Ofgem and Innovate UK announce challenge areas for the SIF

The Office of Gas and Electricity Markets (Ofgem) and Innovate UK have announced the challenge areas for the third round of the Strategic Innovation Fund (SIF), which will open for applications in early September 2023.

The SIF aims to find and fund ambitious, innovative projects with the potential to accelerate the energy transition to net zero at the lowest cost to consumers.

Four innovation challenge areas have been set as the priorities for this year’s project proposals to address. They have been identified in consultation with the energy industry, consumer groups and other stakeholders.

The challenges reflect the SIF’s broad emphasis on delivering innovation which is aligned to Ofgem’s strategic change priorities.

Areas of focus include preparing networks to deliver a net zero power system in 2035, decarbonising heat, ensuring an equitable energy transition for the benefit of all consumers, and integrated approaches to increasing flexibility and energy storage across the energy system.

The four specific challenges for this round are:

• Whole system planning and utilisation of networks, to facilitate faster and cheaper network transformation and asset rollout

This is the challenge to improve and evolve the process of network planning and connecting new low-carbon energy supply and demand to the grid, helping to meet net zero in a timely and cost-effective manner.

• Novel technical, process and market approaches to deliver an equitable and secure net zero power system

This challenge is about developing and scaling-up technologies, processes and markets which will deliver an equitable and fair net zero electrical system at all levels.

• Unlocking energy system flexibility to accelerate electrification of heat

The challenge to address here is the visibility and coordination of electric heat demand, to enable effective network planning and flexibility for a greener and more affordable future energy system.

• Enabling power-to-gas [P2G] to provide system flexibility and energy network optimisation

Using renewable energy to generate gas such as hydrogen can potentially allow long-term energy storage and bring energy system benefits; the challenge is to unlock this potential.

The first funding phase of this round will open in early September, when energy network companies working with other innovators can apply for up to £150,000 for a feasibility study to develop their ideas in response to the challenges.

After this discovery phase, those projects judged to have the greatest potential will go forward to the alpha phase in 2024, with additional funding of up to £500,000 to further develop their ideas over six months.

Then after a further selection process, successful projects will go through to a final phase, beta. They will become multi-million-pound, large-scale demonstrators, working to prove their potential for rollout across energy networks as business-as-usual.

The aim is to speed up the development of new technologies and services that will help meet the urgent challenges facing energy networks and society, as we move towards a low-carbon future.

Marzia Zafar, Deputy Director of Strategy and Innovation at Ofgem, says, “This is a great opportunity for innovators to focus their talents on solving some of the major challenges the energy sector is facing on the road to decarbonisation.

“SIF has already proved to be a launchpad for some fantastic innovative thinking and we’re looking forward to seeing what exciting proposals we get in response to this year’s set of specific challenges.”

Matt Hastings, Deputy Director for the Ofgem SIF at Innovate UK, says, “This year’s SIF challenges express some of the most important areas that must be urgently tackled to decarbonise energy networks by 2035 – whether the backlog in new grid connections or the transition to electric heating.

“We encourage innovators everywhere to look at these challenges and opportunities and bring forward their ideas. The previous two rounds of the SIF have already funded more than 100 ground-breaking innovation projects and we look forward to exciting proposals taking shape over the coming months for this year’s programme.”