Ofgem opens £450m Strategic Innovation Fund for energy networks

Ofgem has opened its new Strategic Innovation Fund for energy networks, introduced to replace the Network Innovation Competition as part of the RIIO2 price controls.

The £450 million fund will initially be open to projects led by transmission and gas distribution networks as well as the electricity system operator whose RIIO2 price controls began in April of this year.

They will be able to partner other parties such as businesses, academics and other networks operators, including electricity distribution networks, which will not be able to access the fund directly until their RIIO2 price controls begin in April 2023.

Innovation projects will be progressively funded in three “agile” stages – discovery, alpha and beta – to ensure focus on the right areas and minimise risk. Ofgem said this will help the projects to develop rapidly, react to change and maximise their potential.

The first competition opens to applications today (31 August). It represents the discovery phase of the first round of funding, which will seek to address four major strategic challenges considered crucial to the transition to a net zero energy system: whole-system integration, heat, transport and data and digitalisation.

Funding will be awarded by Ofgem and managed in partnership with Innovate UK. The regulator said the value of the fund could be increased if a greater need emerges.

Ofgem chief executive Jonathan Brearley said: “What we need more than ever to reduce greenhouse gas emissions and reach net zero is innovation. 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.

“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.”

Energy minister Lord Callanan said: “The UK is leading the world in decarbonising our energy system, with our innovators playing a vital role in going further while ensuring consumers receive clean and affordable energy.

“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.”

Indro Mukerjee, chief executive of Innovate UK, said: “The ideas of the UK’s world-leading innovative businesses and researchers have the potential to reshape the gas and electricity networks for net zero, while generating commercial growth.

“We are delighted to be working with Ofgem to make sure the Strategic Innovation Fund brings maximum impact over the coming years.”