Recommendation 23

HM Government Accepted

Government Response: Partially Agree 54. The FCDO’s Research and Development ODA portfolio leverages UK scientific, engineering, business, and financing strengths to deliver practical, scalable innovations that address global development challenges. These include low-cost technologies and business models that help some of the poorest and most remote communities in the world to access clean energy. We have seen good success with some of the innovations supported under the Ayrton Fund in the last period, particularly the TEA and MECS programmes, which are moving to scale-up investment from FCDO-backed instruments and private investors. This includes Sheffield-based MOPO, which recently raised more than $7m from BII, raised additional investment from Octopus, and more recently partnered with International Finance Corporation (IFC) to extend its battery-as-a-service model in Africa, which has already delivered more than 30 million battery swaps across 7 African countries. Clean cooking innovators such as BURN and ATEC have also started to scale, raising significant investments from other funders, although not yet UK-backed instruments. 55. We agree on the importance of making transitions from R&D, to Demonstration, to at-scale investment more systematic, as well as accelerating and multiplying those transitions–including increasingly with locally-led solutions and UK-southern partnerships. We are developing a number of tools to help join up assessments and decisions between programmes and instruments, including a form of Customer Relationship Management (CRM) system giving our programmes and partners better visibility of interactions and ongoing due diligences for example with individual innovators and businesses – which we would hope in due course to also extend to other development partners and investment funds. The TEA programme has also convened a Venture Facility Steering Group consisting of representatives of many of the investment instruments as well as the Tier 1 innovation partners, with a view to improving the co-ordination and flow of information, identifying gaps and disconnects in the continuum of capital, and filling these gaps as necessary. 56. However, we acknowledge the concerns around overreliance on innovation and share the view that risks must be managed effectively. To mitigate these, we will balance innovation with proven approaches, embed local ownership and co-design to ensure relevance and inclusivity, strengthen risk management and adaptive programming to respond quickly to underperformance, and invest in enabling environments and capacity-building so innovations complement strong systems rather than replace them. 57. While we recognise the benefit of increasing investment in the operationalisation of existing, effective energy solutions, at this stage, we are unable to make firm commitments to any programme or policy beyond FY25/26. However, we commit to bearing the recommendation of the Committee in mind in allocations.