Select Committee on Science and Technology Minutes of Evidence


Examination of Witnesses (Questions 160 - 179)

WEDNESDAY 30 OCTOBER 2002

PROFESSOR GARY ACRES, PROFESSOR TIM JONES, PROFESSOR GORAN STRBAC AND PROFESSOR MICHAEL GRAHAM

160.  Have you all been quite successful in attracting European Union Programme funding?

  (Professor Jones) Yes, but I think again it is incredibly onerous and incredibly bureaucratic.
  (Professor Graham) It is a lot of work.
  (Professor Jones) It is not worth it really in the grand scheme of things. Certainly in the previous Frameworks. And in fact, the universities would turn round and say it is not worth it because there is no overheads on it. It is actually a loss leader.

161.  My next question was going to be; is it the overheads, or the lack of overheads, that the EU Framework Programmes do not pay that make your universities discouraged from applying for the EU funding?

  (Professor Graham) I think the EU expects a different regime. In the universities in continental Europe they expect better direct support for the infrastructure and they are just putting in what you might call "top up" money. So they are surprised at the lack of direct support in the UK. But we, of course, look at the EU grants the same way we look at EPSRC or industry or anything else and we have got live off the whole thing. I come from the same college as Tim, and it has been debated in our college whether we should go away from the EU grants but fortunately they have taken the decision that that would be a bad idea. But it shows it is debated. The level of overhead is 20% and it is very small, but—

162.  And you have just had the transparency review which has revealed all that of course.

  (Professor Graham) It has. And also the other thing, as Tim said, the level of bureaucracy required for an EU grant, just the way they run things, is incredibly high. So my judgment is that it is easier to get into the `train' of getting one and being associated with appropriate research people, but the amount of work you have got to do to put the grant in place is enormous.

163.  So assuming that networks of centres of excellence, are important, I think we would all agree with that, would we not, if we can build them, including across international boundaries.

  (Professor Graham) Yes.

164.  What do you think we ought to be telling the European Union through our members of it, members of the European Union?

  (Professor Graham) I think it is a difficult argument, but I think they would say why is the Government not putting in more supporting funding so that these guys can go out and get EU contracts whuch are then financially worth more to them. EU grants are not as bad as they seem. But I guess Government would say this is not the way we run things in this country, we are not prepared to put that money in.

165.  Are any of you aware of the changes that have been made in the bidding process for Framework 6 bids?

  (Professor Jones) I think it will be better. It is still a bit vague, but it looks more promising, definitely.
  (Professor Strbac) I just wanted to add that I sympathise with the level of bureaucracy and so forth, but we need to be able to recognise that Framework 6 will be significantly different to Framework 5 and this is now about really big players. We are trying to get in, but my worry is that the research base in the UK is comparatively smaller than big research labs in Germany and France. We now find it increasingly more difficult, not to compete, but even to cooperate with these big players. We are now working on three proposals with Framework 6 and the size of those are nearly 14 million Euro, 16 million Euro; these are the size of the projects. The players in there, we are fortunate, the place where I come from, because we are relatively well known historically, but actually we are 10% of the size of the groups which are actually dictating where the research is going. My worry is that unless we redevelop this research base sooner rather than later, we might become not irrelevant but with significantly less say within these big consortiums.

166.  Okay. I have a feeling that you need help.

  (Professor Strbac) Yes.

167.  Where do you think that help should come from? Should it come from your own university or a cluster of universities in your region providing a person who has the skills to give you the help, or do you think the Government, through one of the research councils, should positively foster applications to the Framework Programmes among all universities?

  (Professor Jones) I think there is a government body, is there not, that is dealing with it. I cannot remember what it is called. I certainly went to a talk by somebody which represents UK—

168.  But I mean positive action.

  (Professor Jones) Yes, they were trying to—it was a positive thing. I do not know how big the scale of that operation is, compared to other countries. I think in some countries it is very substantial. They are really trying to lever money, European Union money.
  (Professor Acres) One of the points that the Commission have made in the past is that UK universities, by and large, are preferred partners to these bigger projects in Europe because they deliver what they say they are going to deliver. Also they have a strong science base in many areas. But the Commission have also pointed out that if the UK loses that science base, its position in Europe will be that much weaker. My experience of sitting on both sides of the fence is that, to some extent, as the UK research councils tend to move more and more to applied areas, they are almost competing with Europe. And Europe, as I understand it, Framework 6, is going more and more to the exploitation of rather than just the researching. I think one of the things to look very closely at is whether we are making the best use of Commission funding in the context of our university interest, or whether we are getting too close to competing with them and losing the strength.

  Dr Iddon: Thank you. I think there are some strong messages there. Most grateful.

Bob Spink

169.  Could I just say that with climate change our future is in your hands, so I would like to thank each of you individually for what you are doing. We rely on you. So we are very aware of that and if we are aggressively trying to get answers, it is because of the shortness of time, you understand that, I am sure. Academically and technologically I am sure the problems are very great. We understand them. I know that the political problems are also great. Could you tell me in which sectors of the industry you have been most successful in attracting industrial collaborators?

  (Professor Jones) My own collaboration in photovoltaics. That has been a substantial collaboration with UK industry.

170.  That surprised me because we are far behind other countries, particularly Japan and Germany. Why would that be? Is it because of you as an individual going to the market place and seducing them, or is it some other factor?

  (Professor Jones) It is because they want to develop a disruptive technology and not just modify an existing technology.
  (Professor Acres) I speak specifically in the hydrogen fuel cell area. Until fairly recently that has been something that the UK and Europe has been fairly low key.

171.  I thought Johnson Matthey had been doing—

  (Professor Acres) That is slightly different because they have global interests and they have been pretty active for 30 years or more. What we found recently is that those industries, from the oil industries to chemicals and materials industry, are now picking up the message that there is something important happening in this area and maybe we ought to be involved. And wearing both the Johnson Matthey and the Birmingham hat, what we are now finding is that people are coming to us and saying "Can we work with you?" And that is not just industry; we are also finding the GLA, the Advantage West Midlands, the Welsh Development Agency and, of course, Scotland in the context of renewable energy. They are all coming now and saying "Can we talk to you? Can we join with you?"

172.  What is driving this? A commercial opportunity or just an awareness of climate change?

  (Professor Acres) The perceived—well, because it is driven by climate change and people looking at whether we are going to meet the 2010 or whatever and some people are saying we are not unless we do this, and then they look at transport and things, do something in transport. So that I believe is driving it and it is creating a considerable amount of interest in this area. Almost to the point where we cannot cope with it.

173.  How are UMIST faring?

  (Professor Strbac) In the area of climate change, we have been involved in a relatively small number of directly funded projects and I would perhaps single out a very successful collaboration which is still going on with Regenesys, which is a fuel cell based storage technology. We have been working on problems associated with quantifying the value of the storage, in particular relating to enabling larger amounts of renewable generation to be connected to the UK power system.
  (Professor Graham) I had support from Howdens in Scotland but while they were supporting me they pulled out of wind energy, pulled out of the whole area. More recently I also had support from the Wind Energy Group who again, while they were just about to support me, were bought by a Danish company which is their position now. These two companies were effectively the two players in the UK. Since then, through EC-funded projects, I have worked in collaboration, it is very sad to say, with Danish companies, for example with Bonus Energy. The wave energy and tidal energy, of course, are not in a position where there is any industry as yet.

174.  Could one of you just say, do you think that industrial collaboration actually helps you to pick up public money to help you?

  (Professor Graham) Yes, it absolutely does.
  (Professor Strbac) Fundamentally important.

175.  And of course the existence of public money in your programmes will enable you also to attract industrial collaboration. It is chicken and egg, is it not?

  (Professor Strbac) Yes.

176.  What problems have you encountered in getting your ideas to the market place, commercialising your ideas? Or are you not that far down your research yet?

  (Professor Acres) With a sort of industry perspective, until very recently, as I said before, there is a lot more interest from overseas than there is from the UK, but it appears to be changing. There is a lot interest from venture capitalists in the City now in investing in fairly long-term ideas. But of course you need to have a base to do that. You have almost got to have the concepts of a new product, or even a new business, to get industry and, not least of all, the venture capitalists involved. So you are back to the research, the funding for the research effort for the ideas to start the whole thing off, otherwise they have got no prospect.

Dr Turner

177.  There is a general picture of shrinking investment in R & D by the energy industry in the UK. What is your view of the current situation, not only on the level of research, amount of research they are doing, but are they investing it in the right areas? It is obviously something of a curate's egg, but has anyone got any views?

  (Professor Acres) I think what has happened is that investing in what I might describe as the traditional energy areas, and that includes transport, more particularly stationary power generation, tailed off for one reason or another. The technology got mature. Then, of course, established industry, picking up new areas like, dare I mention it, fuel cells, they take a bit of time to realise that that is an area that may be is for their medium to long term. If I mention Rolls Royce, for instance, that is something you may know, they have had an extensive fuel cell programme because they see a fuel cell as an energy producing device. But other companies, who some of us expected to get involved in this area early on, have almost taken the role "Well, when you want to place an order for this or that, come to us". Well, of course, you do not get to that point very fast. So it is a balance between the traditional industries maturing and the newer energy industries, like renewables, starting to take hold. And catalysing that change, I think is one of the jobs for Government.

178.  It does not sound impressively hopeful at the moment.

  (Professor Graham) I have a comment from the area I work in and there may not be uniformity, I think, in the comments about this, but I feel that certainly in the wind energy industry, although it is the one that you could say has developed most in the UK, industrial partners still see it as very risky. I think all of renewables is seen, from one viewpoint or another, (even PV for example, whether there is going to be a market in the UK or not) as extremely risky without some form of government stimulation, which has been so successful in Denmark—Denmark has a really first class programme of developing wind energy. They have got less resource than we have, considerably less resource, and yet we have no industry now. But the industry has got to feel there is some sort of security of stimulation of a programme that is going to continue over the years. I think that in this country now, probably we would have stimulated the industry correctly, but of course we lost it and it is too late to do anything about it.

179.  Can I ask Professor Strbac specifically about distribution. For one reason, our resource does not match the grid infrastructure and I note that the grid companies spend virtually nothing on R & D. So can you tell us, Professor Strbac, how you feel about R & D, both in addressing the mismatch and problems of power losses etc. between offshore energy resources and the consumer? And what you feel that the distributors need to do to facilitate the greater development of imbedded, distributed sources of generation?

  (Professor Strbac) Could I just start with restating the fact that the industry was privatised in 1990 and that there is no doubt that over the last 10 to 12 years that the industry has been under tremendous pressure in terms of reducing costs and the focus on short term has been very obvious. And the difficulties in supporting research have been very obvious in that context. We can elaborate on that, but regarding the future development, we would like to see the UK meeting the government targets, both 2010 and 2030 regarding the PIU Report, and that really requires strategic thinking. It is very difficult to see how industry, which is allowed only to invest in areas where they are in breach of security standards, how we can look at the overall picture in a global holistic way when we need to have a view of significantly longer term rather than next price control, which is what the companies are generally concerned about, which is, at most, five years. As you rightly pointed out, with the resources being present in the North of England and in Scotland, primarily offshore wind, which is obviously an enormously significant resource, I have been working over the summer on quantifying the costs of meeting government targets to the industry. And one of the scenarios would require significant—if we are to benefit from offshore wind, particularly North of England, Scotland, a major reinforcement of UK GB transmission system would be required. Without that vision, it is very difficult to see how—if the regulation continues to be focused only on short term and primarily focused on economics, not having a strong sustainability angle to it, I find it difficult to see how we would develop the UK infrastructure in a meaningful way, in an optimal way, to be able to benefit from these resources. I am encouraged to see that there are some changes in regulation now. There is significant emphasis on innovation. It seems that Ofgem is becoming more committed towards allowing companies to spend on R & D. We work with a certain national grid company, who owns and operates Transmission Network of England and Wales with Scottish Power, Scottish and Southern, with a number of distribution companies, but the funds they have got available for long-term research are pretty limited and they are shrinking constantly. We see that happen on the ground. So we would very much welcome some sort of coordinated approach where the sustainability agenda is clearly present within the regulation so that companies are actually allowed to do research and maybe, you know, fail in—not fail in terms of mismanaging the funds, but research is a speculative area and you may not get always positive answers from that research.


 
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