Ofgem launches £450m Innovation Fund to drive net-zero transition

UK energy regulator Ofgem has launched its Strategic Innovation Fund, a £450 million ($619 million) initiative designed to support the research, development, and use of innovative energy technologies over the next five years.

The fund, which is part of the regulator’s RII02 initiative designed to ensure cost-effective energy transition, will be managed in partnership with UK Innovate. Funding will be issued to projects that are led by energy transmission and system operators and conducted in partnership with businesses, academics, and other networks.

With the funding aimed at helping the UK to achieve its 2050 net-zero goal, projects that will be selected to receive support will need to address the four major strategic challenges that are crucial for the energy transition:

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

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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.”

In addition, the funding will help:

• Turn the UK into the ‘Silicon Valley’ of energy.

• Accelerate the deployment of renewable energy in the UK.

• Prepare the UK’s transport and energy networks for future business models and commercial growth. Projects the fund will support will help decarbonise the UK’s heat network through the rollout of clean solutions including heat pumps and enable collaboration between energy transmission and distribution operators with other public funders of innovation. Technologies including energy storage, demand response and electric vehicle charging will be funded.

• Ensure the fair treatment of consumers in both the energy transition and day-to-day operations of grid network. The capital used to fund the project will be sourced from consumer bills.

UK Net Zero Business Champion Andrew Griffith said: “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.” 

Ofgem will fund projects in three ‘agile’ stages – discovery, alpha and beta – to ensure focus on the right areas and to minimise risk. This will help 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, according to a statement.