Ofgem SIF pushes further ahead with energy innovation projects

Offshore wind turbines lined up in the ocean

Eighteen innovative projects worth a total of £8 million will start in August, continuing the urgent drive for innovation in Great Britain’s energy networks.

The projects have been given the go-ahead under Ofgem’s Strategic Innovation Fund (SIF) partnership with Innovate UK.

SIF aims to help accelerate the transition over time away from costly imported gas supplies to more homegrown, decarbonised energy at the lowest cost to consumers, turning the UK into a centre of energy innovation.

The projects are led by energy network companies working with a range of partners in technology, innovation and research.

They follow on from feasibility studies carried out in spring 2022 with initial ‘discovery’ funding from the SIF, and won further funding through a competitive process.

A deeper dive into new energy network ideas

The projects all go deeper into developing promising new ideas for gas and electricity networks, with the potential to:

  • help transform the UK’s energy systems in line with net zero targets
  • benefit consumers in the coming years.

The innovations explored include:

  • technologies for the large-scale storage of heat
  • circuit breakers to enable the increasing amounts of power from offshore wind turbines to be connected efficiently to the grid
  • compression and blending of hydrogen for use in gas networks
  • new coatings to protect hydrogen pipework from accelerated wear and tear
  • using weather data to predict risks and faults in our energy networks
  • new superconductor cables that can transmit high levels of energy more efficiently, with three to ten times the power density of existing cables.

Six months’ intensive development

The project teams now have six months to explore their concepts in detail, after which they can enter a further competition for large-scale funding to take their innovation towards market readiness.

The aim is to develop transformative new technologies, products and services, which can be rolled out across all UK energy networks. This makes them fit for the future and delivering benefits for both consumers and the planet.

A fair and affordable energy transition

Neil Kenward, Ofgem Director for Strategy and Decarbonisation, said:

Innovation in energy is a vital part of the process of bringing down the cost for energy consumers, accelerating the decarbonisation of our energy system and reducing our dependence on costly imported fossil fuels, over time.

We have to transform the way we travel, heat our homes, and fuel our industries, and energy networks will need to innovate accordingly.

Ofgem set up the SIF to help accelerate this transition in a way that is fair and affordable for consumers.

I am very pleased to see these innovative ideas progress from the feasibility study stage and take the next step towards becoming a reality.

They are all part of a concerted drive, which will help us diversify our energy supplies in the future, protecting consumers from future energy shocks while also protecting the planet.

Urgency and optimism

Matt Hastings, Deputy Director of the Ofgem SIF programme at Innovate UK, said:

We can’t escape the urgency of achieving net zero and the massive pressures on consumers at this hugely challenging time for us all.

The SIF is an optimistic ray of hope and seeing these 18 projects lining up to address some of key barriers in the road to net zero is something we feel proud to be part of.

It’s only going to get better as these round one alpha projects progress, and when we launch the round two discovery stage competition later this year.

The SIF is a five-year programme with up to £450 million available to promote energy network innovation.

Ofgem and Innovate UK have announced further innovation challenges for round two of the SIF. They will be working closely with all energy networks, network users and consumers, and will issue another opportunity for feasibility study proposals in the autumn of 2022.

Further information

About Ofgem

Ofgem 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 the government, industries, 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.

About Innovate UK

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.

About the SIF

The purpose of the SIF is to:

  • support network innovation that contributes to the achievement of net zero, while delivering real net benefits to network companies and consumers
  • work with other public funders of innovation so that activities appropriately funded by network consumers are coordinated with activities funded by the government.

Ofgem is working with Innovate UK to deliver the SIF.

The partnership brings together the complementary roles of both organisations. Ofgem regulates network and system operators to enable net zero at the 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.

SIF funding

The value of the SIF will be £450 million over the next 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 gas and electricity networks.

Consortia

Under the SIF, gas and electricity networks 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 SIF is drawn from the bills that energy consumers pay, and so all projects funded will be required to bring a net benefit to consumers.

Three ‘agile’ stages

Projects are funded progressively in three phases, discovery, alpha and beta, to ensure focus on the right areas and minimise risk.

This will help the projects to develop rapidly, react to change and maximise their potential to transform the gas and electricity networks.

It will also help grow large-scale successful businesses and contribute to UK economic growth.

The next SIF competition

Round one of the SIF began with a discovery phase competition, which opened in August 2021 and closed in November 2021. The alpha phase competition opened in May 2022 and has just concluded with this announcement.

Projects will be able to apply for the round one beta stage in November 2023.

For round two of the SIF, the discovery stage competition opens in early September 2022.

Read about SIF round one alpha phase: funded projects.

More information about the SIF can be found on the Ofgem website.

Top image:  Credit: jonathanfilskov-photography, iStock, Getty Images Plus via Getty Images

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