with funding of some sort for a range of various activities).

There were also requests for assistance with PR, marketing and sales, some of which related to financial support, others to more practical assistance. A further group of LCEGS businesses focussed on various other types of financial assistance that they would like. Some businesses mentioned specific types of training requirements that they wanted assistance from the public sector with. However, it should be noted that various businesses highlighted concerns over the process of applying for public sector financial support and the manner in which it was administered. There were also several particular references to the need for support for funding apprenticeships and changes to the way in which they were run.

Figure 42 - Public sector support required to help LCGES businesses gain skills to grow

Other answers 4

Assistance with recruitment 2

Prioritised local procurement 2

Networking/promotional opportunities 4

Other types of financial support 6

Specific technical training/apprenticeships 6

Sales/Marketing/PR assistance 6

Funding/grants/subsidised training 18

0 5 10 15 20

Base: 48 LCEGS businesses

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COMMENTS FROM THE SURVEY:

Training:

“Fund our CPB and training”

“Relevant training at economical cost”

“Subsidised training”

“Training funds, marketing training”

Marketing & PR

“Funding for B2B marketing at trade fairs to other UK Marine/Tidal/Wave/Construction industries”

“Support with marketing”

“Sales & Marketing mentor/advice”

“Funding to pay for someone to market my business”

“UKTI/Convergence grants have been critical in helping us ride the recession by supporting overseas marketing. We worked with UKTI to aggregate demand in "hidden" sectors like Geoscience and were able, with CDC support, to take shared stands to key trade shows in the US. We had to lash this together in terms of funding but it should be something that is mainstream. It should be industry driven, as these events were, but you need to have the support mechanism in place.”

Other Funding:

Seed funding to overcome cash flow and need to defray up-front costs”, “reduction in the business rates”, “Funding to take on staff or contractors…or for primary R&D”, “Discounted industrial unit for existing business in Cornwall to expand into”, “Capital investment”, “Salary subsidy support for new staff to assist in cash-flowing growth” and “Support grants like BIF etc have started heading in the right direction but it seems to be a mechanism to get funding for Universities and consultants rather than projects and business development. The small 5K - 10k "kickstart" type grants are useful.”

Public Sector Support:

Improve and encourage technical training opportunities for non-graduate students in vocational subjects - especially renewable energy technologies”

“Training support in areas such as report writing, project management, IT, etc.”

“Trade training [apprenticeships]”

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“There are little or no incentives for employing anyone over the age of 18. I have just received a one off grant of £1500 for my new apprentice (aged 23). His wages cost me £12,000 a year and his college fees for the next 4 years is £7500.... If he was 18 or under all his fees would be paid.”

“Funding of apprentices and training”

“Funding with less red tape, the cost of applying for these funds combined with the doubt of getting them and the complex way they are paid prevent us from applying”.

“Better performing planning system (NB this comment is not isolated to Cornwall but is a countrywide issue)”

“A recognition that Sales jobs are a key training sector - without sales people very little gets sold. It is almost like it is a "dirty" career in Cornwall, un-PC, un-Cornish. It is almost like it is something to be ashamed of - to want to make profit and sell stuff. We base this view on 14 years of trying to recruit in these roles.”

“Government to maintain financial stability in the economy and maintain stable workload conditions. No more boom and bust - some hopes!”

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3.3.4. ACCREDITATION AND INDUSTRY STANDARDS

The view from within the industry on accreditation and industry standards.

Generally, most of the LCEGS businesses consulted during the qualitative work did not feel the need for any further accreditation or industry standards. Most said that they already had the appropriate accreditations and also the processes in place to keep them up-to-date. Nonetheless they expressed some interesting thoughts in terms of the perceived value and importance of being seen to have accreditation and industry standards:

COMMENTS FROM THE SURVEY:

“(We) have a raft of stringent standards to meet. It’s on-going – we need to keep it fresh. There are support systems out there (to do so).”

“We deal with large multinationals and they require high standards, like ISO quality assurance. If you don’t have those standards you’re probably not very ambitious. Traditionally small businesses will say they can’t afford to go for these standards, but the new thinking is that they can’t afford not to. Only those businesses with the ISO standards will be able to trade internationally.”

This last point that “you can’t afford not to” was reiterated by several of the businesses consulted who tended to be among the more ambitious and forward looking. Indeed it should be remembered that for many of the relevant standards there was a legal requirement to have them attached.

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3.3.5. OTHER SKILLS NEEDS

In this section we ask, what skills will be needed from “elsewhere” that could not be sourced locally.

Several businesses noted very specific skills and jobs that they required. The difficulty for these businesses (and for training providers who might consider providing the relevant courses) was that these were often single person role/jobs – insufficient to create enough demand for running a viable course.

Further to these views expressed by C&IoS LCEGS businesses, the research identified some other important issues from a national perspective for the sector in the future:

 The Sector Skills Council for Science, Engineering and Manufacturing Technologies (SEMTA) has found evidence that the engineering sector faces a replacement demand of 200,000 over the next 10 years across the UK due to the ageing workforce. This will lead to a shortage of supply of skilled workers in the LCEGS sector. (SEMTA, 2010)  The skills levels of the 25-40 age range are well below national standards defined against the Organisation for Economic Co-operation and Development (OECD) international competitiveness levels, exacerbating the future replacement of the retiring workers. (D2N2 LEP - Low Carbon Plan for Consultaion)  There is also evidence that young people are not being given enough advice or training about green skills: 63% of teachers think their school is not doing anything specifically aimed at developing the skills needed for green jobs. (Global Action Plan)

These factors are likely to combine over the next 10 years to produce a substantial skills and employee deficit that could greatly limit the sectors ability to grow and develop successfully.

COMMENTS FROM THE SURVEY:

“(We need) power electronics designers. There are no courses in UoE. We will have to look to China (for) skills we need because there is no skills base here. For manufacturing kit skills we have to travel to China.

“(There) will be a need for software and IT systems. It’s not about building more hardware (that’s already there) – we need to stitch it together and ensure connectivity. The coding skills are out there, but there’s no one place to go to source complementary skills.

“We need people that can run software. We’ve spoken to colleges but there is no local provision. If we want a bespoke CRM system for control and monitoring of people’s homes, it’s not programmer’s jobs, we want people who are good at operating software. There’s no clear title for this job – ‘Software Operator’.”

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CHAPTER SUMMARY – SKILLS SHORTFALL AND SOURCING

 Half of the 80 LCEGS businesses who responded to the survey had a training plan in place.  A very high percentage of LCEGS businesses (69 out of the 80 or 86%) said their staff had undertaken training in the last 12 months. Training take up in the C&IoS LCEGS sector is higher than national levels. This is particularly positive considering the number of SMEs which make up the local sector.  Businesses in Cornwall were also more likely to undertake accredited training. The most common reason for not undertaking training for staff was lack of funds.  Employers were generally very positive about the value of training staff received, though some concern was expressed about future training provision.  The most common request for support from the public sector was funding for training.  Other needs identified include marketing, PR, sales and funding for apprenticeships.  Businesses in the LCEGS sector identified very specific skills needs which are as yet unavailable in C&IoS.  A number of factors are likely to combine over the next 10 years to produce a substantial skills and employee deficit that could greatly limit the sectors ability to grow and develop successfully.

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SKILLS PROVISION – 6 KEY RECOMMENDATIONS

This section presents some recommendations for improvements to the current LCEGS skills provision landscape alongside a suggestion for LCEGS skills provision in future. These recommendations are based on the responses and ideas of businesses from the LCEGS sector who participated in the research, together with the ideas of training providers.

Overall the research found that there was a wide and growing range of LCEGS skills provision across C&IoS. Many of the providers were currently expanding or investing more in the relevant LCEGS provision. Providers all emphasised that they “responded to employers’ needs” and engaged closely with local businesses. This meant that there was a fairly good coverage of courses and training available for employers and employees, though some specific gaps were identified previously.

RECOMMENDATION 1: ADDRESS ISSUES WITH CURRENT PROVISION

While current skills training provision is broadly comprehensive in terms of both sector specific and industry wide skills coverage and content, there are some issues with the cost, emphasis, length and timing of courses that need to be examined: “Businesses want short, sharp, punchy, relevant, focused training - not long winded courses. Attending training during the daytime is often challenging. Training that is available in the evening would help – especially small companies”. As such it is recommended that:

 Subsidised courses/training for LCEGS businesses;  Coordination and/or brokering of LCEGS training between employers to reduce costs/time spent arranging/fill gaps in provision;  Revising course content with employers as “editors” to focus it on their specific needs; and  Address the evening/daytime division.

RECOMMENDATION 2: COORDINATION OF AVAILABLE LCEGS PROVISION

As noted, there is a wide range of relevant LCEGS training provision available for businesses in C&IoS, both from colleges and universities and the private sector. However this in itself produces a challenge, as the process of finding the “right” training for a particular individual or a business can be complex and time consuming with providers often in competition with one another to fill courses. For employers and employees this is off putting and difficult to “wade through”. A single coordinated point of entry, portal or help desk detailing all

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 relevant LCEGS training and provision would simplify the process and ease employers’ time issues.

RECOMMENDATION 3: INCREASED AWARENESS OF AVAILABLE SKILLS & TRAINING PROVISION

Promotion and marketing of the available training for the LCEGS sector in C&IoS, focussing on LCEGS as a viable and valuable career option for students and young people. This needs to be directly linked to where to go in Cornwall to get Green skills and training and what it will lead to (counter problems with STEM, engineering, etc. perceived to be unpopular particularly with girls). Cornwall College in particular has excellent facilities for Renewable Energy technologies training at its Camborne, St Austell and Saltash campuses, together with on-going refurbishments at the Marine School at Falmouth and these could be further promoted. Again this could utilise a single PR/marketing point. Further specific initiatives could include:

 Connecting LCEGS businesses with local schools to increase young people’s awareness of and aspirations for the sector.  Linking local unemployed people to low-carbon jobs and training opportunities.

RECOMMENDATION 4: BUSINESS MENTORING

(An extension of the current) Business mentoring system through the colleges and universities would be valued by many LCEGS SMEs for addressing some of the industry-wide and generic skills “growing pains” issues that are being experienced by those that are developing and expanding, such as in relation to management and leadership, human resources management, public relations and marketing, business administration and support issues.

RECOMMENDATION 5: FUTURE PROVISION

The current system of provision is target/demand led (aiming to be employer led), which is a short term focus (i.e. responding to the current demand or what business skills needs are now). What the future LCEGS sector needs is an assessment of the potential longer term skills needs of the sector based on close liaison with those who are at the forefront of developing the relevant technologies, for example by collaborating with the designers and manufacturers of future RE equipment. Current employers don’t, and can’t be expected to know what their skills needs will be in an emerging industry. A longer term collaboration and assessment with industry experts and insiders would help to refocus future planning and hence provision.

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RECOMMENDATION 6: DEVELOP GREEN APPRENTICESHIP

Several employers noted their desire to take on apprentices and the difficulties they have in finding suitable candidates. Various concerns were expressed around finding young people with appropriate practical skills and basic science understanding, together with “green” interests. The development of a multi/cross skill "green" apprentice /renewables apprentice role, based on researching similar initiatives elsewhere in the UK to share best practice, would help to address this issue and support recommendation 3 above in increasing awareness of LCEGS in schools and colleges.

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SKILLS, SERVICES AND SUPPORT

3.5.1. EMPLOYMENT ROUTE MAPS

The brief requested that the research “provide a series of route maps into employment with LCEGS organisations from: school, further education, university, employed, unemployed skilled and unemployed unskilled.”

As discussed previously the LCEGS sector in C&IoS (and elsewhere) is considerably more diverse and complicated than has been assumed. Under the LCEGS “umbrella” there are a very wide range of qualifications, skills and training being provided and the sector operates under the auspices of eleven separate Sector Skills Councils/Sector Skills Boards. It is also clear from the research that very many of the C&IoS stock of LCEGs businesses operate horizontally across the sector – that is, they mix and match their skills to provide a blend of LCEGS goods and services.

This makes providing a route map extremely difficult. Only one of the Sector Skills Councils – SUMMIT (which is the de facto lead for microgeneration within the LCEGS field) – has produced, via the National Skills Academy for Environmental Technologies, a route or skills maps relevant to the LCESG sector. This is presented below.

New Entrants Skills Map: Environmental Technologies

The New Entrants Skills Map is taken from the Low Carbon Careers Route produced by the National Skills Academy for Environmental Technologies (NSAET). It should be noted that at present this only covers four main technologies:

 Solar thermal hot water  Solar photovoltaics  Heat pumps  Rainwater harvesting and recycling

The skills map focuses on basic entry requirements and/or those with no existing (relevant skills) and/or coming from unemployment or other forms of employment. Qualifications (and career maps) for other technologies are currently being developed by the NSAET including:

 Biomass  Bio-Fuels  Combined Heat and Power  Integrated and Hybrid technologies  LED Lighting

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 Micro Wind  Micro Hydro Generation  Mechanical Heat Recovery

The Network Operations Manager for the NSAET has confirmed that there are no other skills or routes maps available for the LCEGS sector that he is aware of.

Table 40 - New entrants careers map

Source: The National Skills Academy

The NSAET has also produced a sector footprint guide detailing job roles and competent person schemes for a range of developments relevant to environmental technologies. This can be found in Appendix 5.2.5.

Further to this, the research explored the views of LECGS employers and employees about skills maps. During the qualitative research the LCEGS business were asked: “Thinking about the current skills profile of your staff, do you have a skills map showing qualification levels and progression routes?” None of the businesses questioned said that they had a skills map for their employees.

Indeed, when asked the follow-up question, “Would it be helpful to have a skills map?” several said that they did not know what a skills map was. There was general scepticism about the value of such a map in the workplace, because every business felt that its

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 situation was unique and was unlikely to be fully covered by a generic sector-wide “map”. Nonetheless some businesses did see the value of such a map for potential entrants to the sector, particularly those with only limited background or knowledge of the subjects.

The employees were asked why they had chosen to work in the LCEGS sector. The most common reason was environmental, with respondents citing climate change, and supporting the environment as common reasons to work in the sector. Comments such as those below were common amongst survey responses.

COMMENTS FROM THE SURVEY

“We all love renewable energy and its role in the future of energy and in protecting the environment through helping reduce the impacts of carbon on climate change”.

“I am passionate about the environment, sustainability & climate change”

“Live in Cornwall, enthusiastic about helping environment, and therefore renewable energy, up and coming technology also interesting”

“Out of interest, a desire to work for myself in something that I am passionate about.”

Figure 43 - Reasons for working in the sector

Interesting nearly half of the employees (47%) who said that they wanted to stay in the LCEGS sector said that the reason for this was because of the opportunities for progression that the sector offers. This seems to imply that route maps (demonstrating progression with associate skills) would be valued by employees.

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3.5.2. REASONS FOR WORKING IN THE SECTOR

An analysis of the main reasons for joining the sector, based on the employee survey.

From the employee survey, there was no clear route into the sector, you are just as likely to work in the sector through word of mouth i.e. having contacts in the industry as you are through work experience.

Most common reasons are:  Degree or relevant training – 15.1%  Graduate placement including UCP – 11.3%  Job application – 17%

30% of respondents identified an opportunity through an employee support scheme, i.e. an apprenticeship, graduate placement, work experience or a training programme, whilst 7.5% identified a business opportunity in the sector.

Figure 44 - Use of employee support schemes

4% 12% Volunteering 20% Apprenticeships Work Experience 20% Mentoring 8% Careers Advice Graduate Placement 12% Unlocking Potential 24%

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3.5.3. APPRENTICESHIPS

An overview of the nature of apprenticeships and their role within the LCEGS.

An Apprenticeship is a job with training that combines earning a wage whilst studying for some nationally recognised qualifications. Apprenticeships take between one and four years to complete and cover 1500 job roles.

The Cornwall apprenticeships campaign is funded through the skills support for the workforce project through the ESF convergence programme, alongside the national apprenticeship service and endorsed by the LEP. The Cornwall training provider network provides apprenticeships through 9 different training providers operating in C&IoS. Cornwall Sustainable building trust offers apprenticeship support for the construction sector in Cornwall.

Employers can receive a £1,500 grant for 16-24 year old apprentice taken on (up to 10 grants per employer), as long as you have not had an Apprentice start with your company in the last 12 months.

Apprenticeships are available to all ages, however only 16-18 year olds have their Apprenticeship training fully funded by the Government. Funded training costs are approximately 50% for an apprentice between the ages of 19-24 and 25% for apprentices over the age of 25. This equates to approximately £200 to £400 per year, respectively.

Apprenticeships typically last between 12 – 24 months, with potential for progression onto a higher level apprenticeship. Apprentices are currently paid the National Minimum Wage for Apprentices of £2.68 an hour for the first 12 months of the Apprenticeship; for apprentices over the age of 19, after 12 months, they are paid the National Minimum Wage.

Apprenticeships are broken down into different sectors that operate specific apprenticeship frameworks that are nationally recognised. For the LCEGS sector, these can be split into generic business skills and sector specific skills. Generic apprenticeships provide generic and transferable business skills, however are applied to a particular business. Customer service, management and team leading, and, business administration are examples of generic apprenticeships. Specific apprenticeships generally meet the needs of traditional industries, and there are very few that would meet the technical needs of the LCEGS sector.

The relevant apprenticeships that could be utilised within the sector are below:

Engineering and Manufacturing technologies

1. Sustainable resource management 2. The power industry - Wind turbine apprentice technician

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3. Marine Industry - Marine Engineer apprentice 4. Heating and ventilation 5. Domestic heating - Domestic heating systems installer - Advanced domestic heating installer 6. Building Services Engineering technician

Construction planning and the build environment

1. Building energy management systems - Building energy management systems installation technician - Building energy management systems maintenance technician - Building energy management systems commissioning technician

The only apprenticeship that meets the needs of the renewable sector is the newly produced wind turbine apprentice technician. The framework was developed in 2010 by RenewablesUk, and launched in 2012. Dependent on the programme, frameworks can be designed at a cost and delivery of tailored apprenticeships can be run through a number of training providers.

The role of apprenticeships in offering routes to employment is currently being prioritised through national governmental steer. In the UK Budget Statement (Spring 2014) the Chancellor, George Osborne, announced new funding packages to encourage the take up of apprenticeships amongst small businesses alongside degree and postgraduate level apprenticeships, providing a comparable higher level alternative route from the traditional academic route through education into employment.

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3.5.4. GRADUATE PLACEMENTS

The current and potential role of graduate placements within the LCEGS.

The main provider of graduate level support for entry into the LCEGS sector is currently provided through Unlocking Potential (UP). Their role is varied and includes employability training courses, graduate level work experience and graduate level placements within businesses in Cornwall. The Grad Cornwall website (UP) provides a varied resource for graduates looking for a job such as application and CV writing support and interview tips.

‘Stand out from the Crowd’ is a dedicated employability training course. It has been developed collaboratively between Cornwall College and graduate employers and is open to graduates living in Cornwall and in paid employment over 8 hours a week. The programme offers intensive support over a two week period designed to improve the confidence of job candidates, provide greater self-awareness of what makes a candidate unique to an employer and provides opportunities to meet graduate employers. The programme, valued at £1500, is free for graduates that meet the criteria above and is funded by European funding.

Unlocking Potential also run a programme called Gateway which provides an opportunity for graduates to be placed in businesses for up to 60hrs to work at a graduate level and get all important work experience on their CV to help them secure a full time position. Graduates on the gateway are continually assessed by the work placement officer.

UP actively promote their services with employers and also provide applicant feedback, through the application itself and/or post-interview, to enable the applicants to improve their future performance.

Through the survey that was carried out with employees to ascertain how they entered the sector, the response rate was low from employees that had benefitted from an employee support scheme. 19 respondents (19/59) have benefitted from an employment support scheme. Out of these respondents 5 have benefitted from multiple opportunities (2 or more). The following table shows the breakdown of schemes that have been utilised.

Evidence from the Unlocking Potential programme that supports graduate level vacancies within Cornwall shows a more positive picture. Over the last three years, businesses in the LCEGS sector have accounted for around 15% of those supported by UP, accounting for around 65-70 graduate placements. The due diligence process of unlocking potential, alongside the restrictions on support as a result of eligibility, will perhaps restrict use of the service for some businesses.

Breaking down the data there are some skills specific placements that occur. Engineering roles, particularly in the renewable energy field are often filled by graduates with a renewable energy degree. Clean Earth Energy have over 15 engineers that have a renewable

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From a UP perspective, the renewable energy sector is an anomaly within Cornwall, and outside of these placements there are very few opportunities for graduates. Roles associated with generic environmental management, carbon management, energy management, waste and pollution control, for example, which would be seen as dedicated roles in large businesses are not necessary in micro businesses which makes up the vast majority in Cornwall. Many graduates continue in education often completing Masters level degrees and specialise in subjects which often require moving out of Cornwall to find a related job. Many graduates have the right skill set to work within the sector, however the main barrier is graduates with the experience that employers are looking for.

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3.5.5. VOCATIONAL AND ACADEMIC ROUTES

What are the potential academic and vocational routes, and are there potential cross-overs?

THE ACADEMY OF INNOVATION AND RESEARCH (AIR)

AIR, at Penryn campus runs a programme of Knowledge Transfer Partnership, which is a national, government funded scheme (Knowledge Transfer Partnership, 2013). A Knowledge Transfer Partnership (KTP) is a collaborative research project between a business and an academic institution which facilitates the transfer of knowledge, technology and skills.

It must be a significant project of strategic value, enabling a business to improve its competitiveness, productivity and performance. Each partnership employs one or more recently qualified people (the Associate) to work in the company on a project of strategic importance to the business.

A KTP can provide real benefits to all partners. The business gains access to technology, expertise or skills which it would otherwise not be able to make use of. The academic institution benefits from interactions with business – for example through developing relevant teaching and research material, publishing high quality research papers and gaining an improved understanding of business requirements and operations. The Associate benefits from work experience in industry at a strategic level that often recent graduates are unable to experience.

AIR also runs a collaborative research programme with business. Research is often collaborative and involves a number of academic and non-academic partners. AIR is keen to explore possible collaborative projects with partners – which could be through their research groups, knowledge transfer partnerships or collaborative doctoral awards.

ENVIRONMENT AND SUSTAINABILITY INSTITUTE (ESI)

The ESI also has a knowledge exchange programme, as well as hosting regular Melting Pot events to provide an opportunity for researchers and creative practitioners to meet each other and identify shared interests. The event aims to bring together creative practitioners and research academics who share an interest in issues of environment and sustainability. The programme is a joint initiative by the University of Exeter’s Environment and Sustainability Institute and Falmouth University’s Research in Art, Nature and the Environment (RANE) research group.

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ESI also run regular workshops for creative practitioners to learn more about how they can work with universities and academic researchers to support and develop their creative practice. The workshops introduce participants to relevant activities and opportunities within the ESI and the University of Exeter, allowing them to meet academic researchers and creative practitioners who work within academic contexts. Workshops explain how to engage with academics and researchers, and look at a range of models for collaborative working. It also provides information and guidance on what funding routes are available to facilitate collaborative research activities.

MASSIVE OPEN ONLINE COURSES (MOOCS)

MOOCS are online university delivered courses (often level 5 – 7) that are designed to provide a short course online at no charge to the student. MOOCS typically last between 5-8 weeks and require up to three hours of study a week. Having been originally developed in America and strongly promoted and offered by universities such as MIT and Harvard they provide access to materials, further study links, and facilitated discussions with expert academics. Due to the open access structure of MOOCS they are offered as unaccredited courses, but most universities will provide a statement of participation. MOOCS are just one of a suite of online teaching methods that are being utilised to reach a broader range of students, alongside distance learning and the more traditional Open University approach.

SCIENCE TECHNOLOGY, ENGINEERING AND MATHEMATICS (STEM)

STEM is most commonly associated with campaigns to increase the number of young people that study and work in science, engineering and mathematics. The STEM approach through STEMNET creates opportunities to inspire young people in STEM through working with schools, colleges and STEM employers, to enable young people of all backgrounds and abilities to meet inspiring role models, understand real world applications of STEM subjects and experience hands-on STEM activities that motivate, inspire and bring learning and career opportunities to life. This is delivered through three core national programmes:

STEM Ambassadors

A network of over 26,000 volunteers provide time and support to promote STEM subjects to young learners in a vast range of original, creative, practical and engaging ways, supporting the curriculum and raising awareness of STEM employment opportunities, supporting the WISE model, 40% of STEM ambassadors are women, with 60% under 35 years of age (STEMNET, n.d.).

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STEM Clubs Programme

Learning outside of the classroom is supported through STEM Clubs programme that provides free, impartial and expert advice and support to schools that want to set up or develop a STEM Club.

Their objective is to allow pupils to explore, investigate and discover STEM subjects in a fun and stimulating learning environment away from the constraints of the school timetable or curriculum.

Schools STEM Advisory Network

The schools advisory network provides advice and business link support and partnerships to enhance the STEM curriculum in schools. The network coordinates 45 regional and local organisations within the STEM advisory network and provides guidance to help schools and colleges access a range of services, resources, activities, toolkits and advice, which supports the curriculum and increases the number of students moving into further STEM education, training and development.

Women in Science and Engineering (WISE)

WISE helps organisations to inspire women and girls to pursue STEM subjects as pathways to exciting and fulfilling careers. WISE has been running for 30 years and now incorporates the UKRC, which had a contract from the Government from 2004-12 to increase opportunities for women in science, engineering and technology through support services to business, education and women returning to employment. The objective of STEM is to push the presence of female employees from 13% to 30% by 2020, boosting the talent pool to drive economic growth.

WISE deliver their services through a combination of events, information, teacher resource and awards designed to build and sustain the pipeline of female talent in STEM from classroom to boardroom, boosting the talent pool to drive economic growth.

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CHAPTER SUMMARY – SKILLS SERVICES & SUPPORT

 The National Skills Academy for Environmental Technologies has produced the only route or skills maps relevant to the LCEGS sector.  Employees in the sector are keen to stay and progress, therefore a route map which reflects this would be a positive step.  The most common routes into the sector were:  Degree or relevant training – 15.1%  Graduate placement including UCP – 11.3%  Job application – 17%  While generic business apprenticeships are available, sector specific apprenticeships generally meet the needs of traditional industries, and there are very few apprenticeships that would meet the technical needs of the LCEGS sector.  The only apprenticeship that meets the needs of the renewable sector is the newly produced wind turbine apprentice technician.  The role of apprenticeships in offering routes to employment is currently being prioritised through new funding packages to encourage take up amongst small businesses.  The main provider of graduate level support for entry into the LCEGS sector is currently Unlocking Potential (UP).  From a UP perspective, the renewable energy sector is an anomaly within Cornwall, and outside of these placements there are very few opportunities for graduates. This is due to the high number of micro businesses in the sector in Cornwall.  Many graduates have the right skill set to work within the sector, however the main barrier is graduates with the experience that employers are looking for.  STEM is most commonly associated with campaigns to increase the number of young people that study and work in science, engineering and mathematics. Opportunities to inspire young people in STEM are facilitated through three core programmes - STEM Ambassadors, STEM Clubs Programme, Schools STEM Advisory Network.

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5. APPENDICES

APPENDIX A

Appendix A contains additional information and supporting evidence related to Evidence Base Report A – LCEGS Sector Overview. It covers:

 The scoring systems for the priority sub sectors identified as significant for C&IoS  The full BIS data on these sub sectors, and level 2 sub-sectors.  Additional information on background and history of the priority sub-sectors in C&IoS, including the European and UK context, Cornwall’s resources, pioneers and principle businesses in the following: o Marine o Geothermal o Smart Energy o Biomass o Alternative Fuels and Vehicles o Wind o Solar o Additional Energy Sources o Building Technologies.  Additional information on strategy and policy drivers across the UK.  The supporting evidence for our analysis of potential collaboration with other LEPs.  The background context to SMART Specialisation in C&IoS.  In-depth discussion of consumer benefits for those buying from the LCEGS sector.  An exploration of the existing clusters in C&IoS.  An analysis of the affordability to consumers of low carbon and environmental products and services.

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5.1.1. PRIORITY SUB SECTORS

Criteria

Other fund BIS Forecasts Sub-Sector EU SIF priority Growth weighting Emerging sector priorities Growth 2016 Score

Wave & Tidal 8 2 6.7 3 1 14.0

Geothermal 8 1 6.0 3 1 13.0

Smart energy 5 3 8.2 4 1 13.0

Biomass 6 0 6.0 3 1 10.0

Alternative Fuel/ Vehicle 5 3 4.5 1 1 10.0

Alternative Fuels 5 1 6.1 2 1 9.0

Wind 2 2 8.2 4 0 8.0

Additional Energy Sources 6 0 4.5 1 1 8.0

Building Technologies 3 2 5.6 2 7.0

Energy Management 3 3 3.4 0 6.0

Photovoltaic 2 0 7.6 3 0 5.0

Carbon Finance 0 0 12.5 5 5.0

Renewable Consulting 3 1 3.3 0 4.0

Waste Management 0 3 3.3 0 0 3.0

Nuclear Power 0 0 6.0 3 0 3.0

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Environmental Monitoring 0 1 4.1 1 0 2.0

Hydro 2 0 3.5 0 0 2.0

Environmental Consultancy 0 1 3.9 0 1.0

Marine Pollution Control 0 0 4.6 1 1.0

Noise & Vibration Control 0 0 4.7 1 0 1.0

Recovery and Recycling 0 0 4.4 1 0 1.0

Water Supply and Waste Water Treatment 0 2 2.1 -1 0 1.0

Carbon Capture & Storage 0 0 3.9 0 1 1.0

Air Pollution 0 0 2.5 0 0.0

Contaminated Land 0 0 3.3 0 0 0.0

Growth weighting assuming UK average of 2.5% Criteria <2.5 2.5 to 4 4 to 5 5 to 6 6 to 8 8 to 10 >10 Score -1 0 1 2 3 5.0 5.0

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5.1.2. CORNWALL PRIORITY SUB SECTORS, FROM FULL BIS DATA

Prio Sub-Sector Analysis all global global Global EU 27 UK UK UK UK UK SW SW SW rity figures 2011/12 unless sales £m growth growth sales £m sales employ Comp. Export Import sales Employ Compan stated otherwise 2015/ 16 £m ment £m £m £m ment ies

1 L2: Wave and Tidal 2323 4.2 6.7 481 91 570 33 9 5 8 50 0

L2: Geothermal (incl. 2 heat pumps) 308834 3.4 6.0 70,592 11,271 81,544 4,462 1,043 720 774 5,599 326

3 Smart Energy Systems

4 L2: Biomass 159002 4.0 6.0 33,656 6,025 48,884 2,339 752 481 494 3,648 190

L2: Alternative Fuel/ 5 Vehicle 355247 3.3 4.5 81,411 13,993 104,428 6,078 662 387 1,158 9,176 540

6 L2: Alternative Fuels 556778 3.8 6.1 124,603 19,151 143,559 7,769 1,266 740 1,938 14,389 813

7 L2: Wind 20359 5.2 8.2 88,144 15,076 94,068 5,481 1,718 736 939 5,587 317

8 L2: Additional Energy 52707 9.1 4.5 15,256 1,400 11,324 583 180 113 86 741 34

9 L2: Building Technologies 97312 2.1 3.4 19,192 3,960 35,908 1,826 1,484 835 446 4,274 205

10 L2: Energy Management 41913 9.0 12.5 13,670 6,749 24,475 1,974 356 205 24 106 5

11 L2: Photovoltaic/ Solar 162601 4.3 7.6 37,494 5,667 40,377 2,084 1,391 689 320 2,242 120

12 L2: Carbon Finance 15004 4.1 3.9 3,302 534 4,672 232 169 101 42 387 6 A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014

5.1.3. FULL BIS DATA FOR LEVEL 2 SUB-SECTORS

Sub-Sector Analysis all figures global global Global EU 27 UK UK UK UK UK SW SW SW 2011/12 unless stated sales £m growth growth sales £m sales employ- Compa Export Import sales Employ Companies otherwise 2015/16 £m ment nies £m £m £m ment

L2: Air Pollution 30300 2.4 2.5 6,376 1,042 9,459 495 175 121 94.4 811 19

L2: Contaminated Land 29838 3.5 3.3 6,222 1,021 8,478 440 95 59 100.3 776 30

L2: Environmental Consultancy 26431 3.9 3.9 5,615 851 7,311 375 43 14 52.0 474 8

L2: Environmental Monitoring 4915 4.2 4.1 1,028 172 1,492 71 21 13 10.7 107 0

L2: Marine Pollution Control 3972 4.1 4.6 843 139 1,055 56 3 2 13 87 1

L2: Noise & Vibration Control 7177 4.2 4.7 1,532 238 1,992 103 35 20 22 175 11

L2: Recovery and Recycling 208880 3.6 4.4 45,736 7,435 56,242 3,147 606 279 681 5,190 262

L2: Waste Management 156126 2.9 3.3 33,283 5,359 44,875 2,294 540 336 521 4,314 228

L2: Water Supply and Waste Water Treatment 259138 2.9 2.1 54,795 8,529 72,847 3,755 1,263 926 844 7,348 388

L1: Environmental Sub Totals 726777 31.7 32.9 155,430 24,785 203,751 10,736 2,781 1,770 2,338 19,282 947

L2: Additional Energy 52707 9.1 4.5 15,256 1,400 11,324 583 180 113 86 741 34

L2: Alternative Fuel/ Vehicle 355247 3.3 4.5 81,411 13,993 104,428 6,078 662 387 1,158 9,176 540

L2: Alternative Fuels 556778 3.8 6.1 124,603 19,151 143,559 7,769 1,266 740 1,938 14,389 813

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L2: Building Technologies 97312 2.1 3.4 19,192 3,960 35,908 1,826 1,484 835 446 4,274 205

L2: Carbon Capture and Storage 434397 3.3 5.6 99,014 15,440 112,433 6,321 71 63 1,240 8,913 547

L2: Carbon Finance 15004 4.1 3.9 3,302 534 4,672 232 169 101 42 387 6

L2: Energy Management 41913 9.0 12.5 13,670 6,749 24,475 1,974 356 205 24 106 5

L2: Nuclear Power 83521 4.4 4.1 17,876 2,903 23,324 1,220 194 81 331 2,574 154

L1: Low Carbon Sub Totals 1636879 39.1 44.6 374,324 64,131 460,123 26,003 4,382 2,525 5,264 40,560 2,304

L2: Biomass 159002 4.0 6.0 33,656 6,025 48,884 2,339 752 481 494 3,648 190

L2: Geothermal (incl. heat pumps) 308834 3.4 6.0 70,592 11,271 81,544 4,462 1,043 720 774 5,599 326

L2: Hydropower 14397 2.7 3.5 3,208 561 5,097 261 71 41 34 337 15

L2: Photovoltaic/ Solar 162601 4.3 7.6 37,494 5,667 40,377 2,084 1,391 689 320 2,242 120

L2: Renewable Consulting 19037 3.2 3.3 3,566 535 4,840 230 68 68 43 383 18

L2: Wave and Tidal 2323 4.2 6.7 481 91 570 33 9 5 8 50 0

L2: Wind 20359 5.2 8.2 88,144 15,076 94,068 5,481 1,718 736 939 5,587 317

L1: Renewable Energy Sub 237141.1 39225. Totals 686553 27 41.3 317 9 275380 14890 5052 2740 2611.9 17846 986

766894.8 128141 L0: LCEGS grand totals 3050209 97.8 118.8 8 .8 939254 51629 12215 7035 10214 77688 4237

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5.1.4. BACKGROUND & HISTORY

This section provides additional context for the emergence of the LCEGS sector in Cornwall and Isles of Scilly within a UK and European context. We look specifically at sub-sectors which have been identified as a priority for C&IoS.

MARINE

EUROPEAN AND UK CONTEXT

1. The National Renewable Energy Centre (NAREC), based in Northumberland, was founded in 2002. NAREC built the most comprehensive open-access test and research facilities anywhere in the world to enable the scale-up of offshore renewable energy technologies. Since 2010, due to UK government cutbacks, NAREC has closed, sold off or separated different parts of the business. It now concentrates on testing blades and drive trains for marine renewables. In 2014 NAREC was accepted as an associate member of the European Energy Research Alliance (EERA).

2. The European Marine Energy Centre (EMEC) in the Orkneys was established in 2003. It was the first centre in the world to offer purpose-built, accredited open sea testing facilities for wave and tidal energy converters. The site has 14 full-scale test berths which attract developers from around the world. There have been more grid-connected marine energy converters deployed at EMEC than any other single site in the world. Eleven devices have so far been installed at EMEC. The centre also offers verification, consultancy and research services.

3. The University of Edinburgh built a wide tank testing facility in 1977 which was the first multi-directional mixed wave tank to be built specifically for wave energy research. It was demolished in 2001 to make way for a building project and a new curved wave tank was built to test models of solo wave energy devices.

4. The Coastal, Ocean And Sediment Transport (COAST) laboratory at Plymouth University provides physical model testing with combined waves, currents and wind, offered at scales appropriate for device testing, array testing, environmental modelling and coastal engineering.

EXISTING MARINE ENERGY GENERATORS

Marine Current Turbines Ltd (MCT) was established in 1999. They have an office and factory in Bristol, and an office in Inverness. In 2003 MCT installed the world’s first offshore tidal turbine: Seaflow 300kW, near Lynmouth in Devon. In 2008, they completed the installation and commissioning of the world’s first commercial scale tidal turbine: SeaGen S 1.2MW, located in Strangford Narrows in Northern Ireland. In 2010 Siemens became a

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 shareholder in MCT and acquired their remaining shares in 2012, with the intention of becoming the leading Original Equipment Manufacturer (OEM) in the emerging tidal energy market. MCT now operates within the Hydro & Ocean Business in Siemens Energy.

The first experimental wave farm was opened in Portugal, at the Aguçadoura Wave Park in 2008. It was designed to use three Pelamis wave energy converters totalling 2.25MW installed capacity, through a joint project between Portuguese electricity utility Enersis and Pelamis Wave Power under the company name Companhia da Energia Oceânica SA (CEO). The Pelamis prototype was tested at EMEC in the Orkneys between 2004 and 2007. The devices were fabricated in Scotland and assembled in Portugal. The wave farm started generating electricity in July 2008. Unfortunately it was shut down in November 2008 when Enersis’ parent company collapsed as a consequence of the global economic crisis. In 2009, Portuguese electricity companies EDP and Efacec purchased Enersis’s share in CEO. The machines were scrapped in 2011 because the technology had moved on. CEO is now planning a follow on project at Aguçadoura to install, in phases, a farm of up to 26 machines with an installed capacity of 20MW using new and improved Pelamis P2 second-generation devices. The P2 design machine has been sold to E.ON and Scottish Power Renewables and the new devices are currently being tested for a number of commercial scale projects.

In May 2013, Ministers approved plans for the world's largest commercial wave farm, a 40MW installation off the north-west coast of Lewis. Scottish and Southern Energy advised that work on commissioning a sub-sea electricity cable will not start before 2017. Aquamarine Power is interested in installing 40-50 Oyster devices at the proposed wave farm. The Oyster devices are currently being tested at EMEC.

In February 2014, Scottish Energy Minister Fergus Ewing announced that the Scottish marine renewables sector was to benefit from £4.8m funding from the Marine Renewables Commercialisation Fund and the Renewable Energy Investment Fund. £2m will go to Atlantis Resources Corporation to establish an engineering hub in Edinburgh.

CORNWALL’S RESOURCES

1. Falmouth Bay Test Site (FaB Test)

The Falmouth Bay Test Site is a pre-consented two square kilometre area situated within Falmouth harbour between three and five kilometres offshore. The FaB Test nursery facility launched in 2012, and enables wave energy device developers to test components, concepts or full scale devices in a moderate wave climate with excellent access to nearby port infrastructure. It is not grid connected. Operational support of the site, as well as on-going monitoring and world leading research, is provided by the Renewable Energy Group from the University of Exeter, who are based at the nearby Penryn campus - made possible in part thanks to an investment of Regional Growth Fund (RGF) money. The RGF investment of £549,000 into FaBTest was approved by the C&IoS LEP. The LEP recognised FaBTest as a key

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 investment priority and a unique asset which can create economic benefits and market opportunities. FaB Test won the 2012 South West Green Energy Awards. Fred Olsen tested their ‘Lifesaver’ device on the site in 2012 this was the first wave device deployed in Cornish waters.

2. Peninsula Research Institute for Marine Renewable Energy (PRIMaRE)

In 2007 the Peninsula Research Institute for Marine Renewable Energy was launched at Tremough Campus near Falmouth, providing world-class R&D facilities and international research. It was formed by the Marine Institute of the University of Plymouth in partnership with the University of Exeter. PRIMaRE is a network of world-class research institutions based in the west, south, and south west of England who undertake research and development to address challenges facing the marine renewable energy industry at the regional, national and international level. The overall aim of PRIMaRE is to foster a multi- institutional, world-class research cluster in all aspects of marine renewable energy. The PRIMaRE programme has funded specialist research facilities such as the South West Mooring Test Facility (SWMTF) in Falmouth Bay and the Dynamic Marine Component Test facility (DMAC) based at A&P Falmouth. Its first annual conference will take place in Plymouth in June 2014. In 2014 PRIMaRE was re-structured and re-named the Partnership for Research in Marine Renewable Energy and was integrated into the SWMEP providing research towards the Offshore and Marine Energy sector. Partners are Bath University, Bristol University, Exeter University, Plymouth University, Southampton University and Plymouth Marine Laboratory.

3. Marine Renewables Business Park (MRBP)

This proposed business park, owned by Cornwall Council, forms part of the wider £16.5m regeneration plans for North Quay in Hayle and is intended to augment the Wave Hub proposals. The regeneration scheme includes a new road and bridge, flood protection and refurbishment of the harbour walls. When the public sector engaged with the Hayle Harbour Commissioners, developer ING gave 1.2ha of land to Cornwall Council on which the MRBP will be built. The team at CDC are currently putting a revised funding bid together which includes the original infrastructure plans plus £6.9m to build Phase One. Detailed planning consent has been secured and the funding contract is anticipated in the next month, with the aim of starting construction in April 2014. Phase One includes 890m2 of BREEAM excellent office accommodation and 1520m2 of industrial accommodation, including seven industrial units. The intention is to attract a cluster of marine sector businesses to the Park, which will provide good access to Wave Hub and Hayle Harbour facilities.

4. Marine Offshore Renewables group (MOR)

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The Marine Offshore Renewables group was formed in 2012 as a network of quality businesses providing outstanding solutions for the marine renewable industry. The group champions the South West as an international centre of excellence for sourcing products and services that are used within the marine renewable energy sector. It encourages its members to collaborate; sharing know-how, skills and resources so that innovative, cost- effective and profitable solutions can be deployed. The group is a formal sub-group of, and is supported by, Cornwall Marine Network which has secured resources via two EU Transnational projects (MERiFIC and Channel MOR) to support marine renewable energy skills development and supply chain co-ordination.

5. Offshore Renewables Delivery Programme (ORDP)

In January 2014, £360,000 funding was awarded to the ORDP partnership between Cornwall Council and Plymouth University, and managed by CDC. The funding includes a £50,000 investment from the C&IoS LEP’s Regional Growth Fund. It will create a marine renewables focused programme looking to de-risk and better resource the development pathway to commercialisation. The programme also includes the creation of an industry-led forum, chaired by Mike Reynolds of Falmouth based A&P, which aims to develop the support offering around deployment; technology development; supply chain and skills development; inward investment; industrialisation; access to funding and infrastructure – such as ports and grid.

CORNWALL BUSINESSES

1. Mojo Maritime Ltd.

Mojo Maritime in Falmouth provides specialist project management, engineering and consultancy services to the marine renewable energy sector. The company was incorporated on 30 April 2010 and employs a team of analysts, engineers, naval architects and master mariners. Mojo Maritime Ltd. has recently secured ERDF funding to develop, build and test a low motion floating platform for offshore LiDAR measurements (LiDAR is an advanced technology deployed in support of offshore wind energy farms). Concept development and tank testing of the platform was completed in 2013. Deployment of the platform and motion testing is planned at FAB Test in autumn 2014. Allowing for possible design optimisations, the platform would be redeployed early 2015 to carry out LiDAR validation against a fixed met mast with the aim of having it ready for commercialisation by late 2015.

2. A&P Falmouth

Established in 1909, A&P is a major shipbuilder based in one of the UK's largest ship repair complexes in the port of Falmouth. These facilities are located close to one of the UK's best wave and tidal resources, whilst their Tyneside base is well located for access to the larger Round 3 offshore wind programme. A&P employs 900 people across the UK, of which 400

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 are in Cornwall. In November 2010 Marine Designs Ltd, part of the A&P Group, won the Best Business Innovation Award at the annual RegenSW Green Energy Awards for the innovative Dockmaster pontoon system designed to support the offshore renewables industry. In 2011 they appointed a dedicated Marine Renewables Project Manager; in 2013 they were awarded a £1.5m Technology Strategy Board (TSB) grant to design and develop a vessel to make the installation of tidal energy devices easier and more cost effective, in collaboration with IT Power, Keynvor MorLift Ltd and Reygar Ltd. In February 2014, they were awarded a landmark contract by leading wave energy firm Seatricity to build a wave energy device to be deployed at Wave Hub. A&P Falmouth will manufacture, fabricate and assemble the wave energy converting device, Oceanus 2, employing up to 20 people for a month. Seatricity plans to deploy the device in spring 2014 and if successful, a further 60 devices will be manufactured. A&P Group also works with PRIMare and more recently has embarked on collaborative partnerships with Ocean Power Technologies and Offshore Wave Energy Ltd. to work on the research and development of their respective wave device technology and engineering. A&P also fabricated Fred Olsen’s Lifesaver device.

3. Fugro Seacore

Fugro Seacore in Falmouth was established in 1976. It is a specialist marine drilling contractor, registered in the UK, employing 320 people and working on projects all over the world. In 2009 Fugro Seacore was involved in the installation and commissioning of a single full-scale 315 kW Oyster 1 wave energy converter at EMEC. In 2011, Fugro Seacore (Australia branch) working with Carnegie Wave Energy limited, installed three sets of foundations for Aquamarine Power’s full scale pre-commercial Oyster devices at EMEC. The £3 million contract for the foundations was signed in February at Fugro Seacore headquarters in Falmouth, where it was witnessed by Chris Huhne, then Secretary of State for Energy and Climate Change.

Cornwall has many successful and active supply chain companies working in the tidal power sector, but does not have a commercially viable tidal resource to support this technology. If smaller-scale tidal flow opportunities are developed however, they could provide a useful training ground for local companies to gain experience in the tidal sector.

Sadly, one early mover didn’t survive the long processes involved in securing Government support and funding to develop their technology. Exeter-based Orecon was established in 2002 by Nicola Harper and Fraser Johnson who had been developing a wave energy technology system since 2001. The company was formed as a `spin-out` from their postgraduate project at the University of Plymouth, which included sea trials of a 12th scale concept prototype. Early industrial seed investment kick started development of the company and was later followed in 2003 with a DTI SMART Award. Following the SMART funded feasibility work, Orecon raised private investment to match fund a Carbon Trust grant for the industrial development of the MRC wave energy technology. In February 2008 Orecon secured major investment from a powerful syndicate of international Venture

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Capital investors led by Advent Ventures. They were planning to test the device at the Wave Hub. Unfortunately, in 2009 their venture capital funders withdrew their support and in 2012 the company was closed down due to lack of funding.

GEOTHERMAL

EUROPEAN & UK CONTEXT

The first electricity to be generated from geothermal was at Larderello in northern Italy in 1904. There are now geothermal energy plants in 24 countries throughout the world and there are deep geothermal energy systems currently being developed and tested in France, Australia, Japan, Germany, the USA and Switzerland as well as the UK. In Iceland, geothermal energy is used to provide the majority of the country’s electricity and heating demands.

In the late 1970s, the UK’s Department of Energy (DoE) set up a research programme for alternative energy sources as a response to the oil crisis. A number of potential geothermal power generation sites were identified for research, including locations in Southampton and Cornwall. The Government didn’t pursue these pilot schemes further due to cost and commercial viability.

EGEC, the European Geothermal Energy Council, was founded in 1998 as an international non-profit association in Brussels. EGEC has now more than 129 members from 28 European countries: private companies, national associations, consultants, research centres, geological surveys and other public authorities.

Geothermal district energy scheme, Southampton

In 1981 the DoE funded the drilling of a well in Southampton but decided that the geothermal resource was too small to invest in. Southampton City Council persevered with the project and formed a partnership with French energy services company Utilicom to take it forward, resulting in the Southampton Geothermal Heating Company. The UK’s first deep geothermal aquifer power generation scheme was launched at Southampton in 1986. Combined Heat and Power (CHP) generators were added to the geothermal network later. The system supplies heating and cooling to a mix of leisure, retail, housing, university and hospital customers, and all of the electrical power from the scheme (26 million kWh) is to be used by Associated British Ports via a private electrical connection to the port.

Enhanced Geothermal System (EGS) Pilot Plant, France

The main objective of this 26m Euro project was to establish the world's first commercial geothermal pilot plant or EGS. It was part funded by the EU Sixth Framework Programme.

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The project involved the installation and operation of a 1.5 MW geothermal power plant, situated along the French-German border in Soultz-Sous-Forêts. The project started in 2004 and three 5000 m deep wells were created. In 2008 above ground infrastructure was installed to convert geothermal heat to electricity. The plant started producing electricity in autumn 2010, just after the introduction of the Feed-in-Tariff (FiT). The sustainability of the operation is being assessed for wider application. The plant will also be made available as a training facility to other European EGS teams.

Germany

Germany first produced geothermal power at Newstadt Glewe using both geothermal and fossil energy to provide district heating. In November 2007 Germany’s first commercial geothermal power plant with an electrical output in the MW range was commissioned at Landau. The EGS facility is rated 3MW electrical and 3.5MW thermal. The plant exploits thermal water of 155°C from a depth of 3,000 metres and the high temperature water is used to generate electricity. Once it leaves the generating plant the residual heat from the water at a temperature of 72°C is used in a district heating system. Then, the water at a temperature of 50°C is injected back under the surface via a 3,170 metre deep injection well.

The Unterhaching Power Plant in southern Germany was commissioned in 2009 and produces 3.4MW of electric power and 30MWth of heating for the local township of Unterhaching. Up to 150 litres per second of water at more than 120°C are extracted from a depth of over 3,300m. Another plant at Bruchsal was commissioned in 2009 and produces 580kW of electricity. By 2013, Germany had 12.3 MWe installed, a further 48 MWe under construction and an additional 90 MWe in the planning stage. Heat production from CHP and heat only plants stood at 223 MWth.

Iceland

With its abundant hydrothermal resources, Iceland is a pioneer of geothermal energy. Geothermal power facilities currently generate 5% of the country's total electricity production. During the course of the 20th century, Iceland went from what was one of Europe's poorest countries, dependent upon peat and imported coal for its energy, to a country with a high standard of living where practically all stationary energy is derived from renewable resources. In 2011, roughly 84% of primary energy use in Iceland came from indigenous renewable resources, of which 66% was from geothermal. In May 2012, the UK and Icelandic governments signed a Memorandum of Understanding to exchange information on deep geothermal development in the UK and to explore the possibility of developing electricity interconnection between the UK and Iceland.

CORNWALL’S GEOTHERMAL PIONEERS

1. Camborne School of Mines

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Founded in 1888, Camborne School of Mines (now part of Combined Universities in Cornwall) has world renowned expertise in geothermal energy. Camborne School of Mines (CSM) led the world on the development of hot dry rocks (geothermal) projects at Rosemanowes Quarry. CSM has a unique comb ination of scientific and engineering expertise in geology, mining and minerals processing and applies this to world-leading research and teaching.

2. GeoScience Ltd.

Falmouth-based Geosocience Ltd. was established in 1984. The company provides consultancy specialising in deep underground investigations for the oil and gas, nuclear and geothermal industries. It became a significant player in the NIREX deep exploration programme at Dounreay and Sellafield - due to expertise in deep underground investigations in hard rock acquired at the Hot Dry Rocks project (an unforeseen outcome).

GeoScience Ltd. promotes itself as having more than 30 years’ experience in research, demonstration and commercial exploitation of geothermal resources of all types. The company conducted a mine water heat pump geothermal assessment in the CPR Energy Feasibility Study in 2006. Working in partnership with London-based Geothermal Engineering Ltd. (GEL), they have plans to construct a £50m power plant at United Downs near Redruth. The plant has planning permission from Cornwall Council and will supply 10MW of base load electricity to the National Grid and up to 55MW of renewable heat for local use. It will involve drilling to approximately 5km depth in a region of high heat flow and natural fracture permeability, to develop a reservoir system and recover hot water to surface for electricity generation. GeoScience conducted the feasibility and design for GEL and a drilling site is in preparation. The company has ongoing involvement with CSM and the Mining and Renewable Energy courses. Managing Director Tony Batchelor is Geothermal Adviser to the Commission of the European Communities, DGXII and a member of the Geothermal Resources Council as well as other geothermal forums. Operations Director, Peter Ledingham, was an engineer on the Hot Dry Rocks project and is a Director of GEL.

3. EarthEnergy Ltd.

This once 50-strong UK wide design and installation company, based in Falmouth, initiated the UK groundsource heat pump industry. EarthEnergy Limited was founded in 1996 and has been designing, specifying and installing ground source heat pump systems in the UK almost twice as long as any other UK company. It also led to the establishment of Kensa Engineering - as a result of their involvement with EarthEnergy in the early days. EarthEnergy collaboration with Earth Energy Engineering Ltd, PowerGen (now E.ON) and Calorex Ltd led to development of the first UK built ground source heat pumps for the social housing sector. Sadly, Earth Energy Systems is now in administration.

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4. Kensa Engineering/ Kensa Heat Pumps

Kensa was established in 1999 by engineers Richard Freeborn and Guy Cashmore. Finding imported heat pumps unsuitable for British homes, the company graduated to become a heat pump manufacturer. Both founders had worked previously on ‘super yachts’ where they recognised the value of heat pump technology to provide heating and cooling to these vessels. They saw an opportunity for the technology to be deployed in buildings. A wide range of heat pumps are manufactured in Kensa’s ISO 9001 certified factory at Mount Wellington Mine near Truro. The award-winning company promotes itself as the UK’s number 1 manufacturer and supplier of MCS accredited Ground Source Heat Pumps for domestic and commercial new build and retrofit installations. Kensa reports that the launch of the RHI, coupled with a new £500,000 fund for installer renewable technology training, has resulted in an unprecedented demand for ground source heat pump training. The company offers training for its product range and on-going professional development. Nationally, Managing Director Simon Lomax is the Chairman of the Ground Source Heat Pump Association, as well as a representative on the Micropower Council and the MCS Heat Pump Technical Working Group. Chairman, Richard Freeborn, left Kensa in 2011 and is now Technical Advisor to Government on Renewable Heat at DECC.

5. Wardell Armstrong International Ltd.

This multidisciplinary Engineering, Environmental and Mining consultancy was founded in 1998. The company employs 450 employees and has offices at Wheal Jane Mine near Truro, across the UK and overseas. Regional Director, Haydn Scholes, was Director of Camborne School of Mines Associates (CSMA) from 1981-1991 and was involved in the Hot Dry Rocks project. CSMA was acquired by Wardell Armstrong in 1999 when it was renamed Wardell Armstrong International Ltd. The company conducted an Environmental Impact Assessment (including a seismic hazard assessment) and secured the first planning consent for the first enhanced geothermal power plant in the UK at united Downs.

6. EGS Energy

EGS Energy is a geothermal development and consultancy company based in Penzance, with an office in London. Technical Director Roy Baria was Deputy Project Director at the Hot Dry Rocks project and was Chief Scientist at the Soultz-Souz-Forèts project in France. In 2009 EGS formed a partnership with the Eden Project to establish a pioneer deep geothermal plant. Planning permission was secured in December 2010 for a 4MW plant. Drilling was scheduled to start in 2011 with electricity being produced in 2013. Work started on site in December 2013 after ground investigations and planning conditions were fulfilled. EGS Energy is developing a deep drilling technology in partnership with Slovakian company, Geothermal Anywhere. EGS is also advising the Wheal Jane Group with regards to the potential for a 5 MW geothermal plant utilising a disused mine shaft at their site near Truro. Wheal Jane Group has an ambitious plan to create a Renewable Energy Centre at the site

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Cornwall Council advises that The Eden Project and United Downs geothermal projects could potentially access the next round of European funding and start drilling in 2015/2016. They are high risk capital intensive projects but with potentially huge rewards. Deep geothermal can potentially provide some high value jobs and opportunities for Cornwall’s industry, research and education sectors. Currently the temporary drilling and construction jobs will be bought in but direct ongoing O&M jobs and indirect jobs in agriculture and heat network infrastructure for example will be of benefit to Cornwall. Deep geothermal is capital intensive due to a lack of UK based drilling expertise, however as the industry develops, the UK drilling industry may develop to provide high value jobs and reduce capital expenditure for the geothermal industry going forward. The industry should maintain and build on the educational links with UoE, UoP and CSM to create the expertise needed for the future (Carroll, 2014).

HEAT PUMP INNOVATION

One spin off from the Rosemanowes project was the early development and expertise in heat pump technology and manufacture, and ground source heat pump installation. With the help of local and national grant funding, specialist companies in Cornwall pioneered the retrofitting of ground source heat pumps in existing buildings.

Isles of Scilly Health Centre

In February 1997, Earth Energy commissioned what is believed to be the first closed loop vertical ground source heat pump system in the UK, to the Isles of Scilly Health Centre. The low energy building uses an EarthEnergy system to provide heating and cooling to the underfloor system, and to provide domestic hot water preheat. The building was designed by Cornwall-based architect Barry Briscoe, who identified the opportunity to utilise a ground source heat pump long before the technology was in common use for heating systems.

Tolvaddon Energy Park, Camborne

At the time it was built in 2001, this was promoted as the most environmentally advanced business park in Cornwall. Development was funded through a £4 million investment from the South West Regional Development agency and the Objective One European Funding Programme. Kensa Engineering Ltd. supplied the complete geothermal heating system through individual heat pumps, ranging from 4kW to 24kW for each of the 19 units. The heat pumps are connected to over forty 70m vertical ground arrays installed by Carnon Contracting.

Chy an Gweal, Ludgvan

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In 2004, Earth Energy Systems Ltd. installed the UK’s first ground source heat pump retrofits to social housing in Ludgvan, near Penzance. Fourteen Penwith Housing Association homes, previously using solid fuel systems (coal), were fitted with ground source heat pump central heating systems. The ground loop system consisted of 2 x 40 metre deep boreholes and one 3.5 kilowatt Calorex 3500DT heat pump per property. The drilling contractor was Carnon Enterprises Ltd. and the M&E contractor was MV Clatworthy Ltd. The £151k project was funded by Penwith District Council and a Government Clear Skies grant. At the time, the heat pumps saved the vulnerable tenants £548/ unit per year. Subsequent energy price rises will have drastically increased that saving. The project won a South West Green Energy Award and an award from the National Home Improvement Council in 2004. The partners then worked on two Innovation Programme funded projects to encourage other social housing landlords in the UK to adopt the technology, and to provide support to those that did. This led to roll out of ground source heat pump retrofits in social housing across the UK. Penwith Housing Association also participated in the Energy Saving Trust’s nationwide heat pump monitoring project.

Tarn West, Redruth

In 2007 Earth Energy Systems Ltd. commissioned the first multi occupancy dwelling with a shared ground source heat pump for Coastline Housing flats at Tarn West in Redruth. Coastline Housing converted 16 small energy inefficient bedsits in Redruth into 11 carbon neutral apartments for homeless families. Other technologies retrofitted to the building included solar thermal, wind, insulation and low energy lighting. The project was funded by Community Energy Plus, Coastline Housing and EDF Energy.

St Piran Homes

In 2007, St Piran Homes was the first private developer to make use of heat pumps in a private housing development in Cornwall at Praa sands near Helston.

Tuckingmill Conservation Centre

In 2008, CSEP and Cornwall County Council funded the first community building to be heated by an air source heat pump in Cornwall (and possibly the UK). A 12kW Thermia Atria 12 air source heat pump was installed to the new-build Tuckingmill Conservation Centre in Pool by Eco Heat Pumps.

Carrick Housing

In 2008, Carrick Housing and Earth Energy Systems Ltd. implemented what was then the biggest Calorex ground source heat pump mass installation retrofit programme in the UK. The heat pumps in 254 homes displaced oil, solid fuel and electric heating systems.

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SMART ENERGY

EUROPEAN & UK CONTEXT

Current projects include:

 Energy Demand Research Project

Between 2007 and 2010, large scale trials were conducted in 50,000 households across the UK to understand how consumers react to improved information about their energy consumption over the long term. Methods used for the research included smart meters and real time display devices as well as information and community engagement. The trials were run by EDF Energy, E.ON, Scottish Power and Scottish and Southern Energy.

 Energy Technologies Institute (ETI)

The ETI Smart Systems and Heat programme aims to design a ground-breaking smart energy system in the UK. Projects include a consumer behaviour study, data management and systems architecture, enabling component technologies, value management and delivery.

 Technology Strategy Board (TSB)

In 2010, the TSB awarded £3.8m to 13 smart energy projects. The TSB has also established a special interest group of Knowledge Transfer Networks to foster collaboration and knowledge sharing about smart meters, smart grids and smart homes.

 Scenarios for the Development of Smart Grids in the UK

This multi-institutional, inter disciplinary project is supported by the UK Energy Research Centre (UKERC). The project aims to advance understanding of smart grid deployment and utilisation up to 2050. The research team includes Dr. Peter O’Connor Senior Lecturer in Renewable Energy Policy at the University of Exeter (University of Exeter, 2013). The concept of a ‘smart campus’ is also being explored at the University’s Cornwall campus in Penryn.

SMART ENERGY PIONEERS IN CORNWALL AND THE ISLES OF SCILLY

Enigin Plc

St Austell-based Enigin Plc was incorporated in 2006. It provides a range of smart energy products, including: ‘Eniscope’ - an advanced Real-time Energy Management System; ‘iMEC’ - Intelligent Motor Energy Controllers; ‘LESS’ - Light Energy Saver Sensors; a Chiller Unit Energy Saver and ‘ACES’ - Air Conditioning Energy Saver. The company has representation in over 50 countries. Whilst collectively relatively new, the Enigin team has many years’ experience in the sector. In 1982, Managing Director, Ian Wrigley FRSA, commissioned the installation of the first Digistat microchip based energy saving controller in the UK. Hundreds

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Carnego Systems

Truro-based Carnego Systems was incorporated on 19 December 2006. They offer online solutions for optimising building performance, including automated data analysis. They developed the Haboakus Shimmy home information system installed in homes in Swindon, which is a simple touchscreen noticeboard that provides information on energy use, local bus times, community car club bookings, local lift shares, traffic information, community news and alerts.

Natural Generation Ltd.

This award-winning microgeneration installer, based in Perranporth, includes an energy and microgeneration manager device, an immerSUN PV monitor and voltage optimisation within its product range. It was founded by Mike Field in December 2006. After learning about peak oil, Mike left his lighting and sound installation company to pursue a career in renewable energy.

Cornwall Smart Homes

This company based in Blackwater near Truro is part of Cornwall Super Homes, which offers solar, electrical and roofing services. Managing Director Tony Sampson retrained as an electrician and set up an electrical company in 2009. Cornwall Smart Homes was added to the portfolio in 2012 and offers smart home systems for retrofit or new build applications. The award-winning company employs 14 staff. Tony Sampson is on the advisory panel for Cornwall’s Business Leaders for Low Carbon Group.

Kernow Controls Ltd.

This company based at Tremough Innovation centre in Penryn was incorporated on 29 October 2010. They are building control and automation specialists in the commercial, industrial and residential market. Kernow Controls designs and installs intelligent building management systems. Managing Director, Drew Dorling, has worked in the Building Energy Management Systems (BEMS) industry since the late 1990’s, working for 15 years under control systems giant Honeywell.

ZLC Energy Ltd.

This multi technology consultant and installer includes energy efficiency controls, building management systems and voltage optimisation in its product range. The company is based in St Austell and was incorporated on 16 March 2012. Its Managing Director, Mark Smith is a Chartered Engineer, Chartered Water and Environmental Manager and Chartered Environmentalist with experience in running flood management programmes in the south east and designing BREEAM excellent commercial buildings.

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Wattstor Ltd.

This award winning company based at Tremough Innovation Centre in Penryn, was incorporated on 2 January 2013. They produce an Intelligent Power Management (IMP) control and monitoring system that ensures the optimum use of on-site generated electricity with no export back to the grid and minimal import. They also offer batteries for energy storage. The products are manufactured in Cornwall. Wattstor was formed by Peter Cunningham, a semi-retired engineer in St Austell. Peter will remain as Executive Chairman and Mark Smith from ZLC Energy Ltd. will be interim MD pending recruitment of a full team to grow the business.

British Gas

In its 2013 HECA report, Cornwall Council reported that as its officially endorsed ECO investment partner and Green Deal provider for Cornwall, British Gas, will “promote the benefits of Smart Meters and facilitate their installation. They will also create “smart” tariffs for Cornwall which will help develop a smart grid across Cornwall – designed to work in conjunction with the Cornwall Together scheme”. British Gas recently won the 2014 European Smart Metering ‘Utility of the Year’ award for their focus on customer involvement through their opt in model and their recent track record in convincing customers of the benefits of smart meters (Smart Metering UK & Europe Summit, n.d.).

BIOMASS

BIOMASS PIONEERS IN CORNWALL AND THE ISLES OF SCILLY

Lanhydrock

In 1898 Drake & Gorman installed a wood-fuel boiler at Lanhydrock House, Bodmin (Edmonds, 2002).

Duchy College

Duchy College near Camborne installed the UK’s first Miscanthus biomass boiler. The boiler is fuelled from a 45 acre block of Miscanthus (‘elephant grass’) which is grown and made into bales on site (Farmers Weekly, 2006).

Trelowarren

In 2006, Wood Energy Ltd. installed the South West’s first 350 kW Binder wood chip boiler at the Trelowarren Estate near Helston. The woodlands on the estate have the highest yield in the UK. A combination of coppiced wood from the estate and waste wood is used to fire the boiler. It supplies homes on the estate and an outdoor swimming pool via an electrically

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Jubilee Wharf

Cornwall’s first Zero Emission Development (ZED) new build was constructed by Bill Dunster Architects at Jubilee Wharf in Penryn in September 2006. The mixed-use multi-technology development included a 75kW wood pellet boiler providing hot water and underfloor heating.

Kernock Plants

In 2007, Wood Energy Ltd. installed what was then the largest biomass boiler in the UK at Kernock Plants nursery near Saltash, replacing an oil-fired system.

Forest Fuels

Devon-based Forest Fuels was established in 2006 with the aim of supplying wood chip across the South West. In 2009 they won a 15 year contract with the NHS to supply wood chip to Treliske Hospital in Truro and opened a new depot in central Cornwall. Also in 2009 they started delivering wood pellets as well as wood chips. By 2010, the award-winning company had 5 depots spread strategically across the South West. They have since expanded into Yorkshire, East Anglia, the East Midlands, Hull and Suffolk. Forest Fuels not only operate as a fuel supplier but also as a heat energy service company (HESCO) co- ordinating and financing biomass boiler installations for public and commercial end consumers keen on securing low cost, low carbon heat supplies in return for Renewable Heat Incentive payments.

ALTERNATIVE FUEL AND VEHICLES

Electric Car Rally

Cornwall’s first ever electric car rally took place on Truro’s Lemon Quay on 17 March 2013. The rally was hosted by Hawkins Motors and supported by Eco Drive (Hawkins Motors, 2013).

Green Power

Green Power aims to educate school children about sustainable engineering and technology, linking into STEM subjects and social inclusion. This on-going national project brings together education, industry and community in order to tackle many of the sustainability issues facing society today and future generations.

Formula Goblin is aimed at the 9-11 age range, but generally gets the majority of the school

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Goblin cars are ‘eco-friendly’ electric cars and share race day with other environmental and sustainable activities. A large education marquee allows students to take part in a range of activities throughout the day, including building model solar cars to race on internal tracks and close-up investigations of Police vehicles, Air Ambulance and the airport’s fire engine. The event draws together around 1500 people from 50 schools across Cornwall.

Community Energy Plus has taken part in 2 race days and been overwhelmed with enthusiastic future engineers and designers. They have spent the day designing and testing hydro kits, generating clean green electricity purely through the power of water. There is fierce competition throughout the day to generate the most electricity and top the leader board. Students learn about kinetic energy, waterwheel design and getting the maximum energy from 2 litres of water!

Hydrogen

The UK Hydrogen and Fuel Cell Association acts on behalf of its members to accelerate the commercialization of fuel cell and hydrogen energy technologies (UK Hydrogen and Fuel Cell Association, n.d.). The Association presents a range of statistics to demonstrate the potential of this emerging sector.

The hydrogen fuel cell was invented in 1838 by Welsh scientist William Grove. The emerging oil industry of the time saw it as a threat and it was not until a century later that NASA first deployed the technology commercially. Hydrogen fuel cell technologies have been employed to a small extent in the UK. In 2003 Woking Borough Council installed the UK’s first hydrogen fuel cell heat and power system to the Pool in the Park. London first trialled hydrogen buses between 2007 and 2009 as part of the Cleaner Urban Transport for Europe (CUTE) project. London is now part of CHIC, the Clean Hydrogen in European Cities Project, which is the next step leading to the full market commercialization of Fuel Cell Hydrogen powered (FCH) buses.

Camelford Hydrogen Project

In May 2000, the Camelford Economic Regeneration Feasibility Report proposed an electric mini bus service for the area, which would utilise renewable electricity generated at the Delabole wind farm. In December 2002 a draft business plan was written for the proposed bus service to be powered by hydrogen gas generated at the wind farm. The Camelford and

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Delabole Community Development Trust commissioned Whitby Bird and Partners to proceed with a feasibility and outline sizing study. Conditional funding was secured to build a wind-hydrogen plant near the wind farm. Ford Motor Company said it was prepared to provide a Hydrogen ICE Ford Transit Minibus. Whilst some funding was secured, the project didn’t go ahead because of a funding shortfall. Difficult financial conditions also meant that Ford had to re-evaluate their participation. The project partnership included Gaia Energy Centre, Camelford and Delabole Community development Trust, Market and Coastal towns Initiative, Community Energy Plus, Element Energy/ Whitby Bird, East Cornwall Rural Transport Partnership, Countryside Agency, Cornwall County Council, Ford Motor company, Wind Electric and SWRDA.

WIND

EUROPEAN & UK CONTEXT

The European wind industry emerged in 1982 when a group of manufacturers of agricultural machinery returned from a trade visit to California with enough orders to start production of a new series of wind turbines. By the end of that year 25-30 turbines had been shipped and installed. The year after 350 turbines were exported, marking the start of what became known as the ‘California wind rush’. In 2011 Europe was the global leader in offshore wind energy with more than 90% of the world’s installed capacity (The European Offshore Wind Industry - key trends and statistics, January 2013). In the UK 61% of installed and proposed onshore wind developments are based in Scotland, 21% are in England, and Wales and Northern Ireland both have 9%. In 2011 DECC reported that onshore wind supported 8600 jobs in the UK and was worth £548m to the economy (HM Government, 2013).

In 2013 RegenSW reported that there were 679 wind projects totalling 150MW across the south west, of which 95% were single turbine projects. Two thirds of the region’s installed capacity comes from wind farms such as Delabole (North Cornwall), Goonhilly (Lizard) and Fullabrook (Devon). Over the last few years most of the increase in capacity has come from two repowers and one new wind farm. In 2012-13 the number of wind projects in the south west increased by 22 per cent, and the total capacity had grown by 3.5 per cent. That year saw the greatest increase in the number of small and medium wind projects ever in the south west; with twice as many new projects as the previous year. The greatest increase in wind capacity was in Cornwall, with over 80 new projects and a capacity increase in that year of 3MW. Cornwall had 306 wind energy schemes which generated 67.6MW by March 2013.

WIND PIONEERS IN CORNWALL

Redruth Generator

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The use of wind energy was pioneered in Cornwall. The UK’s first wind electricity generator was constructed in Redruth between 1890 - 92, supplying part of the house of Mr. R.H. Michell (Edmonds, 2002, p. 1).

Delabole Wind Farm

The UK’s first commercial onshore wind farm was developed at Delabole and started operating in 1991. The owners, the Edwards family, sold their 150-strong dairy herd and milk quota in order to part fund the investment needed for the project. Good Energy bought the wind farm in 2002 and has owned and operated it ever since. In 2009 they invested £11.8 million to develop the second generation of turbines on the site which now generates enough electricity to supply around 5,700 homes. The wind farm generates £9000 a year for community projects in the Delabole neighbourhood and residents living near the wind farm are offered a discounted energy tariff (the first of its kind in the country). The wind farm has since been repowered, replacing 10 old turbines with 4 new more efficient models.

South Wheatley Renewable Energy Trust

This trust installed a 15kW wind turbine in the hamlet of South Wheatley in North Cornwall in 2006. The income is reinvested in sustainable energy projects in the area (mainly microgeneration and energy efficiency measures). The project was fully grant-funded by the Clear Skies programme, EDF Energy and a TV award. The original proposal for a much larger turbine was thwarted by anti-wind protestors. Trustee, Bill Andrews, was an active member of CSEP. The project won the 2007 SW Green Energy Awards for Best Sustainable Energy Community.

Low Carbon Living

In 2010, Community Energy Plus and Kabin enabled Transition Ladock to install community- wide renewable energy measures, including a 20kW wind turbine, that generate an annual long term income for the community. Low Carbon Ladock Ltd bencom and Ladock Carbon Co-operative Ltd co-op were set up to manage and distribute the income with everyone living in the parish having the opportunity of membership of both. The project generates an initial return for the community of about £30,000 per year before reinvestment. The project was funded by a £500k grant from the Low Carbon Communities Challenge (LCCC) programme. An interesting outcome of the project is that it prompted democratic change to local decision-making structures. The parish council held its first ever public elections in an attempt to re-engage the community members that were committed to the low carbon cooperative. There were 7 members on the parish council and 80 in the cooperative and the income the project will generate is 5-6 times more than the parish precept. Since the parish council membership changed, more renewable energy applications have been approved and the parish now generates more renewable energy than it consumes. Prior to the project, renewable energy applications in the parish were routinely rejected by the parish council.

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The project won the South West Green Energy Award ‘Best Community Initiative 2010’ and ‘Cornwall Sustainable Village of the Year 2010.’

Community Power Cornwall

Community Energy Plus and Kabin (Cornwall’s cooperative development organisation) commissioned Cornwall’s first genuinely community-owned wind project in 2011. Two 80kW Endurance E3120 turbines were installed on land at Gorran Highlanes near St Austell. Cornwall’s first community share issue for renewable energy was launched in 2011 as part of the project, raising £80,000 and gaining 100 members. The Low Carbon Society, a Community Development Finance Institution (CDFI) was established which uses the principles of peer reviewed lending to help de-risk new projects. The project has also created a fund for the benefit of the local community in Gorran. Co-funding for development costs came from Cornwall Strategic Partnership via a Local Area Agreement outcome to reduce carbon emissions. Additional gap finance came from Community Energy Plus and Cornwall Council; since that initial phase the partnership of the Council, the Low Carbon Society, Kabin and Community Energy Plus have established a revolving loan fund for the support of further community energy projects (see Section 5.7.6 – Community-Led Investment for more details.) Community Power Cornwall has used its revenue income from Gorran to develop a broader portfolio of projects including new community projects at BF Adventure (installation due March 2014) and holds planning consent for a Joint Venture project at Pengelly Farm in Wadebridge, and is in process of securing consents for projects during 2014 in Launceston, Summercourt, and on the Rame Peninsula.

Wind Fences

Since 2010, Cornish-based Spinetic Energy has been developing an innovative wind-fence technology. In 2013, Spinetic installed its first production scale wind-panel near Calne in Wiltshire and plans to build four UK factories, one of which would be based in Cornwall.

SOLAR

SOLAR THERMAL GENERATORS

Solar Thermal projects in Cornwall include:

Plug into the Sun

The first solar PV installer to be established in Cornwall, was Plug into the Sun, in 2005. Its Managing Director, Andrew Tanner achieved the first UK Master of Science in Environmental Technology. The award-winning company has since installed nearly 2 MW of solar PV. It expanded rapidly in 2011 employing 35 people. Some of the team have since gone on to establish their own installation companies.

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Wheal Jane

In July 2011, the South West’s first solar farm was connected to the grid at the Wheal Jane Group’s site near Truro. The 1.4 MW, 7.2 acre development was the first commercial scale solar farm to gain planning consent in the UK. It was implemented by Lightsource Renewable Energy Ltd. and Solarcentury, utlising funding by Octopus Investments. Shortly afterwards the Government announced 70% cuts in the FiT.

Kernow Solar Park

In 2012 Cornwall Council built the UK’s first local authority-owned solar farm at Newquay. The 5MW 36 acre Kernow Solar Park supplies electricity to the Newquay Cornwall Airport terminal and businesses located at the airport. It is projected to produce an initial income of around £700,000 per year and enough power to run 1,000 homes. Plans to develop the project were first considered by the Council in 2010 but the authority was forced to postpone it in the autumn of 2011 following the Government’s decision to change the Feed in Tariff (FiT). Some of the original budget was redirected to small solar PV arrays on Council-owned libraries, schools, leisure centres and offices in four months. A subsequent drop in the price of large scale panels then enabled the £6.5m solar farm project to go ahead (RegenSW, 2013).

National Solar Centre

In April 2013, the Building Research Establishment (BRE) founded the National Solar Centre. In November 2013, BRE announced that it would relocate the Centre to the Eden Project, near St Austell. The aim is to establish a Centre for excellence and knowledge in the use of solar energy in the UK, providing a technical, trusted and independent voice for industry and related parties by providing industry led research, analysis, testing and training. The Centre will provide a PV test site on brownfield land on the perimeter of the site (BRE, 2013). The Centre currently has commercial consultancy offers underway, is conducting research with the MET Office, has produced best practice guides for planning and is setting up test site at Eden to test existing products to verify the manufacturers’ claims under UK conditions. They plan to offer courses on the operation and maintenance of large scale solar PV and advanced level design. Some of these courses will be based at BRE head office in Watford and some at Eden. Some BRE construction courses (e.g. BREEAM) are being held at Eden now.

The timeline of events below highlights just how much uncertainty and flexibility the sector has had to handle over recent years (EvoEnergy, n.d.).

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Table 41 - Uncertainty in solar energy sector

Date Development

March 2002 to Solar PV Major Demonstration Programme available February 2006 April 2006 Low Carbon Buildings Programme (LCBP) launched, offering maximum grants of £15,000 for solar PV (capped at £3000/kW). Dec 2006 The LCBP funding model was changed to a first come, first serve basis.

April 2007 High take up led to the LCBP being suspended, whilst a review of the financial model took place. May 2007 LCBP re-launched. Max. grant reduced to £2,500 (capped at £2000/kW).

April 2009 Only MCS accredited installers could be used for LCBP funded work.

July 2009 Announcement: Systems installed from 15 July would be eligible for payments from the forthcoming Feed in Tariff for energy generated from 1 April 2010. Dec 2009 The LCBP was closed to new solar PV applications.

Jan 2010 Only MCS accredited products could be used.

Feb 2010 LCBP closed to new applications for electrical technology across all sterams.

Apr 2006 Feed in Tariff launched – providing payment for energy generation over a fixed time period. Rate set at 29-41p/kW depending on size of the system. Apr 2011 Feed in Tariff rates were increased to 32-43p/kW.

Aug 2011 Feed in Tariff rates for >50-150 kW systems were decreased to 19p/kW. Rates were cut by up to 70% for large scale systems. Oct 2011 DECC planned significant FiT cuts for December, saying the current rates were unsustainable. For <4kwp systems the rate would be cut from 43.3p to 21p/kW. Dec 2011 The industry challenged the legality of the cuts because DECC announced them before the consultation period had closed. Jan 2012 The Government lost its High Court appeal. The proposed cuts were delayed until 3 March 2012. Mar 2012 The proposed FiT cuts came into effect.

Apr 2012 A new requirement was introduced that only properties with an EPC D+ rating were eligible for FiT. May 2012 DECC announced a quarterly pre planned FiT rate degression based on a regular percentage reduction (dependent on installed capacity) to be implemented from November 2012. Aug 2012 FiT rates were reduced across all system sizes. The new rate for a <4kW system fell to 16p. Nov 2012 The FiT degression came into effect.

Source: EvoEnergy

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ADDITIONAL ENERGY SOURCES

EUROPEAN AND UK CONTEXT

In 2013, the European Commission announced a list of 140 electricity projects that will be fast tracked and have access to a funding pot of €5.85 billion (US$7.9 billion) including a new UK storage installation and interconnections with Ireland. The list includes several GW of pumped hydro storage across the continent, a 250MW battery storage system in southern Italy and a compressed air energy storage system in Northern Ireland with an annual storage capacity of 550GWh. The largest energy storage demonstration project in Europe is a 6MW test facility in Leighton Buzzard (Solar Power Portal, 2013).

In the UK, Swindon Council has a target to get the town recognised as a UK centre of excellence for hydrogen energy technologies, creating jobs by building on the town’s emerging strength in hydrogen energy storage, by 2020 (British Photovoltaic Association, 2013).

BUILDING TECHNOLOGIES & ENERGY MANAGEMENT

HISTORY – CARBON OBLIGATIONS

As part of national efforts to tackle fuel poverty and mitigate climate change, the UK Government has set obligations on energy suppliers to enable their customers to save carbon since 1994 when the Energy Efficiency Standard of Performance (EESoP) was introduced. EESoP ran from 1994 to 2002. The majority of measures were for disadvantaged customers.

EESoP was followed by the Energy Efficiency Commitment (EEC) in 2002, which had a similar methodology. Through EEC 1 the Government set mandatory carbon saving targets for energy suppliers with 15,000 or more domestic customers to be achieved by 2005. Failure to meet the targets results in hefty fines. In the early days of EEC energy suppliers funded mass distribution of low energy lightbulbs as a low cost way to achieve carbon savings, but Government policy eventually put an end to this practice. In phase 2 of EEC, which ran from 2005 to 2008, the targets were doubled and applied to suppliers with over 50,000 customers.

From 2008 to 2011, EEC was replaced by the Carbon Emission Reduction Target (CERT). The targets were increased again, with a further rise introduced in 2009 and again in 2010 when the CERT period was extended to the end of 2012 to help fill the gap between CERT ending and the new Energy Company Obligation (ECO) starting. In December 2011, following a consultation by DECC, the threshold for mandatory participation in CERT increased from

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50,000 to 250,000 customers. Energy suppliers implemented their EEC and CERT targets primarily by fully funding or partly subsidising loft and cavity wall insulation (households in certain vulnerable groups received full funding). Other eligible measures included heating, lighting, appliances, microgeneration, Combined Heat and Power (CHP) and Real Time Displays. Energy companies were required to achieve an overall target of 293 million lifetime tonnes of carbon dioxide (Mt CO2) by 31 December 2012. They achieved 296.9 Mt CO2 (this included excess measures carried over from EEC2) (Ofgem, 2013).

Another supplier obligation, the Community Energy Saving Programme (CESP) was launched in 2009 and ran until December 2012. It required certain gas and electricity suppliers and electricity generators to deliver energy saving measures to homes in specified low income areas of Great Britain. Energy companies were required to achieve an overall target of 19.25 million lifetime tonnes of carbon dioxide (Mt CO2) by 31 December 2012. They achieved 16.31 Mt CO2, almost 85% of the overall target. Suppliers met 92.4% and generators met 36.0% of their respective targets. Over the three year CESP period 500 schemes were completed and over 75,000 dwellings were treated with external solid wall insulation. Across the UK 43% of eligible low income areas received measures – only 30% of eligible areas in the south west region received measures, compared with 72% in Wales and the East Midlands. In Cornwall the few eligible CESP areas tended to be IMD deprived urban areas with mass social housing that had already been insulated (Ofgem, 2013).

Where supplier/ generator obligation targets are not met, Ofgem has powers to impose financial penalties of up to 10% of a non-compliant company’s annual turnover. Since April 2010, Ofgem has completed 14 full scale investigations. More than £35 million of penalties have been imposed and around £6 million of redress payments have been made to benefit consumers. In May 2013, Ofgem announced that they were launching investigations into six companies that failed to meet their CERT and CESP targets: British Gas, Drax, GDF Suez / IPM, Intergen, Scottish Power and SSE (Ofgem, 2013).

Energy supplier obligations have caused work flows in the insulation and heating industry to fluctuate. Typically when a new scheme was introduced there would be a slow start and in the year before a scheme ended a peak in activity and higher carbon price as suppliers rushed to meet their targets.

GREEN DEAL IN CORNWALL

On 18th December 2013, 21 accredited Green Deal Providers were offering finance in Cornwall. This figure had dropped to 18 by 19th March 2014 (Green Deal Orb Participant Register, n.d.). Green Deal providers offering finance in Cornwall are have their head offices in Derbyshire, Wolverhampton, Manchester, St Helens, Witham, Blackburn, Heywood, Worksop, Reading, Radcliff, Brighouse, Beverley (Yorks), Leeds, Warrington, Doncaster, Berkshire and Bristol. British Gas has set up a base in Pool Innovation Centre from which

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On 18th December 2013, 52 accredited Green Deal Assessors were offering their service in Cornwall. This figure had risen to 61 by 19th March 2014. Only 3 have their head office in Cornwall: Community Energy Plus (Camborne), DG Energy Solutions (Truro), Green Deal Atlantic (Newquay). The remainder had their head offices in Bedfordshire, Bristol (2), Cheshire (2), Cleveland, County Durham (2), Derbyshire, Devon (1 Barnstaple, 2 Exeter, 2 Plymouth), Dorset, Gloucestershire, Hampshire, Herefordshire (2), Kent, Lancashire (3), Leicestershire (2), Lincolnshire, London (2), Merseyside, Middlesex (2), Nottinghamshire (2), Scotland (4), Sheffield, Staffordshire (2), Sussex, Tyne and Wear, Wales (8), West Midlands (3), Worcestershire and Yorkshire (4). The distance of most of these GDA’s is impractical, given that a Green Deal Assessment requires a visit to the property. Correspondence from the Green Deal Orb suggests that potential customers have been frustrated by the online searchable Green Deal Participant Register because it is difficult to find a local Green Deal Assessor on the register without sorting through a long list of companies that offer the service across the UK.

The Green Deal Participant register listed 253 Green Deal Installers offering measures in Cornwall on 19th March 2014. The majority of these are not based in Cornwall which is a long way from national supply chains.

CORNWALL PROVIDERS

Enact Energy

Enact Energy was incorporated in 1996. Enact provided a UK-wide managing agent service for CERT and CESP providers, including a national scheme for Tesco. In 2012 they secured £100m to deliver Green Deal and ECO services exclusively to private landlords through the Residential Landlords Association (RLA). Enact Energy was the first company in Cornwall to become a Green Deal Provider. In May 2013 they went into administration as a result of the slow start to ECO and Green Deal. Some 29 jobs were lost from their premises at Tolvaddon Energy Park in Camborne. A number of individuals found employment with the newly set up Glow Cornwall office. Enact’s solar PV offer was also badly impacted by the rapid and unpredictable changes to the Feed in Tariff.

Community Energy Plus (1998+)

Community Energy Plus (CEP) is a registered charity, SME and social enterprise based at Tolvaddon Energy Park in Camborne. It was established in 1998 with financial support from Carrick District Council, Cornwall and the Isles of Scilly Health Authority and the Energy Saving Trust (EST). CEP initially provided EST’s Energy Efficiency Advice Centre (EEAC) service for Carrick, then for the whole of Cornwall and in 2011 for an extended south west region which went up to Milton Keynes, as part of the Energy Advice South West consortium. In

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2012 the Government tendered for and awarded the advice contract on a national basis to the Energy Saving Trust. Since then CEP has operated as an Independent Advice Centre. CEP has also delivered many award-winning initiatives including the Cornwall Sustainable Energy Partnership, Home Health, Environmental Skills Network and Community Power Cornwall. CEP is an ECO managing agent and Green Deal Advice Organisation. The company has installed energy saving and heating measures in over 26,400 homes in Cornwall and has advised over 158,000 people. It currently employs 22 staff.

Mark Insulation

Mark Group was founded in 1974 to install loft and cavity wall insulation in Leicester. The company expanded rapidly and now has national and international coverage, including a recently established distribution centre in Redruth.

Happy Energy (2011)

Happy Energy was founded in August 2011 by Adrian Wright, formerly CEO at Enact Energy. The company is a Green Deal Provider.

Glow Cornwall (2013)

In 2013, Cornwall Council selected British Gas as its officially endorsed ECO investment partner and Green Deal provider for Cornwall. British Gas has ring-fenced an initial £50m to deliver the ECO initiative in the first two years, as well as help to access a further £50m of Green Deal funding. British Gas established a Customer Operations Team in Cornwall to run the ‘Glow Cornwall’ programme.

PARTNERSHIPS AND INITIATIVES

 Cornwall Sustainable Energy Partnership (CSEP) 2001-2009

In 2001, the UK’s first sub-regional sustainable energy partnership was launched: The award-winning Cornwall Sustainable Energy Partnership (CSEP). The cross-sector partnership brought together over 50 key organisations to develop policies and active sustainable energy programmes. Member organisations included all the Local Authorities, Health Trusts and Housing Associations, plus businesses, community groups and voluntary and community sector organisations. The partnership focused on promoting the social benefits within an integrated energy policy. A series of sectoral and then thematic task groups were set up to take individual actions and projects forward. In July 2004, Action Today for a Sustainable Tomorrow, the Energy Strategy for Cornwall was published after a comprehensive consultation process. The strategy put Cornwall on the national and international stage, attracting the attention and support of Ministers and the European

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Commission. The partners agreed to implement 32 actions from 2004 to 2010. CSEP had a Memorandum of Understanding with its equivalents in London and Orkney – London Energy Partnership and Orkney Renewable Energy Forum. CSEP was developed and managed by Community Energy Plus until 2009, when most of the CEP policy team was transferred to CDC to form the Low Carbon Cornwall team.

Whilst the original partnership has ceased to exist, many of the original partners continue to engage with each other and the CSEP model is being replicated in 110 counties in Poland by the Institute for Sustainable Development which is working in partnership with Community Energy Plus on a LIFE+ project to share good practice. The project culminates in 2015, with a study tour for Polish leaders to Cornwall to learn more about the county’s approach to action on climate change.

The Business Leaders for Low Carbon Group (a sub-group of the CSEP private sector low carbon leadership group) was continued by the private companies supporting it. Secretariat support was provided initially through the Clear about Carbon project and it is currently managed by Cornwall Marine Network.

Combined Universities in Cornwall

Combined Universities in Cornwall launched the UK’s second renewable energy degree and foundation degree programmes in 2003.

Envision programme 2005-2010

The Envision programme was funded by SWRDA and delivered a service providing environmental support and resource efficiency advice to businesses in Cornwall. It aimed to increase productivity and competitiveness and reduce CO2 emissions. This was achieved through a tailored programme of environmental audits, training and mentoring. The Envision programme resulted in an estimated 4,902 tonnes of waste being recycled, 213 tonnes of waste reduction, 1,253,798 kWh of energy saved and 13,881 litres of vehicle fuel saved, resulting in overall saving of 373 tonnes of CO2.

REALISE: Renewable Energy Local Industry Enterprise, 2006-2009

In 2006, Cornwall Strategic Partnership funded a Local Area Agreement outcome to grow Cornwall’s sustainable energy economy, reduce greenhouse gas emissions and reduce fuel poverty. Community Energy Plus developed and led a comprehensive programme of support for the local sustainable energy sector, working with key CSEP partners.

A consultation with microgeneration businesses identified a need for a free service to provide initial technical and funding advice to potential customers. Installers reported that they were spending a considerable amount of time explaining their technologies to callers. They were acting as a free advice service, when what they really wanted was warmed up leads. In response, CEP employed a technical officer to provide free advice to householders,

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CEP collected quarterly data from local installers on microgeneration measures installed, which fed into the regional summaries produced by RegenSW. The programme resulted in a 974% increase in renewable energy installations in domestic and community buildings. In addition over 4870 homes were made more energy efficient, which boosted the local insulation sector.

Kyoto in the Home (KITH) (2006-2008)

KITH was an EU funded education project which developed approaches to working with young people in schools and involving communities in the design and positioning of renewable technology. Community Energy Plus led practical education and awareness- raising tasks with school children, their families and teachers on the need for, design and positioning of renewable energy technologies on school sites, plus wider energy efficiency studies of their own homes. Activities engaged young people, teachers and schools across 10 European countries, helped to raise awareness of global warming, explain why it is occurring and the issues and solutions that each family will have to adopt and what can be done by individuals at local level to reduce the impact of climate change. A large number of activities were developed, translated and successfully trialled in primary as well as secondary schools in the partner countries. These activities were in a form suitable for developing lesson plans and supporting specific aspects of the national curricula in subjects as diverse as geography, science and global citizenship (Kyoto in the Home (KITH), n.d.).

Environmental Skills Network (ESN), 2008-2011

Community Energy Plus and Resolve delivered this programme which offered subsidised training for environmental businesses and environmental training for all businesses. By Apr 2011, ESN had a membership in excess of 256 companies. The programme supported 435 learners, with 237 undertaking non‐accredited courses, 235 undertaking NVQs and 61 Skills for life qualifications. Training for plumbers and electricians to install microgeneration systems proved very popular.

Cornwall Council, 2009+

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Cornwall’s unitary authority was established in 2009, replacing the former county council and six district/ borough councils. The commitment of the new Council to being a champion of environmental and low carbon matters was confirmed with the creation of the Green Cornwall programme; with three aspects of the programme, Green Council, Green Economy and Green Communities the Council is seeking to both set a high environmental standard for its own activities and encourage the wider Cornish community to adopt a low carbon lifestyle. In September 2011 the Council became signatories to the Covenant of Mayors, committing to meet and exceed the European Union 20% CO2 reduction objective by 2020.

In 2013 Cornwall Council’s ‘Sustainable Energy Action Plan for a Green Cornwall’ (SEAP) was published. It sets a 30% energy reduction target from the SEAP sectors by 2020 on 2009 levels.

Schools for Intelligent Energy Use (2009-2012)

Community Energy Plus led a European project which linked 114 intermediate vocational schools and civil societies in 9 countries and increased the involvement of intermediate vocational students, teachers, businesses and local authorities in the field of energy saving and renewable energy technology. Overall results derived from 1,602 of the 2390 participating European students showed that 50% of the students improved their knowledge, awareness and attitude concerning energy saving and renewable energy. Additionally, the energy behaviour of two-third of the students had improved after the project. Students more often switched off appliances when not in use and therefore SIEU also created energy savings at home. On average almost 75% of the students were satisfied with the SIEU project (Schools for Intelligent Energy Use (SIEU), n.d.).

Clear About Carbon, 2009-2013

Clear About Carbon was a European Social Fund (ESF) financed project which aimed to find new ways to increase carbon and climate awareness within businesses and the public sector in C&IoS. The award-winning project created a carbon management course in Cornwall, developed a carbon literacy e-learning package, provided an online carbon footprint tool and promoted case studies about local businesses. Delivery partners were the University of Exeter Business School, Cornwall Development Company, the Eden Project and Duchy College Rural Business School.

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5.1.5. POLICY DRIVERS

Here we present more detail on the strategic landscape and policy drivers within the UK as a whole.

UK

Large scale renewable energy generation is currently supported by the Renewables Obligation (RO) which places an onus on UK energy companies to ensure that a given percentage of their energy is sourced from renewables. This percentage increases year on year until 2017, when the RO will be replaced by Contracts for Difference (CfD). CfDs are part of the Electricity Market Reform programme and “provide long-term revenue stabilisation to low-carbon Generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers” (Department of Energy and Climate Change (DECC), 2013).

Grants and occasionally prizes are available from public sector stakeholders to kick-start large renewable energy projects.

Communities, businesses and individuals are incentivised to sell energy and heat from renewable sources back to the grid through the Feed in Tariff and Renewable Heat Incentive. The framework of these financial instruments is therefore fundamental to growth in the LCEGS, and for meeting the UK’s carbon targets. The price of carbon and the oscillations of the energy market can provide financial drivers or disincentives. Government influence on these factors (and a consistently applied policy) is therefore key, and could help to bring peripheral technology into the mainstream.

Other recent policy announcements may influence growth in the LCEGS sector in the future:

The government released its first ever Community Energy Strategy in January 2014, which effectively sets out plans to grow renewables, particularly in the wind and solar PV sectors, using the vehicle of community energy projects. DECC is seeking to remove barriers to such projects, and the government is working with the European Commission to include small scale projects within the scope of the Green Investment Bank (GIB), providing a useful source of funding to fledgling projects. Estimates suggest that community schemes could power 1 million homes by 2020 (Department of Energy and Climate Change (DECC), 2014, p. 3), a major contributor to the UKs renewables target and helping to drive growth in the LCEGS sector.

The Public Services (Social Value) Act of 2012 could act as a driver to growth in the LCEGS. This requires all public bodies to consider how the services they commission and procure might improve the “economic, social and environmental well-being of the area” (HM Government, Cabinet Office, 2012). Social value is considered to be a collective benefit to the community, directing tax payer’s money towards improving people’s lives, opportunities

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 and environment. Cornwall Voluntary Sector Forum is currently developing standard metrics for measuring social value that could be included in public sector procurement team’s scoring criteria. One of the metrics being considered is a company/organisational carbon footprint.

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5.1.6. COLLABORATION RESPONSES

As part of the research for this report we contacted various other LEPs to find out about potential for collaboration in the LCEGS sector.

Researching the interest of other LEPs in England in collaborating on LCEGS proved to be a challenge. The central LEP website has not been maintained or updated, so many of the contacts proved to be old, and it took considerable effort to track down an appropriate person to talk to. Regrettably not all LEPs responded to the e-mail and phone enquiries. The telephone calls were high level and open in structure, but designed to cover three main overlapping topics:

 Collaboration on specific sub-sectors  Skills, in general and for specific sub-sectors  Smart Energy systems

Due to the time restraints of the research process, the phone conversations took place before the results of the online survey were known or analysed, so the sub-sectors that were highlighted were in part those identified in the brief, namely marine/offshore, deep geothermal and smart energy systems, and often with the addition of building technologies.

LEP or Area Contact Interview Skills Marine Deep Geo Smart established held Energy Heart of the SW Y Y Y Y ? Y West of England Y Y Y Y N ? Dorset Y Y N Y N N Solent N N / / / / New Anglia Y N / / / / D2N2(Derby/Notts) Y Y Y N N ? Oxfordshire Y Y Y N N Y London Y N / / / / Liverpool N N / / / / Greater Manchester Y Y Y ? N ? Wales N N / / / / Scotland Y Y Y Y / /

5.1.7. SMART SPECIALISATION

This section explores the concept of SMART Specialisation in more depth, and in the LCEGS sector in particular.

Regional Research and Innovation Strategies for SMART Specialisation (RIS3 strategies) are integrated, place-based economic transformation agendas that do five things:

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 They focus policy support and investments on key regional priorities, challenges and needs for knowledge-based development  They build on each region’s strengths, competitive advantages and potential for excellence  They support technological as well as practice-based innovation and aim to stimulate private sector investment  They get stakeholders fully involved and encourage innovation and experimentation  They are evidence-based and include sound monitoring and evaluation systems

The European Commission wants national and regional authorities across Europe to draw up research and innovation strategies for SMART specialisation, so that the EU’s Structural Funds can be used more efficiently and synergies between different EU, national and regional policies, as well as public and private investments, can be increased.

To develop and implement strategies for economic transformation, RIS3 requires an integrated and place-based approach to policy design and delivery. Policies must be tailored to the local context, acknowledging that there are different pathways for regional innovation and development.

These include:

 Rejuvenating traditional sectors through higher value-added activities and new market niches  Modernising by adopting and disseminating new technologies  Diversifying technologically from existing specialisations into related fields  Developing new economic activities through radical technological change and breakthrough innovations  Exploiting new forms of innovation such as open and user-led innovation, social innovation and service innovation

As part of EU Cohesion Policy in 2014-2020, the European Commission is proposing to make SMART specialisation a pre-condition (so-called ‘ex ante conditionality’) for supporting investments for two key policy objectives:

 Strengthening research, technological development and innovation (the R&I target)  Enhancing access to and use of quality of ICT (the ICT target)

The Commission is also proposing to make SMART specialisation a pre-condition for obtaining support from the European Agricultural Fund for Rural Development (EAFRD) (8) in order to foster knowledge transfer and innovation in agriculture, forestry and rural areas.

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SMART SPECIALISATION IN THE LCEGS “UMBRELLA”

With specific regard to offshore renewable Catalys and Innovative Futures Research (IFR) concluded that:

“Offshore renewables R&D activity may be too closely defined given that local business growth is important stemming from R&D and its use in the global marketplace, and the spin offs from this sector are likely to be more broadly marine in nature. A broader marine technologies services approach may be more appropriate. We therefore suggest that the scope is tested through further work.”

SMART Specialisation seeks to better utilise R&D to improve economic growth, it is not specific to the skills agenda, but obviously skills is a component part of SMART Specialisation. We consider that the broad approach to marine technology services suggested by IFR is relevant and applicable to the whole of the LCEGS “umbrella” of technology services.

IFR also recommend that “The information economy may be better re-cast as a cross cutting enabler rather than a SMART specialisation strand in its own right”. Again we concur with this approach, as a broad approach to ICT skills has particular relevance to SMART Energy Systems.

5.1.8. CONSUMER BENEFITS

This section considers the motivations for procuring and consuming from the LCEGS sector from a general perspective, using comments gathered during data gathering for this report.

CARBON AS A METRIC

Measuring greenhouse gas emissions, somewhat inaccurately referred to as Carbon Footprinting, has become popular in a lot of businesses and for some Commissioners it appears to have become a proxy indicator for good environmental practice, (although measurement does not necessarily imply action).31

In 2006 Professor Lord Nicholas Stern of the London School of Economics and Political Science led a review of the impacts of climate change and his conclusions on the economic impacts were a forceful call to early action. “Central estimates of the annual costs of

31 It is an inaccurate term because the main basket of greenhouse gases monitored and reported as part of the IPCC’s Climate Change assessments contains six main gases of which Carbon Dioxide (CO2) is only one, and others are potentially more significant contributors to raising global temperatures.

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WHY BUY GREEN?

When considering the growth of the LCEGS sector from the consumer’s perspective there is a need to recognise that much of the sector’s activity, especially in Renewables and Low Carbon is still using relatively new technology and an education process is required, before larger, mass market take up occurs. It appears that there is difference between the level of risk acceptable in making purchasing decisions between early movers, keen to innovate and gain competitive advantage, and the majority of businesses who are more wary. Evidence was found of businesses that wanted to innovate but had been frustrated by the results of purchasing decisions based on what transpired to be poor advice and as a result are now more risk averse.

When asked to describe the barriers to LCEGS purchasing, the responses can be grouped in three broad categories – people, money and awareness of technology:

People

Areas of concern included continuing uncertainty with government policy,

“Greenest government ever, my ****”; “The bloody government is going flaky and keeps on changing the rules.”

Equally, while individual business owners and members of staff were clearly motivated to make positive decisions, this approach is not universal in many companies.

“Not all our lecturers are green”; “The senior management are not on board”; “Staff go off and do things on their own.”

Money

“When the costs outweigh the benefits – for example, green electricity is simply more expensive and provides no additional benefit”

“Lack of cash”

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Basic financial ROI calculations remain the dominant metric for decision taking, and is preventing investment in renewables:

“The Board will not support anything with a ROI of over 3 years”; “Salix will only allow a payback of 5 years, so renewable energy is out of the question”.

A related issue is ownership of property in order to plan capital investments, and the changing nature of business demands. Community Energy Plus’s Solar Communities project was in advanced discussions with a national business in the waste sector, where a programme of solar PV installations foe eight sites across the South West was agreed, meeting the company’s requirement for reducing on-site demand and producing good savings that counted against their mandatory carbon reporting. The project stalled when asset managers couldn’t commit to more than 5 year plans on their existing buildings.

This challenge is amplified for businesses that do not own their properties

“All our properties are leased, so it’s down to the landlord”

Awareness of Technology

“Verified and independent assessment of equipment, plus advice and information is difficult to get”;

“We have had conflicting advice from companies and consultants, resulting in a lack of confidence”;

“There are not the skills in house to sense-check whether something works and delivers.”

There remain significant concerns about the robustness of the supply chain in the south west,

“A lot of the relevant goods cannot be sourced to high enough standards in the local supply chain – UK businesses are not making goods to a high enough specification”

“Certainly for the higher tech stuff, there aren’t businesses in the SW that meet those standards”

“All the big investment equipment/systems are bought outside Cornwall and often outside the UK”

“Some warranties insist that maintenance is done by certain contractors, none are local”

“When buying regular machines we can go out and see the kit and try it out – can’t do this so much with smart or LCEGS”

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When deciding to purchase the LCE goods and services described, the methods of sourcing these goods does vary dependent on the size and structure of the organisation.

The public sector procure goods and services according to what many businesses may perceive as strict or bureaucratic rules. Generally speaking the larger the value of the contact the more rigorous the tender process will be. Large value items or services are purchased by open tender and small value items or services by a closed (by invitation) tender. Public sector bodies will also operate approved contractor lists, especially for regular call off items, but getting added to such lists can prove problematic to smaller companies. Anecdotal evidence suggests that a significant proportion do not spend time competing for tender contracts.

“We are not big enough to compete with the big nationals who have teams of bid writers whose job is to find and write tender submission. We have to fit it in with the day job, and when you know that the odds of securing a contract are fairly low, it is an expensive route we can’t afford”;

“We don’t bother with tenders because we get enough business from our reputation and recommendation.”

Four public sector procurement officers undertook the market survey. They all work differently from each other, but all seek to support local suppliers if they can. This help can be formal, such as seminars and information on website, or more informally by one to one phone conversations. The requirements for environmental management systems or other forms of green compliance within the tender specifications are generally dependant on the size and nature of the tender.

Procurement in the private sector is much more varied. Large, expensive projects are more likely to be tendered. Personal contacts, reputation and networks are much more important in the private sector.

The most important selling points for businesses to demonstrate in order to gain customers in the sector in Cornwall were clear for the survey participants. Overall the good news for local LGEGS businesses in that these businesses all state that they try to buy local. Less positive was the view that buying local is generally more important than buying green. The public sector has less flexibility in buying local and in some cases in buying green, and has been challenged by EU for trying to do so.

The public sector is very risk adverse so businesses have to think carefully about everything that could go wrong, and provide evidence that they have thought about it and state clearly how they will seek to reduce risks. Where tender documents require policies and procedures to be in place, then businesses need to evidence those policies and procedures. Two respondents suggested that a consortium of local LCEGS businesses would be helpful in securing contracts.

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If the business is mission or conviction driven then green concerns will move up the hierarchy. Many businesses do not set out to buy low carbon goods and services, rather they set out to buy the goods and services that they need and then assess its potential with regard to saving money, energy, carbon, water etc. The most important selling points are therefore no different to any other sector, e.g. cost, quality and time.

Most businesses are not looking for accreditation such as ISO 14001 unless they themselves are under supply chain pressure to do so.

5.1.9. CLUSTERING AND COLLABORATION

This section considers the opportunities and potential advantages and disadvantages of business clustering and collaboration in the sector, drawing on some of the comments from the surveys.

The potential benefits for businesses that are in the same line of industry or trade of “clustering” geographically close together have been well rehearsed. These are primarily considered to relate to the economies of agglomeration that may result from the close proximity of working:

 A local pool of expertise and skilled workers;  Easy access to component suppliers; and  Networking and information channels.

That is, the economies of scale and networking effects resulting from clustering can result in reduced costs of production for the businesses. Indeed many governments have pursued policies supporting clusters, both building on existing businesses and among new business start-ups. These policies have often been targeted on regeneration zones or areas in need of special economic assistance.

However, there is evidence to indicate that having sufficient numbers of complementary and linked supply chain businesses to achieve the right mix in a cluster for the potential economies to fully manifest themselves can be challenging.

Furthermore, in the cases where benefits have accrued from clustering they have not always been uniform, as the size and ages of the businesses in any cluster can be crucial. Often larger businesses are able to benefit most from reduced costs of production, while small businesses benefit more from knowledge transfer and access to specialised labour.

In relation to collaborative working between businesses, the main recognised economic benefits are also primarily related to cost reductions, although in this case they tend to result from savings in such things as training, capital costs and labour. More pertinently

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RESPONSES TO THE SURVEY

The businesses expressed mixed views about working with other businesses in the same line of work as them. Some already did so and were positive about the various benefits that resulted from doing so:

“Yes, (I work) with a similar electrical fitter…we share with each other...pass business across when we are busy to even it all out”.

“Yes we work with complementary businesses to enable us to meet all our clients’ requirements… to offer a more complete package.”

“We do …when we can find someone who can do it (whatever it is) cheaper than us, so that we can keep our prices down.”

However, other businesses did not work with other in the same line as themselves and had various reservations, most of which related to specific concerns about the USP of their products or services:

“No, we have to protect our USP – we need to make sure we defend our niche in the market.”

“No – I’ve got particular skills and expertise that I market on their unique basis of me and my experience alone.”

No – we’ve spent a lot of time and money on design and R&D and getting this right and now we need to get a return on that.”

Those businesses that were working with others were asked whether these other businesses were located in C&IoS. Again there were mixed replies, usually relating to the current geographic spread of each company’s clients and the presence (or not) of other businesses in these locations to work with:

“Well I work all over (C&IoS)… if I’m down in Falmouth I know (other businesses) that I can call on to help, likewise in the Newquay area, but up in Bude, North Cornwall up there, I don’t know anyone, so if I needed help I’d have to get someone else in.”

“It depends upon what work we’re doing. Sometimes we can source things locally but other times we have to go to someone in Plymouth or further up to Bristol.”

It should be noted that this question about working with other Cornish businesses also had a follow-up querying whether the “other” businesses were located within 5 miles of the main business. However, as indicated above, this question did not make sense for many of

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“It’s easy!”

“We need to know what we’re getting and that (we can) quickly sort it out if necessary”

“I like to know the people I’m working with and if they are local then it’s much more straightforward for everyone.”

Turning to collaborative working between businesses, there was a more general consensus among those business consulted that it would bring positive benefits, although these benefits were again often linked to specific sets of circumstances and, in particular to the skills and needs of partners with whom they might be able to collaborate:

“When business is tough companies come together for survival. Now times are improving there will be a different kind of collaboration - more positive – win, win.”

“It might not be labelled as collaboration… (Business) has got smart home products, we’ve got electric vehicles - where there is a mechanism like invest-to-save/ cost neutral it could be viewed as collaboration. But it could also be seen as opening new markets”.

“Data mining and analysis is an ideal opportunity for businesses to collaborate with universities. They have the skills, there are a vast number of students working on statistical analysis development, but they don’t have relevant/ current data. Businesses could provide the data.”

Other businesses said that they were keen to collaborate but either could not find suitable businesses locally or did not know where to go:

“I would like to (collaborate locally) but there is no one around here with the skills I need... finances, auditing, marketing.”

“We looked before and started searching further and further afield…had to give up in the end.”

Further to this, some business put forward ideas and suggestions for potential support actions for CDC to assist in business collaborations:

“CDC could help by identifying the synergies between different applications. Is the same technology needed for smart homes as for telehealth? It has taken 6 years for BT to get into telehealth – the discussions started years ago. From a distance these technologies can be applied. If CDC could identify the links it would help”.

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In this same vein, several businesses referred to previous programmes that they felt could be reinvigorated in Cornwall to assist with collaboration:

“Partner to Succeed was really good. I’ve just been introduced to it. There’s potential to do more of the same”

“Partner to Succeed… was a great programme at the wrong time. There’s a gap (in B2B collaboration) at the moment now”

A small group of businesses were not keen on collaboration, primarily for the same reasons as those who were not keen on clustering – either because of the level of competition that they faced, their concern over the position of their goods or service in the market place or a perceived threat to their USP.

Finally it is worth noting that in the context of global competition, rapid transport and high- speed telecommunications, using location as a basis for clustering or collaboration should not theoretically be a source of competitive advantage. However this disregards Cornwall’s poor transport links and the currently insular nature of the LCEGS market in the county. With these issues to overcome, it seems likely that the benefits of collaboration could be very significant for Cornish businesses and their desire to pursue it should be supported.

POTENTIAL EXCHANGES WITH OVERSEAS LCEGS SUB-SECTORS

The online survey revealed that local businesses are highly insular in nature when it comes to exporting overseas (see 4.2.1). In the sector focus group, participants identified several opportunities for overseas knowledge exchange:

“We will have to look to China for the skills we need because there is no skills base here. For manufacturing kit skills we have to travel to China.”

“If we believe what’s happening in Vietnam with the flappy bird, there are developers who are more advanced than us in third world countries. There’s nothing to stop Cornwall’s businesses from hiring from across the world. In the smart sector, employees don’t physically have to be in an office. The traditional way of recruiting used to be via an advert in the West Briton, now it’s more word of mouth. This is where the need for HR skills comes in – how do we manage an employee in a different country and time zone?”

“Businesses could bring this overseas workforce here – e.g. as contractors. They could be attracted to Cornwall for 12 months and whilst here train existing staff.”

“How much support could CDC give to bringing people from Vietnam to teach skills here?”

“There are three businesses at Pool Innovation Centre that are never there during the day. One has a complementary site in Australia, which runs a 24hr clock marine

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monitoring service. There is an opportunity if we develop the skills, software and systems here that Cornish companies could be running smart grids in Australia.”

“We would love to have an apprentice whose role is to find the opportunities in America”.

Horizon 2020 and Interreg offer opportunities for overseas exchange and collaboration in Europe. EU funding programmes positively encourage SME’s to participate, but for smaller businesses the onerous application and contract management requirements are off-putting. This is where larger organisations with experience of securing and managing European funding (e.g. CDC, Cornwall Council, CUC) could play a positive role in connecting local businesses with overseas contacts through project partnerships. This is a role that we suggest the proposed Research and Innovation Hub could include within its remit (see Section 8 - An Action Plan for Skills).

5.1.10. AFFORDABILITY TO CONSUMERS AND BUSINESSES

Here we unravel questions of demand and affordability, payback and behavioural change.

DEMAND AND AFFORDABILITY

Affordability appears at first to be a simple question. For commodities that are driven by standard market forces of supply or demand it can be simple as, “does the customer have enough money in the bank?” Or for large purchase items such as a car or a house, “can the customer afford the repayments on a loan?”

Demand for energy in whatever form (electricity, gas, fuel) is very elastic. Conversely, even with the current round of price increase for gas and electricity, market driven demand for energy saving technologies is nascent at best. It remains the case that many low carbon and environmental goods and services are not primarily driven by market forces, rather they are driven by government policy and regulation. Furthermore, after more than 20 years of public subsidy there is an expectation on behalf of the public and business that the cost of low carbon good and services should be subsidised, regardless of the cost or the pay-back period.

Since the early 1990’s, academic research has consistently challenged free market orthodoxy with regard to improving the energy efficiency of appliances, buildings, plant and machinery (Eyre). The existence of a number of market barriers or failures that reduce economic efficiency have been clearly articulated:

 Financial barriers, such as lack of capital or unhelpful discounting rules that reduce the value of energy cost savings

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 Fiscal barriers such as the disparity between the high rates of VAT on energy saving measures and the lower rate on energy supply

 Hidden cost barriers such as senior management time, and also hidden benefits, such as improved comfort and productivity

 Market misalignment barriers, where the person who makes the investment does not benefit from it, such as the (in)famous landlord/tenant split

 Behavioural barriers where people, both as individuals and in organisations, make choices that mitigate against energy efficiency.

The fundamental problem is that, in the real world, individuals and businesses do not optimise their investment decisions in response to price signals alone, they can be, and often are irrational economic players.

UNDERSTANDING BEHAVIOURAL CHANGE

Research by the Energy Policy Group at Exeter University (Penryn Campus) makes it clear that the policies and messages required to affect behavioural change, and thus the uptake of carbon saving measures are complex and remain very poorly understood. To date, consumers are not responding to government sponsored marketing messages in anything like the numbers to meet national carbon saving commitments.

Figure 45 - A multi-level perspective for addressing the factors that affect energy consumption

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Source: Nicola Hole, Energy Policy Group, University of Exeter

Understanding Attitudes to Energy Saving Payback

The concept of payback is the energy efficiency industry standard method to explain and compare the cost effectiveness of different energy saving measures. It is a simple payback calculation, the cost of the measure divided by the annual savings, and normally expressed in years. It assumes you have the money in the bank and don’t have to borrow. Equally it makes no assumptions about the interest you could have received if you had left the money in the bank. A recent survey undertaken by Wadebridge Renewable Energy Network (WREN) in Wadebridge town centre on a Saturday asked the question: What would you be willing to pay for a Smart Energy device which could save you £100 per year on your electricity bill? (RegenSW, 2013)The results were as follows:

Table 42 - WREN survey on Smart pay-back timescale

The survey was relatively small with only 107 respondents, and the results should not be regarded as scientific, but even so the result is startling in that 88% of those questioned

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 expected a payback of just one year. Within the energy efficiency industry anything longer than a 3 year payback is considered a hard sell.

Research by the Carbon Trust suggests that most businesses regard a 3 year payback as optimal (The Carbon Trust, 2010).

Figure 46- Reported IRR requirements and reported payback requirements

Source: CFO Survey

The Carbon Trust states that:

“A typical large organisation has the opportunity to save an average of 15% (and often more) cost-effectively on its annual energy bill. This saving is available from approaches and technologies that are well established and understood, such as lighting, heating, employee engagement and training. The investments required to save 15% of energy bills have an average IRR of 48%, well above the minimum requirement set by businesses, which averages 11.5%”.

AFFORDABILITY FOR BUSINESSES

The Carbon Trust research suggests that in general, businesses do act rationally in choosing to implement the energy saving measures with the highest IRR and the shortest payback. However most businesses who receive advice on energy saving only implement about half the recommended measures; in the main businesses are highly sensitive to price and will only implement those measure with a quick return. The chart below shows that measures with a payback period of less than 1 year have an almost 10 fold implementation rate over those with a 1-3 year payback. This seems to back up the WREN survey of domestic consumers. In general these are also the least disruptive technologies to fit.

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Figure 47 - Implementation rate and IRR by payback period

Source: Carbon Trust Database

The market focus group and telephone interviews undertaken repeated this message almost verbatim:

From a private sector correspondent

“The Board will not support anything with a ROI of over 3 years”

From a public sector correspondent

“Salix will only allow a payback of 5 years, so renewable energy is out of the question”

The challenge of persuading business to take up low carbon/energy efficiency capital projects is illustrated by the following diagram from the Green Investment Bank:

Source: Green Investment Bank (GIB)

AFFORDABILITY OF DOMESTIC APPLIANCES

For low carbon appliances, successive governments have enacted a very effective policy of Market Transformation. A report by the Environmental Change Unit of Oxford University states that:

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Figure 48 - The challenge of persuading businesses to take up LCEGS

“Market Transformation… has a long history in product markets, improving the energy efficiency of stocks of energy-using appliances through research, minimum standards, energy labels, incentives, procurement, competitions and stakeholder networks”. (Gavin Killip, 2009)

So for low carbon technologies, from energy efficient light bulbs to fridges to gas fired boilers, in the price range of a few pounds to a couple of thousand pounds, the combination of regulation, rating schemes and promotions has transformed the market place to the point where no subsidy is required and normal market forces take over. When their old appliance needs replacing, the consumer is able to choose from a range of appliances, all of which are, to a greater or lesser extent, low carbon.

AFFORDABILITY AND SUBSIDY OF LOFT AND CAVITY WALL INSULATION

For volume energy efficiency improvements to homes, namely loft and cavity wall insulation, the aggressive marketing and price subsidy brought about for a succession of energy company obligations, often combined with trusted intermediary schemes from local authorities and voluntary sector organisations, has driven huge volumes of installations. Between April 2008 and January 2012, 3.8 million lofts and 2 million cavities were insulated in the UK (Department of Energy and Climate Change (DECC), 2012). For example Community Energy Plus have run such schemes very successfully over the last 15 years,

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A Skills Action Plan for the Low Carbon Environmental Goods and Services Sector May 2014 helping to insulate over 26,400 properties in C&IoS. Evidence and experience tells us that the varying costs of these works, provided they stay in a range between £50 and £200, made little difference to the volume of sales. Trust in a partnership of local authority and local charity, combined with effective management and high quality customer service ensured success. Loft and cavity wall insulation are high volume, (relatively) low margin installations installed by semi-skilled operatives in just a few hours with minimum disruption to the household. The loft and cavity wall insulation industry has proved remarkably resilient to the on/off nature of supplier obligation schemes and has been able to expand and contact many times over the last 20 years.

However when schemes such as these stop, as they did in 2013 when the Green Deal started, the volume of sales collapses. According to DECC official statistics, loft insulation retrofits plummeted by 93% between 2012 and 2013 (1.61 million to just 110,000) and cavity wall insulation measures dropped 76% over the same period (640,000 to 125,000 in 2013). It is clear therefore that for loft and cavity wall insulation there has been no market transformation, and the market remains entirely dependent not just on subsidy, but on the active promotion of “government backed” schemes. As is covered elsewhere in this report, ECO is a political football at present and significant uncertainty has been created within the industry with changes to targets and the consequent impact on the value of carbon savings.

AFFORDABILITY AND SUBSIDY OF HOUSING REFURBISHMENT

For the refurbishment or retrofit of properties, including external and internal wall insulation, the considerations of demand, affordability and payback are even more complex. The Environmental Change Unit (ECU) report states that:

“Attempts to apply Market Transformation to buildings have failed to fully take account of the difference in nature between appliance markets and buildings, most noticeably in relation to the refurbishment of existing buildings, which is inherently labour-intensive and bespoke: products and materials are used in transforming buildings, but the tasks involved and the resulting energy performance are related to service quality at least as much as to product quality” (Gavin Killip, 2009).

There is a very big difference in approach needed in order to market and “sell” low carbon refurbishment of housing to owner occupiers, (and even more so to private sector landlords), compared to the marketing and selling of low carbon appliances. For the Green Deal finance package, the affordability of the refurbishment is determined by the Golden Rule, which states that the customer must be able to recoup the cost of the installation from the resultant saving in energy consumption over the lifetime of the loan, which can be up to 25 years. But from the householder perspective, their fuel bills, or more accurately their electricity bill will not come down as a result of the installation until the loan has been repaid. In other words there is no cost to the householder, so by definition it is affordable, but neither are there any financial savings.

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There is no doubt that even greater public subsidy of the Green Deal would increase the attractiveness of the scheme to the consumer, and make it more affordable in the sense that the loan would be repaid quicker. The evaluation of the Pay as you Save pilots which preceded the Green Deal considered that the role of the trusted intermediary became even more important, and in fact became a very time consuming “hand holding” exercise in order to get the householder through the ordeal of the refurbishment.

The real benefit to the customer is in greater warmth and comfort. There can also be improvements in health and wellbeing, not just from increased warmth in winter or better cooling in summer, but also from and a reduction in damp and mould where this has been a problem in the past, provided the measures are installed correctly.

THE MARKET FOR GREEN OR ENERGY EFFICIENCY HOUSING

The Market Transformation approach has so far failed to create a market for energy efficient housing. Despite the fact that since 2007, every house that is marketed for sale or rent must display an Energy Performance Certificate (EPC), research from the CBI in 2011 suggests that only 23% of people consider the energy performance of a property when looking to buy or rent (Confederation of British Industry, 2011). The next big test for a Market Transformation approach is not scheduled until 2018, when the Energy Act 2011 requires that all rental properties must have a minimum EPC rating of E. There are exceptions and it remains to be seen if these provisions in the Act are implemented and enforced.

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APPENDIX B

Appendix B contains additional information and supporting evidence related to Evidence Base Report B – Sector Skills Requirements. It covers topic guides in the following areas:

 Market  Business  Smart

Finally we present The National Skills Academy Footprint Guide

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5.2.1. MARKET TOPIC GUIDE

INTRODUCTION Good morning/afternoon. This is (NAME) from Community Energy Plus (CEP) on behalf of the Cornwall Development Company CDC. CDC have asked us to develop an action plan for the growth of skills in the Low Carbon and Environmental Services sector in order to develop appropriate skills training provision for local businesses.

As part of this we are talking to organisations and businesses who either already have or might in the future purchase either products or services from Low Carbon and Environmental Services businesses.

Could I speak to the person within your organisation who is responsible for purchasing decisions of this nature?

(AS NEEDED) Explain research Confidentially of answers No organisations or businesses will be identified in the results

1. OUTLINE BUSINESS PROFILE AND BACKGROUND

Number of employees: Broad business sector: Annual purchasing budget: Anticipated change in budget in next 5 years Policy/strategy leading them to purchase “green” goods/services 2. MARKET

Thinking of this organisation/business as a consumer of Environmental, Renewable Energy and Low Carbon goods and services

ASK ALL Q2.1 Which LCEGS goods/services has already purchased or might this business be interested in purchasing?

PROBE: Any others?

FOR EACH LCEGS GOODS/SERVICES AT Q2.1 Q2.2 What are the key reasons this organisation/business might be interested in purchasing (LCEGS goods/services described)?

PROBE: Any other reasons? – cost savings on energy/waste/water – compliance issues (regulation) – environmental concerns.

FOR EACH LCEGS GOODS/SERVICES AT Q2.1

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Q2.3 (And can I just check), are there any factors that might be a barrier to this business purchasing (LCEGS goods/services described)?

PROBE: price-payback/Government policy/subsidy uncertainty, knowledge/support at board level, cash, reserves, investment, bank loans, etc.

FOR EACH LCEGS GOODS/SERVICES AT Q2.1 Q2.4 If this business decided to purchase (LCEGS goods/services described), how would it go about sourcing the (LCEGS goods/services described) that best meet its needs?

PROBE: On open market/best of 3 quotes/by tender-commissioning/trade fair/networks/recommendation?

FOR EACH LCEGS GOODS/SERVICES AT Q2.1 Q2.5 And in order for this business to be willing to purchase (LCEGS goods/services) from another business in Cornwall/Isles of Scilly what are the most important selling points that the other business would need to demonstrate?

PROBE: Reputation/accreditation ISO etc/value for money/ease of delivery/local support/clustering/other benefits?

3. ORGANISATION/BUSINESS STAFFING

Thinking now about this organisation/business and its staffing

ASK ALL Q3.1 Thinking now about this organisation/business and its staff members. Within the organisation, do you have or do you need staff with low carbon and environmental skills? IF YES PROBE: What level and what number?

ASK IF YES AT Q3.1 Q3.2 Do you have any issues or experience barriers in recruiting and or training staff with these skills?

IF YES PROBE: What types of issues/barriers? How could they be overcome?

ASK IF YES AT Q3.2 Q3.3 Do you address this need or role by part time work, external consultants, sub- contractors, zero hours contract, etc.?

IF YES PROBE: Are there any other solutions that you would prefer? IF NO PROBE: How do you address it?

4. BIG PICTURE

ASK ALL

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Q4.1 And finally - As an organisation or business in or critical friend of the LCEGS sector, are there any initiatives or interventions that the public sector could make that you consider would make a real difference to: A. Growth in the LCEGS sector? B. Improving skills in the sector?

PROBE FULLY

5. THANKS AND END

ALL Q5.1 Thank you for your help in answering these questions. Your answers will be treated in strictest confidence and no businesses will be identified in the results. Thank and close.

5.2.2. BUSINESS TOPIC GUIDE

INTRODUCTION Good morning/afternoon. This is (NAME) from Community Energy Plus (CEP) on behalf of the Cornwall Development Company CDC. CDC have asked us to develop an action plan for the growth of skills in the Low Carbon and Environmental Services sector in order to develop appropriate skills training provision for local businesses.

Could I speak to (named contact from online survey)?

(AS NEEDED) You recently completed our online survey of CIoS businesses and indicated that you would be willing to participate in a follow-up telephone interview. As with the online survey any answers that you give will be treated confidentially and no businesses will be identified in the results.

1. OUTLINE BUSINESS PROFILE (CHECK FROM ONLINE SURVEY)

Number of employees: LCEGS broad sector: Environmental Industry/Renewable Energy/Low Carbon Industry One/one of a number: Which staff have skills needs: Key skills needs identified online: Training plan: Forecast growth of business in future SMART?

2. SKILLS NEEDS OF BUSINESS

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ASK ALL Q2.1 I’d like to start by talking about the skills needs you identified for your business in the online survey. READ OUT PRIORITIES IDENTIFIED: Add these from online survey as appropriate… Which of these needs are the main priority? What level of staff?

PROBE: Why are they a priority for your business? PROBE: What is the impact of the skills need (shortage) on your business?

ASK ALL Q2.2 How could (Main priority identified at Q2.1) be best addressed (in Cornwall and the Isles of Scilly) for your business?

PROBE: What would that involve? PROBE: How would it be delivered/provided? PROBE: Where/by whom?

ASK ALL Q2.3 What would be the main benefits to your business now of addressing (Priorities identified at Q2.2)?

PROBE: How would it improve quality/performance? PROBE: How would it open new markets/products? PROBE: Where/by whom?

ASK ALL Q2.4 Thinking about the current skills profile of your staff, do you have a skills map showing qualification levels and progression routes?

IF YES: How is this skills map used? DISCUSS/PROBE AS NECESSARY: As part of recruitment/career reviews/training/other? IF NO: Would it be helpful to have a skills map? DISCUSS/PROBE AS NECESSARY: How would it be used?

ASK ALL Q2.5 Turning to the future – looking forward to 2020. What do you think will be the key skills needs of this business in 2020?

PROBE AS NEEDED: Which specific skills will be required?

PROBE AS NEEDED: Among which employees?

PROBE AS NEEDED: Where would you go to address these skills needs?

3. ACCREDITATION/INDUSTRY STANDARDS

ASK ALL Q3.1 Aside from these skill needs, does or will this business need help in gaining or maintaining any accreditations or industry standards?

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IF YES PROBE: Which ones and what kind of help?

ASK IF ACCREDITATION/INDUSTRY STANDARDS NEEDED AT Q3.1 Q3.2 Are there any (other) barriers that prevent or deter this business from getting any accreditations or industry standards it might need?

PROBE: What barriers/accreditations/standard is that?

4. CLUSTERING/INTRA SECTOR COLLABORATION/EMPLOYMENT ROUTES

ASK ALL Q4.1 (Can I just check) Does this business work with other businesses in the same line of (LCEGS) work?

PROBE: What does this involve?

ASK IF YES AT Q4.1 Q4.2 Are these other businesses located in CIoS? Nearby (5 miles?)

PROBE: What are/would be the benefits of being close?

ASK IF NO AT Q4.1 Q4.3 Would you like to collaborate with other businesses?

IF YES, PROBE: What would be the benefits of collaboration? IF YES, PROBE: Would you like to be located close to other similar businesses (Why?)

ASK ALL Q4.4 Now thinking about when new employees have joined this business. In general, what were they doing before they joined?

PROBE: AtSchool/college/university or working in other businesses in the sector or working in businesses not in the sector? PROBE IF OTHER BUSINESS NOT IN SECTOR: Which other sector?

ASK ALL Q4.5 And when employees leave this business. Where do they tend to go?

PROBE: To college/university or work in other businesses in the sector or work in businesses not in the sector or retired or maternity leave or into consultancy/self-employment or somewhere else? PROBE IF OTHER BUSINESS NOT IN SECTOR: Which other sector?

5. BIG PICTURE

ASK ALL

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Q5.1 And finally - As a business in or critical friend of the LCEGS sector, are there any initiatives or interventions that the public sector could make that you consider would make a real difference to: A. Growth in the LCEGS sector? B. Improving skills in the sector?

PROBE FULLY

6. THANKS AND END

ALL Q6.1 Thank you for your help in answering these questions. Your answers will be treated in strictest confidence and no businesses will be identified in the results. Thank and close.

5.2.3. SMART TOPIC GUIDE

INTRODUCTION Good morning/afternoon. This is (NAME) from Community Energy Plus (CEP) on behalf of the Cornwall Development Company CDC). CDC have asked us research the SMART / Low Carbon and Environmental Services sector in order to develop appropriate support services for local businesses.

Could I speak to (named contact/senior person responsible for SMART Energy systems and energy management in the business)?

1. OUTLINE SMART STAKEHOLDER BUSINESS PROFILE

Number of employees:

Business broad sector:

Forecast growth in next five years:

Current SMART Energy systems/services provision:

2. SMART MARKET DEMAND ASK ALL Q2.1 What are the key factors leading to the adoption of Smart Energy Systems at the moment?

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PROBE: What types of benefits: Energy security/concern over potential unreliability of supply – Cost savings on energy/waste/water – Compliance issues (regulation) – Environmental concerns PROBE: Current or future benefits?

Q2.2 (And can I just check), are there any factors that might be a barrier to the take up of (more) SMART goods/services?

PROBE: price-payback/Government policy/subsidy uncertainty, knowledge/support at board level, cash, reserves, investment, bank loans, etc.

ASK ALL Q2.3 And do you think these key factors or barriers will change over the next five years?

IF YES: PROBE AGAIN: What types of benefits or concerns: Energy security/concern over potential unreliability of supply – Cost savings on energy/waste/water – Compliance issues (regulation) – Environmental concerns

ASK ALL Q2.4 Where do your customers go to find out about the SMART goods/services that best meet their needs?

PROBE FOR INFORMATION SOURCE(S): CDC/ CEP / Other source? Do their advisors have SMART / peak power knowledge?

PROBE FOR SOURCE: On open market/best of 3 quotes/by tender-commissioning/trade fair/ networks/ recommendation?

3. SMART SKILLS NEEDS ASK ALL Q3.1 What are the current key skills needs of businesses (like yours) that are developing SMART energy solutions?

PROBE: Which qualifications? What level of staff?

ASK ALL Q3.2 What will be the key skills needs of businesses (like yours) that are developing SMART energy solutions in the next five years?

PROBE: Which qualifications? What level of staff?

ASK ALL Q3.3 Turning to the businesses that are installing or using SMART energy solutions – what are the key skills they will need to enable them to install/use SMART solutions?

PROBE: Which qualifications? What level of staff?

ASK ALL

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Q3.4 And what will be their key skills needs for installing/using SMART solutions in five years?

PROBE: Which qualifications? What level of staff?

4. OPPORTUNITIES IN CIoS ASK ALL Q4.1 (Can I just check), Does your company (name) see any opportunities in Cornwall and IoS for delivering its SMART goods/services?

PROBE IF YES: What opportunities/Where/when/how?

ASK IF YES AT 4.1 Q4.2 Will there be any specific skill needs associated with delivering (the SMART opportunity described in 4.1) in Cornwall and IoS?

PROBE IF YES: What skills needs/levels/when?

ASK IF YES AT 4.1 Q4.3 What are the key factor influencing the decision to proceed with the (the SMART opportunity described in 4.1) in Cornwall and IoS?

PROBE FULLY:

5. BIG PICTURE

ASK ALL Q5.1 And finally - As a business in or critical friend of the SMART sector, are there any initiatives or interventions that the public sector could make that you consider would make a real difference to:

A. Growth in the SMART sector (in CIoS)? B. Uptake of SMART ENERGY systems/services (in CIoS)?

PROBE FULLY

6. THANKS AND END

ALL Q6.1 Thank you for your help in answering these questions. Your answers will be treated in strictest confidence and no businesses will be identified in the results. Thank and close.

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5.2.4. NATIONAL SKILLS ACADEMY FOOTPRINT GUIDE

Figure 49 - NSA: Environmental Technologies Sector Footprint

Source: National Skills Academy

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