The UK government’s support for cleantech takes the biscuit.

The UK government’s support for cleantech takes the biscuit.

Last week President Obama awarded $3.4 billion in grants to support smart grid companies in the USA. Meanwhile in the UK after several days of dithering, the prime minister announced his favourite biscuit was a chocolate digestive.

The UK doesn’t get cleantech and as a result should prepare for brownouts. That’s not just a new prime minister – that’s electricity being cut off on a rotating basis, as happens routinely in South Africa, as there will not be enough energy efficiency or generation capacity in the future to power the daily demands of houses, offices and electric vehicles. This is the problem that the smart grid is aiming to solve, through helping homes reduce and redistribute energy, and investing in modern transmission infrastructure (an area my company, Moixa Energy, is working on) that enables every home to save energy via low cost off-grid or monitoring technology.

Britain has now sold most of its electricity generation capacity to the continent, used up most of the oil that created and carried it through the boom years, and continues to dither over the investments required years ago in wind farms, wave generation, barrages and research grants that could have helped the UK become a global leader in green technology. Perhaps if Boris Johnson builds a green airport in the Thames as a renewable wave system and new flood barrier (as we can expect London to be flooded), we might keep our heads above water.

Any money the UK did have has gone to bail out failed banks and last-century jobs, or has been squandered on MPs and government adviser expenses, or on quangos set up to provide advisory services out of shiny new offices – anything rather than providing grants effectively to the start-ups, small businesses and research institutions that could build a more sustainable future for Britain. Much momentum has also been wasted in constantly re-organising and re-branding the government departments responsible for helping UK business. The latest news is that by April 2010 the government may finally authorise a feed-in tariff, new green taxes or at least complete a policy review on what might be useful for the next government to do in clean technology. There is finally talk of starting to invest in smart meters, to catch up with the many millions already installed in Italy and other countries.

Last month did see a small ‘shot in the arm’ of £18 million in additional ‘investment funding’ allocated to the Carbon Trust (compared of course to the $3,400 million in the US), but such money is invested here on venture capital principles. This is one of the major problems with cleantech in the UK – government acting as Dragons’ Den-style venture capitalists, with low valuations and small amounts of funding rather than as a sponsor of research or aiding small business. Even the current Carbon Trust campaign for energy efficiency is fronted in the media by former Dragon Theo Paphitis, with money treated as a loan (albeit on 0 per cent interest, like some dubious sofa offer).

Cleantech needs dragons like it needs a shot in the head – innovative companies need to preserve equity in order to raise the significant amount of funding required from Series A and B investors to compete internationally. The US is spending billions in grants and tens of billions in venture capital to catch up. China is ahead on deployment, spending hundreds of billions on energy and efficiency infrastructure. Portugal and Germany are European leaders after a culture of good governance and grants/incentives.

Meanwhile local UK government support takes the biscuit, and it doesn’t even have chocolate on it. Early pioneers like Deepstream have gone into administration, and the intellectual property of the nation looks set to be sold in a grand car-boot sale to foreign companies – rather like the discount sale of Rover Group, which incidentally used to be the largest filer of patents in the UK. Even the latest advice from UK Trade and Industry is to seek funding from the US. It is helping UK cleantech companies visit the US to raise funds, whilst another group has invited leading Silicon Valley entrepreneurs and investors to Cambridge for a select fashion parade of UK cleantech assets. 

Of course everything may change with Copenhagen but in the meantime the best advice for UK cleantech companies is either to do a James Dyson (work independently and in private without any government or external support until ready), or move to the USA and participate in US grants and VC activity. The only other option is to wait until a new government starts to take cleantech seriously as an engine for growth.