Funding competition Ofgem 2021: heat - Discovery

Organisations can apply for funding under the Ofgem - Strategic Innovation Fund to deliver projects that offer value to energy consumers and society through energy network innovation.

This competition is now closed.

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Competition sections


This competition is delivered in partnership with the Office of Gas and Electricity Markets (Ofgem). It is funded by the Ofgem Strategic Innovation Fund, which aims to deliver value to energy consumers and society through energy network innovation.

The aim of the Ofgem Strategic Innovation Fund is to decarbonise gas and electric energy distribution and transmission networks and benefit the consumer.

Discovery is the first phase of a 3 phase competition:

  1. Discovery
  2. Alpha
  3. Beta

There are 4 challenge competitions in Discovery phase:

  1. Ofgem 2021: whole system integration
  2. Ofgem 2021: data and digitalisation
  3. Ofgem 2021: zero emission transport
  4. Ofgem 2021: heat (this competition)

It is the responsibility of the applicant to ensure that they are entering the appropriate challenge competition for their project.

Successful applicants from the Discovery phase will be invited to apply for the Alpha phase.

This competition will be supported with 2 briefing events:

  1. Licenced network briefing.

A briefing for licenced gas distribution networks, transmission network operators, or electricity system operator that are eligible to be the lead applicant. This event will focus on the eligibility criteria, the application process, and the support available.

2. Competition launch briefing.

An event for all organisations wanting to participate in the programme. This event will provide an introduction to the programme, focussing on the background of the competition, the eligibility criteria, the application process, and information on finding an eligible licenced network to work with.

In applying to this Discovery phase competition, you are entering into a competitive process.

Any adoption and implementation of a solution from this competition would be subject to a separate, possibly competitive, procurement exercise.

This competition closes at 11am UK time on the deadline date.

Funding type


Project size

Discovery phase projects must last two months and have total eligible costs up to £150,000, exclusive of VAT.

Who can apply

Your project

Your project must:

  • start by 1 March 2022
  • end by 30 April 2022
  • last 2 months


To lead a project, you must:

Subcontractors can include a variety of third-party innovators such as:

  • start-ups
  • SMEs
  • suppliers
  • academics
  • independent researchers
  • disruptors
  • other energy network companies

This list is not intended to be exhaustive.

For more information on company sizes, please refer to the company accounts guidance.

Project direction will be awarded to a single legal entity only.

This work will still be the responsibility of the lead applicant.

We are looking for proposals that involve all the necessary stakeholders relevant to the proposed innovation, from a heat perspective.


A total of up to £3million exclusive of VAT, is allocated to the Discovery phase.

Only successful applicants from the Discovery phase will be invited to apply to the Alpha phase.

Your project must primarily focus on the energy network aspects of innovation.

Components of the energy system which sit outside the regulated energy network infrastructure such as energy generation, storage, or in-home services are within scope if their inclusion delivers a net benefit to network consumers.

This list is not intended to be exhaustive.

If you are unsure whether your project or parts of your project are eligible for funding in this competition on this basis, you must contact us by email to at least 10 working days before the competition closes. We will decide whether to approve your request.

The total funding available for the competition can change. The funders have the right to:

  • adjust the provisional funding allocations between the phases
  • apply a ‘portfolio’ approach based on technology, geography, innovation, markets, and participants

Ofgem reserve the right to make the final decision as to which projects are funded.

The project direction is fulfilled at the end of Discovery phase, and you are expected to exploit the developments and disseminate the learnings of your project.

Value Added Tax (VAT)

Your total costs must exclude VAT.

VAT is the responsibility of the invoicing business, and your application must list total costs exclusive of VAT.

Subsidy control

Ofgem competitions are not subject to subsidy control.

Your proposal

The aims of this competition are to:

  • decarbonise gas and electric energy distribution and transmission networks and benefit the consumer
  • develop innovative products, processes and services for the planning, operation and delivery of energy networks that support low carbon heating solutions
  • produce insights and findings to support decision making for low carbon heating by energy networks, industry, and government
  • demonstrate how low carbon heating can be intelligently managed during operation to improve efficiency and reduce overall energy system costs

Your project must address the overarching requirements of the Strategic Innovation Fund (SIF), as stipulated in the SIF Governance Document.

Over the three phases, applicants must demonstrate that projects deliver a net benefit to network consumers through:

  • energy bill cost reductions
  • carbon emission reduction
  • access to revenues for users of energy network services; or introducing products, process and services that are new to the UK energy market

Your proposal must:

  • focus on network innovation that can be deployed or applied to benefit GB energy networks’ infrastructure, network consumers, operation, and utilisation

Your project must address:

  • users and their context
  • constraints affecting the problem or wider context
  • opportunities for improvement
  • environmental impacts

You should consider all the points listed here, but as a minimum you must directly address at least one as the primary focus of the proposed project:

  • using smart approaches to manage large-scale electrified heat deployment in a local area, reducing the need for network reinforcement
  • using smart meters with heat pumps to optimise usage and energy system flexibility
  • the commercial and investment case for financing heating technologies alongside energy network innovation
  • working with partners on how deployment of low carbon heating solutions can be better coordinated to minimise gas and electricity network constraints at lowest economic cost

At this stage a project direction will be issued for the Discovery phase only. You must define your goals and outline your plan for the Alpha phase. Only successful applicants from Discovery phase will be invited to apply for Alpha phase.

The Alpha phase of a project will focus on preparing and testing the different solutions to the problem identified during the Discovery phase ahead of any future large-scale demonstration of the project. It will also include testing of the riskiest assumptions.

Projects we will not fund

We will not fund projects that do not meet the requirements of the SIF Governance Document.

31 August 2021
Competition opens
7 September 2021
Online competition launch briefing – watch the recording
8 September 2021
Online licenced network briefing – watch the recording
17 November 2021 11:00am
Competition closes
4 February 2022
Applicants notified
28 February 2022
Project direction issued

Before you start

By submitting an application, you agree to adhere to the terms of the Strategic Innovation Fund as set out in the SIF Governance Document.

If successful, you will be issued with a SIF Project Direction by Ofgem. The SIF Project Direction is a document which outlines the deliverables, milestones, timelines, and costs against which your project will deliver. These terms will be consistent with the details you submit within this application, and once the Project Direction is accepted these are not expected to substantially change during the delivery of your project.

Ofgem reserves the right to make changes to the project terms ahead of issuing the SIF Project Direction, where deemed necessary.

The Innovation Funding Service (IFS) is an online application process.

When you start an application, you will be prompted to create an account as the lead applicant or sign in as a representative of your organisation. You will need your account to track the progress of your application.

Applications are separated into sections, which all need to be completed to submit your application. You cannot submit an application unless you have correctly completed each section. Applications not submitted via the Innovation Funding Service, or which are sent by email will not be accepted.

Full guidance for completing each section is found within the service.

As the applicant you are responsible for:

  • collecting the information for your application
  • representing your organisation in leading the project if your application is successful

You will be able to invite colleagues from your organisation to contribute to the application.

What happens next

A selected panel of independent assessors will review and assess your application.

Ofgem reserves the right to invite you to attend an interview with an independent expert panel.

All applicants will be provided with feedback.

Your end of phase report and show and tell presentation will be considered as part of your submission for the next phase.

What we will ask you

The application is split into 3 sections:

  1. Project details.
  2. Application questions.
  3. Finances.

1. Project details

These sections are required for monitoring and are not assessed.

Application details

The lead applicant must complete this section. Give your project’s title, start date and duration.

Who made you aware of the competition?

Select a category to state who made you aware of the competition. You cannot choose more than one.

Equality diversity and inclusion

We collect and report on equality, diversity and inclusion (EDI) data to address under-representation in business innovation and ensure equality, diversity and inclusion across all our activities.

All participants must complete this EDI survey and the lead applicant must then select yes in the application question. The survey will ask you questions on your gender, age, ethnicity and disability status. You will always have the option to ‘prefer not to say’ if you do not feel comfortable sharing this information.

Public description

Please provide a brief description of your project. If your application is successful, we will publish this description. This could happen before you start your project. This question is mandatory, but we will not assess this content as part of your application.

Describe your project in detail, and in a way that you are happy to see published. Do not include any commercially sensitive information. UKRI have the right to amend the description before publication if necessary but will consult you about any changes.

Your answer can be up to 400 words long.

2. Application questions

The assessors will assess your answers for questions 2 to 9. Your answers to questions 1 and 10 are not scored as they are for monitoring only.

Your answer to each question can be up to 400 words long. Do not include any URLs in your answers unless we have explicitly requested a link to a video.

Question 1. Applicant location (not scored)

You must state the name of your organisation along with your full registered address. We are collecting this information to understand the geographical location of all participants of a project.

Question 2. Problem and opportunity

Define the problem the innovation is aiming to solve and the opportunity that could be realised in solving it.

Question 3. Project summary

Provide a short summary of your project.

Describe or explain:

  • how it meets the scope of the competition
  • the experience and capability to deliver their part of the project of each partner or subcontractor
  • why each partner is best placed to develop the idea further
  • the potential users of your innovation
  • your understanding of the potential users needs in relation to the challenge

You must download and complete the slide template provided to create a single ‘Project on a slide’ plus a single slide ‘Postcard from the future’ which will be made publicly available if successful. When completed you must upload the template as a PDF appendix to this question. The font must be legible at 100% zoom.

You must also upload an appendix detailing the relevant skills and experience of each partner and subcontractor and the role that they will be fulfilling in the project. It must be a PDF, no larger than 10MB, with a maximum of one page per partner. The font must be legible at 100% zoom.

You must upload a video to YouTube or Vimeo. You must provide a link to your video and any passwords to allow access to it, in your answer to this question. Please ensure your video is ‘unlisted’ in the privacy settings.

Your video must be no longer than 60 seconds. In your video you must summarise:

  • the problem you are addressing
  • your idea in providing a solution
  • the benefits it will bring to customers

If we are unable to view your video or it is not hosted on Vimeo or YouTube, your application will be made ineligible. The video must remain available until 30 June 2022.

More information on how to create an unlisted video on YouTube and Vimeo.

If you are having problems uploading your video to YouTube or Vimeo, you must contact at least 10 working days before the competition closes for advice.

Question 4. The big idea

How does your proposal address the aims described in the competition scope?

Provide a brief description of your proposed idea, technology, or service.

Describe the current state of development or readiness of the idea and the current and proposed IP arrangements.

Question 5. Innovation justification

How have you researched similar projects elsewhere nationally and internationally? What learnings have you gained?

Clearly demonstrate your idea is truly innovative and should not be funded elsewhere within the price control or considered as part of business-as-usual activities.

You can submit a single appendix as a PDF containing tables of similar projects, images, and diagrams to support your answer. It can be no larger than 10MB and up to 2 A4 pages long.

Question 6. Impact and benefits

How will your idea deliver benefits to consumers?

How will your idea reduce CO2?

How do you expect to quantify the market benefits of your innovation? Use indicative metrics where possible.

Using your chosen metrics, describe and explain, where applicable:

  • economic benefits resulting from the project to your users and any other parts of the supply chain, broader industry, and the UK economy, such as productivity increases and import substitution
  • impact on government priorities and any associated benefits with this
  • environmental impacts, either positive or negative
  • any expected regional or wider energy supply resilience benefits
  • impacts on consumers of the whole energy system (both individuals, and collectively), including those considered to be vulnerable or experiencing fuel poverty
  • quantitative measures you expect to use

Question 7. Project plan and milestones

What is your project plan? What are your milestones?

We expect you to be flexible in the delivery of this phase in line with an agile approach to working.

Outline your project approach:

  • describe the main work packages of the project for phase 1, indicating the lead resource or subcontractor (where appropriate) assigned to each plus the relevant success criteria
  • describe the main risks to the successful delivery of the project and any plans to mitigate these risks
  • explain any major constraints you have identified within, regulatory, commercial, and technical constraints

You must submit a project plan as an appendix to support your answer.

You must also submit a risk register including identification of major constraints with regulatory, commercial, and technical constraints, including your mitigation actions.

You can also upload an additional appendix to include images and diagrams illustrating your project approach, known barriers including regulatory or commercial.

Each appendix must be PDF, can be up to 1 A4 page long and no larger than 10MB in size. The font must be legible at 100% zoom.

This will be used to inform your contractual deliverables to the Gas and Electricity Markets Authority, which will be set out in the project direction.

Question 8. Route to market

How will your idea become business as usual within your network and across the other networks?

If your idea becomes viable after the Beta phase of the project, how will you enable procurement and utilisation of your innovation across the UK and internationally?

You must download the template and read the guidance included. When completed, you must upload all investment need executive summaries as a single PDF no larger than 10MB in size as part of your answer to this question.

For each non-licensee project partner, please provide an indication of their need for investment either before, during or after the project.

It is the responsibility of the lead applicant to ensure that all non-licensee partners review the investment need executive summary template and have completed it as applicable.

Question 9. Costs and value for money

How much will the project cost and how does it represent value for money for the consumer?

In terms of the project aims, describe, or explain:

  • the total eligible project costs
  • the funding you are requesting
  • how each partner will finance their contributions to the project
  • how it compares to what you would spend your money on otherwise
  • the balance of costs and SIF funding across the project partners
  • any subcontractor costs and why they are critical to the project
  • how this is complementary to, and provides additional value over your business as usual activity

You must download and complete the project costs template. It must be uploaded in a XLSX format as an appendix and be no larger than 10MB in size. The font must be legible at 100% zoom.

Question 10. Regulatory barriers (not scored)

Are there any regulatory barriers which may affect your proposal?

You must select ‘yes’ or ‘no’ as your answer to this question.

If yes, you must download the Ofgem Innovation Link 'Fast Frank Feedback Enquiry Form’, complete and upload it as an appendix in PDF and no larger than 10MB in size. The font must be legible at 100% zoom.

If a known or perceived regulatory barrier exists, you can discuss such regulatory barriers with Ofgem's Innovation Link service by emailing

3. Finances

Enter your Discovery phase costs exclusive of VAT, organisation details and funding details.

Background and further information

Context of the heat competition

This competition focuses on energy network innovation to support decarbonisation of heat.

Consumers need improved accessibility to low carbon heating options which remains reliable and affordable in comparison to existing solutions. For many domestic, commercial, and industrial end consumers, heat represents a significant proportion of their energy bills.

Heating accounts for almost over a third of the UK’s overall greenhouse gas emissions and to date has proved challenging to decarbonise. Presently most heating requirements are served by natural gas, or oil.

Heat networks, electric and hybrid heat pumps, hydrogen, biofuels, and other technologies have potential to contribute to the heat transformation necessary to meet national 2030 and 2050 emissions targets.

It is likely that the best low carbon heat choices will be dependent on local characteristics such as local heat sources, or infrastructure capacity, and consumer preferences.

In all scenarios, the energy networks will play a crucial role in delivering the infrastructure required to support the decarbonisation of heat.

Strategic Innovation Fund Context

Ofgem recognises that innovation will continue to play a crucial role in delivering best value to energy consumers. Innovation will prepare the regulated energy network companies to deliver net zero greenhouse gas emissions at lowest cost to consumers, while maintaining world-class levels of system reliability and customer service, and ensuring no consumer is left behind.

The Strategic Innovation Fund (SIF) has been introduced under the regulated price control mechanism for the Electricity System Operator, Electricity Transmission, Gas Transmission and Gas Distribution sectors.

The SIF seeks to support energy network innovation that contributes to the achievement of Net Zero, while delivering real net benefits to network consumers. It is delivered in partnership with UKRI, who will work with other funders of innovation so that activities appropriately funded by network consumers are coordinated with activities delivered through other funding providers.

Strategic Innovation Fund competitions will continue to be developed in collaboration with input from the energy networks, innovators, Government, and wider industry. With competitions focussing innovation on the most pressing challenges facing the sector.

The requirements for energy networks and other organisations that wish to participate in the SIF are outlined in the SIF Governance Document.

Benefits to consumers

Potential benefits to consumers as defined by Ofgem may be:

  • cost savings
  • delivering new products, processes, and services
  • improving products, processes, and services
  • enhancing their wellbeing
  • helping consumers access new or existing markets or revenue streams more easily for example increasing the share of renewable generators contributing to energy markets, or providing granular information services on locational network capacity

About Ofgem competitions

The Ofgem Strategic Innovation Fund (SIF) programme is a multi-year programme which will deliver competitions with varying scope requirements sharing a common focus on energy network innovation.

Future phases

The Alpha phase of a project will focus on preparing and testing the different solutions to the problem identified during the Discovery phase, ahead of any future large-scale demonstration of the project. It will also include testing of the riskiest assumptions.

The Beta phase of a project focuses on the deployment of the solution to the problem and the duration of the Beta phase will depend on the scale and complexity of the solution deployed. Beta phases will range between six months and five years and represent the largest scale phase of the project.

Data sharing

This competition is operated by Innovate UK, on behalf of Ofgem (each an “agency”).

Your submitted application and any other information you provide at the application stage can be submitted to each agency on an individual basis for its storage, processing, and use. Any relevant information produced during the application process concerning your application can be shared by one agency with the other, for its individual storage, processing, and use.

This means that any information given to or generated by Innovate UK in respect of your application may be passed on to Ofgem and vice versa.

Innovate UK and Ofgem are directly accountable to you for their holding and processing of your information, including any personal data and confidential information. Data is held in accordance with their own policies. Accordingly, Innovate UK, and Ofgem will be data controllers for personal data submitted during the application.

Innovate UK complies with the requirements of GDPR, and is committed to upholding the data protection principles, and protecting your information. The Information Commissioner’s Office also has a useful guide for organisations, which outlines the data protection principles.

Further help and information

If you are a 3rd party with a project idea and would like to partner with a network licensee on an application, please contact

If you have any questions about the scope requirements of this competition, email

Contact us

If you need support with the application process, email us at or call the competition helpline on 0300 321 4357 between 9am and 11:30am or 2pm and 4.30pm Monday to Friday (excluding bank holidays).

Innovate UK is committed to making support for applicants accessible to everyone.

We can provide help for applicants who face barriers when making an application. This might be because of a disability, neurodiversity, or anything else that makes it difficult to use our services. We can also give help and make other reasonable adjustments for you if your application is successful.

If you think you need more support, it is important that you contact our Customer Support Service as early as possible during your application process. You should aim to contact us no later than 10 working days before the competition closing date.

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