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Network companies are “heading towards” innovation becoming ‘business as usual’, which would see Ofgem scrap current funding provisions.
Ofgem’s senior partner, improving regulation, Martin Crouch reiterated at a recent event held by the regulator that its end goal is to scrap funding provided to network companies for innovation projects.
Crouch said: “It was always intended to be time limited, so in a way the signal for success is when innovation of this nature becomes a bit more business as usual”.
He added: “That’s what we are heading towards”.
Network operators are currently incentivised to innovate through the network innovation allowance (NIA) and the network innovation competition (NIC), which combined provide up to £99 million annually for innovation.
Northern Powergrid has already started seeking alternative sources of funding, such as Innovate UK which has approved a project that was denied funding in the NIC.
But the UK Energy Research Centre’s director Keith Bell told the Energy and Climate Change Committee last month that the support must continue.
Bell said there is “further road to travel down” before a culture of innovation as ‘business as usual’ is achieved, although added that the schemes could be “rearticulated”.
An Ofgem consultation earlier this month reviewed the success of the precursor to the NIA and NIC, the Low Carbon Networks Fund, and asked industry for input into the future of the funding.
Ideas that have received backing include opening up the NIC to third parties to compete for funding and allowing projects to be more customer centric.
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