Ofgem launches £450m fund to unlock innovation across gas and electricity networks

Electric Pylon – Valda Energy

Ofgem, Britain’s independent energy regulator, has launched a new fund to unlock greener ways to travel, heat and power homes and businesses, by harnessing a new approach to energy network innovation.

The fund, which opened for applications yesterday is part of Ofgem’s RII02 price controls for the electricity system operator and the network companies that operate GB’s energy pipes and wires. The fund will be approved by Ofgem and managed in partnership with Innovate UK.

£450 million will initially become available over the next five years through the fund, with the option to increase in response to need and if innovators bring forward strong plans. Together, network companies, system operators, and the world’s leading businesses and researchers will use this money to drive big ideas that accelerate the transition to an emissions-free energy system and at the same time help to position the UK as a world leader in energy innovation.

To apply for the first round of funding, network companies must address four major strategic challenges that are crucial for the energy transition. These are:

  • Whole system integration
  • Data and digitalisation
  • Heat
  • Transport

Projects could range from ensuring the networks are ready to roll out clean heating solutions such as heat pumps to Britain’s homes to developing ways for network companies to work together across transmission, distribution, system operation, gas and electricity. Projects could also include developing new technologies for networks to support flexible energy solutions, such as battery storage technology, to ensure electricity is used and stored more effectively, thereby bringing down bills and emissions. Ideas need to be big, bold and ambitious with potential to scale across the networks upon completion.

Energy Minister, Lord Callanan at the Department for Business, Energy and Industrial strategy, 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.”

Jonathan Brearley, chief executive of Ofgem, 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.”

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.”

UK Net Zero Business Champion Andrew Griffith said: “UK businesses have proved time and time again that our country is home to world-leading entrepreneurial talent, innovators and disruptors.

“As we approach the COP26 Climate Change summit in Glasgow the Strategic Innovation Fund is an example of how business can provide the solutions that will make our energy cleaner and tackle climate change.”