 Good morning, ladies and gentlemen. Welcome to this, the 11th meeting in 2015 of the Economic Energy and Tourism Committee. I welcome all members and I welcome our witnesses who I'll come to in a moment. Anyone joining is in the public gallery. I remind everyone to turn off or, at least, turn to silent all mobile phones and electronic devices so that they don't interfere with the sound equipment. Now that we are getting into the first session, I would like to formally record our thanks to the committee, the former assistant clerk, Diane Barr, who has now left the committee to go and work for the known Government Bill's unit. Diane was with the committee for quite a number of years. I think that we all appreciated her effort and her cheerful support for the work of the committee over that time and we wish her all the best in her new role. I would like to welcome Ailsa Byrn Murdoch, who is not here at the moment, who was here a second ago, who is joining us as the new assistant clerk from the Equal Opportunities Committee. Item 1 on the agenda. Can I have the committee's agreement that we take item 3 in private? I agree. Item 2 on the agenda. We are taking evidence this morning on the future of marine energy in Scotland. We have a large and distinguished panel joining us today. What I would like to do is ask the panel to introduce themselves, say who they are, who it is that they are here to represent and how they feel that fits into the very broad picture that we have around marine energy, and maybe start with Neil Kerrmode on my left hand side and just work along. Thank you very much indeed. My name is Neil Kerrmode. I am a chartered civil engineer and I live up in Orkney, so ignore my accent for a minute. I am the managing director of EMEC, which is the European Marine Energy Centre, where the world's only testing laboratory. That also makes us the first, therefore, for full-scale wave and tidal energy devices which are out in the open ocean. We are grid-connected and we are accredited as a laboratory. We were set up by Public Sector Finance and we have been successful in piloting all of the tests that have gone on for full-scale wave and tidal energy devices in the UK so far. I will be glad to fill in more as we go. Good morning. My name is Stephen Wyatt. I am the commercial and strategy director for the offshore renewable energy catapult. Catapult centres are a network of technology innovation centres set up by the UK Government to help the development and commercialisation of technologies in sectors that are strategically important to the UK. As such, the offshore renewable energy catapult engages with offshore wind innovators and wave and tidal innovators. I am personally an engineer and I have been designing and running innovation programmes to support wave and tidal technology development for eight or nine years or so. Good morning. I am the interim director of Wave Energy Scotland. Wave Energy Scotland is a new organisation recently set up by Harners and Arles Enterprise, funded through the Scottish Government. The main objectives for us are to continue the development of wave technology within Scotland, retain the IP of wave energy companies that have gone into administration and provide a pathway for indigenous Scottish wave developers to take their technology through to commercialisation and to generally drive the technology development process through a more collaborative approach to wave technology. I think that is a pretty good summary of where we are. Good morning. I am Eileen Hanton. I jointly head up for the energy team at Highlands and Islands Enterprise. Over the past four months, I have worked exclusively on the establishment of Wave Energy Scotland alongside Tim. In my recent past with HIE, I also led the public sector group, which established the European Marine Energy Centre in Orkney. I have been working on marine energy for around 15 years or so now. Good morning. I am Lindsay Leisk. I am the Senior Policy Manager at Scottish Renewables for Offshore Renewables. I look after our offshore wind, wave and tidal policy work. Scottish Renewables is the trade association for companies involved in renewable energy in Scotland. We represent over 300 members and we have a very active membership in marine energy. I personally am a policy wonk, so I will leave the technical questions to our engineers over in the corner. Thank you. Good morning. I am Stuart Bradley. I am the offshore renewable strategy manager at the ETI in Loughborough. The ETI is a partnership between industry and government. We make targeted investments in specific technology projects. We have invested in marine energy technology projects since 2007 and have recently published some insights papers into tidal and wave energy. I am a marine engineer by profession and I have worked on technology introduction projects for the last 10 years. Great. Thank you all very much for that introduction. It is very helpful in just setting the scene and also making members aware of where everyone is coming from. We will go into questions. I have said two things just to preface that. First of all, I am conscious that marine energy is our topic. That falls into both wave and tidal power, where the issues might be related, but they are very distinct. I remind members if they would to make a distinction when they are asking questions whether we are talking about wave or tidal power or both, so that we do not get confused. The second preliminary point I will make is that we have a very large panel today. Clearly, it is not going to be practical if all six of you try to answer every single question that is being asked. I would ask members if they would direct their questions, perhaps initially, at one panel member. If you would like to come in and comment either to agree or disagree with something that someone else has said, just catch my eye and I will do my best to bring you in as time allows. We have about 90 minutes for this. Clearly, if we can have questions as short and to the point as possible and responses similarly, that allows us to get through the topics in the time that is available to us. I wonder if I can start off and maybe I could address this first to yourself, Tim Hurst, from Wave Energy Scotland, although I am interested to get other views as well. Looking specifically at wave energy, for the last 30 years we have been talking about this. We have had prototypes, we have had the technology in some form for 30 years, we have been saying that this technology is 30 years away, and yet we do not seem to be making much progress. In a nutshell, why have not we got there quicker? What has been the reason for the delay? There are several issues there. The most fundamental one is that wave energy technology is a bigger challenge than we thought it was. It is a huge challenge. Not only do you have to create a device that is sensitive enough to capture energy from the waves, you have to create a device that is survivable in peak waves. That is quite a challenge. I think that part of the more recent problem is that the way in which we have tried to stimulate the development of technology in waves is that we have tried to push technology forward. We have tried to, by our own admission in the public sector, we have encouraged people to move to worlds full-scale devices, to arrays, we have put funding packages in place to do that. That has resulted in us trying to push technology too far, put things in the sea before they have been fully tested. The end result is that we have failed at the full scale. The reason why wave energy Scotland has been established is that we can come back from that. We can go back to the earlier stages of the technology development process and go through that process in a more scientific and rigorous way, building up reliable subsystems as we go and going through a process of verification and certification, so that when we get to the point where we turn up at Neil's door with a device ready to test, we have done the necessary engineering preparation to give us a good chance of success. There is a combination of reasons why we have gone the way we have. It has not worked and we need to think again about how we did it. Okay, right. Thank you very much for that. Does anybody else want to add anything to that list, Neil? Yes, if I could. I would challenge the 30-year premise, if I may. We have only really been trying this for the last 15, to be brutally honest. There was a lot of innovative work that was done by Stephen Salter, particularly who really coined wave energy, put those two words together in pretty much the first occasion. Unfortunately, the programme that was then set up that was quite a big initiative that was going on and was then killed off by, frankly, a loss of faith some years ago, principally by Westminster Government, and then it all went into a bit of a hole. It was only probably around about the millennium when further work was done and Hyland's Enterprise particularly saw the opportunity that was there, that there was a resurgence in interest and effort, and that gave rise to the support for a number of companies locally and then the creation of EMEC. I have to say that what we have seen is a dramatic escalation of effort that has gone on in certainly in the last few years, driven, I would argue, entirely by the fact that EMEC is even in existence. We have nucleated a lot of the activity, so it is taking place around Orkney. The reason that the Pentland Firth and Orkney Waters leasing round was issued, I would argue, was entirely due to the fact that we had the attention of everybody and marine energy was something that was possible. I do not think that we have been at it really for 30 years, and that was part of my contention. We have been trying pretty hard lately, but we need to try harder, and we need to try slightly differently. I want to highlight some of the achievements that we have had as well. It has not all been failures and disasters. We have made some really significant progress over the last few years, and I want to pick up on another point that Tim made about the way that the development was stimulated. He mentioned the way that the public sector funding was pushing towards array development when we should have maybe been a few steps previous to that, but a lot of the private sector investment was looking for that kind of speed of development as well, so the whole package was pushing us towards array development more quickly than we needed to be going. Just on that last point, Lindsay, that you made about money, can anybody tell me how much money has been spent cumulatively on trying to develop wave power over the last 15 years? I might better pass in that question to some of my public sector colleagues. We have figured out, so we have done research of what has been invested by our companies, and Renewable UK, our sister organisation, has done it by what has been invested at UK level as well. Our research shows that, from our membership and the companies that responded to the survey, they have invested over £200 million in Scotland already, and their supply chain was around 62 per cent Scottish. That is just in wave power? Oh, sorry. Do you know what the figure of a wave power is? I am quite keen that we understand the two quite separately. I do not have a split for which was wave and which was tidal. Overall, the Renewable UK research has also shown that, for every £1 of public sector investment, it has stimulated about £7 of private sector investment. It has been a really successful—what am I trying to say?—it is really well stimulated. The public sector money is really well stimulated by private sector investment, but in terms of overall public sector spending and wave, it is probably better for the public sector colleagues to answer that. Just to add to that, I think that it is clear that there is a direct correlation between the public sector funding schemes that tend to exist and the rate of progression in terms of technology development. Typically, in my experience, what we find is that we typically put in around 25-30 per cent of public sector money—the rest is private sector money—to develop prototype technologies, et cetera. It is very clear that the public sector stimulus leads to activity, either in the wave tank or in the e-mech. Can anybody give me an answer to my question? Do we know how much money has been spent publicly or privately? According to our research, since 2010, nearly £51 million of public money has been committed or spent in developing the sector. That number feels about right if you include wave and tidal. That would include tidal as well. If you look at the level of support that has gone into tidal projects as opposed to the technology development, there is a distinction between trying to develop the technology to get a proven product and build out the first projects to generate electricity, tidal being at the latter stage, wave technology being at that technology development stage still. I am just trying to understand in terms of the public money that has gone in when we like to see a return upon it. There is a figure quoted—I think it is from Stephen White—from your organisation of £300 million that you estimate would be required to take us to commercial readiness. That seems quite a chunk of public money to go in, but it would also be private money to go in to back that up. How do you arrive at £300 million? That is right. We did a bottom-up on that. That £300 million is split 200 broadly for wave, about 100 for tidal, and it includes the amount of money that you have to put into building the first projects as well as the technology development. If you like, it is to get wave and tidal technology to the point that we are now with offshore wind, where we can see large-scale deployment, where it can make a significant contribution to the energy mix. We have typically broken it down in those two phases. How do we know if we give you £300 million of public money and you will not come back knocking on our door in five years' time and ask for more and say, well, we have not got very far with us and all the money is gone? I guess that there is an element of risk to developing all new emerging technologies, particularly a new form of energy generation technology. I suppose that we would look at the general scheme of things and say that actually £300 million is fairly small compared to some of the other energy options that we could be creating here. I think that what £300 million would do is to create an appropriate platform and a long-term signal that there are significant funds and weights behind the technology development agenda and indeed the project development agenda for wave and tidal. The numbers that you have quoted are £51 million. That would be a right for the technology development, but on top of that, there has been the public sector investment and EMEC itself, and that is around £36 million. I should have the numbers on my fingertips, but I am sorry that I do not, but we can certainly check those numbers for you and come back to the committee with a fuller answer. No, I forgot what I was going to say. I do have some numbers for investments from the ETI. We have committed 34.2 million for marine energy. We have spent £28.5 million to date, and of that, £6.2 million has been unwife. I am struggling slightly with that number that you gave with the 52 because I am just wondering how much of that is spent and how much is committed. One of the issues that we have certainly had is that quite often money has been able to be announced and then had to be handed back at some later date due to programme failures. I know that that has certainly been the case with some of the Westminster programmes, and the numbers are quite large. The MRDF is £42 million. I do not think that any of it got spent. There are a number of occasions, so I think that we need to be very careful about the difference that has been announced and spent. That is all that is cautious on that point. Thank you. I have a couple of hours left to follow this up and start with Dennis Robertson. Thank you very much, convener, and good morning. Let me just come back to Stephen in your point. You said that £3 million is not a particularly large amount of money in terms of investment compared to perhaps other types of technologies moving forward. Can you maybe expand on that just a bit for me so that we can understand why you think that it is a small amount of money compared to other sources? What are your comparisons with? Sure. The £300 million figure, I guess. Remember, we are talking about two different sectors here, effectively, Wave and Tidal, so let us just be cautious around lumping them together. The £300 million—I am happy for you to separate it. Sure. Is really a make-up of public and private sector money? Really all we did was say, well, how much money do we need to get to the point where we can confidently build out Wave farms or Tidal farms? Of course, a smart government will leverage in as much private sector money as possible during that journey. We would expect that, typically, you would get for the first types of projects, you typically get half of that money from the private sector. So, not by any means is anyone calling for a full lump of £300 million from public sector funds. In terms of the relativity, I think reminding ourselves what we are trying to do here, which is create a new form of energy generation technology. £300 million is fairly small, and I suppose the ready reckoner I was used is looking at the cost of building a new nuclear power station or something like that. We are talking gigawatts from Tidal, gigawatts from Wave potentially, so it is the same order of magnitude. If you look at the cost, then £300 million is not a huge amount in that regard. Given that scenario that you have just outlined, why is there indeed a reluctance for that investment? Has there been a reluctance in terms of investment? I think that there has always been a challenge around financing the sector. Partly what we have done is, in the early days, perhaps in the last five to eight years, we have perhaps asked too much of the private sector, so we have tried to get commercial too quickly. Many people have invested on the promise of returns too soon, and that in turn has driven perhaps a pace of development that has taken perhaps too much risk, and people have been too disappointed when we have had technical failures. I think that in setting out a clear runway and significant funding behind it and a long-term commitment, that will allow a sensible pace of development to take place, a proportionate level of technology risk. Also, it would not mean that the private sector has constantly disappointed and exiting the sector, and we end up in this stop-start cycle where teams are built and then they are laid off. Technology is left rusting on the key side. I think that the long-term solid commitment from both the private sector and the public sector will allow us to sensibly develop the technology. It is very interesting that any of the members wish to comment on that sort of relativity of spending and some of the spending. Neil, if I may, just to put some context around Steve's point, the work that was done by the Carbon Trust some time ago said that 20 per cent of the UK's electricity could be delivered from wave and tidal. The vast majority of that was going to be from Scottish waters. 20 per cent is comparable to what nuclear is doing in the UK at the moment, so that is the scale of the prize there for wave and tidal. Hinkley alone is £16 billion. The outfall pipe for the Hinkley power station has just been won by costains. That is £230 million just for the outfall pipe. In terms of context, what we are talking about is small compared with major industrial generation quantities that we have to get to one day. We are looking at the development of new technologies in terms of sustainable future technologies without a wider benefit, not just to one part of the islands, but to ensure the sustainability of energy for all parts of the British islands. Would that be your assessment if we invested that appropriate amount of money in the new technology? Yes, because the resources are here and it works on several levels. One is that there is the resource in Scottish waters to be harvested. Secondly, there is the technology to be developed and deployed. The technology that we need to remember is not just the machines, it is the entire process by which one goes and installs this stuff. It will be the vessels, the knowledge around the learning, the cabling, all of this work together. Frankly, that gives you a product to which it is then saleable elsewhere around the world in due course. If we get this right, we have then a product that we can then take around the world. Already we are working with a number of people all over the world who are coming to Scotland to see how to build test centres. We absolutely believe that there is a massive market to get this right and then sell it around the world to everybody who has a western facing coast and electricity demand. I am sure that the members will like to come in. On a point, do you have a time scale? It so depends on how hard we want this. Regardless of how hard we want it or not, it depends on the investment then. Yes, it is a function of investment. There is also a technical pace because these materials and machines are big and complex and we have to work out how to make them work well. However, there are places where this technology is applicable now. We are seeing some interesting niches open up, for example around the powering of small sites such as fish farms or in remote locations or in island communities. There are a number of niches. We have started in one location that is aiming to supply grid quality electricity first day out. That has been quite a big brave ask, which has not come off quite as well as we would have liked. However, there are other spaces. I think that we will see technical deployments of machines within three, four or five years where they will actually be doing useful work. Will they be economic and cost-competitive with grid electricity? No, they will not at the start, but they will be in some locations. I have three members who want to come in and follow up and start with Lewis Macdonald. Thank you very much. I am interested in a number of the answers that we have had already this morning. I am focusing on the first instance on wave power. Tim Hurst said that it has proved to be a bigger challenge than we thought it was. Stephen Wyatt said that, in the past five to eight years, we have asked too much of the private sector and tried to commercialise too quickly. Before we look at how we go forward with this, if you could help us to understand why that strategic wrong direction was taken, why we tried too hard or too fast to commercialise over that period, given that, as Neil Commode said, this has been under way since the millennium. It seemed to be, at least at first, to be developing at an appropriate pace. What has gone wrong to require a re-examination of the way forward for wave and why? Let me kick off. Colleagues can come in. First of all, there is always a driver for the public sector to try and leverage in as much money as possible from the private sector, so getting value for money for the taxpayer effectively. When the private sector is saying, well, actually we can do this, then that clearly means that, well, let them try and let them invest. One of the artifacts of the earlier days, thinking about five to eight years ago, was there were wave companies who were floating on aim. They did have venture capital investment, et cetera. They had to make substantive claims about their technology. Indeed, some of the early indications when we have devices in the water off the coast of Portugal, off the coast of Scotland, gave everyone confidence. Now, what we didn't expect was actually we have to fail a few times before we're successful. We did end up in this cycle where we had private sector money coming in, we'd spend it, we'd then struggle to raise further money. I think that's caused us, certainly from a commercial point of view, not to have an ideal pathway to develop the technology. In terms of the establishment of EMEC as well, I think that when we set out in the process of setting up EMEC as a test centre, we knew there would be failures. We knew there would be some real challenges along the way. The fact that some technologies haven't come through and they haven't delivered as might have been hoped in a way isn't a surprise. That had to happen in this technology development space. That's why EMEC was set up, so that failures could take place in a safe environment, if you like. That's what EMEC has provided to the industry. It's allowed that independent testing, that verification and classification in a max of whole support network, so that lessons can be learned. The challenge for us now is to make sure that we capture as many of these lessons and that we learn from them going forward and we don't replicate them. I would disagree with what Elena Sayer said. We've seen some quite high-profile failures, but that isn't a complete failure. There is a lot of learning and a lot of technology within the previous programmes that can be taken forward. Wes is doing some work now to try to capture some of the knowledge from previous way programmes, some of that money that's been invested, and try to take perhaps the subsystems, perhaps the experience of operating machines through into a Wes programme, into a more collaborative process, so that we can harvest some of the knowledge. It isn't all failure. It's a high-profile failure at the system level, but at the subsystem level, there's a lot of good learning that's gone on, and we don't want to drop that ball at this particular moment. Neil, you want to come back? Could I just clarify this piece about failure? Can we just be really clear? We haven't failed to prove this works. We've just failed to make it commercial so far. We haven't killed anybody or injured anybody. It's been done safely. We haven't had pollution incidents. It's been done in a very cautious and careful and measured way, and where there have been problems, they've generally been at a component level that something has let a machine down. I think the risk, the failure that we have had is, as mentioned earlier, we've pushed people towards going too big too quickly, and we have to realise that most of the people who've got machines in the water are probably only on their second generation of machine. Open Hydro had, I think, seven turbines in the water. Palamysa have built six machines in total. TGL have built two. Hacker Arena have built two. We're very, very early days on this whole development process, and generally speaking, the more often you do something, the better you get at it, and people have only really had a chance to have a couple of goes, and it's not really surprising. It's not working perfectly because the sea is very unforgiving, but I would argue that the single biggest driver that pushed us towards an increase in scale was the means by which we rewarded success, and that was through the electricity marketing process, in other words, you could get rocks, renewable obligation certificates. You got paid a premium tariff for the electricity you landed, which therefore meant people sought to maximise the amount of electricity that they were going to create from those first machines, rather than maximising the learning from those first machines. That is probably the single biggest failure. We needed to have a mechanism to reward people for the success of doing what we wanted them to do—that clever thing of turning seawater into electricity. Unfortunately, the only mechanism that we had to our hand was to charge it in the consumer's bills through a tariff on electricity prices, and I think that led us into a bit of a dangerous space. I share the optimism on the potentials of the technology. I guess that my question is more about the business model, and we've heard the difficulties with the business model over the recent period. I guess that the important thing to understand is what change or what guarantee there is that the same business model failures won't recur. In other words, if there was undue optimism or undue ambition among some of the developers in a commercial sense and the wrong reward mechanism from government in terms of support, how are those two factors different going forward to give us certainty about allowing that technological development? That is an important question. I think that one of the things that has happened with the public funding in the past is that we've run a programme for a while, then there's been a gap, we've run another programme, it's been a slightly different programme, so developers have had to change track, they've had to change what they're doing in order to get the funding, perhaps jump forward to get some funding, perhaps in a different direction, and that has been very disruptive in the whole technology development process. That's one of the things that we're seeking to address in ways in that we're producing a technology programme that has a continuity of funding right from the early stage concepts right through to arriving at Emake. Provided technologies can meet their technical milestones, they can continue to get funded at an appropriate level to allow them to pass through the programme and to get to the point where they can commercialise. That's one of the biggest issues that we've had raised when we've spoken to the sector as to what are the problems, continuity of funding has been a big issue. Our current programme aims to address that directly by providing this technology pathway right through from concept to pre-commercial devices. Perhaps I can add that actually we will all be aware of the high-profile failure of companies like Palamys Wave Power. Actually the flip side of that is it can be positive in the sense that we're no longer held to the private sector investment time horizons and that means that we can pause for a breath a little bit and take this longer term view. Now Tim's outlined the wave energy Scotland and the long term commitment that makes is great and I think the other challenge we've got is actually making sure we're pulling on absolutely every lever we've got in terms of the technology learning that we've had, the expertise that exists to draw in to that programme and to other wave developers that exist and that's part of the reason why the catapult has been set up. It is a centre of deep-setting expertise in Glasgow to support offshore renewables in Scotland and the broader UK and so we need to make sure that we're using every tool in the box now over the next four to five years to get where we need to be. Actions that we're proposing are actions to take to overcome these challenges in the future. I'd like to draw your attention to the marine energy programme board report that we recently prepared with the industry. The marine energy programme board is a UK government's industry liaison group so we did a bit of work that set out seven key actions that we think needed to happen. There's three of those that cover both wave and tidal, then there's separate ones for tidal and there's a separate one for wave and the innovation part of it that we've heard about recently that's captured in there as actions that we need to do so I won't repeat that but the first overall overarching action that we really think is important is the development of a UK wide strategy that really sets the scene for the development of the progress for this for the sector over the next few years. BBG Associates did a bit of work for us looking into the supply chain to look at supply chain gaps and they carried out a series of interviews with companies already involved in the sector wave and tidal and companies who had been involved and had since fallen out and those who were yet to be involved and asked them what's the biggest thing that's holding you back why aren't you getting involved in the sector or what has made you leave and the single biggest factor was about market conditions and market support what they're really looking for is that long term clarity of government support for the industry and for the sector moving forward so that overarching strategy is the sort of thing that tackles those issues. The other things that are in there are exactly as Neil's highlighted we think there could be amendments to the way that revenue support is driven CFD it seems to appear doesn't isn't the product that we've ended up with doesn't really work for test centres and I think for some of the smaller arrays as well so thinking about something we can do there that's more akin to a sort of a feed-in tariff type scheme might be more appropriate for the smaller developments and the other things that we've been looking at for tidal as well are these sort of performance guarantees as well you can't one of the the problems been simulating the big private sector funding is there again a scale of market that they're looking for they're not particularly interested some of them some of the investors not really interested in the couples megawatts schemes they want the tens of megawatts schemes but you can't get the tens of megawatts until you've proved the smaller schemes and the smaller schemes have got such high upfront capital costs to them that it doesn't make it attractive into those types of investors as well so we need to look at a way that we overcome that hurdle and the sorts of things like performance guarantees availability guarantees for performance with turbines being available or for the wave device being available is the sorts of things that we're looking at here and the actual detail of those is still being worked out um as we as we speak and we're still working on exactly how that will work in practice but these are the kinds of things that we're we're thinking about doing because they're the real stumbling blocks I think okay thank you okay Patrick Harvie thank you convener um good morning to the witnesses the um I think the phrase that Neil Cymods used a while ago was that the sea is an unforgiving environment so are markets as clearly most of the witnesses have acknowledged can I ask what impact you feel fossil fuel prices have had on the nature of investment in wave and tidal or do we even know yet what the impact has been so I can start and colleagues can come in so I think you're right to highlight we don't actually know fully yet that's still being played out um I think it's a double-edged sword actually um what what we do see is um there's now significant um skills capacity um existing in the only gas industry that's now available to bring to bear on the offshore renewable sector so we see more availability of vessels more availability of engineers um and that's positive they they have many of the right skillsets and toolkit that we need to solve many of the challenges this sector faces so so that's the positive bit I think that clearly the the obvious negative bit is actually Engie's got a whole lot cheaper um and so you know for the short term you know that counterfactual you know the measure in which we're competing against has has got lower um but I think we all know that fossil fuels are finite and over the longer time horizon I don't think that's kind of a significant issue yes it's a blip yes it could shake investor confidence but equally the the large redundancies zero hours contracts we're seeing in all the gas industry is clearly a strong message to say actually we need something a bit more stable in the longer term this argument of stability is important and and several witnesses have talked about the the difficulty for the long-term development of a new industry running according to short-term private sector time scales and the the argument for long-term can I even suggest permanent public sector role in this industry you know if the public sector is necessary to help bring this industry to fruition should it be seen simply as helping the industry along to the point at which the private sector can take control again and all of the profit flows into the private sector or should it be looking at ensuring a public sector return on the necessary public sector investment should we be looking at a permanent public sector role rather than simply a transitional one given the the necessity that that long-term stability is having in the in the early stages sure um so perpetuity it's obviously a long time and we're all in the game here to um to try and develop a commercially viable um industry for the wave sector and indeed the tidal sector um but I think the acknowledgement is true that actually this is a long game um you know we're talking you know five years ten years before we can begin to get proper commercial proper commercial returns in a subsidised environment and yeah and then after that it's well okay what level of subsidy does this industry need um yeah anyone else um yeah uh I think we can break down um what the industry is into a couple of components because I think some of these pieces certainly could benefit from enduring support um and the main one that comes to my mind is the way the grid operates we know there is not grid to the places where the marine resources exist so we know we have to get grid to those places if we're going to make the most of it and if and since the resources will be enduring one would imagine the the value you can obtain from them will also endure so that would seem to be an entirely appropriate place where um a the public sector could take a significant role in leading the development on those pieces I would also argue and I promise this is not self-interest in as much as the test centre side of things um I think we need to recognise that test assets are difficult and complex and have changing needs as the industry grows but I would point out that say you know the motor industry has got a test centre or number of test centres around the world for machine for their cars and we invented those 100 years ago plus so I think there will inevitably be um a technical journey which will need to be embarked upon and if we do want to make sure that the real value flows back to Scotland it has to be through the ip that's that's created around this technology rather than purely the value of the electrons you land so there's an awful lot to be done in that space and I would absolutely argue that there is a very strong opportunity for for public sector enduring involvement there's also not an ongoing public sector role in the whole supply chain development and supply chain engagement in the sector going forward because retaining ip and the knowledge of in Scotland is one thing but we also want to ensure that as much manufacturing and wider supply chain activity associated with developing and supporting the sector is kept here as is possible so there's an ongoing role for us there as well and for Scottish Enterprise and High as Weave Energy Scotland really starts to operate you know there's a role to make sure that projects that are attracted to Scotland actually spend in Scotland and they base themselves in Scotland so I think there's a role there for us as well I wanted to ask on ip as well shall I deal with that now as it's come up particularly I guess to Tim Hearst because this is about the Weave Energy Scotland operating model it's business model could you explain a little more in detail than the written submission about how ip will operate within Weave Energy Scotland's model you know that there's a certain amount which has already been acquired from Plamys yes that's that resides now with Weave Energy Scotland there'll be the development of further ip one would hope and expect in association with other companies how how do you envisage the long-term relationship developing between Weave Energy Scotland the ip that it manages and the way in which the revenue flows from that that ip whether it's whether it's deployed here in Scotland or by companies exporting it around the world okay the the way we intend to deal with ip within the west programme is that we will fund technology development but we will allow the contractor to keep the ip and we will require them to commercialise the ip and sell it within the industry we will also require them to license it to others at commercial rates sorry we will also require them to be able to to be willing to license it to others at commercial rates so so that our idea is that if you come into the west programme you get you get the funding you own the ip but you can only keep that if you do something with it if you supply your subcomponents or whatever they are into the market to stimulate growth and push us towards commercial wave devices there will be a number of clauses in the contracts that we sign that say if you don't do that if you don't use the ip for a period it will revert to wezz automatically yes if you try and sell it we get the first refusal to buy it um and particularly if you if you don't share within the within the programme if you decide that you're going to develop an exclusive arrangement for say you're a subsystem supplier and you decide to have some sort of exclusive arrangement with a particular wave developer then we would claw back to the ip as well so the aim is give the ip to the contractor and get him to use it commercialise it and make that technology available to all within the programme i'm interested in the um the point you make about the first right of refusal to acquire ip which is a risen through wave energy scotland's investment what do you think the attitude will be to the exercise of that right will wave energy scotland seek proactively to acquire ip in those circumstances in order to gain additional benefit in the future additional revenue which could come from licensing that to others or will it simply be about um i don't know operating as a kind of transitional owner so that that that goes back into another private company i mean we would only do that in exceptional circumstances and our view is that we don't want to own ip we think ip is best kept in the private sector why um well there's there's a number of reasons that i mean if we look back at other public sector models of ip ownership for instance iti energy um there's been a number of attempts to to own ip and then commercialise it and it's never been very successful and just just the management of all that ip is is a huge workload in itself i mean we we're planning to have around 50 projects running at any one time within wave energy scotland and that would be a a huge volume of ip to manage and i i can't actually see an advantage in doing that i can't i can't see how i'm in part apart from the the potential commercial advantage coming back to us from from licensing that ip if you can't see an advantage in owning it why would the private sector see an advantage in owning it because because because they can commercialise it and they can sell it and surely we can license it the public sector to the license it and see the the technology deployed private sector being the operator rather than the public sector but some there's also some return on the public investment there's also consideration of of creating an environment that is attractive for industry to come into if they if they don't believe that they can retain the ip they're very they're very unlikely to try and join the west programme i mean we've done a bit of testing with a number of companies particularly the larger oems and those are the people that we're trying to bring into the sector and if we suggest that we are going to own the ip because one of the models we looked at was we own the ip and we'll license it back to you um there was a there was a reluctance to get involved and i think we've got to be honest about about where we are with wave it's a sector that that not many people in the industrial sector want to get involved in they don't see it's a huge market and we have to create a programme that is attractive to them to bring them in to get them to bring their knowledge and their technology to develop wave technology and i think if we create an environment that has ip arrangements that they don't like that will discourage them from from joining the programme and i think that's that's that's a you know that's not just my thoughts that i have actually tested that with a number of organisations i think that's an experience of the iti programme as well where many many months who are lost trying to negotiate ip arrangements with applicants to iti and many projects just weren't taken forward as a result so we hope this way we've got the safeguards to in place to ensure that if the private sector working with ways doesn't behave in the way we wish to then ways can step in and it can enforce that but in the same token we're trying to make it attractive enough to them that they wish to take part and they wish to participate in the first place and we're also trying to take people in from other sectors as well so it's about it's a balance really make it attractive so that we want to participate but ensure we've got safeguards in place to ensure we retain benefit in Scotland and that's what we hope we've got it does just seem an odd contrast between the former argument that we can't rely on the market we can't rely on the private sector to have consistency and long-term investment not just given current scenarios but the unpredictable volatility of oil prices for as long as they remain a crucial signal for investment we can't rely on that so we need long-term reliance on the public sector investment and yet the public sector investment should get the lowest return well yeah i think the safeguard that's in place at any ip that's created through ways there will be a license back to ways a free license and if the private sector player does not do its part of the deal if you like to try and commercialise and take forward that technology then west will have their ability and the right to sub-license that to anybody else in the market so that it is that safeguard to ensure that they are operating and they are taking forward technology as we expect them to do under this contractual arrangement we'll have as i say it's a balance what do we need to do to make sure we get the right people in the programme not just those who have got nowhere else to go but the people who have got skills from other sectors experience in other sectors which they can bring to bear and actually help us to develop this technology and that's why we've gone down the route we have okay still share some views on this um i i i i partialy agree with weirs on on this topic i've spent a lot of time working on the innovation programs waving title i think it comes down to usp's unique selling points um i don't personally think it's necessary for all technology developers to own all of the ip all of the time and all too often ip becomes the barrier to collaboration um so i think it's necessary to look quite hard at well which bits of the ip need to fundamentally be in the private sector to enable a key stakeholder a key engineering company to develop commercial revenues further down the line which bits actually aren't that important to that journey um and so i think we need to be fairly precise in our view around well where do we want to try and create collaboration by freeing up some of the shackles around ip um and which areas do we actually recognise that well yeah that's core technology you know at some point this is going to be need to be commercialised and therefore there needs to be an arrangement in place to allow this private sector company to get commercial revenues from it um and i guess you know clearly if you if you ask the private sector would they prefer to hang on to their ip or not they're going to say yes but actually sometimes that becomes a bit of a bind and everyone thinks everything is valuable so i think where's working with other sort of technology literate uh partners need to sort of identify well what are the important bits which are the bits that really matter here and how do we handle those the answer to this may be a simple yes or or more in line with my expectations a simple no uh if we've got a a long term interest if scottland is a long term interest in seeing this whole industry prosper and develop is there any role at all to be played for open licensing of intellectual property in this industry quite possibly and i think you know what we've set out to date is the route we've taken for the first call under wave energy scotland i think we'll we'll see how that goes we'll see how it works and if it's not working if it looks there's a better arrangement then we will evolve the process and we will look at better ways of doing it i think we want to make sure that we learn lessons as not just from the past but we learn lessons as we go as well and that we are flexible in the approach to have wave energy scotland operates and if we need to change things change arrangements then we'll do that ultimate goal is here's the develop technology and if we're putting in place barriers to that then we're not going to be at objectives and aggressive protection of it could be a barrier we think so yes yes if i may the parallel that keeps coming back to my mind is what happened with the chap who's name i can't remember now but he invented the shipping container and he cracked the whole thing and worked at the size of them the way the doors were shut and the way they'd lock on the corners a whole bit protected the whole lot i made it freely available and in doing so made sure that everybody then used exactly the same kit because you don't have to go and invent it away around it so you have standardisation and that allowed the whole shipping boxes process to take off so i think there may be spots where we can identify there is a blocking step and by it being in public ownership and then letting and giving free license to it that might be an unlocking element so i can see somewhere off okay check ready yes here i may follow on i have some sympathy with with the view that it's a good morning by the way Patrick expresses i mean the natural resource is is Scottish water and the technology yes there has to be recognition of the the return on that but there's a very interesting project that the northern island government did called the telus project in terms of how they developed mineral and are developing mineral resources with some collaboration with with the northern island government i wonder why may talk about we talk about wave energy and where it sits in the hierarchy of energy provision and and as a consequence where investment might flow in terms of that hierarchy when we talked about fossil fuels and everyone looks at the prediction of oil prices whether the Brent crude or economic futures agency there are predictions of the oil price being about 120 140 dollars a barrel which makes it attractive to suck investment there what comparisons have been made in terms of firstly the technical due diligence between wave and tidal and therefore the commercial due diligence i mean we've had the the global number but who sits down and looks at this in terms of the overall impact of investment and the ROR that is anticipated by the private sector investors who's doing that so i guess one of the from a government perspective one of the initiatives that happens on a biannual basis at a UK wide level is a technology innovation needs assessment framework that looks at all of the possible forms of renewable energy generation looks at the barriers to commercialisation looks at the economics around that and the associated gva to the UK and and that framework allows allows government and and it's freely available to to compare across all of the renewable energy technologies and consider where to make innovation investment and clearly one of the facets on that is the timeline so where would where would we like to invest now for energy generation in the next few years versus where do we want to be in 10 15 years time so that's probably the framework i point to that is a sensible sort of comparator so to look across the piece here else tim yeah i know i i i'd agree steve i think that's that's the the reason for asking us is i've had some dialogue with a company in johnson that has manufactured submissibles and has its own tank and has tested them and said we've had conversations with marine scotland and they've had phd in a in a county to look at the numbers along with the technicians and now they're looking to do better tests and the things way down the road i would hope but i don't see that being you know when we're looking at public investment saying well where do we want to you know where are we going to get the elixir rate of return and i'm not sure how we can address that or who's doing it so i guess to follow up you know that that piece of analysis that the the team of work is is definitely sort of a good source of that sort of data and not an observation on that sort of analysis is that actually the benefits of these technologies sometimes fail you know in fairly small pockets so if we look at where the benefit for marine energy is failed it is right here in scotland it's on it's on awkney it's you know it's here so we can look at the uk wide numbers if you like we can look at the european wide numbers or the global numbers but actually looking at where the concentration of that benefit is failed is really important too so clearly we're going to have a balance of energy technologies providing our energy mix going forward to 2050 but actually using a broad brush comparator is obviously sometimes a little bit challenging because there'll be certain areas that are more appropriate for certain technologies and the benefits have failed us but forgive me just the last question in terms of the broad brush i mean surely someone you know there has to be some someone who's a little group or government looking at the technical due diligence in terms of what's going to get to the market first yeah and about i don't believe there's been a failure as neil indicated any new project or product or service will hit you know the occasional bump but you know looking at the public investment sector i'm saying about where are we going to get the earliest return and optimize the opportunity for scotland driving the market and where does it lie between wave and tidal sure and certainly from a technology perspective i think we've got a pretty good grasp on where are the economics now and where can the economics be in the future and certainly the offshore renewable catapult is very much looking at well what are the innovation building blocks that are needed to get us down the cost curve what are the deployment rates will bring that learning that we see in other sectors what does the shape of that curve look like and we're able to do that for you know wave tidal offshore wind and and there is other data around for other renewable technologies and more conventional plants so that that comparison can be done i guess with wave energy we look at sort of well actually we're still in the proving phases of this technology so we need to know the longer term can we come down the cost curve but right now i think it's about well okay can we make this technology work reliably okay thank you okay Gordon MacDonald thanks so much convener and good morning i wanted to ask you about some of the challenges that faces the sector and Lindsay some of your evidence said uncertainties around longer term market visibility has impacted investor confidence and what i was wanting to ask about was the recent announcement by national grid and stat net about the interconnector from norway which my understanding originally was going to come ashore in the north east of scotland which was allowed the wave and tidal power to be sold on the european energy grid once it was complete and now it's going to come ashore in north ampton so so what impact will this have had on your sector in terms of one market availability et cetera i have to forgive me i'm not an expert on the on that particular interconnector actually and and the impact the direct impact that that will have had but grid as a whole for this sector for wave and for tidal is clearly it's a long running issue and it's always been one of our our main asks and no doubt you've had people here before giving evidence on grid charging and grid needs assessments et cetera it's it's still a challenge and it is still an issue we didn't Scottish renewables didn't agree with absolutely everything that fell out of the recent project transmit process um but it did have some benefits some of the changes were definitely beneficial for renewable energy developers so that's all about changing the sort of locational charging regimes um it did have it did have benefits so it is disappointing to see that the implementation of those changes is still held up in legal processes um we were pleased to see often consulting at the moment on um looking at ways it can amend anticipatory investment so how you can make easier to make a needs case for anticipatory investment and for the distribution network um from the case of arc need though there's very specific thing that that some of these incremental changes if you like may undermine the broader need for that sort of more holistic change to the system and may undermine the need for a greater uh change to the transmission system and for constantly tinkering the edges with the distribution work to kind of and to make it fit for purpose in the short term um sure neil will have lots of things to say about that as well um so that that specific interconnector i can't i couldn't tell you what direct impact that has had on wave and tidal but grid as a whole um getting clarity and understanding um grid connection regimes and the grid charging regimes that's incredibly important i'm going to move on to the the grid connection charges but i was wanting to does emdy have a view about that sorry neil yeah just um it fundamentally um the the fact it had a more southern landfall is less helpful than it would have been if it had been nearer to us because we've got further to go to get to it because we need to think about the grid is working in two directions it's not just a case that we it's a means for us to send energy out but it's also means for us to bring energy in and balance the system because there'll be times when there are no waves but there's plenty of Norwegian hydro so um getting the cable connector nearer to us um is part it was important would have been useful however it's not the only game in town and the scale of the connectivity that is going to be needed is going to dwarf that that connector on its own um case in point just for context awkney at the moment has got connectors which allow it to support the about 30 megawatts of demand that the that the islands represent the generating capacity of the islands of wave tidal and offshore wind which is also big it's probably in the region of four or five thousand megawatts so there will have to be further cables to these islands and then you patch in shetland and you put it so it would have been useful if it'd been nearer to us it's not the end of the world it's not but that's only the first game there's been more strands in this in this tapestry the 2.1 billion euros that's being underwritten by UK taxpayers um for this project would that have been better spent invested in making connections in and off of scotland to the islands etc i would have certainly not been about the bush but i don't know the quality of the investment decision that was taken there so i can't really i don't want to compare one with the other but we do certainly need to make sure that we are looking at those sorts of investments to be made to in these areas because quite clearly the resources there and it won't work without the wire okay under government underwriting support for island cables and that would go a long way to to appease some of the concerns and we do a lot to support the marine sector as it grows on our islands bearing in mind you guys have got to sell your electricity once you get the technology right and we're in a situation in scotland where transmission charges are substantially higher than elsewhere in uk where subsidies apply connection charges are more than double what they are in the south of the country and you've got a new interconnector coming in which my understanding doesn't attract transmission charges is that really helpful for the renewable industry in the north of scotland is the government doing enough to tackle and put on a more level playing field both uk especially uk government i should say part of government i suppose i couldn't stick my neck out on this one um the government clearly needs to recognise the scale of the opportunity we have been arguing long and hard with off-gem and others who have come up to see us um that the that we are failing to grasp the opportunity and the grid is fundamentally holding this back um i slight slight contention with lindsay's point about project transmit project transmit worked well within mainland scotland and didn't actually get as far as the islands it doesn't help the islands at all um and the point you made about the interconnector you're quite right if we had an interconnector from awtney to norway we wouldn't pay we wouldn't pay transmission charges but if we had one to go south we do i'm also not part of government too for this any computer um yeah i completely agree with neil i mean that was the caveat there was lots in lots and transmit that work for some of our members and for some of the technologies there's other bits that that just doesn't um but it was uh we appreciate it was a very very long process we went on for yeah for lots of years and lots of input um so we were uh yeah we we welcomed the changes some of those changes and they were good to see and it's a frustration that they're i'm still being held up in terms of delivery but by no means are we suggesting that project transmit the outcome was perfect okay thanks and perhaps just uh it perhaps sounds obvious but um you know there's a risk that people sort of look at this industry and say well they won't need the grid until 2020 you know that's when the real electricity is going to happen but actually what we need is the confidence that we can sell electricity and there's this backup effect where people aren't going to invest in the technology now if they don't have the certainty they can export it when they make it okay it's really just following up in gordon mcdonald's point um and i think these are figures that that the many of you have brought forward in the past and it's there is a potential you know we use this word as potential for the the resource is 25 per cent of europe's a wave and 10 percent of the title europe's title can be based here in scotland now that is saying the resources they are those figures i don't think are really disputed but are we saying to to to realise that 25 percent of wave and 10 percent of title we need that infrastructure absolutely it's the other way around and as neil often points out to me 25 percent of nothing is still nothing so and it's still understanding if you're looking about 18 gigawatts of um the theoretical capacity uh for wave power in scotland now nobody's suggesting you're going to be able to exploit all of that that is just the theoretical potential and you're looking about 11 for title so although it's 10 percent of europe's um wave it's actually a bigger resource and it is a bigger global resource as well so market for waivers is bigger than it is for title around the world okay all right long lead-in time for grid investment as well it can take a number of years so to have grid ready by 2020 we need to really start working on it right now there's no there's no time for delay here okay all right thank you um wish you'd like a question yes thank you can read that very interesting um points and as you said earlier on it would uh neil it would take 16 billion pound invested in uh a nuclear uh energy you know new facility but basically the money that that's been spent how much would you say would need to invest all the next number of years in order to move this project along i know you've had various setbacks and every new invention was said earlier on there are setbacks but when when do you think we could get there and how much money more money would we need to invest in order to ensure that we get what we need out of this project could i hand that to you know that steve because i think they've got my job is really to focus on the guys who rock up on the beach and trying to make this stuff work so um but i think steve supplies the money and you make it work that's something like that sometimes on the good day um so yeah so unfortunately i don't supply the money um i'd love to be able to but um yeah so in in terms of costs i mean typically it costs around 10 million pounds to take a prototype wave device to emec and test it um evaluate an iteration of the technology so really this is a question around well how many options does the industry need to be creating here you know do we put all our eggs in one basket back one technology well we've we've kind of done that in the past i guess um so you know we believe that you need to have you know three or four technology options you know keep keep a number of ions in the fire at this stage then eventually there may be design conversions we may end up with all these wave technology converters looking the same but right now we don't know exactly what that winning formula is going to be so keep those alive so 40 50 million pounds to keep four devices in the water at emec now the important thing is actually we're not necessarily chomping at the build to build more full-scale prototypes tomorrow what we need to be doing is learning at a reduced scale as well that actually costs a whole lot less and typically we look at this industry as sort of saying tenth scale third or quarter scale and then full scale and those are typically orders and magnitude in terms of the funding so what would cost you 10 million pounds at full scale may actually only cost you one or two million pounds let's say a third scale or something like that and a whole lot less in the wave tank and so it's really a question of balance and making sure that we're sensibly proving out what we can in the wave tank what we can at quarter scale at emec nursery and then we tentatively go into the water at full scale to really shake down the things that we couldn't have found out in the wave tank or beyond and so it's really a blend of portfolio of activity but to give you a flavour it's 10 million pounds per device if you like when they get to that stage a whole lot cheaper before then there was also quite an interesting and I'll come back to Lindsay at least you in your submission and you may be wanting to explain this there have been significant challenges over the last few months leading to a reassessment of the scale and pace of development in Scotland over the near term what do you mean by that? I think it captures most of the discussion that we've been we've been having today and understanding that particularly in the wave sector the technology is not progressed at the speed that a lot of us originally envisaged it has been and that has caused us all to step back and reassess and put into place other schemes to make up for that and to adapt to it like Wes and just how quickly we're going to be able to move to the sort of scale of industry that we all want and we all want to see. So basically what we're saying this morning is we have something which has a potential that you know is into it and you know basically we're going you know we can make loads loads of technology advances money etc sell it all over the world but basically it's we're just so far away and is that what we're basically saying Neil we're just so far away from it but it's going to as and when it happens I would not fall into place. There's a lot of truth in that we have I keep coming back to a parallel that somebody gave me a long time ago about the aviation industry and the point is that we are quite close to I would argue we are quite close in wave and tidal to where certainly wave industry to where the Wright brothers were when they got heavier than air flight working for the first time now at that point people been trying to aviate for hundreds and hundreds of years and eventually they got it right now the fundamental principles that the Wright brothers used in terms of the lift and the controlling processes are in every aircraft that flies today so they got it they got bits of it right but you certainly wouldn't regard the the right fly as a commercial aircraft now but they the rights did actually sell their second and their third aircraft and that then led to a whole whole industry being created now there are there are energy changes levels that happen within that largely driven by wars and strategic imperatives to actually go and get this sorted out so we can actually escalate but we need to be able to escalate the scale of this when we are technically ready and when the need is here now the need is becoming more pressing as we've just passed 400 parts per million in carbon dioxide for the first time in human history this a few weeks ago the pressing need is definitely there but the technology is not quite right yet so i think Steve's point about us making sure that we innovate and develop at a scale we can afford get good at what we can do at this scale and then be ready to really blossom when we get this absolutely right that's the critical thing and i would draw a parallel that go that happened where we really got it badly wrong in awtney with wind in the past we had a test centre in awtney at burger hill we had the most innovative wind turbines around we went for a jump from a 300 kilowatt machine to a three megawatt machine and there were some technical issues with it it worked it was fine but it but people just weren't quite comfortable with it and as a result of that we then gave up our wind industry the Danes on the other hand stayed with it and it's been a huge success and now we've passed the three megawatt mark and now we're heading towards as an eight megawatt turbine just gone up so it and it's heading onwards but we stalled and we stalled because we pushed it a little bit too hard and too fast at a critical moment and i think we need to get really good at what we're doing use the technologies and use the facilities you've got to really make sure we understand this and then build that when we are ready don't force people to go to the water too early so basically my last comment through you can you know would be stick with us we've got to do it and and and and if you do stick with us we'll ensure that we do it i had written the word patience on the bottom of my pad before i came in today so that was something we actually need we need we need a degree of impatient patience we need to keep pushing but we absolutely need to not not be unreasonable when we go oh that's it you know and walk away the creation of ways i think was a brilliant move i absolutely do it at a time of threat scotland stood up and said we're not having this and and stepped towards the threat and i think that was exactly the right thing to do we could have stepped bang on up it's all a bit hard really but we didn't and and i think that's why it's it's such an innovative process and we need to support it we've got to ride this through because the wind is so huge it'll be criminal not to do it thank you lindsay this is um taking the convener's tip here um one where we really need to differentiate between wave and tidal still so we were kind of talking the generics there and wave is further behind but when we're looking at tidal we're talking about you're asking about being so far away we've got to remember we've got major in that's just reached financial close and you've got nova innovation doing fantastic things up in shetland you are looking at your first small raise but your first a raise coming to fruition in the tidal sector um so the idea that it's so far away i don't think is so true for for tidal we've made it in a different place as we've all acknowledged this morning very brief supplementary first of all from patrick harvey thank you very much convener just in relation to neil camod uh your comparison with aviation uh you you said that the urgency was there but you gave the example that war for example had been an imperative uh spurring the the development of the the early industry forward you talked about the the urgency of climate change and that's clearly understood we're not yet seeing anything close to the same imperative that a war would have delivered in terms of of aviation development what's what's needed to turn that that scientific recognition of urgency into the political imperative that's necessary to spur this industry in the way that you've uh outlined happen with aviation it's not an easy one i know no thank you rish indeed um i think we've got to recognise that the the the real risk is that we we say we have to get wave energy going we've got to do it tomorrow and it's a desperate rush and we'll rush out there and and not be prepared for it we we have to get this technology right because i fundamentally believes what i'm spending my life doing this um that this is a technology that will deliver benefits um but it will deliver benefits when we are ready to go and do it um we can only ever prepare uh the equipment and get things organised and learn how to optimise this and therefore do it at the lowest possible cost um in the expectation that there will be deployment and the point that was made earlier was that setting the market conditions means that people will focus on this and continue to drive and develop and and be ready for the opportunity when it opens up can government trigger that opportunity it can trigger it to some extent by by demand it could it could choose to um buy to set a market for a for wave energy because they we will buy um team gigawatts of wave energy first one ready bring it on you know there are a number of things that could be done in that sort of space um but there isn't really one very very clear picture um i think i think we've seen that renewables works we're seeing that it it generates jobs there's two hundred and fifty three hundred people working in Orkney today on this sector it is it is very very real um where we are and we know that this can be delivered but it is about having the patience to get the technology right rather than going off and doing this thing and going off half cocked. A timescale for decommissioning fossil fuels might focus the mind. The commitment and the support we've had um political support we've had in Scotland exemplified by the establishment of wave energy Scotland allows us to do exactly what Neil's set out it's set out just now it allows us to take that breath pause look at what we've done right look at the things that clearly led we aren't going to lead it anywhere successful we put them aside and allows us to take that step by step rigorous engineering approach now to developing the components and subsystems and doing it in a competitive way so that we take forward a small number hopefully of technologies which at the end of the day the private sector will step back in and they will help us commercialise and create generation around the Scottish coastline and I think this is exactly the approach we need now um and we're satisfied that the budget we have available to us is is appropriate for the work that's ahead of us in terms of wave energy Scotland and that earlier stage prototyping technology development. All right not a brief supplementary. The Ensign Young report in September 2016 showed the UK had been downgraded to seventh for renewable sector investment by default particularly new products. I mean what would you believe I'm going to ask you where you think Scotland fits in but is that lack of innovation are we too risk averse has it been the EMR or lack of I mean what do we need to do to I mean we talk about patience and we need to get things right you know what is happening elsewhere that is managing the countries are managing leapfrog the UK in terms of the sector investment. Tim sorry. I'd better say that investment in wave energy across the world is has reduced it's not just happened just a case that that's happening in Scotland so when we talk about investment in renewables I think wave is a separate case and we certainly have seen a significant change not not just reduction in the amount of investment in wave technology but almost a complete drying up of investment in wave technology and if I go back to January of last year when the First Minister had his wave summit on wave technology to look at the reasons why investment had dried up in wave technology it was quite clear by the industry representatives that turned up on that day that it was all about the technology and their their view was get the technology to work and we'll come back to the table and we'll reinvest and that was a strong message across the whole of the the committee that sat on that wave summit that day and I think that that has a big stimulus as to why wave energy Scotland has been set up because that that's exactly our role get the technology to work and I think that's that's the that's what we should do we should put all our efforts into getting the technology to work and investment we'll come back in and do your feel for international competition all right so let's do it let them do that I think that the specific reason in the Ernst and Young report was around EMR so it was sort of the renewable sector as a whole and that has been a big shift for us to understand the EMR regime coming in and to get our heads around a new contract for difference regime and as Neil and I were both saying earlier on I actually don't think at the moment it's had too much of a direct impact on this sector there's some really sort of technical stuff in there that has been challenging in terms of skilled market but I think we've got to a point now where we've realised that product doesn't necessarily work for the very early stage technologies we need to amend something in there as well like I say something akin to a feed-in tariff for very for the first small scale arrays and for the test centres is probably more appropriate than trying to play into the CFD regime at the moment but I think that was the underlying reason behind the the Ernst and Young report so in this technology we know where we are internationally in terms of competitiveness, in terms of development of the technology. We absolutely do. An awful lot of the work that's been going on on EMAC has actually been international players coming in and playing here and we are continuously attracting people in who want to come and try their technology and they want to try it in Scotland because they know there's a market they can see the supportive environment that's going on we are still the pinnacle of what's going on even though the pyramid has sunk slightly and people are really really keen to find a way into this so we're right in the right place for it the international side of things but it is up to us to make the most of it. It's in Steve's own written evidence as well I think it's in all of our written evidence about we might still be at the pinnacle just now but the rest of the world is rapidly nipping at our heels some of his real programmes going on. It's probably worth saying that actually the reason many of these international technology developers in the past such as EMAC and in the broader UK is public sector support and public sector commitment. People come here frankly because they can get support in the costs of developing their technology and I think I'd probably disagree just slightly in terms of yeah we are sort of level pegging with what's happening elsewhere I mean the example I've sort of it keeps me awake at night a little bit is what's happening in the US and the Department for Energy in the US have got a major push on wave energy technologies just now they're talking a hundred million dollars or so on a competition basis to develop technology so yeah you know there are other things happening that we've got to be cognisant of. It's pretty much in line with the the programme that we're about to kick off as well so it's along the same lines a competitive pathway for technology development. We most definitely do still have a leave those in terms of the learning we've had apologies. We've hit the buffers first but these other countries are going to suffer similar problems so we've definitely got a lead there. I appreciate we're getting close to the end of our time there's two more members need to get in Joan McAlpine. Just to go straight to the back to the investment issue we have a green investment bank in this country I wonder what maybe Lindsay might want to say how much assistance have you had or your members have had from the green investment bank? So the green investment bank at the moment it's an interesting topic and a hot topic in terms of marine energy. They don't invest in marine energy products at the moment, marine projects at the moment and there's a real question about whether they should be or not. You don't invest in the green energy? Not at the moment. And they're a green investment bank? It's to do with the way the bank is set up and the terms upon which they have to enter into commercial deals and not seeing it as being ready for their type of investment that they're bound by through their regulations at the moment. But we are discussing and lots of discussions with them about amendments that we could be made there, how we could bring green investment bank funding into the sector. The Scottish Government, I have to say, has been fantastic at being very flexible and reactive in the way that they provide support to the sector. They've done that through the Marine Renewables Commercialisation Fund and made that grant funding support when it needed to be. Another thing that was amended was to reef the renewable energy investment funds and a lot of the changes that were made to reef were to recognise the lack of green investment in ability of the green investment bank to invest into the sector at the moment. So they have tried to kind of make up for that just now. I think there's the start to be a question about whether they could be investing in tidal and they should be investing in tidal soon and these are parts of the discussions we're having with them. Waves are a different game, but we certainly speak to them a lot and it's a very hot topic. Obviously, the green investment bank is a UK Government initiative and a great deal was made when it was located in Scotland. Have you had political engagement with the people who make the decisions at UK Government level about this difficulty with the green investment bank? We speak about this a lot with our UK colleagues and it's something that we take down to Westminster. What success have you had there? We're getting there. I think there is definitely they are interested in what we have to offer and again it's a lot for the industry and the sector itself to do to prove that it's at a stage that makes it ready for that kind of investment and to play that kind of game and that's what we're trying to do. It's a very constructive discussion that I would say that we're having with the bank at the moment. When the green investment bank came before this committee on the last occasion they revealed that only 1% of their funds was invested in Scotland. Do you think perhaps that's because of this policy regarding marine entitle? Not necessarily. I wouldn't see it, I don't know, how much that percentage would grow if they decided to take on marine in comparison to investing more in say offshore wind projects in Scotland, which would be much higher and much more significant investments in the role that we play in those kind of percentage levels. Like I say, we are keen to keep following the discussions about green investment bank and its relationship with the marine energy sector and specifically with the tidal sector. I think a lot of people out with the bubble would be very surprised to hear that. Given the hype around the green investment bank, would other members of the panel care to comment on that? I think probably the figure that you quoted in terms of how much activity goes on with Scotland is an artifact of the type of project that historically invested in. It's mainly been offshore wind and most of those projects that are being built and being refinanced are south of the border just now. I think what would be constructive is to have pretty clear sight around what are the conditions, what are the criteria that could trigger an investment from all investors, particularly the GIB, and that would at least set out what is it that we're shooting for here. I think organisations such as mine have got an opportunity to work with the investment community to help us to better understand what are the conditions that these organisations would invest under. Neil, have you got any thoughts on that? Yes, and I did wonder whether there might be elements of what the green investment bank could do that could support the underlying infrastructure. That is that it may not be appropriate for them, given the technical risk that might be there for some of the particular projects that are there. However, most of these projects are going to require a grid behind them. If there are some mechanism that that could be brought in or indeed in the same sort of thing about a testing infrastructure, there may will be places in which they might be able to meet their investment criteria, which I'm not a banker, so I really can't comment on how high they've set their criteria. What's the point if I'm in a green investment bank in Scotland if only 1% of its funds are invested in Scotland? Are you shaking your head, Tim? No, I would agree with you entirely. Neil, earlier you mentioned that you made a comparison with Denmark in the 70s and 80s, and there's a reference to that in our spice briefing on today's session. The sustained investment that happened in Denmark in Germany in the 70s and 80s, is that a good comparison in terms of the actual money that they spent to get themselves to a place where the technology was commercial and that they became world leaders? With the level of public investment, could we do that for waving tidal here? I would have thought so, and if somebody wants to, it's got better numbers than the ones that I've got in my head. My recollection is that, every year between 1993 and 2003, they put £130 million into wind, so it's £1.3 billion overall. The Danish GVA on wind last year, £1.5 billion last year, and I've seen figures even higher than that, so they got their money back in just a year. I would have thought that that sort of approach would make a lot of sense. The other thing that they also did, which I have not seen the UK do as a whole, but I think we've done something in Scotland, is about positively polarising the population towards this sort of investment. In Denmark, they had wind guilds, which were a saving scheme that allowed people to invest basic crowdsourcing of their own individual wind projects, which then meant that when they had a village save enough money for a wind turbine, they wanted to build the wind turbine, and not only that, they wanted to see how their investment was doing, so it led them into a place where, rather than trying to hide wind turbines, they were proud of what they did. I do think that there's an emotional element that we need to make the most of. The UK does see itself as a maritime nation. Scotland's got a very strong maritime heritage, and I think we're not really playing a very strong game here about trying to make sure that people realise that marine energy is actually strategically important, environmentally benign, and is actually a massive opportunity for economic development for the country. That's a piece that doesn't seem to be being played for you strongly. Do you think that creating that atmosphere would actually help leverage private sector investment? Would it give the private sector more confidence if it had that level of public support? I'm quite sure it would. In Auckland, we've argued quite strongly for a number of years that we get a number of people come through our site and, indeed, come to the island. There are 57,000 people who get off cruise liners every year and walk past two tidal turbines, but we don't really have anything that really interprets that. I think that there is clearly an opportunity to inoculate all these people with such positive messages about what's going on. It's called advertising in other forms, but there is a need to positively polarise people so that when these people get to a point when their investments through their pension funds and all the rest of it are even considering marine, they've already gotten awareness of this. Just in a way, Stephen Salter joined wave an energy together 30 years ago and made those words fit together into a phrase. There's something to be done mentally to people now so that they are ready for this when the technology is good to go. In terms of you mentioned the cost of the Hinkley pipeline earlier. Obviously, in terms of sending out a very strong message, the UK has sent out a very strong message that, at the UK level, it's backing nuclear and it's prepared to invest huge amounts of money. Is that detrimental to investment in your industry? That very hyping up nuclear power at UK level? I think that we're in something of a shadow, that's the problem. I don't think that it's necessarily renewables or nuclear. We have a problem with carbon and at the moment the UK Government is rather focused on the nuclear side of things in the central part, but there is a lot of strong work going on in the south west, in Pembrokeshire, and there are other areas which are very keen to make this work. I think other places are seeing the value on it, but we don't seem to have the same sort of traction. It would be really useful to see ministers up seeing what is going on with the marine, which we haven't managed lately. Just to add to that, I've got a few figures in my head that I carry around, which the Welsh Government have outlined £80 million from Marine Energy within their budget. The south west LEP, Local Enterprise Partnership, has got £40 million or £50 million ring fence from Marine Energy. There is commitment south of the border, if you like. I think the challenge we've got is to make sure we're leveraging that here in Scotland, and we're pulling all the right bits together. That's certainly part of my remit as the catapult centre to make sure we're doing that. That's regional law, in terms of Westminster. That's right, but I think the activity is a bit regional. For offshore renewables, for wave and tidal, the benefits are felt really quite regionally, which I think is why we've seen more engagement on a regional level than sometimes we do in Westminster. Just very briefly, my observation is that across Scotland and beyond, everybody is very good at explaining what energy sources they don't like. In fact, some of marine development has been for people arguing against onshore windfarms. That would be better, and that would be better. What do you think needs to be done at every level? I think it's come back to the point that Patrick makes about the urgency of war developing technologies. What do we need to do? What in the political situation do we need to do to stop arguments around energy being about what we don't like? People are very inconsistent in favour of renewables until there's a community locally who are against them. We've seen that in the lifetime of this Parliament where, for example, in the Western Isles, an onshore development was very actively campaigned against. What do we need to do politically? How do we get a proper understanding positively of what wave and tidal actually offer? Rather than it simply being because it's not something else and it's not near people's houses? I'll kick off. Simply put, we need to get climate change back on the agenda. There's no getting away from the fact. Onshore wind turbines, if I said to you, you can put a temporary structure up that will generate electricity that will be cheaper than most fossil fuels. Why aren't people jumping at that? The same with wave and tidal. In the future, that's the next onshore wind. Putting climate change back on the agenda and, in the shorter term, playing the arguments of security of supply and economic benefit, they're the three tools that we've got to try and bring about this change in the public perception. Is there also something about a sense of community benefit of those developments as well that they're more closely related to quite often quite fragile communities who would benefit economically from them but don't perceive that to be the case? Yeah, I think so. With the islands, I think it's really quite easy to demonstrate that link. If you look at a map of economically fragile areas that are then off the Scotland and you look at offshore renewable energy resource, there's almost a perfect alignment. So if we can develop projects in those areas, then we can create economic activity exactly where we want to do it. So there is a perfect match there. It's worth pointing out that we obviously do quite regular pooling in terms of people's perception of renewables and their support for them against other resources. It's consistently high. We're consistently up in the 70 plus per cent and there's consistent support for onshore winds and exactly the point that you were making, we have to remember a lot of the onshore infrastructure that we require for the wave and tidal sectors is driven by onshore wind development at the moment. So it's definitely, we have to get that message across. It's not one or the other, the two work together is really important. As a trade association, we do a lot to try and get those messages out there, but I think what we can really do at the moment, that I keep coming right to this UK wide overarching strategic plan for the sector over the next few years pooling and working with our colleagues at Westminster as well to develop something that really sets the direction of travel and gives people confidence, poots it back up the political agenda again and really drives us forward, that's really crucial. Neil, do you want to come back in? If I may, thank you, convener. I think you're absolutely right that this is, we don't want people running away from another technology in order to come to this, but what we need to do is to make sure people realise that this is strategically important, that there are real jobs to be had, that it's a sustainable technology and there's a massive export opportunity. We're very fortunate, I have to take Auckland as a microcosm, we've ended up with a cluster there of between 250 and 300 people, it's a descending number of people at the moment, unfortunately, who are employed in marine renewables as a whole. So people in Auckland really get it, they understand that it's a benefit, everybody knows somebody who's working in the industry and therefore well they're willing to give it a bit of a go. So I think as we need to spread the knowledge about the technologies wider, we need to make sure that we are able to point to the benefits that have been had so far and those benefits be continuous. Tim's point about sporadic funding is a problem, so we need to make sure it's continuous. So far we've seen methyl built the acymru machine, the leaf constructed the polymers machine, there's the blades for the nova things built in Shetland, Port Glasgow built in the Nordicity device, there's a whole bunch of stuff going on, but generally they're one-off events and then they go away again, so people are brought up and then disappointed. We need to get rid of the disappointment elements about it. So I think sustained activity and realising this is Scotland's Apollo programme, that's what we've got to get people behind this and realise that everybody's contributing to something that's bigger than themselves and I think that will help ride through some of these hiccups that we've had, at the pothole we've stepped in at the moment with what's happened with Palamas. It's not a cliff that we've fallen off, it's just a blip in the road. All right, Lewis. Yeah, thanks very much. I just wondered if we could get on the record a couple of factual things about Wave Energy Scotland just while we're here and we have that opportunity. It's been said that the industry has had some track record of funds being committed and not spent, so just to establish the initial budget of Wave Energy Scotland, how much of that is funds previously committed and then not spent because of companies going out of business or ceasing to operate in the same way. Also, it would be helpful to understand the value and nature of the contract with the former Palamas staff at Wave Energy Scotland. Finally, back to our previous line of questioning, given that Wave Energy Scotland does not aspire to hold IP in perpetuity, what is to become of the IP acquired from Palamas? On the budget point first, this has not de-secheled money from MRCA for waters or anything like that. This is money from the Scottish Government's energy budget for last year and for this year that's committed, so it is new money. On the second point, sorry, forgive me. Yes, the value and nature of the contract with the former Palamas employees. That's our contract worth £226,000. That's with a group of 15 ex-Palamas employees and that's around capturing the knowledge and documenting as much as possible of the lessons that they have learned over the last 15 years. What's worked? What hasn't worked? Where have they actually got to in the technology? Where would they have gone next? Where have they got in terms of certification? Basically to write down as much as they've got in their heads as possible, so we've got some value to add to the IP that we've acquired and the IP that's been acquired and actually the assets, physical assets as well, will be made available to anybody coming into the WEDS programme. So we want to use it to support the growth of the industry in whatever way is appropriate. So we haven't been prescriptive, but other than to say that we've got it and it's available to use and we want it to be used. Just to add, as part of that contract with the ex-Palamas people, we've looked specifically at trying to extract the best parts of the technology and see which of those bits of technology can be taken forward into the WEDS programme and developed and perhaps slotted into other technologies or developed as standalone subsystems. So it's specifically focusing on what is the value over the last 15 years that over £90 million has been invested in that we can take from that and develop for the future. So it's specifically looking at the future of that technology programme. Will the results of that work be made available? Yeah, so publicly publish the results of that work. And do I understand from what you've said thus far that your line of accountable to your line of management essentially is to HIE specifically? That's right. And that you will be audited as part of the HIE? Yes. So WEDS has been set up as a subsidiary of HIE. It will operate under HIEs, operating and governance framework, and HIE's chief executive is the accountable officer. So all of HIEs, reporting and monitoring another system and frameworks will all apply to Wavenge Scotland. Wavenge Scotland will all report to the High Board on progress and thereby back to Scottish Parliament, Scottish Government. And that remit is specifically and exclusively for Wavenge, title energy, you will continue to support in other ways. That's right, yes. And finally, community reform A, a lot of what we've heard has been very positive about title energy that's close to first array, that some of the issues that we've heard about with Wavenge have not arisen at this stage. Can I, and Lindsay was very positive, I wonder if other panel members would confirm that you are equally confident that the development of title energy, us distinct from Waven, is at the point where moving forward to commercialisation is realistic and where some of the issues around running before you walk that have hit wave energy are not going to get in the way at this critical stage. Yeah, I think we would absolutely agree with the points that have been made with the medium project that's now started on-shore works and offshore drilling. You're looking to start deployment from next year and have all four devices in the water by 2017 and commissioned. So that's not to say that there won't be further technical challenges and hitches and a lot more learning to be had, but we do agree that title sector is at a different stage and is that bit further forward? I guess it's because it's more of a known technology. Industrialists understand it, there's been design convergence which hasn't been in the wave sector and that's made a massive difference. I can just apologise on behalf of Tim and I for both of our phones, so please accept your apologies. I don't think that we're home and dry in terms of tidal energy. We do have the first project that's reached FID. We're starting to do some of the land works around that. There's a bit of way to go yet before we have energy generating. Then I think there's another step. Once we put those five devices in the water to then configure the next phase of that that will be significantly greater. In part with the advent and wave energy Scotland, the ORE catapult has sort of focusing a lot harder on tidal energy, working with those that are looking to develop the projects and develop the technology to try and overcome some of those barriers looking out to the first project and beyond. So there is a bit more work to do. I just wanted to make the distinction between where wave is and where tidal is. I can still agree by no means to take any of the success for granted. It's in the home and dry yet there's a long way to go. In the MAPB report that I referred to earlier, it still has a recommendation in there for an innovation programme for tidal and a lot of that's focused. I would suggest that it should be focused on cost reduction as well. That's a big thing that the tidal sector is going to focus on. So it was just a distinction between where the two are and not a suggestion that it's home and dry. Okay, thank you. Can I ask one last question then on specifically on wave power? We talked earlier about how we're 15 years into this. It's now 2015. If you were to come back to this committee in 2025, what will you be telling us? Will you be telling us we are now at a stage where this is commercially viable or will you be going back and saying we're still facing difficulties and we need more public money? What's your best game? It's commercially viable. Of course they're viable. Any advance on commercially viable? I'm just curious that my light went on first. I think we'll be coming back and pointing to the successes we're having, that there are things going on and there are machines out there and they're working. I think we will be facing some technical challenges that will start to come home to roost after a number of years in seawater. That's inevitable. I think we will be saying we'll be wanting some money but not for the same sort of things. There'll be a variety of bits but I think we'll also be able to point to a much bigger group of people and be able to show what's going on because it won't just be a small group. It'll have achieved some critical mass by then. Likewise a group of everything that people have said, I think we would be coming back to talk to you, to talk about a number of successes but also we'd be pointing to what more can we achieve here? So how plus were this cost reduction journey? Let's maximise the opportunity that Scotland, the UK, Europe has in the wave energy sector because it's now really tangible and we're there delivering. Stuart, you want to add anything? I'm really looking forward to hearing what the first programmes through Wales will deliver. I think there's a lot for us to gain from those. I'm really looking forward to seeing what happens with the first PTO call. Okay, well thank you all very much. It's been a long session but you've answered our questions very comprehensively so on behalf of the committee I thank you all for coming along this morning and we will now go into private session and have a short suspension.