Funding competition Ofgem Round 2: Discovery – Preparing for a net zero power system

Projects can range in size up to total eligible costs of £150,000, exclusive of VAT.

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Competition sections

Description

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 net zero at lowest cost to consumers and support innovative businesses to grow and scale.

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 Round 2: Supporting a just energy transition
  2. Ofgem Round 2: Preparing for a net zero power system (this competition)
  3. Ofgem Round 2: Improving energy system resilience and robustness
  4. Ofgem Round 2: Accelerating decarbonisation of major energy demands

It is the responsibility of the lead 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.

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.

Funding type

Thirdparty

Project size

Your Discovery Phase Project must last up to three months and have a total requested funding of no more than £150,000, exclusive of VAT.

Who can apply

Your project

Your project must:

  • have total eligible Strategic Innovation Fund (SIF) requested funding of no more than £150,000, exclusive of VAT
  • provide a minimum of 10% of total project costs as a compulsory contribution from alternative funds
  • start by 1 April 2023
  • end by 30 June 2023
  • last up to 3 months

Due to current Government trade restrictions, any commercial, business development or supply chain activity with any Russian or Belarusian entity as partner or subcontractor must be scrutinised in detail by Ofgem ahead of their funding decisions. This includes any goods or services originating from a Russian or Belarusian source.

Any applications that are viewed as involving Russian or Belarusian entities, goods or services, which includes parent companies, may be at risk of funding approval and additional delays. Where potential concerns are identified the lead energy network applicants will need to work with the relevant Government bodies to ensure the ongoing protection of critical national infrastructure.

Applicant

To lead a project, you must:

  • be an Ofgem licensed electricity or gas distribution network, transmission operator, or electricity system operator (ESO)
  • work with an organisation with expertise focused on data and digitalisation approaches
  • work with at least one other network licensee in addition to the Project Lead: an electricity transmission, electricity distribution or electricity system operator network licensee

Applicants are encouraged to have other Project Partners in addition to the mandatory requirements listed above. Your Project Partners can include a variety of third-party innovators such as:

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

This list is not intended to be exhaustive.

If successful, the Project Direction will be awarded only to the lead network (Funding Party). Project Partners must be responsible for at least one deliverable in the Discovery Phase.

Ofgem are looking for proposals that involve all the necessary stakeholders relevant to the proposed innovation. We particularly encourage projects working with suitable SME technology developers and growth companies.

Previous applications

Ofgem will not award you funding if you have, failed to comply with the eligibility criteria set out in Chapter 2 of the SIF Governance document.

In line with paragraph 5.8 in the SIF Governance Document, projects submitted under Round 1 of the SIF are eligible to re-apply into SIF Round 2 Innovation Challenges, on the condition that they must:

  • meet the Round 2 Innovation Challenge scope, eligibility, and partner requirements
  • note the focus of the Innovation Challenges change with each round of the SIF
  • comply with the requirements of the Innovation Challenge it is applying to, rather than a previous round’s Innovation Challenge

If unsuccessful in any Round 1 application, you must demonstrate that material changes have been made based on the feedback of the previous application.

Ofgem is the decision maker on the SIF and it is at Ofgem’s discretion (on a case by case basis) whether projects have materially changed since a project was last submitted.

If you are resubmitting a previously unsuccessful project, you must contact Innovate UK and Ofgem for approval as soon as possible prior to resubmission. You must email Innovate UK at SIF_Ofgem@iuk.ukri.org and copy in Ofgem at network.innovation@ofgem.gov.uk to provide an explanation as to how the project has materially changed since it was last submitted and to consider how the project aligns with the current Innovation Challenge.

Subsidy control (and State aid where applicable)

Ofgem competitions are not subject to subsidy control.

Funding

A total of up to £12 million exclusive of VAT, is allocated to the Discovery Phase across the 4 challenges.

If you are unsure whether your project or parts of your project are eligible for funding in this competition, you must contact us by email to SIF_Ofgem@iuk.ukri.org at least 5 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.

At the end of Discovery Phase all milestones detailed in the Project Direction must be fulfilled. The successful organisation is expected to progress to Alpha Phase and to pursue commercialisation of their solution by completion of the Beta Phase.

Your proposal

The Strategic Innovation Fund (SIF) aims to deliver net zero at lowest cost to consumers and support innovative businesses to grow and scale.

This can include decarbonising gas and electric energy distribution, transmission networks and benefit the consumer. These projects should help shape the future of the gas and electricity networks and succeed commercially where possible.

The aims of this competition are to:

  • develop innovations in technology, markets and standards that help the power system be ready for net zero by 2035
  • develop evidence on the technical and commercial capability of new assets to provide power stability services
  • support the system integration of novel assets including the necessary digital interfaces and their market accessibility to help increase the pool of resources providing system stability services ahead of 2035

Your project must focus on and address at least one of these areas:

  • novel ways to reliably support low stability systems
  • accessing grid or system support from novel supply and demand side sources

Your project must meet the eligibility criteria 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:

  • financial cost reductions (operating the network, energy bills, users of network services)
  • 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

At this stage a Project Direction will be issued for the Discovery Phase only. 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

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

5 September 2022
Competition opens
8 September 2022
Online briefing event: join at 1.30pm
23 November 2022 11:00am
Competition closes
3 March 2023
Applicants notified
24 March 2023
Project Direction issued

Before you start

A selected panel of independent Expert 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 show and tell presentation will be considered as part of your submission for the next phase.

You must read the guidance on applying for a competition on the Innovation Funding Service before you start.

What we ask you

The application is split into 3 sections:

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

1. Project details

This section provides background for the Expert Assessors and is not scored.

Application team

Decide which organisations will work with you on the project. Invite people from those organisations to help complete the application.

Application details

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

Project description

Describe your project briefly and be clear about what makes it innovative. We use this section to assign experts to assess your application.

If your application is successful, we may publish this short description in reports or presentations to provide an 'at a glance' overview of the project.

Your answer can be up to 400 words long.

2. Application questions

The Expert Assessors will score your answers for each question, apart from questions 1, 2, 8, 10 and 12. All applicants will be provided with feedback.

You must answer all questions.

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.

Unless otherwise stated, all appendices have been condensed into one Excel spreadsheet entitled 'Project Management Template'. This is available to download in question 3. Once completed, this Excel spreadsheet must be uploaded in response to question 12.

Question 1. Applicants 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. Project short description (not scored)

This is a two-part question.

You must provide a 'one line' description of your project, along with a video lasting 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

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

If we are unable to view your video or it is not hosted on YouTube, your application will be made ineligible. The video must remain available until 30 June 2023.

You can find more information on how to create an unlisted video on YouTube.

If your project is successful in winning funding, Innovate UK will publish your 60 second video as part of its publicity for the Round 2 Discovery projects.

This means, videos that are submitted need to be:

  • of good quality
  • suitable for representing your project and company in public
  • an acceptable standard for Innovate UK's YouTube channel

If necessary, we may ask you to remake your video to a better standard before publication. Separate guidance on quality standards will be available in September 2022.

If you are having problems uploading your video to YouTube, you must contact support@iuk.ukri.org at least 10 working days before the competition closes for advice.

Question 3. Project summary

Provide a summary of your project and describe:

  • how your project meets the aim of the specific SIF Innovation Challenge
  • the energy network innovation involved
  • an overview of the experience and capability to deliver their part of the project for each Project Partners or subcontractor
  • the potential users of your innovation and how your project addresses their needs

You must download the Project Management Template attached to this question and complete the Skills and Expertise tab. In order to complete this question, you must upload a blank document as a PDF. Your completed Project Management Template must be uploaded in your response to question 12.

This question covers Eligibility Criterion 1: Projects must address the Innovation Challenge set by Ofgem and Eligibility Criterion 6: Projects must include participation from a range of stakeholders as outlined in chapter 2 of the SIF Governance Document.

Question 4. Innovation justification

What value will your project deliver? Why is it suitable to be funded by the Strategic Innovation Fund rather than other sources?

You must explain:

  • the problem that you are looking to solve
  • why your project is innovative, novel or risky
  • what knowledge is missing from a previous or related project, how your project will overcome these gaps
  • the economic and sustainability value of delivering your solution against an appropriate counterfactual
  • why your project can not be funded elsewhere within the price control or considered as part of business as usual activities

You can also upload a separate appendix to support your answer. You can include images and diagrams illustrating your project approach. It must be a PDF or Excel spreadsheet, up to one A4 page long and no larger than 10MB in size. The font must be legible at 100% zoom.

This question covers Eligibility Criterion 3: Projects must involve network innovation and Eligibility Criterion 5: Projects must be innovative, novel or risky as outlined in chapter 2 of the SIF Governance Document.

Question 5. Benefits Part 1

From the following list, select all applicable SIF benefits which your project is looking to deliver against a business as usual counterfactual:

  • Financial - future reductions in the cost of operating the network
  • Financial - cost savings per annum on energy bills for consumers
  • Financial - cost savings per annum for users of network services
  • Environmental - carbon reduction – direct CO2 savings per annum against a business-as-usual counterfactual
  • Environmental - carbon reduction – indirect CO2 savings per annum against a business-as-usual counterfactual
  • Revenues - improved access to revenues for users of network services
  • Revenues - creation of new revenue streams
  • New to market – products, processes, and services

For information on evidencing potential benefits to consumers, see chapter 4 in the SIF Governance document.

Question 6. Benefits Part 2

How will your project deliver net benefits to consumers? At Discovery Phase these can be high level; if the project progresses we would expect more granularity and evidence.

Referencing the benefits selected in Benefits Part 1 , you must describe:

  • the metrics you will be using to track the selected benefit(s)
  • an indicative quantitative measurement you expect to achieve, with justification and when you expect to achieve this by

This question covers Eligibility Criterion 2: Projects must have clearly identified potential to deliver a net benefit to gas or electricity consumers (whomever is paying for the innovation) as outlined in chapter 2 of the SIF Governance Document.

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 your project for this Discovery Phase
  • indicate the lead resource or subcontractor (where appropriate) assigned to each work package
  • indicate the relevant success criteria including any deliverables or outputs plus the SIF Funding allocated to each work package
  • describe the main risks (such as technical, political, policy, commercial, managerial, and environmental factors) to the successful delivery of the project and any plans to mitigate these risks
  • describe your risk management strategy
  • explain any major constraints you have identified including regulatory, commercial, and technical constraints for delivery and business as usual adoption of the innovation

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

You can either:

  • upload a risk register and project plan as 2 separate documents

or

  • use the Project Plan and Risk Register tabs of the Project Management Template

Your risk register must include any regulatory barriers your project is aware of at this point. These must be detailed in your response to the relevant question.

If you are using option 1, you must upload both documents in a PDF format. Each document can be up to one A4 page long and no larger than 10MB in size. The font must be legible at 100% zoom.

If you are using option 2, you must complete the Project plan and Risk Register tabs on the Project Management Template. The Project Management Template must be uploaded in response to question 12.

This question covers Eligibility Criterion 8: Projects must be well thought through and have a robust methodology so that they are capable of progressing in a timely manner as outlined in chapter 2 of the SIF Governance Document.

Question 8. Regulatory barriers (not scored)

What would you consider to be the regulatory barriers for fully embedding your expected project outcomes into business as usual?

Describe:

  • the regulatory barriers which may hinder the delivery of your Alpha Phase or Beta Phase project
  • if different to bullet point one, any longer-term regulatory barriers to transitioning your project into business as usual
  • the policy considerations for longer term implementation
  • your proposed approach to creating evidence to influence future policy and regulations
  • whether your project will require a derogation or exemption from any project-related regulatory requirements in any future project phase

For more information see chapter 4 of the SIF Governance Document.

Question 9. Route to market

How will your idea become business as usual within your network and across the other networks? What considerations have your Project Partners made for the commercialisation strategy for this innovation?

You must describe:

  • the steps you will take to ensure your innovation achieves suitable business as usual adoption at the quickest opportunity
  • why your project and its outputs do not undermine the development of competitive markets
  • who will be responsible for the implementation of your innovation and why they are the best person or team to achieve this
  • who is the primary customer segment for your innovation, for example, who could own, operate or purchase your product or service after the Beta Phase including national and international opportunities
  • the customer value proposition and associated business case, aligning with the net benefits as outlined in the Benefits Part 1 and 2 and Project plan and milestones questions
  • your funding strategy for adoption of your innovation, giving consideration to potential investment, ongoing costs and third-party involvement

If you have not already done so, you must download the Project Management Template in question 3 and complete the Investment tab. Your completed Project Management Template must be uploaded in your response to question 12.

This question covers Eligibility Criterion 4: Projects must not undermine the development of competitive markets as outlined in the SIF Governance Document.

Question 10. Intellectual Property Rights (not scored)

What are the Intellectual Property Rights (IPR) arrangements for your project?

Describe how each Project Partner complies with Chapter 9 SIF Governance Document.

Question 11. Costs and value for money

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

In terms of your project aims, describe:

  • the total project costs
  • how your project will fund the minimum 10% of total project costs as a compulsory contribution from private funds
  • the balance of costs and SIF funding across the Project Partners
  • any subcontractor costs and why they are critical to the project
  • how your project delivers value for money

This question covers Eligibility Criterion 7: Projects must provide value for money and be costed competitively markets as outlined in chapter 2 of the SIF Governance Document.

Question 12. Project Management Template (not scored)

You must upload your completed Project Management Template. You must add the word "Uploaded" in the free text box provided in order to complete this question.

3. Finances

Each organisation in your project must complete their own Discovery Phase project costs, organisation details and funding details in the application exclusive of VAT.

Background and further information

A key policy commitment within the UK government’s net zero strategy is to fully decarbonise the power system by 2035, subject to security of supply considerations. Significant increases in deployment of offshore wind (supported by a policy commitment of 50 GW by 2030), onshore wind, and solar PV (five-fold increase by 2035) are expected.

As noted in the Operability of High Renewable Electricity Systems Report by the National Infrastructure Commission (NIC) and the System Operability Framework by the Electricity System Operator (ESO), aspects including inertia, short circuit level, voltage control, system restoration, loss of mains protection and fault ride through will need to be met to operate a safe and secure system.

While challenges exist, developments in digitalisation and decentralisation creates a significant opportunity to reimagine and deliver future system operation for net zero. Research from the Energy Systems Catapult highlights some of these opportunities including using demand side flexibility to support system operation, more real time, and dynamic approaches to manage risks and constraints, distributed intelligence and control systems and regional system operation with national coordination. Unlocking these opportunities will require innovation across technology, markets and standards.

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, Gas Distribution and Electricity 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 and supporting innovative businesses to grow and scale. 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.

Further help and information

If you have any questions about the scope requirements of this competition, email SIF_Ofgem@iuk.ukri.org or join our optional applicant drop-in sessions on Tuesdays and Thursdays at 3pm.

Data sharing

This competition is jointly operated by Innovate UK, on behalf of Ofgem, and in coordination with the Department for Business Energy and Industrial Strategy (BEIS) (each an 'agency').

Any relevant information submitted and 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 BEIS, and vice versa. This would include, but is not restricted to:

  • the information stated on the application, including the personal details of all applicants
  • scoring and feedback on the application
  • information received during the management and administration of the grant, such as Monitoring Officer reports and Independent Accountant Reports

Innovate UK, Ofgem and BEIS 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, Ofgem and BEIS will be data controllers for personal data submitted during the application. Innovate UK’s Privacy Policy is accessible here.

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.

Contact us

If you need more information about how to apply or you want to submit your application in Welsh, email support@iuk.ukri.org or call 0300 321 4357. Our phone lines are open from 9am to 5pm, 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 as a result 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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