Offshore renewables: proving that long-term innovation funding works

This summer, the UK government outlined a ten-year strategy to double investment in clean energy industries, including offshore renewables.

But innovation in offshore renewable energy requires considerable up-front investment and does not provide a quick win. Should governments commit long-term funding to it?

Frontier’s unique study into ten years of funding for the Offshore Renewable Energy (ORE) Catapult suggests they should.

Our research is rare evaluation of the results of long-term public funding for innovation. Here’s what it revealed, and what it teaches us about designing effective support for innovation – in offshore renewables and beyond.

The context: innovation takes time

In June this year, the UK government published its Clean Energy Industries Sector Plan. It outlines a ten-year strategy to double investment in clean energy industries, support the transition to net zero, and create high-value jobs and export opportunities.

The plan states the need for ‘catalytic public investment’ in several priority sectors, including offshore and floating offshore wind.

But innovation in offshore renewables is capital intensive and like all innovation, is hard to predict. Technologies can take years to move from concept to commercialisation, and require technical and market expertise, high-quality data and access to state-of-the-art testing and validation facilities. Is long-term public funding worth the risk?

Frontier’s study

To help answer this question, Frontier studied the impact of long-term investment in the UK’s Offshore Renewable Energy (ORE) Catapult – the country’s leading technology, innovation and research centre for offshore renewable energy. We delivered retrospective assessment of the impact of ten years of funding, from 2013 to 2023, in collaboration with Frazer-Nash Consultancy and BMG Research.

Evaluations are often conducted over short time horizons. This evaluation was a rare opportunity to look at the longer-term benefits of innovation funding.

The case for long-term innovation support

Our findings make a compelling case for long-term funding. The evidence from ORE Catapult shows that sustained and predictable investment has yielded real results for innovation in a challenging sector.

There are three main ways in which long-term investment has paid off: creating a centre of expertise, nurturing a national asset base, and helping SMEs to thrive.

1. Building an independent centre of expertise

Thanks to its sustained funding, ORE Catapult has had the time to accumulate substantial knowledge and expertise, establishing credibility for its independence and technical know-how.

Its status as trusted adviser has informed several big policy decisions, including the Offshore Wind Sector Deal, ringfencing for tidal stream energy in the UK’s Contracts for Difference (CfD) auctions and being a long-term reference for the UK’s Floating Offshore Wind (FOW) policy framework.

2. Maintaining a national innovation asset base

Thanks to long-term support, ORE Catapult was able to build a national asset base that serves both small UK-based innovators and large international developers.

National testing and validation (T&V) assets are vital to small innovators in the UK, because these companies often lack the resources to test in-house. Access to modern T&V facilities at home enables smaller companies to compete with larger international ones. And cutting-edge facilities also attract those bigger, global companies, who need to conduct first-of-a-kind testing for longer blades and more powerful powertrains. That brings know-how to the UK and strengthens prospects for inward investment.

Because of government funding, these T&V facilities operate as open access assets. This is beneficial for start-ups, because it allows flexible contracting arrangements which accommodate the uncertainties of testing. It also enables co-investment and co-development of T&V facilities with promising UK businesses looking to scale-up fast and win global contracts.

3. Helping innovative SMEs scale and succeed

We found that over its first decade, ORE Catapult provided technical, commercial and grant support to more than 440 UK businesses. In some cases, ORE Catapult intervened many times, over several years, to help bring a business’s technology to market – which would not have been possible had funding not been sustained.

Speed to market is critical to market leadership. 96% of the innovators we surveyed said their technology had been developed faster and/or further as a result of ORE Catapult’s help.

This sustained support for innovation also boosted employment and turnover growth. Our modelling, comparing supported firms with similar unsupported firms, found that ORE support boosted employment by 55% and turnover by 111% after five years. That equates to a 36% increase in business productivity, and more than 5,400 additional jobs and £167 million extra turnover across more than 250 firms included in our analysis.

Crucially, we did not find evidence that the benefits of Catapult support started to fade away over the longer-term – a question unanswered by previous studies of innovation support where impacts could only be observed for a short period.

Lessons for designing innovation support

This evidence points to an important finding: that innovation institutions like ORE Catapult generate increasing returns to scale. Their value lies not just in individual projects, but in their ability to invest in important assets and build knowledge, relationships and credibility over time. This finding is reinforced by other Frontier evaluations of innovation support. For example, stakeholders in different evaluations of the Challenge Funds emphasised uncertainty about the funding landscape post-Fund as a limiting factor in the impact they could generate.

This is a crucial takeaway for governments seeking to design similar support frameworks. Such support frameworks must do four things:

1. Be predictable and enduring.

2. Have multi-year funding horizons.

3. Employ strong evaluation mechanisms which support adaptation to changing circumstances based on sound evidence.

4. Be built on governance structures that protect independence and accountability.

Our evidence suggests that Government should be investing in long-term support innovation. But it does not suggest that it should be doing this alone. It is critical that private finance also plays a role. Government funding can lower risk by indicating where the highest potential investment opportunities are.

A recent report by the Offshore Wind Champion highlighted current low levels of Venture Capital investment in offshore renewables. The British Business Bank also suggested that a lack of institutional investors and a reliance on government agencies for investment may be holding back both the UK venture capital market and the UK. This suggests there are barriers to be addressed before private finance can effectively complement government investment and provide a much needed injection of scale-up and commercialisation support to high potential UK innovators. The announcement in the 2025 UK’s Modern Industrial Strategy of an increase in the amount of available growth and innovation capital, including £4 billion of additional capital for the eight high-level sectors (which includes Clean Energy Industries), should lead to more UK innovators being able to benefit from complementary public and private innovation support.

To deliver innovation, patience is key

As offshore renewables become central to the UK’s pursuit of net zero, the lesson is clear: the speed and efficiency of the transition depend on the patience of public investment.

The ORE Catapult story shows that when public funding is sustained and mission-driven, it can catalyse innovation and growth. Long-term innovation support works because it can deliver outcomes and impacts that are unlikely to be realised – at least to the same extent – by multiple rounds of short-term programme funding.

The Modern Industrial Strategy emphasises additional private investment intro strategic sectors as its key objective. Sustained public investment will be one mechanism to achieve this.