Ofgem Strategic Innovation Fund announces 10 funded projects

Wind turbines on British farm land

Ten innovative large-scale demonstrator projects worth a total of £95.3 million have been approved and will begin this July.

Transforming the UK’s energy systems

These projects are part of £450 million Office of Gas and Electricity Markets (Ofgem) Strategic Innovation Fund (SIF), delivered in partnership with Innovate UK.

SIF aims to help accelerate the transition to more homegrown, decarbonised energy at the lowest cost to consumers and turn the UK into a centre of global energy innovation.

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

The 10 projects announced today successfully competed for beta funding, the final stage in the SIF’s first programme round which began in 2022 with ‘discovery’ feasibility studies followed by ‘alpha’ proof of concept projects.

The projects represent a major investment in ideas which have shown real potential to be widely adopted. They will help to transform the UK’s energy systems in line with net zero targets and benefit consumers in the coming years. They will also provide a significant step in the urgent drive for innovation in Great Britain’s energy networks.

The innovations being developed range from using weather data to predict energy network risks and faults, to circuit breakers which will enable the increasing amounts of power from offshore wind turbines to be connected efficiently to the grid.

Several projects will demonstrate technologies enabling the future use of hydrogen, such as compression and blending of hydrogen for use in gas networks.

Building a smart flexible energy system

The CrowdFlex project, led by National Grid ESO (Electricity System Operator), aims to further explore household energy flexibility as a national resource to help decarbonisation.

Flexibility over when and how energy is used can help align demand to generation, improve coordination across the network and reduce stress on the system, while reducing consumer energy bills via incentives.

The beta project aims to build a forecasting model of domestic demand and flexibility, based on large-scale consumer trials, to establish flexibility as a resource and inform new product design. It will be working with partners including:

  • Octopus Energy
  • OVO Energy
  • Ohme

Carolina Tortora, Head of Digital Transformation and Innovation Strategy, at National Grid ESO said:

We believe there is a huge opportunity during this transition to build a smart flexible energy system by enabling consumers to act as a new source of flexibility, supporting more low-carbon technologies and reducing consumer costs.

The CrowdFlex demonstrator is a major step towards a national domestic flexibility programme.

Reduced costs for consumers

The Digital Platform for Leakage Analytics (DPLA) project is led by Cadent with Guidehouse as technology delivery partner. It aims to demonstrate a prototype for how data, analytics and innovative sensors can be used to identify, locate, and predict leaks in the gas distribution network.

The system will enable Cadent colleagues to receive real-time alerts about critical leaks, more accurately analyse and model leakage data across the network and take quick and effective action.

Leakage is a continual focus when transporting gas over hundreds of miles of pipelines. With a vital role to transport gas over hundreds of miles of pipeline, reducing leakage remains a continual focus.

The DPLA project will now deliver major advancements in the industry’s ability to monitor and reduce leakage from gas networks. This will not only contribute to net zero goals by reducing leakage-related emissions but will also help to reduce costs for customers.

Transformative technologies of tomorrow

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

Net zero is the most urgent issue of our lifetime, the SIF and the energy networks have moved fast to develop these ideas from initial proposals into large-scale demonstrators in less than 18 months.

The SIF is accountable to the customers who fund the programme through their bills. In these 10 Beta projects we have a direct line of sight to significant potential benefits that are greater in magnitude than the £108m we’ll be investing as part of round 1.

The SIF has already funded more than 100 innovative projects since 2022, and we encourage more innovators to come forward with great ideas that could become the transformative technologies of tomorrow.

Further information

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

Round two of SIF is well under way, with 53 feasibility studies just completed, and round three opens for feasibility study proposals in autumn 2023.

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

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.

Ofgem is working with Innovate UK to deliver SIF. The partnership brings together the complementary roles of both organisations.

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 government

Ofgem has determined that the value of 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 the 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.

Projects are funded progressively in three ‘agile’ stages, 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 while growing large-scale successful businesses and contributing to UK economic growth.

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