Strategy Fellowship Newsletter March 2013
Travels in Japan and Korea - Dr Aidan Rhodes
We’re now nearly half-way through the first stage of the Fellowship, with five workshops completed and five to go. Once that’s done, we have the (extremely) difficult task of synthesising the vast amount of data we’ve collected into a coherent and compact Prospectus for the Research Councils to digest. That goal still feels a ways off right now, but it’s feeling like we’re beginning to get to a place where we can start to bring together our findings and tease out the underlying messages. We’ve got a long way to go, but we’re getting there!
I took a half-term trip off to the Far East, having been invited out to Japan and Korea by members of the FCO Science and Innovation Network to give a few talks about the UK’s energy policy. While I was there, I took the opportunity to arrange some meetings with institutions and academics working in the energy sector there in order to show some of the early results from our Fellowship reports and to understand in more detail how the energy policy and innovation systems functioned in these countries. Something that surprised me was how much interest there was in the methodology we used in our workshops – I think that the way we run our workshops, with facilitated exercises and a great deal of post-it notes, is a lot more novel out in Asia than here (where possibly we’re getting a little sick of it!).The way we’ve collected our results and the broad base of experts we invited to our workshops make our work of great interest to them, especially as I met a couple of organisations beginning to engage in similar work themselves.
I was in Japan for four days and in Korea for four, and the contrast between the two nations was very interesting. Japan, recently rocked by the Great Tohoku Earthquake and the resulting Fukushima disaster, is in a position where there is considerable political pressure to liberalise and open up its vertically integrated energy system. I met with two of the academic members on the committee in charge of developing a plan to do this to ask some questions on how this will be accomplished. Unlike the UK, with our nationalised CEGB, Japan has ten vertically integrated electricity companies, each in charge of a specific region. The current, though as yet un-adopted plan, is to move towards setting up a merit order for generation plant across the networks, and ensuring that outside private generators and micro-generation aggregators can access the network equitably by 2016. Full retail liberalisation will then follow, with Japanese consumers deciding which company they would like to buy their power from, and the companies being able to set retail prices without government interference in the market. Once this liberalisation is achieved and successful, transmission and distribution unbundling will follow, with a stated goal of 2020. That’s the current recommendation anyway – let’s see if it survives the political system!
The people I met in both Japan and Korea were very interested in the UK’s experiences with liberalising our market, seeing us as a global pioneer in this area. I presented the current Energy Bill reforms, which were met with great fascination. It was very interesting to hear the two nations talk about further liberalising their markets as we plan to bring ours more tightly under government control. There’s probably a decent middle point in there somewhere! Korea began a plan to liberalise its electricity market, currently dominated by the vertically-integrated company KEPCO, back in 2000. This succeeded in partially opening the generation market, but the unbundling of the networks and retail market was halted in 2004 due to labour and environmental protests, and won’t be restarted in the near future. The country has however adopted a ‘Green Growth’ strategy, committing to spending 2% of its GDP from 2009-2013 on low-carbon measures including smart grid development, low-carbon homes and renewable energy.
I visited the Korea Institute of Energy Technology Evaluation and Planning, responsible for funding over $700 million of projects a year. This organisation performs similar funding functions to our TSB and ETI – funding demonstration and pre-commercial deployment programmes. They always have an eye on exports - the Korean economy is relentlessly export-focused, with every technology and project reviewed to assess its potential in the global market. The price of electricity in Korea is below the marginal cost of producing it – the difference subsidised through taxation to provide a boost to the nation’s vital manufacturing and heavy industrial sectors. Electricity demand is also rising quickly as the economy grows – leading to very lean capacity margins during the winter and summer peaks. The government is attempting to lead by example in cutting demand – the heating in the buildings I visited was turned down very low despite the nearly 00C temperatures outside. I learnt very quickly to leave my coat on during meetings! These worries about capacity margins are driving higher standards in energy efficiency in new buildings (a lot of even very modern Korean houses still have single glazing) and investment in research and demonstration of smart appliances, metering and grid technologies. Of course, these technologies also have a substantial export potential as well....
I had an extremely interesting and enjoyable eight days in Japan and Korea, and it’ll take a while for me to digest all that I’ve learnt. I was also interviewed for Korea Energy News – you can read the completed article here (if you can read Korean!)
We’ve got our Energy Infrastructure workshop coming up in mid-April, so I’m deep in preparations for that. Until next time!
Measuring Energy Innovation - Professor Jim Skea
Aidan as editor of this newsletter has asked me for “a dynamic and hard-hitting piece on innovation metrics”. I’m glad I don't work for him, who knows what other impossible demands he’d make.
Since the Fellowship team will switch its focus this autumn from the energy research and innovation prospectus to a research programme on the “effectiveness of energy innovation systems”, it’s a fair challenge to set. It is quite easy to measure is how much public money is poured into energy research, development and demonstration. The International Energy Agency publishes regular updates for member countries which can be freely accessed by academics via the UK Data Service (www.esds.ac.uk – ESDS International, IEA data). This shows a huge boost for investment in energy RD&D recently, in the UK and in other countries.
The more pertinent policy question is not how much money gets poured but in how much knowledge and, more specifically, how much exploitable knowledge comes out. Designing and managing RD&D programmes is more of an art than a science but the process can be informed by evidence about processes and outcomes.
Innovation literature uses many different data sources and methods – “patent counting” (but is usable knowledge always patented?), deployment of technologies to which RD&D has clearly and, less tangibly, exchange of know -how through human capital. The literature has also highlighted the importance of contextual and institutional factors in making RD&D productive. The nature o f the higher education system, industry-academia links and regional clustering of innovative activity all appear cr itical.
One question that has not really been answered is whether research is best conducted in physically concentrated “centres” or through networked activities as in the UK. The grass is al ways greener on the other side. People in the UK speak wistfully of the loss the national R&D labs during the 1990s following energy sector privatisation. But in other countries with national R&D centres the trend is often towards de-centralisation. The transfer of the Risøe Laboratory to the Technical University of Denmark and developments at ECN Petten in the Netherlands speak to this.
The build-up of energy RD&D in the UK has led to the creation of a network of public and public-private bodies, several of them new, which have had to learn to work alongside each other. These include the Carbon Trust, the Energy Technologies Institute (ETI) and the Technology Strategy Board (TSB), as well as DECC and the Research Councils. Have they performed together like Manchester United under Sir Alex Ferguson or like nine-year olds kicking a football round the park?
The National Audit Office (NAO) took a look at support for renewable energy in an influential 2010 report (http://www.nao.org.uk/publications/1011/renewable_energy.aspx). The broad conclusion was that the UK was at neither extreme of the footballing spectrum but perhaps languished in the lower divisions. The headline conclusion was that “Government funding for renewable energy technologies has delivered innovation and increased supply. However, co-ordination has historically been limited and the absence of a consistent approach to measuring the impact of this support means overall value for money cannot be demonstrated…DECC needs a more strategic approach to delivering government funding for renewable energy technologies. This requires clearer plans, better information, improved co-ordination and a more consistent approach to assessing results.” Ouch!
The response has been to beef up an informal grouping of the Carbon Trust, ETI and TSB set up primarily to avoid duplicative research calls (the Low Carbon Innovation Group) into a more formally based Low Carbon Innovation Co-ordination Group (LCICG) http://www.lowcarboninnovation.co.uk/ . This includes DECC and the Research Councils as well as bodies like Ofgem which is becoming a big energy innovation player through its new RIIO (revenue, incentives, innovation, outputs) regulatory approach.
A major LCICG activity has been the development of TINAs (Technology Innovation Needs Assessments) which aim to identify and value the key innovation needs of specific low carbon technologies. LCICG is also pursuing a project aimed at developing low carbon innovation metrics which responds directly to the NAO’s 2010 criticisms. The aim is that the metrics could be used in a coherent way across the LCICG membership. Mindful of the potential synergies between the LCICG project and next year’s research programme, the Fellowship team is participating in the Steering Group for this project and contributing actively to workshops.
This is still work in progress, but it is clear that a number of themes will need to be covered by the indicators, notably the contribution to energy policy goals, contributions to the economy and competitiveness, and the accumulation of capacity, knowledge and skills. Identifying indicators which are both meaningful and supportable by readily available data is no small task, but the nettle is being grasped.
Whether or not this has been “a dynamic and hard-hitting piece on innovation metrics” is for you to judge. But we know we have (another) big challenge to take on once the first version of the energy research and innovation prospectus is complete.
The Expert Workshop Process - Dr Matthew Hannon
In order to provide the evidence base to inform the design of the RCUK’s Energy Strategy Fellowship, the Fellowship team have been undertaking a series of workshops to uncover emerging research challenges and associated research & training needs. The first group of these workshops have focused on cross-cutting themes that are relevant to all aspects of the UK energy research landscape and these have been examined as part of our Strategic workshops. The second group are focusing on much more subject-specific aspects of the UK energy landscape, for example transport energy, energy infrastructure and bioenergy, which have been explored as part of our two-day Expert workshops.
Since October 2012 we have been on a very steep learning curve about how best to elicit responses and capture feedback from energy experts during these workshops. This challenge was most acute as part of our two-day residential Expert workshops, which needed participants to really think deeply about specific aspects of the UK energy system. To help guide us through this methodological maze we enlisted the experienced experts at the Centre for Facilitation. Whilst this learning process is still ongoing we have already learnt a few key lessons about the dark art of ‘workshopping’. These are as follows:
- Establish a workshop organisation committee – To ensure our workshops possessed both direction and bite we enlisted the help of a handful of individuals who were leading experts on the workshop subject. This small committee were consulted on the key research themes the workshop would encompass, the type of attendees that should be invited and overall structure of the workshop. Their insights played a key role in the success of these workshops
- Be flexible – The Fellowship team quickly learnt that despite both careful planning and the best of intentions, it is difficult to cater for everyone’s conceptual and/or methodological tastes. As such the workshops were designed to be broad enough to enable the group to assert their own focus, however some instances it was deemed necessary to apply particular frameworks or methods in order to help facilitate the exercises. On occasion the attendees questioned these, normally for valid reasons, and the team soon learnt that in order to get the best out of them it was necessary to adjust aspects of the workshop design ‘on the job’ that reflected their wishes
- Work them hard but not too hard – The Fellowship team has begun to get a reputation for working its workshop attendees particularly hard. Doing so has ensured that the attendees remain engaged and immerse themselves in the subject material in order think deeply about the issues at hand. This approach has yielded some valuable insights, however it does eventually lead to fatigue. As such we have had to be sensitive to when the attendees are running low on fuel/coffee and need a rest in order to get the best out of them
- Consider both space & location – It became quite obvious to us early on that the space in which the workshop will take place, as well as the geographical location of the workshop were both very important considerations. Space because the attendees needed to be able to collaborate with one another in a comfortable environment for long periods of time. Furthermore, the space needed to suit the specific data collection methods being employed (e.g. round table discussions; flip chart exercises etc). Location because if the workshop invitees are unable to get workshop both easily and quickly they most likely won’t attend. This last consideration has meant that we have provided the Midlands region with a substantial amount of business.
We expect that the upcoming works hops will yield yet more interesting insights, which we will be sure to relay. Until then we hope the above lessons will help those facing the daunting but rewarding task of designing and delivering a series of workshops.