Ofgem is consulting on potential changes to its strategic innovation fund (SIF) to reflect how the scheme has evolved during its two years of practical use.
Launched as a RIIO-2 funding mechanism by Ofgem in 2021, the SIF is a five-year, £450 million initiative that focuses on funding “ambitious” network projects to accelerate net zero and deliver benefits to energy consumers.
While Ofgem is SIF decision maker, it partnered with Innovate UK to deliver the scheme and advise Ofgem on operational matters. To date, four rounds of Innovation Challenges have run and the SIF prgoramme has provided £235 million funding for 246 projects.
The changes to the governance of the scheme that Ofgem is seeking feedback on:
- Referencing of additional dissemination portal and associated requirements for quality and accessibility;
- Detailing additional guidance and evolved process for the application process, assessment and project delivery;
- Introducing two defined terms ‘Cycle’ and ‘Stage Gate’, with cycle replacing ‘round’ (of funding) and stage gate describing points at which Ofgem could make interventions to de-risk a project;
- Updating organisation references e.g. National Energy System Operator (NESO) and Department for Energy Security and Net Zero (DESNZ).
As RIIO-3 approaches, another consultation will take place to reflect any further changes to the programme—feedback to the current consultation that does not relate to what is proposed now may not be answered but kept and addressed in future.
SIF funded projects
At the end of August last year, Ofgem changed its approach to the SIF programme, to open three application windows each year and allow projects to apply to any one of the three development phases depending on the project’s progress, rather than having to start at the earliest stage. Projects will now be able to move through the SIF process in as little as 23 months, eight months less than the current fastest times.
In December 2024, Scottish and Southern Electricity Networks (SSEN) received £550,000 funding for four projects using various technologies including AI and 3D modelling.
National Grid Electricity Transmission (NGET) also benefitted from SIF funding, with the programme supporting its partnership with cable manufacturer SuperNode to develop industry standards for high-temperature superconducting (HTS) cabling systems.
NGET just began construction on the Eastern Green Link 1, in collaboration with SP Energy Networks (SPEN), which Ofgem gave its approval for last year, having identified and cut £43 million from the project, which it says was possible without impacting delivery or quality.
Ofgem provided £2 billion funding for the project through another mechanism that it oversees, the Accelerated Strategic Transmission Investment (ASTI) framework, which is for new offshore clean energy projects.
