Ofgem announce new approach to Strategic Innovation Fund to drive progress to net zero by 2030

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Ofgem has announced the introduction of a new process which gives innovators more opportunities to apply or re-apply to the Strategic Innovation Fund (SIF) and gain funding quicker than ever before. 

SIF projects support efforts to end the era of high energy bills, excessive carbon emissions and energy insecurity by accelerating the transition to clean, homegrown energy. The changes, which follow extensive engagement with stakeholders, will make the SIF more flexible and create more opportunities to apply for funding.

More than £95 million was announced for ten trailblazing projects through the SIF in July of 2023. Projects being developed include technologies that will enable more flexible use of energy, artificial intelligence (AI) and weather data systems to predict energy network risks and faults and circuit breakers that enable the increasing amounts of power generated by offshore wind to be connected to the grid more efficiently. 

What impact will these changes have? 

  • more application windows – rather than a single application window for each phase annually, there will be three each year for all phases which include Discovery, Alpha and Beta
  • introducing flexible start dates and duration – project teams can decide which phase to apply to depending on progress. The new approach allows project teams to decide their own start date to suit the project and their resources. Projects will also be able to deliver within a flexible window of time
  • projects will be able to move through their life cycles faster – the shortest route from a successful Discovery to Beta phase can now be completed in 23 months, saving up to eight months compared to the previous process 

Marzia Zafar, Deputy Director Strategy – Energy Systems Management & Security at Ofgem, said:   

“In the past few decades, the energy system has already begun to move from its old way of thinking and doing to adopting new technologies like smart meters and new arrangements to create flexibility in the energy system. There is still more that needs to be done, we need longer duration energy storage and seasonal storage.  We need households to have smart devices that automatically flex when the system sends signals. We need nuclear, Carbon Capture Utilisation and Storage (CCUS), offshore wind, onshore wind and digital solutions that can use machine learning to run the energy system efficiently and visibly. 

“Great British Innovation has led to some of the greatest transformations in history such as the Agricultural, Industrial, and more recently Digital revolutions. We need this innovative spirit more than ever if we are to meet our ambition for clean energy. What these changes mean is that great innovation will be funded and rewarded seamlessly – just bring us your ideas.”

Delivered in partnership with Innovate UK, the SIF is funded by Ofgem and taps into the best of UK and international innovation while aligning with other public innovation funding for the benefit of energy network users and consumers. Launched in 2021, the fund is expected to invest £450 million by 2026. 

Jodie Giles, Innovate UK, Strategic Innovation Fund Programme Director, said:

"As we strive towards net zero, we are continuously improving how we support innovation. The launch of the enhancements to the application process for the Strategic Innovation Fund will increase the frequency of application cycles and streamline our processes.  With these improvements we aim to accelerate the delivery of transformative solutions and drive forward the energy transition with greater efficiency and flexibility."   

Part of the RIIO 2 price controls, the SIF is a funding mechanism for the Electricity System Operator, electricity transmission and electricity distribution, gas transmission and gas distribution companies, working in partnerships with other innovators. 

NOTES TO EDITORS   

  • Ofgem – the Office of Gas and Electricity Markets – is Britain’s independent energy regulator. Its role is to protect consumers now and in the future by working to deliver a greener, fairer energy system. It does this by: 
    • working with Government, industry, and consumer groups to deliver a net zero economy at the lowest cost to consumers 
    • stamping out sharp and bad practice, ensuring fair treatment for all consumers, especially the vulnerable 
    • enabling competition and innovation, which drives down prices and results in new products and services for consumers 
  • Innovate UK is the UK’s innovation agency and is part of UK Research and Innovation. It drives productivity and economic growth by supporting businesses to develop and realise the potential of new ideas, including those from the UK’s world-class research base. 
  • the purpose of the Strategic Innovation Fund is to support network innovation that contributes to the achievement of Net Zero, while delivering real net benefits to network companies and consumers; and to work with other public funders of innovation so that activities appropriately funded by network consumers are coordinated with activities funded by Government 
  • Ofgem is working with Innovate UK to deliver the Strategic Innovation Fund. The partnership brings together the complementary roles of both organisations. Ofgem regulates network and system operators to enable Net Zero at lowest cost to consumers. Innovate UK focuses on business growth and is delivering the SIF using its expertise in engaging with innovators on funding programmes across multiple sectors such as offshore wind, energy storage, defence, transport, aerospace, healthcare, and space 
  • Ofgem has determined that the Strategic Innovation Fund is expected to invest £450m in the current network price control period (‘RIIO-2’). The level of funding available can be increased upwards if there is a need for greater funding. It will issue regular challenge competitions focused on areas of strategic importance to the future of the gas and electricity networks
  • under the Strategic Innovation Fund, gas and electricity network and system operators are able to form consortia with businesses and academics to propose innovative solutions to the challenges facing the networks. They can then apply for funding through the competitive process 
  • the Strategic Innovation Fund is drawn from the bills that energy consumers pay, and so all projects funded will be required to bring a net benefit to consumers 
  • projects are funded progressively in three ‘agile’ phases – discovery, alpha and beta – to ensure focus on the right areas and minimise risk. Discovery projects are short feasibility studies, alpha are longer proof-of-concept projects, and beta projects are largescale demonstrators. This helps the projects to develop rapidly, react to change and maximise their potential to transform the gas and electricity networks while growing large-scale successful businesses and contributing to UK economic growth 
  • to maximise consumer benefit and minimise risk funding for each phase is provided incrementally and is dependent on key milestones being met
  • for more information visit the SIF page 
  • for more information on projects already funded visit Ten trailblazing projects secure investment from Ofgem’s Strategic Innovation Fund (SIF) as part of the drive to decarbonise the energy system at the lowest cost to consumers. 
  • listen to the Bright Spark Podcast where Ofgem and Innovate UK discuss the changes ahead 

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