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Ofgem announces £450m Strategic Innovation Fund

Projects should target whole system integration, data and digitalisation, heat and transport. Image: Getty.

Projects should target whole system integration, data and digitalisation, heat and transport. Image: Getty.

Ofgem has announced a new £450 million fund to help unlock innovation in energy networks.

It forms part of the regulator’s RIIO-2 price controls, with the financing available over the next five years. Applications can be submitted from today (31 August) and the fund is being managed in partnership with Innovate UK.

Network companies, system operators and leading businesses and researchers can apply for funding for projects or technologies that target four major strategic challenges for the energy transition, namely whole system integration, data and digitalisation, heat and transport.

This could include anything from the rollout of clean heating solutions to developing holistic systems that work across transmission, distribution, system operation, gas and electricity.

Additionally, projects could include new technologies such as flexible energy solutions for networks like battery storage technologies.

“The Strategic Innovation Fund means cutting-edge ideas and new technologies become a reality, helping us find greener ways to travel, and to heat and power Britain at low cost,” said Jonathan Brearley, chief executive of Ofgem.

“Britain’s energy infrastructure will play a pivotal role in cutting net zero greenhouse gas emissions, and this fund will help make sure our energy system is ready to deliver that.”

The fund will be open to the Electricity System Operator, Electricity Transmission, Gas Transmission and Gas Distribution sectors, with consortia with businesses and academics welcome. While the fund is set at £450 million initially, this could be increased if there is a greater need, with regular challenge competitions launched throughout the five year RIIO-2 period.

Projects will be progressively funded in three stages – discovery, alpha and beta – to minimise risk and focus in on the right areas efficiently. The first round will be focused on the discovery phase.

“The Strategic Innovation Fund will ensure the best projects and most talented minds have the grants available to reduce carbon emissions and enable bill payers to see the benefits of building back greener,” said Energy Minister, Lord Callanan at the Department for Business, Energy and Industrial Strategy.

The fund will take over from the Network Innovation Competition previously run by Ofgem, which has helped fund network development and demonstration of new technologies, operating and commercial arrangements over the last price control period. Most recently this included four projects from network operators passing the initial screening, which are seeking £29 million for green heat and flexibility.

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