Doing the dirty: coal, gas, and cleantech in the UK

Oil and gas prices, it is often said, do more to influence the development of the cleantech market than the appetite for clean technologies in themselves. This is, largely, a truism: investment amounts in cleantech in the past 10 years have largely tracked rising oil prices, as alternatives are explored and investigated. Rising oil prices also make alternative sources of energy more affordable, and potentially profitable. And as the post-Cold War world struggles to realign itself, energy security has become a geopolitical as well as an economic issue. So far, the focus has largely been on those parts of the cleantech sector which have addressed ‘peak oil’ issues through large-scale engineering solutions: wind power, solar, and – yes – nuclear.

However, a niche market is developing in the exploitation of ‘pockets’ of energy left over from the industrial era and its abandoned landscapes of resource extraction. This niche market is proving especially interesting in those countries like the UK, where industrialization and extractive activities like mining have left opportunities for smaller-scale operators to benefit from the efficiencies to be found in former mining areas. This is the case, for example, with cleantech firms which exploit gas deposits in mines. The potential benefits are twofold: first of all, these pockets of resources are local nuggets of opportunity for firms able to utilise them; secondly, their extraction and use in energy generation feeds in to larger utility and power companies’ need for alternative generation sources to stabilize peak demand during critical periods.

An example of the potential benefit of links between firms which exploit the ‘left-overs’ of extraction and energy firms is Alkane Energy plc. The company has benefited from recent cleantech interest in the ‘greening’ of more traditional utilities and energy firms. Alkane Energy is based in Nottinghamshire, and focuses on the capture of coal mine methane (CMM) for use as fuel for electricity generation. It is one of a handful of players active on the CMM scene and its offshoots, which includes UK Coal’s flaring and gas generating and utilisation facilities at its UK sites.

Another key player is Greenpark Energy, with its business focus on onshore, UK-based coal bed methane (CBM). Alkane Energy currently has a capacity for 37 MW, which is can generate from 25 modular reciprocating engine units at 9 sites across the UK. The basic idea is to exploit gas reserves in coal mine areas – of which the UK has more than a few. The power generated from the engines at the firm’s UK sites feeds in to the grid through a deal with Gaz de France Suez: this is aimed at stabilizing peak supply and demand.

Another example of UK cleantech’s increasing engagement with technology deployment focusing on energy can be found at the venture level. In the past few weeks, Intelligent Energy has announced a successful partnership with the Suzuki Motor Corporation in producing the fuel cell-powered Suzuki Burgman scooter. Intelligent Energy has offices in Loughborough and London in the UK, as well as in Long Beach, California, and a presence in Japan – and it has a long and distinguished track record in technology development and research. The firm was founded in 2001, when it started operations both in London and Loughborough, as a result of its close collaboration with technology know-how at Loughborough University. Fast-forwarding to 2010, the company’s main remit is the development and production of clean power systems, including fuel cell stacks and integrated technologies.

The company has hit the headlines by being selected as a member of the UK’s Cool & Clean Mission 2010 to California, aiming to foster links with investors and other tech firms and potential partners. This means that it has been ranked among the top twenty most innovative and growth-focused cleantech firms in the UK. Nonetheless, Intelligent Energy’s working partnerships have also included Scottish and Southern Energy plc, showing that a focus on utilities and grid energy providers is increasingly seen as the way to go in deploying innovation and clean technologies.

Reporting by Federico Caprotti, writing for Skipso from London


UK Cleantech Heats Up in January 2010

Wind-powered farm tractors

No, this post is not about protest-happy farmers, nor is it about gas. Picture a wind turbine-powered tractor. Good. Now that I’ve got your attention, read on….

One of the trends to watch in cleantech is the tie-up between established engineering, power, utility, and media firms and smaller firms operating within the cleantech sector. This creates synergies and economies of scale, and gives cleantech firms access to management teams and capabilities enabled by these larger players.

However, positive synergies can also be reached when two firms with a cleantech focus merge, especially if these companies’ activities can complement their respective industrial or service focus. This is also the point made by a recent publication by Ernst & Young. The report Cleantech Matters. Going Big: The Rising Influence of Corporations on Cleantech Growth, argues that for ‘investors and entrepreneurs, the increasing interest and activity of multinational corporations in cleantech emphasize the growing market opportunities in this arena.’

Specialist Energy Group on the horizon?

A sign that this trend is heating up in the UK is the recent news that Nviro Cleantech, a UK-based low-carbon technologies commercialisation firm, is close to announcing a reverse takeover of Southbank UK. After the acquisition, the two companies would merge to form a new entity, the Specialist Energy Group. The deal would mean a tie-up between Nviro, a company with a wide experience base in the cleantech investment sphere, and Southbank UK, which describes itself as an ‘acquisitive niche engineering group’. Indeed, Southbank UK’s activities have included the acquisition of engineering firm Hayward Tyler, which is focused on pump and fluid-filled motor technologies for the oil and gas, power generation, chemical processing, and renewable energy industries.

Southbank UK is listed on the Channel Islands Stock Exchange, where it was floated in 2006. Nviro was floated in 2007 on London’s Alternative Investment Market (AIM); one of the positive aspects of a takeover, according to Tom Young at BusinessGreen, is that:

‘The move would give Southbank access to London’s Alternative Investment Market and better access to capital as it looks to reduce debt and broaden its shareholder base. It is also likely to improve its access to the fast-expanding renewable energy market.’

According to the acquisition announcement by Nviro, if a takeover goes ahead, Southbank UK’s shareholders will own approximately 52.68% of Specialist Energy Group, while Nviro’s shareholders will hold 26.34%. As a result, subscribers to the share offering will own 20.98%. Because Southbank UK’s size is larger than Nviro’s, the deal is classified as a reverse takeover.

Farming the wind: Ecotricity’s electric tractor

Another way of achieving horizontal as well as vertical synergies is through internal development and expansion into lateral markets without acquisitions. This seems to be the direction taken recently by, for example, electricity company Ecotricity. The firm is associated most closely with the delivery of electricity, although it hit the headlines in late 2009 with its announcement that it would supply biogas (‘green gas’) for the first time to UK households.

However, the firm announced plans this January to expand into low-carbon energy generation and transport: the first step will be the development of an electric tractor, tapping into the food production transport market. There are even rumours that the final design will be wind-powered, which would be an exciting development. Watch this space.

By Federico Caprotti, writing for Skipso from London