Its Not You, Its S-ME: Why Current Standards Are Holding Small Businesses Back
The debate on how best to tackle the issues of climate change often regurgitates familiar concepts of resilience building, risk management and opportunities to improve efficiency across industry. It has been suggested however that we should bypass these ideas and instead innovate our way out of trouble. Here in the UK, we are certainly not short on blue-sky thinkers, with small-medium sized enterprises (SMEs) constituting the majority of the environmental technology sector. However, as technologies become more advanced, it raises the question of whether the current regulatory environment can keep up with this increasingly innovative and fast-moving market, and if not, what alternatives can SMEs turn to.
The UK is deemed to have a good environment to innovate, which perhaps explains why over 500,000 new start-ups registered their business in 2014 alone. Most of these start-ups can be found in the technology sector, but the clean technology (Cleantech) scene is also demonstrating a vibrant and fast-paced energy that is growing at an impressively high rate. Indeed, the 2014 Global Cleantech 100 report, ranked the UK second, behind the US, for having the most innovative Cleantech companies in the industry. However, like in any sector, creativity and innovative thinking will only get you so far.
When a Cleantech start-up, for example, develops a new product with a distinct competitive advantage, it is vital that that company demonstrates the product is workable, before introducing it into the market. This can be normally be easily achieved by external testing or certification. However, it is becoming increasingly apparent that current regulatory standards are ill-equipped to handle new innovative designs, hindering continuous improvement and blocking new technologies from entering the market.
UK Solar Industry
An example of this issue can be found within the UK solar energy industry. According to a report by the Department of Energy and Climate Change (DECC), a rapid rise in the number of solar photovoltaic (PV) installations in the UK, around 650,000 since 2010, meant that 1.7% of the UK’s total electricity generation in 2014, was provided by solar PV.
Much of this growth has been based on silicon-PV technology, a conventional solar cell composed of layers of semi-conducting silicon that form an electric field when exposed to light. Today, this technology makes up 90 percent of the global photovoltaic market; however power efficiency levels have remained stagnant over the past 15 years, at only 25 percent.
With this in mind, the industry is increasingly turning to alternative technologies such as, polymer solar cells, e.g. organic photovoltaics (OPV) and hybrid solar cells, e.g. Perovskite. The former is comprised of an organic photoconductive layer that uses organic polymers to produce electricity from sunlight, whereas the latter combines the benefits of both organic and inorganic solar cells to form a photoactive layer. These new technologies are pushing the boundaries of the solar harvesting industry with their increasing rapid efficiencies and low cost manufacturing methods.
Conventional vs Organic PV
OPV has become increasingly popular on account of its ultra-thin, lightweight and flexible design, which not only enables greater sunlight absorption, but also facilitates integration into a variety of products potentially offsetting the use of batteries. Furthermore, the roll-to-roll printing process used in OPV’s manufacturing could mean exceptionally low production costs if generated on a large scale.
The technology is however still plagued by teething problems, with the most prominent issue relating to its variable lifespan. In its current state, it cannot yet compete with conventional PV cells, which can retain power output at >80% for up to 25 years. Nonetheless, the potential to produce low cost clean technology is still a large attraction for manufacturers to continue to develop and improve OPV, for its potential far exceeds its current faults.
Its lack of widespread use however is due to the fact that only regulatory standards for silicon-PV systems have been published (around 68 in total). These standards provide the frameworks in which silicon-PV technologies can be measured against in order to ensure they meet recognised quality and safety requirements, as well as reduce barriers to trade. Therefore when you apply these existing standards to newer OPV technology, they are not fit-for-purpose – designed with only the traditional silicon PV technology in mind and often under-reporting or excluding the benefits of the OPV.
This issue is not only seen within the solar industry, but across the Cleantech industry and more broadly by many small-medium sized enterprises (SMEs), which according to the Department for Business, Innovation and Skills (BIS) constitutes the majority of the environmental technology sector. These small firms are frequently facing barriers to market due to a lack of appropriate verification standards for emerging technologies.
Modernising the regulatory environment
As it stands, environmental technology performance certification schemes are not fit-for-purpose. They currently lock in pre-existing technologies, impacting the development of newer, more efficient technologies, which could potentially offer significant greenhouse gas (GHG) savings over existing products. This will ultimately influence emission trajectories, affecting our ability to meet commitments to limit global warming to no more than two degrees.
This problem is recognised at government level and in attempt to help SMEs tackle this barrier to market, the European Commission has been piloting a programme known as Environmental Technology Verification or ETV.
The ETV scheme, backed by the Department for Environment, Food and Rural Affairs (Defra), provides independent verification of performance claims of environmental technology products, without using pre-defined criteria or standards like in other existing certification or labelling schemes. The scheme instead assesses each technology against its own characteristics, tests on a case-by-case basis and is intended for business-to-business relations.
This gives SMEs the independent proof of how the performance of their new technology compares with existing competitors on the market, building confidence for buyers and investors that are critical to the success of SMEs. It also systematically fosters innovation and competitiveness in the UK and Europe, by allowing a more appropriate verification process for emerging technologies.
ETV: The Facts
The Centre for Carbon Measurement at the National Physical Laboratory (NPL) operates as a Verification Body (VB) for Energy Technologies under the programme. In total, there are 13 VBs across Europe, which offer verification services in two other technology areas: water treatment and monitoring; and materials, waste and resources. Any company that manufactures environmental technologies can submit a proposal to one of these VBs, provided the technology is at prototype phase and offers an environmental advantage over an existing technology.
The European programme has achieved three completed verifications from a range of energy and water treatment technologies, with high expectations that there will be many more as the process continues. Whilst still in a pilot phase in Europe, the programme has succeeded for several years in other countries such as the USA, Canada and South Korea. Indeed, since 2013, the International Standardization Organisation (ISO) has been working on a new standard for ETV, known as ISO 14034, which will provide the basis for mutual recognition of ETV programmes in the future. Thus a technology undergoing ETV verification can not only expect easier market access under its own regional programme but also across other markets e.g. North America and Asia.
A scheme that satisfies an immediate market need
Innovative products are often novel in nature and therefore cannot be characterised with currently available standards, because they do not have proof of performance. Programmes like the ETV scheme are critical to providing this evidence and facilitating the uptake of new commercial environmental technologies within the market.
ETV differentiates a technology from the competition based on its case-by-case approach and can help UK and European companies gain a distinct market advantage in a complex global environment.
Green policies and standards, including ETV in Europe, can promote and help make innovations successful. If we are to limit global warming to no more than two degrees, these new flexible schemes will be essential in supporting the commercialisation of innovative, low carbon technologies that will help increase energy efficiency, and thus reduce GHG emissions.
Article first published in Energy Manager Magazine May 2015 edition. www.energymanagermagazine.co.ukCentre for Carbon Measurement