Specialist R&D Tax & Grant Funding Advisors

R&D and greener energy

Barrie Dowsett

Chief Executive Officer


Climate change has been big news lately, putting the spotlight on how sustainably we live our lives and how we generate the energy we use. Wind and solar power generation in particular is gaining momentum around the world at record rates, meaning more of us get our electricity from renewable, clean sources than ever before. But whilst this is brilliant news all round, there’s still plenty more we can be doing by investing in innovation.

Through such investment, we can continue to move forward in enhancing current technology like renewables, thus speeding up the move from fossil fuels to a future of more affordable, reliable carbon-free energy. Not only would this be an amazing achievement it would be vital in shielding us from the most negative impacts of climate change.

The simple fact is that 25% of all greenhouse gas emissions are due to creating electricity - and that figure is growing; the time to innovate is now.

But how can we reach the goal of zero carbon electricity generation?

It seems there are two challenges here, with the first being about harnessing the power of the wind and the sun. Thankfully the prices of things like wind turbines, solar panels and other renewable technology is coming down but we need to keep up momentum.

The second challenge is more tricky and perhaps less obvious. It involves making breakthroughs in technologies that mean we are still able to supply the power grid with clean energy even when the weather is cloudy, still and at night time.

Let’s look at these further.

Improved energy storage systems

The wind and the sun are fantastic energy sources, but finding ways to store such energy when the wind isn’t blowing and the sun has set is a huge challenge. Granted, we have long been able to store energy for a few hours using things like lithium ion batteries, but what we haven’t yet achieved is a way to store renewable energy for days, weeks or even months. We need to build resilience so that seasonal changes, long periods of cloud or little wind for weeks on end don’t cause significant electricity supply problems.

What innovation is taking place into new energy storage systems?

There are four main areas of innovation when it comes to improving how energy is stored. These are batteries, zero-carbon fuels, thermal storage and pumped hydro.

Batteries: Trusty lithium-ion batteries, like those used in mobile phones, laptops and electric cars for example, are one of the fastest growing solutions for energy storage - but they only retain energy short term. Research and development (R&D) is currently being undertaken on a new class of batteries designed to provide storage for far longer than standard lithium ion batteries at a much reduced cost.

Zero-carbon fuels: Another exciting potential energy storage solution is zero-carbon fuels. These include fuels produced using wind and solar energy that can be made back into electricity or used for de-carbonising other sectors.

Thermal storage: Technologies in the thermal-powered storage arena have the potential to provide a reliable, flexible power backup system for the national grid. It’s been discovered that a particularly effective way to store heat is in molten salt. Innovative work has begun in developing a molten salt thermal technology that works in the same way as a heat pump. Renewable energy is stored as heat in molten salt and when discharged, the system works like a heat engine using heat to create electricity.

Pumped hydro: A particularly common type of energy storage nowadays is pumped hydro, where electric motors are used to pump water uphill to a reservoir. As the water is released from the reservoir, it flows downhill to generate electricity via hydroelectric turbines. The weakness here however is that it will only work in geographical areas that have hills. The R&D challenge comes in how to make this system work in locations that are flat, whilst still keeping costs low.

Nuclear power

Nuclear power has been a source of carbon-free electricity for quite a while already and produces around 10% of the world’s power. It also has the potential to be a very reliable source of sustainable energy, however high costs and safety concerns in recent years have been a problem.

Innovation in nuclear power could hold the key to creating a new generation of nuclear energy that would be less wasteful, lower cost and of course safer. This is a real challenge, but one which sustained investment in R&D by both private companies and the government could work to solve for the future.

How can R&D Tax Credits help with the cost of this innovation?

Any form of research and development (R&D) will very likely incur costs that companies need to meet. To help encourage innovation and growth, the UK government offers financial assistance in the form of R&D Tax Credits. It means the chance to offset some of the costs via either a reduction in their Corporation Tax or a cash lump sum.

SMEs are currently claiming £46,000 each per year on average, and costs that can be included in a claim can be anything from materials to staff salaries and much more. It also doesn’t matter whether your company is in profit or not, or what sector it’s in; if there has been some element of scientific or technological advancement then it’s likely to qualify.

The scheme was launched in the year 2000 and its generosity has increased over the years. The current rate offers a 24.7% benefit on R&D expenditure for profit-making SMEs and 33.35% for SMEs making a loss - a significant amount in anyone’s book.

Does this sound relevant to your company?

Our website offers a wealth of information about R&D Tax Credits and grant funding, or feel free to call us on 0207 118 6045. Alternatively use our contact page and we’ll get back to you.

Myriad Associates is made up a team of accountants and tax specialists who deal with R&D tax relief claims on a daily basis. Although the application process is notoriously tricky, we know where the pitfalls lie and how to offer you the very best chance of success.

We are highly trained and experienced and can guide you through your claim from start to finish - so whatever your query get in touch and we’ll be pleased to help.

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