Net zero challenge areas for energy network innovation funding

London city skyline shortly after sunset

Innovate UK and Ofgem have set the challenge areas for the next round of the Strategic Innovation Fund to help energy networks accelerate the transition to net zero.

Office of Gas and Electricity Markets (Ofgem) and Innovate UK have announced the challenge areas for the second round of innovation funding under the Strategic Innovation Fund (SIF). It opens for applications in early September 2022.

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.

Now four innovation challenge areas have been identified as the priorities that this year’s project proposals should address.

Towards net zero energy systems

Chosen in consultation with the energy industry and consumers, the four challenge areas, which incorporate a focus on transport, heat, data and integration across the whole gas and electricity system, are:

  • supporting a just energy transition: new ways to identify and support vulnerable customers and help those who are disadvantaged, fuel poor or off the gas grid to reduce heat and mobility carbon emissions
  • preparing for a net zero power system: new ways to support low-stability systems and to use new sources of energy supply and demand to help manage grids
  • improving energy system resilience and robustness: ways to develop multi-energy systems and make them more resilient, and strengthening energy system robustness so that new infrastructure can be rolled out efficiently
  • accelerating decarbonisation of major energy demands: ways to manage and integrate large-scale demands from heat and transport, integrating heat networks for wider energy network management and improving energy efficiency at all levels in the system.

Now the challenge areas have been identified, the programme will open an initial discovery phase, whereby innovators working with energy companies can apply for £150,000 to further develop their ideas.

Accelerating new technologies to reality

After the discovery phase, those projects judged to have the greatest potential will be awarded up to £500,000 to further develop their ideas.

Another selection process will follow, with successful projects receiving more funding and able to carry out large-scale demonstrations of their technologies.

The aim is to develop innovations that can be rolled out across all UK energy networks. This includes:

  • making them fit for the future
  • delivering benefits for both consumers and the planet.

Addressing pressing issues

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

Ofgem set up the SIF to harness the power of innovation to help accelerate a fair, affordable and inclusive transition to low carbon energy.

The challenge areas announced today address some of the most pressing issues on this journey and we encourage energy networks and innovators to consider how they can develop the best ideas with the greatest potential for this year’s competition.

Joining in a ‘giant leap together’

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

We believe we can make the UK the best place in the world to be an energy entrepreneur. The first round of the SIF produced 40 innovation projects across a wide range of themes, showing that the sector is ready to join in this ‘giant leap together’ to decarbonise the energy networks.

With the next challenge areas now clear we expect that many dynamic new collaborations will form this year, as energy networks get together with other innovators, inside or outside the energy sector, to take part in the SIF.

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

A launch webinar on 25 May 2022 will explain more. Innovators wanting to partner on projects can sign up on the registration page.

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 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.

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 SIF

The purpose of 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 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 SIF will be £450 million over the next network price control period.

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.


Under SIF, 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.

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.

The ‘Giant Leap Together’ model

As part of the SIF programme, Innovate UK has created ‘Giant Leap Together’, a carefully designed activity plan recurring and being refined each year.

It has four stages:

  • challenges: identifying the most important energy network innovation challenges based on problems that users and consumers are facing
  • ideation: generating new ideas for projects or products and services that will target these challenges;
  • incubation: helping energy networks and innovators form effective partnerships that can develop the ideas into powerful innovation projects or products and services
  • acceleration: selecting and funding the most promising ideas, sharing insights, solving problems, helping businesses secure investment and developing the very best ideas into ‘business as usual.’

Three ‘agile’ stages

In the acceleration stage, projects are funded progressively in three phases:

  • discovery
  • alpha
  • beta.

This is to ensure focus on the right areas and minimise risk.

This will help the projects to:

  • develop rapidly
  • react to change
  • 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

The round two discovery phase opens in early September 2022.

Projects under this competition have to be led by:

  • gas transmission, gas distribution or electricity transmission
  • electricity distribution network operators or the electricity system operator
  • working in collaboration with other networks, businesses and academics.

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