This interview explores the intersection of policy, innovation, and commercialization within the UK's cleantech sector, with a focus on the initiatives and strategies being pursued by Cleantech for UK under Sarah Mackintosh's leadership.
Please could you share your vision for Cleantech for UK and the key strategies you plan to implement to foster innovation in clean technology?
The core of Cleantech for UK’s work is bridging the gap between the cleantech community and British policymakers. It convenes a coalition of cleantech leaders – chiefly investors – whose experience and insights contribute to our research and advocacy.
We will continue to voice their needs so that the UK policy space can supercharge UK cleantech through predictable, long-term policymaking. The need to deploy cleantech is not a political wedge issue, and we will continue to engage across the political spectrum to maintain British cleantech competitiveness and continue to be a world leader in the efforts to combat climate change.
The UK power sector has recently seen significant legislative changes and investments. How do these developments impact the commercialization of innovative cleantech solutions?
While the UK urgently needs a more coordinated, holistic approach to tackling net zero, it is important to recognize that there has been praiseworthy sectoral progress, especially with regard to the power sector.
The passing of the Energy Act 2023 in October 2023, designed to leverage investment into cleantech, reform the energy system, protect consumers, and maintain the resilience of our energy system, is a welcome development, primarily since they were underpinned by announcements in the Autumn Statement to reform the planning system and speed up connections to the national grid.
The Autumn Statement included business-wide policies to incentivize investments through, for example, R&D tax credits, permanent full expenses, and a new growth fund for pension funds. All these contribute to positive market signals for cleantech investors and enable power sector innovators to bring their tech forward.
You have worked extensively in public service, particularly energy and innovation policy. How does this experience inform your approach to leading the Cleantech for UK initiative?
Coming from the public service, policymakers are inundated with messages and often drown in the sheer volume of noise. These impulses are often conflicting, and juggling conflicting political directions from different ministers is not unheard of.
All this amounts to a demanding need for clarity, conciseness, and precise timing. Organizations that chase every ball, strategic or otherwise, may well have the best policy ideas nobody will ever read.
With that in mind, Cleantech for UK reflects carefully on when to opine on a matter or not, and we always act with a sense of purpose. If we are an organization whose voids would bring a unique value-add to the debate, we will intervene in the manner most useful to decision-makers. If ours would be yet another empty voice, we will sit the issue out and continue to work on matters that are more urgent.
Cleantech for UK emphasizes the need for a robust cleantech ecosystem. Can you elaborate on the current state of this ecosystem in the UK and its main challenges?
We are working on our investment update for last year, and what we have found is £2.6bn of venture capital was invested in 2023, which is a slight decrease from the total venture capital investment made in 2022.
Considering inflationary pressures and the state of the global economy, this shows the resilience of cleantech, and great potential for growth which we need to nurture through good policy.
Image Credit: metamorworks/Shutterstock.com
Generally speaking, the UK is a global innovation powerhouse, and we have historically broken records for cleantech investment. However, our market remains significantly smaller than other major international blocs. To take the cleantech innovations that originate in the UK and ensure that they are deployed and commercialized here – something current British innovators struggle to do - we need clear policy, de-risking instruments to unlock private capital, and a comprehensive net zero delivery plan to ensure our legally binding commitments are realized.
The Innovation in the UK power sector report refers to a £500 billion investment requirement by 2050 for the UK to meet its net-zero targets. What role do you see Cleantech for UK playing in mobilizing this level of investment?
We do not facilitate individual deals, and our role is to equip policymakers with the information they need to build an investment ecosystem and cleantech capital stack in the UK, which can crowd in the necessary levels of investment. Policy needs to be an enabler, not a barrier, and this cuts through policy sectors, be it funding, permitting, planning, or standards.
Concretely, we aim to point policymakers to the pain points in the cleantech scaleup journey so that deployed measures are strategic and carefully focused on the issues faced by actual clean technology frontrunners.
This means closing the funding gap at the First-of-a-Kind (FOAK) stage. There is an almost complete absence of funding at the pilot and FOAK stages of deployment, and we are keen to provide input on how the government can support. This can come in revenue certainty mechanisms, loans, and different types of guarantees – we need to explore the potential and feasibility of such measures and enable these companies to go to market.
There seems to be a gap in skills necessary for the cleantech sector. How does Cleantech for UK plan to address this, and what partnerships or programs are being considered?
The government, as well as potential employers, definitely need to incentivize skills development and address urgent skills gaps in energy transition. Incentivization, such as starting bonuses, career growth opportunities, and improved access to training, is vital to close the urgent skills gaps required for the energy sector. Encouraging and incentivizing skill development is crucial to meet the growing demand and facilitate a well-trained workforce.
It is great to see private initiatives crop up in this space. Octopus, for example, has launched heat pump training which is set to upskill the market for future needs. Public support for these private initiatives is vital, as the market is poised to grab the bull by the horns and upskill itself.
On the continent, interesting initiatives are coming up that the UK could look to for inspiration. Companies such as Verkor – an incredibly promising French battery producer – has launched its own “battery school” with partners, and the EU institutions are looking to launch “Net Zero Academies” as part of upcoming legislation.
Given the current energy grid's limitations and the increasing demand for renewable connections, what innovative solutions do you foresee being pivotal for the UK's energy future?
Cleantech innovation is playing an increasingly important role in helping the operator to manage the grid. In the form of demand reduction, storage, or exploitation of assets such as EVs or rooftop solar, energy supply flexibility is forming an alternative to grid system expansion. It can also smooth demand, reducing the need for gas-fired peak generation and storing excess renewable generation instead of paying for curtailment.
To raise some examples, this flexibility can come in the form of domestic assets and mechanisms, including rooftop solar PV, domestic EV charging, and other storage and smart controls enabling load shifting and peak demand reduction.
The report suggests that long-term policy predictability is crucial for market confidence. How does Cleantech for UK work with policymakers to ensure this stability, and what are the key policy areas you are focusing on?
Policy predictability is a key driver of investor appetite. We will continue to share the lived experiences of our coalition members in the field, and we will also continue to share the insights of our research and data. We will continue to publish insights, reports, and take part in the public debate to ensure the cleantech perspective is present in the discourse.
You have highlighted the importance of scale-up funding and building a skilled workforce. Could you delve into the specific strategies or programs Cleantech for UK is advocating for or implementing in these areas?
We see a large range of measures available to supercharge the rollout of UK cleantech, and it more often than not boils down to unlocking sufficiently large capital flows into the sector. We see a big opportunity coming from the Mansion House reforms to unlock pension and insurance funds for cleantech. We would like to see more support from government at the scale up stage through a loan and public guarantee scheme. We would also like more blended finance options to access public instruments to help de-risk projects, including creating revenue certainty.
What are the most promising areas of innovation within the UK's cleantech sector, and how does Cleantech for UK plan to support growth in these areas?
It is important to note that Cleantech for the UK does not pick individual winners but advocates for the ecosystem's health. However, if we look at the data – last year’s most-invested sector in the UK was power energy, which garnered 1,05 billion pounds.
The UK cleantech space is exciting; credit to innovators who continue developing cutting-edge climate-positive solutions. It is uplifting, for example, to see that out of Cleantech Group’s list of ‘Global Cleantech 100’, nine of last year’s frontrunners are British in sectors such as energy/power, materials/chemicals, and transport/logistics.
Where can readers find more information?
About Sarah Mackintosh
Sarah is the Director leading the Cleantech for UK initiative, building up a coalition of cleantech and policy leaders to scale up sustainable innovation in the UK. Before joining Cleantech Group, Sarah spent 11 years working for the UK civil service, primarily in energy and innovation policy and legislation. She began her career as a research associate working on carbon capture and storage. Sarah has a degree in Environmental Science, a Ph.D. in Isotope Geochemistry and a master’s in public policy.
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