In 2023, Pelergy, supported by LumenEE and POSET-renew, was commissioned by the Offshore Renewable Energy (ORE) Catapult to investigate R&D spend and to collect innovation activity data in the offshore wind sector, to support ongoing sector benchmarking activities.
To deliver the study, Pelergy identified, and subsequently teamed up with The Data City. Together we helped uncover crucial data on innovation activity in the UK economy, with a focus on those companies most active in offshore wind.
The Data City offers a platform that makes use of The Data City’s ‘Real-Time Industrial Classification’ (RTIC) as an alternative to the Standard Industrial Classification (SIC) code system. Offshore wind lacks dedicated offshore wind SIC codes for company categorisation, which makes this approach particularly relevant to our industry. Aerospace for example, is a much more mature sector and has various SIC codes for capturing company activities.
To create an RTIC, The Data City uses a combination of artificial intelligence (AI) and ‘expert-in-the-loop’ training to classify firms based on textual descriptions found on their websites. Using Companies House data, this means access to data from approximately 1.6 million firms.
The Data City also offers emerging sectors, like the offshore wind sector, that do not have dedicated SIC codes for companies, an alternate route to classify and then analyse data. Pelergy was able to use The Data City’s platform to build a specific offshore wind RTIC for the industry. This RTIC was analysed in combination with other data sources such as the Innovate UK Gateway to Research database.
Benchmarking financial performance of ORE Catapult collaborating companies
ORE Catapult provided Pelergy with a high level analysis of its work with SMEs across its ten years of work. We focussed on companies that had undertaken a meaningful activity with the ORE Catapult, such as an R&D project, identified by ORE Catapult as “Stage 3 engagements.” Pelergy compared this cohort of companies to the SMEs within the offshore wind industry RTIC that we created. The results were really insightful.
| Offshore wind RTIC SMEs | ORE Catapult stage 3 engagements |
Companies Considered | 2,005 | 272 |
Total Employees | 44,672 | 25,565 |
Total Turnover in 2022 (Projected via CreditSafe) | £5,616,839,222 | £4,355,752,426 |
Total Investment Funding (Via Dealroom) | £112,320,000 | £54,850,000 |
Total Innovate UK Grant Funding | £154,397,747 | £83,604,831 |
When we compared SMEs in the overall offshore wind RTIC to the ORE Catapult supported company cohort, we discovered that it:
Represents a very high proportion of innovation funding. The ORE Catapult engagement cohort represents only ~13% (272 out of 2,005) of the SMEs within the wider offshore wind RTIC yet are responsible for around ~55% (£84m out of £154m) of the Innovate UK SME-funded projects within the RTIC.
Is outperforming industry benchmarks in achieving private equity financing. The ORE Catapult engagement cohort makes up ~50% (£55m out of £112m) of the overall private equity financing since 2014. Relative to the number of companies and the turnover, this demonstrates the ORE Catapult engagement cohort is much better at achieving venture capital funding than its industry peers.
Scores very highly for funding intensity (compared to turnover). As a proportion of turnover, the level of public sector R&D funding and the level of venture capital raised is much higher than SMEs in the wider RTIC. Whether rapid growth is causal with working with ORE Catapult or self-fulfilling as ORE Catapult seeks out high growth companies to work with, it is unclear, and warrants further study. ORE Catapult continues to conduct in-depth evaluation periodically to investigate the extent to which such results can be attributed in part to the support and opportunities it provides.
Benchmarking innovation activity of companies that collaborated with ORE Catapult
Pelergy also used The Data City to analyse other indicators of innovation activity, predominantly from data scraped from the cohort’s websites. When we compared SMEs in the overall offshore wind RTIC to the ORE Catapult supported company cohort, we discovered that it:
Follows the broader industry on innovation key word use. The ORE Catapult cohort is however more likely to use the words: idea, automation, concept, innovation and research on their websites. This is indicative of the kind of company that would be working with ORE Catapult, as well as in line with the ORE Catapult focus on automation and robotics technologies.
Potentially experiences spillover effects in greater measure than the wider offshore wind RTIC SME cohort. It also scores far above the national average in RTIC crossover (a company that appears in more than one RTIC) or spillover with industries such as advanced manufacturing, scientific research and the space economy. In each of these cases, the companies that make up the ORE Catapult supported company cohort, represent proportionally more employees in these areas than the wider SME RTIC. Despite representing only ~10% of the companies by count, they all represent much more in terms of total employees that have interactions with those other sectors.
The finding demonstrates how far reaching the companies are. The skills base in these areas is also a clear area of competence for the UK offshore wind sector.
Limitations and boldly defining new methods
The analysis presented above was only a small part of the overall study so the detail was limited and the topic warrants further detailed investigation.
The period of analysis is limited by available data but available data used in the study dates back to 2016. The ORE Catapult was set up in 2013/14 and merged with the National Renewable Energy Centre (NaREC) in 2015, therefore the analysis period covers the operational period of the ORE Catapult in its current form.
Pelergy is a key collaborator with The Data City and has invested significant amounts of time into mastering the platform and maximising the outputs of its data for the benefit of the offshore wind industry. RTICs are a brilliant tool to help us measure industry activity and we will release more information over the coming weeks about how we can use it.
How did it go and where do we go from here?
Albeit limited by time and budget, the analysis of this cohort of companies using the RTIC method shows that they have grown in line with the wider group of offshore wind RTIC SMEs. ORE Catapult supported cohort has proven to be more successful at securing private equity investment and public sector grants. This provides early confirmation that ORE Catapult is working with some of the most successful high growth businesses in our sector. RTIC analysis also identified that there are potentially spillover effects in this cohort of companies, with above national average scores in sectors such as advanced manufacturing, scientific research and the space economy, when measured by employee count.
Pelergy welcomes engagement on the topic of RTICs and their use in measuring and benchmarking impact and innovation activity.
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