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R&D in the Energy Sector

Posted on September 8, 2021

With the Government’s global emphasis on a sustainable future, there are plenty of domestic incentives created to boost sustainable production and practices. These incentives range from capital allowances (when purchasing energy-efficient or low carbon emission technology for your business) to getting tax credits if your business sends waste from the landfill to be recycled. However, these incentives are not enough, to the point where Government’s from around the world are passing legislation to promote the use of sustainable energy resources for a more environmentally friendly future in the fight against climate change. 

The energy sector is the industry that’s taken the biggest hit with these sustainable incentives. They require adapting rapidly to avoid losing revenue streams and match the Government’s sustainability goal (which is to become the first major economy to hit zero emissions by 2050). To achieve this goal, companies in the energy sector need to undergo extensive and rigorous research and development into new technologies and processes for creating clean energy. 

Clean Energy? 

Clean energy is the energy that comes from renewable, zero-emission sources that do not pollute. In recent years since the sustainability announcement plan, clean energy has been the focal point of all things to do with R&D within the energy sector. As a result of this focus, companies have managed to develop a wide range of clean energy products that are cost-effective and environmentally friendly. Some of the examples are shown below: 

  • Solar Panels 
  • LED lighting 
  • Wind Turbines
  • Hydroelectric Power 
  • Smart Grid Technologies 

These are the pioneers of clean energy within the sector, but with constant research and development occurring there are potential new up and coming trends that we may see coming in clean energy. 

These could be: 

Green Hydrogen 

Mainly produced by water electrolysis using renewable electricity and is one of the levers that will contribute significantly to a carbon-neutral future. Boris Johnson announced a 10 point green recovery plan where hydrogen plays a key role in. The plan aims to generate 5GW of low carbon hydrogen production capacity by 2030. So we can expect research and developers to focus a lot more attention on this energy source. 

AI Energy Management 

AI is also rapidly adapting each year in different forms. Most recently, Elon Musk announced his development of the Tesla robots to do the more mundane jobs that have little demand in the economy. However, when it comes to the energy sector, energy management is moving towards real-time decision making. This needs more real-time data gathering and analytics, therefore making automated and AI energy management systems an integral part of the entire process. 

Nuclear Fusion 

This is the hottest topic (literally) in the energy sector with every country across the globe hoping to access its full potential in some form or another. However, unlike fission, it produces no long-term radioactive waste but still creates a substantial amount of output. It is also important to remember that fusion is among the most environmentally friendly sources of energy due to the lack of CO2 (or other harmful atmospheric) emissions. 

Where Do R&D Tax Credits Come Into This? 

This industry alone generated £95 billion in economic activity through the supply chain in 2020, this demonstrates the significant impact that the sector has with its research and development. R&D Tax credits are (one of the) government incentives designed to encourage innovation across multiple industries. This is an opportunity for companies in the energy sector to reduce their corporation tax bill or receive a refund from HMRC based upon the number of working hours that their business dedicates to R&D.