The global market for energy technologies and services is worth over £2 trillion a year, and it’s awash with opportunities for innovative and entrepreneurial engineering and manufacturing businesses. This is because it’s a market that’s changing rapidly, driven by global responses to climate change.
This should be an ideal market for businesses based in GBSLEP: not only does it play to our traditional strengths, we also have a ready local market – the citizens and businesses of the West Midlands alone spend over £8bn a year on energy.
However, despite its commercial attractiveness, entering the energy market can appear daunting to many companies. This is because retail energy in the UK is dominated by a small number of very large companies (British Gas, EON, SEE etc) and a lot of the market rules are very complex. Innovators and entrepreneurs typically find their activities either limited to small-scale innovation around the edges, with ‘early-adopter’ customers willing to take a few risks or operate at the edge of the rules; or more often find commercial success provided they limit their ambitions to niche markets like commercial customers. This ultimately constrains growth and fails to make the best of the enterprises and innovation we have in the region.
Energy Innovation Zones (EIZ) are an approach being developed by the LEP to overcome this constraint (which holds back both economic growth and attempts to accelerate efforts to tackle climate change). The idea is that large parts of Birmingham and Solihull might be identified as special zones for deployment of new approaches to supplying clean energy. This will make it much easier for existing businesses to enter the market and attract jobs and investment to our region.
With government permission and the agreement of local voters local authorities would be able to flex energy market rules to make it easier to deploy local energy solutions which worked for them. Examples might be electric vehicle charging infrastructure where an area has a clean air problem and wants to encourage more low emission vehicles; more efficient local heat supplies where there are hotspots of fuel poverty or energy intense manufacturing which could get competitive advantages from cheaper energy; or battery storage which increases local resilience and reduces reliance on national electricity networks.
Initial pilot zones are being looked at in Solihull, particularly around the airport and NEC and in the town centre (where an innovative district heat pump project is already under development) and also on the Eastside of Birmingham, including Tyseley Energy Park, which aims to become a hothouse for innovators and entrepreneurs, backed by the University of Birmingham and national Energy Systems Catapult, which is based here.
The LEP is also now leading a national project, backed by the Department of Business, Energy and Industrial Strategy, to roll this idea out nationwide, working with Cornwall, Coventry and the WMCA.