Funding competition Smart local energy systems: demonstrators

UK organisations can apply for a share of up to £40 million to develop world-class smart local energy system demonstrators.

This competition is now closed.

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Competition sections


UK Research and Innovation, will invest up to £40 million from the Prospering from the Energy Revolution Industrial Strategy Challenge Fund. This competition aims to invest in up to 3 world-leading practical smart energy systems demonstrators. These will include new business models that intelligently link supply, storage and demand patterns across power, heating and transport. The result will be a dynamic energy system that can:

  • dramatically reduce whole system energy costs and emissions
  • transform services to users
  • improve efficiency, productivity and resilience
  • reduce environmental impacts

Projects must demonstrate new, smarter, local energy approaches at scale, which can:

  • provide cleaner, cheaper, more desirable energy services for the end user
  • lead to more prosperous and resilient communities
  • prove new business models that are suitable for investment and can grow and replicate in the 2020s
  • provide evidence on the impacts and efficiency of novel energy system approaches by the early 2020s

Projects will be expected to work closely with and share information with programme stakeholders.

Funding type


Project size

Total project costs can be between £26 million and £160 million. To request more than £13 million in grant funding contact us by 18 June. Projects can last between 24 and 36 months starting by January 2019 and ending by March 2022 including evaluation.

Who can apply

To be eligible for funding you must be a UK-based:

  • business
  • academic organisation
  • charity
  • public sector organisation, local authority, higher education institute or research and technology organisation (RTO)

You must also:

  • carry out at least 90% of your project work in the UK
  • intend to exploit the results from or in the UK
  • work in collaboration with other businesses, research organisations, public sector or third-sector organisations
  • include at least one micro, small or medium-sized enterprise (SME)
  • include at least one university, higher education institution, RTO (including Catapults) or public sector organisation
  • include a local authority or equivalent organisation

We welcome innovative and ambitious partnerships and particularly encourage teams that include:

  • energy network companies
  • energy suppliers, big and small
  • technology developers including smart appliance manufacturers
  • smart system developers
  • digital systems developers including data analytics and AI
  • design and consumer interface specialists
  • engineering service and integration businesses
  • exceptional leaders and communicators who can inform and inspire consumers and private investors

The lead organisation must claim funding through this competition. At least one other organisation in the consortium must also claim funding.

Any business, university, public sector organisation or RTO may lead on one application and collaborate in a further 2 applications. If an organisation is not leading an application, they can be a collaborator in up to 3 applications.

If an RTO or public sector organisation is the lead on an application they must have at least 2 business collaborators (one SME and one other business of any size) and clearly explain why it is not appropriate for it to be business-led.

Projects may include partners that do not receive any funding, such as non-UK businesses, public sector organisations, industry associations, consumer or environmental non-governmental organisations (NGOs), or bodies involved in setting regulations, standards or codes. Their costs will count towards the total project costs but they will not count as collaborators.

Projects will be required to share important information with Prospering from the Energy Revolution stakeholders. This is explained in more detail in the section on ‘Catapult support and information sharing'.


We have allocated up to £40 million to fund innovation projects in this competition.

We would like to fund up to 3 demonstrators. Our preference is for grant funding for each project of £13 million or higher. Projects intending to request grant funding above £13 million must contact us to discuss their proposal before 18 June.

We welcome projects that bring together multiple sources of public and private finance. We are looking for private funding for demonstrators that at least matches our funding, but would expect to see closer to 3 to 1 private funding to UK Research and Innovation grant funding. That means that we expect you to provide an investment up to 3 times the amount you are being funded.

The RTOs and public sector organisations collaborating as part of a consortium may share up to 30% of the total grant funding (including as sub-contractors). If your consortium contains more than one research organisation or public sector organisation, this maximum will be shared between them.

We are looking to fund the portfolio of technology and market innovations that best deliver the competition objectives.

You are responsible for making sure your project complies with state aid rules, including the maximum thresholds for grants.

Your proposal

Several UK organisations are already working on new smart local energy models. We want to fund up to 3 practical demonstrators that will realise the best of these models by 2022.

Your proposal must:

  • demonstrate that you have the necessary financial support
  • have evidence of existing and planned data, infrastructure, supply chains, planning and regulatory approvals, or existing consumers
  • show that you have excellent project management, including stakeholder management and risk management
  • have distinct phases so we can carry out a formal review at the main milestones (at least once a year), to allow Innovate UK to approve continuation of funding
  • show a clear plan for how data and intellectual property (IP) will be generated, managed, owned, protected, shared and exploited within the project, in any linked projects, and after the project finishes

Your smart local demonstrator project must:

  • be based over a specific large UK location such as a medium-sized town
  • seek to optimise energy across a diverse range of energy supplies, varieties of infrastructure and types of demand
  • deliver significantly lower costs and emissions while creating economic benefits for the local area and the UK as a whole
  • encourage private investment to replicate your model nationally through the 2020s
  • use innovations that intelligently link energy supply and demand across power, heat and transport
  • deliver benefits to a range of stakeholders by 2022
  • develop processes and skills in the UK for designing, financing, building and operating smart local energy systems, joining up supply chains where appropriate

Catapult support and information sharing

Projects are funded as part of a broader Industrial Strategy Challenge Fund programme: ‘Prospering from the Energy Revolution’.

The programme will be supported by an Energy Research and Integration Network. We expect projects to build in this support rather than copy it. The Network will consist of the Energy Systems Catapult working with a group of leading researchers and stakeholders.

Your proposal must include plans to share important project data sets with the network. If you are successful you will be required to sign non-disclosure agreements with the Energy Systems Catapult, other network members and the organisations contracted to manage the programme evaluation.

The Energy Systems Catapult, as a member of the Energy Research and Integration Network, will support projects with:

  • project co-ordination
  • local area energy system modelling
  • initial design assessment and advice
  • analysis and synthesis
  • evaluation frameworks
  • learning library and dissemination

Where appropriate the Energy Systems Catapult will also provide:

  • whole systems perspective
  • independent energy system expertise and analysis
  • energy markets and governance advice
  • advice on testing and demonstration
  • consumer engagement and business model development advice
  • analysis of project data
  • domain expertise

A range of additional services could be built into your project in coordination with the Catapult. For further information, and to access help from the Energy Research and Integration Service, you must email the Energy Systems Catapult at by 18 June 2018.

The network will recruit experts from the research community during the bid period. UK Research and Innovation will announce the support available.

Project types

Our assessors will take into account the extent to which you have secured private funding and other sources of funding. For the experimental development activity in your demonstrator project you could get funding for your eligible project costs of:

  • up to 45% if you are a micro or small business
  • up to 35% if you are a medium-sized business
  • up to 25% if you are a large business

Find out if your business fits the EU definition of an SME.
8 May 2018
Competition opens
15 May 2018
Briefing event recording.
25 July 2018 12:00pm
Competition closes
7 September 2018
Invite to interview.
25 September 2018
Interview panel.
26 September 2018
Interview panel.
16 November 2018 10:43am
Applicants notified

Before you start

Please read the general guidance for applicants. It will help your chances of submitting a quality application.

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 an account to track the progress of your application.

As the lead applicant you will be 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 to contribute to the application
  • other organisations to collaborate in the project if your application is successful

Collaborating organisations can be other businesses, research organisations, public sector organisations or charities.


If your application is successful at the written stage you will be invited to attend an interview.

Presentations should be a maximum of 30 minutes in length, with no more than 30 slides (using Microsoft PowerPoint). Please do not include any video or embedded web links. This will be followed by 60 minutes of questions and answers.

You must submit your presentation slides to UK Research and Innovation by the date stated in the email we will send inviting you to an interview. You will not be able to make any changes to the presentation after this date.

Up to 8 people from your project can attend the interview panel. Agree with your consortium who will attend, ideally one person from each organisation, and send us their names by the date stated in the invitation email. Make sure they will be available on all of the published interview dates. We are unable to reschedule slots once allocated.

You will be expected to answer questions based on your application form and the feedback from the independent assessors and Prospering from the Energy Revolution ISCF team from the written stage.

You will have the opportunity to provide a supplementary written response to the assessor feedback, answering any concerns raised by the assessors. This can be up to 10 A4 pages in a single PDF or Word document. It can include charts or diagrams. This must be submitted to Innovate UK, as part of UK Research and Innovation, by the date stated in the invitation email.

What we will ask you

The application is split into 3 sections:

  1. Project details
  2. Application questions
  3. Finances

1. Project details

Explain your project. This section is not scored, but we will use it to decide whether the project fits with the scope of the competition. If it doesn’t, it will be immediately rejected.

Application details

The lead applicant must complete this section. Give your project’s title, start date and length. List any organisations you have named as collaborators.

Project summary

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

Public description

Describe your project in detail, and in a way that you are happy to see published. Please do not include any commercially sensitive information. If we award your project funding, we will publish this description. This could happen before you start your project.

Project scope

Describe how your project fits the scope of the competition. If your project is not in scope it will not be eligible for funding.

2. Application questions

In this section, answers to these questions are scored by the assessors. Following assessment, you will receive feedback from the assessors for each question.

Your answer to each question can be up to 600 words long.

Question 1: Project description

Describe the challenges and requirements and how your methodology addresses them, including the main innovations that will be trialled. Provide details of:

  • the project
  • its outputs and the main inputs
  • activities
  • innovations and deliverables linked to the outputs, including any uncertainties

Describe the scale and scope of the project in terms of:

  • the location
  • numbers or types of users
  • the capacity and diversity of energy supplies and networks involved

Outline the role of the new technologies, financing, business, and/or regulatory models, codes or standards, and the reasons why these are suitable for your chosen approach and location. Identify the options for learning and rapid feedback between the project and the wider market.

Explain how much enthusiasm there is within your chosen locality, and from the wider private sector, to contribute inputs (such as data, infrastructure, funding or experience from other sectors) to the project. Describe any local work that has either built capability, reduced risks, or contributes directly to the project in another way. You may wish to describe how this project relates to any relevant local, regional, national or international strategies, challenges and opportunities.

You can submit a single appendix as a PDF no larger than 1Mb and up to 10 pages long to support your answer. You may include images, maps and tables. The font must be legible at 100% zoom.

Question 2: Project structure


  • your approach to project management
  • the work packages and main tasks of the project
  • who will lead each work package
  • the costs, milestones and deliverables associated with each work package
  • key local, national and international stakeholders for the work packages
  • the additional economic, environmental or societal benefits resulting from the outputs from each work package
  • your project plan in enough detail to identify the critical path, decision points, deliverables, milestones, any links or dependencies between work packages
  • how your project will be split into distinct phases at least every 12 months so that formal funding continuation reviews can be held with UK Research and Innovation
  • how project partners will work together and manage stakeholders
  • how monitoring and evaluation will be built into the project

You can submit a single appendix as a PDF no larger than 1 Mb and up to 10 pages long to support your answer. You may include images, maps and tables. The font must be legible at 100% zoom.

Question 3: Business growth

How will your proposal drive the growth of a UK smart local energy systems industry?

Please provide evidence for:

  • the level and nature of private sector and other funding available to fund this demonstrator and repeating and scaling it up in the future
  • any opportunities for local and UK-wide smart local energy systems industry and wider supply chain growth and new high value jobs
  • how this project will build opportunities to research, test and support the evolution of technologies, standards, codes, financing, business or regulatory models
  • how easy it would be to repeat the project or expand it to other parts of the UK during the 2020s
  • any potential for future commercial exploitation, both domestic and international, by project partners, and define your target markets
  • any opportunities you expect to improve technology and market readiness
  • any opportunities for UK business growth

Please estimate inward investment and export opportunities.

Question 4: Improving user experience

How will your proposal improve the experience of a range of users of the energy system?


  • how you will engage with all the stakeholders that may be impacted over the lifecycle of the demonstrator.
  • how you will be confident of recruiting end users for the demonstrator
  • what benefits users will experience, such as costs, service provision or engagement
  • which user groups and interactions will be targeted, such as domestic consumers, landlords, public sector users or industrial users.
  • how well you understand what different users want

Tell us what information you have about the user experience, how reliable it is, any gaps and how it will be developed through the project.

Question 5: Energy system benefits

How will your proposal improve the energy system? By how much? Who will benefit?


  • how this approach will reduce energy system costs, increase infrastructure productivity and competitiveness, and reduce fuel poverty, locally and nationally
  • how your project will result in improvements to the environment, for example in greenhouse gas emissions, air quality or other aspects of the natural or built environment
  • to what extent this project could accelerate national progress to meeting the UK’s fifth carbon budget and air quality targets
  • how the proposal will increase energy security and resilience to technological, societal and environmental changes, including cybersecurity challenges and climate change

Please quantify and justify any local and national targets in absolute terms and relative to business as usual for the following:

  • total energy system costs
  • investment costs
  • operating costs
  • financing costs
  • infrastructure productivity
  • competitiveness
  • energy security
  • fuel poverty
  • greenhouse gases and other emissions

Please justify any estimates, timescales, assumptions or interdependencies. Indicate how you will overcome any limitations or uncertainties on data availability and reliability.

Question 6: Innovation

How is your proposal revolutionary?

Describe the innovations that are included in your proposal, including for example:

  • new energy technologies, such as storage, local generation, efficiency measures, vehicle to grid, micro combined heat and power and multi-vector approaches
  • new smart systems, such as internet of things (IoT) connectivity, novel sensor solutions, smart controls and automation, and data analytics
  • new market systems, such as blockchain, peer to peer and aggregation systems for highly dispersed assets
  • new societal engagement tools, such as gamification, voice control and integration with users preferred technology interfaces
  • regulatory approaches, such as ones that can unlock system liquidity and maintain consumer protection
  • how your proposal will enable more competitive energy markets in the future
  • provide an internationally significant ‘test bed’ for trialling new technologies, financing, business or regulatory models, codes or standards
  • opportunities you see for scaling up innovations that have previously been shown to work at smaller scale
  • opportunities you see for disseminating and making use of research findings
  • the impact on UK international leadership in smart local energy systems
  • the information that you are able to generate and share with the wider Prospering from the Energy Revolution programme

Question 7: Team and resources

Due to the scale of these projects, we expect you to give a description of the roles, skills and experience of the core team of individuals that will be responsible for delivery of key tasks and work packages. Where necessary you may also want to describe the expertise that project partners or groups offers more widely, including project management, data science capability and the level of backup in case core team members are not available.

You should describe or explain:

  • the roles required for delivering the demonstrator alongside the skills and experience of the team.
  • the resources, equipment and facilities needed for the project and how/when you will access them.
  • the details of any vital external parties, including suppliers/sub-contractors, who you will need to work with.
  • the current relationships between project partners and how these will change as a result of the project
  • the management reporting lines that will be employed
  • experience of partner organisations working together in similar projects, particularly the track record the team has together in responding efficiently and effectively to the challenges arising on a high-profile and fast-paced innovative multi-disciplinary and inter-disciplinary projects.
  • risks, timescales and backup options for critical resources
  • any gaps in the team that will need to be filled

You can additionally submit a single appendix as a PDF no larger than 1MB and up to 5 pages long to support your answer including CVs of key personnel. Diagrams or tables are welcome. The font must be legible at 100% zoom.

Question 8: Risks

What are the main risks for this project, and how are you going to manage them?

Include a detailed risk register covering the main assumptions, risks, and issues involved in delivering your project.

Explain or describe:

  • the probability, severity and uncertainty of the main risks
  • which stakeholders will be impacted by the risks
  • how risks will be managed, monitored and mitigated, giving details of contingency plans
  • how the risk register will be monitored and updated throughout the project

Some of the risks you should consider are:

  • project inputs, including procurement, recruitment, installation, commissioning, obtaining matched funding, recruitment of participants or consumers, access to key locations, and the availability of equipment and resources such as personal data
  • project activities, linked to health, safety, environment, diversity, inclusion, reputation, cash flow, collaborative working, social, political, and regulatory risks, and stakeholder engagement
  • project outputs to achieve the desired scale and quality in the target location
  • how easy it is to repeat and scale, and your expectations for follow-on private sector investment
  • wider local and national economic, environmental and societal impacts not being achieved
  • how the project will ensure maximum value and minimum liabilities once public funding ceases

Please also describe whether and how stakeholders’ attitudes are currently aligned with the project, and how this might affect your risks. Indicate the risks associated with the project’s critical path against your project plan.

You should also detail risks that will need to be managed by the government, UK Research and Innovation, or other stakeholders outside of the project partnership.

You can submit a single appendix as a PDF no larger than 1MB and up to 5 pages long to support your answer. Risk registers, diagrams or tables are welcome. The font must be legible at 100% zoom.

Question 9: Added value

Describe the impact that an injection of public funding would have on this project.

Describe or explain:

  • if this project could go ahead in any form without public funding and if so, the difference the public funding would make, such as enabling an acceleration of products and services to market, more partners or reducing risk
  • the likely impact of the project on the business of the partners involved
  • why you are not able to wholly fund the project from your own resources or other forms of private-sector funding, and what would happen if the application is unsuccessful
  • how this project would change the nature, amount and timing of activity the partners would undertake (including R&D), and the related spend

Question 10: Costs and value for money

We are looking for a minimum 1:1 industry private funding leverage but would expect to see closer to 3:1. How much will the project cost and how does it represent value for money for the team and the taxpayer?

Describe or explain:

  • the total project cost and the grant being requested in terms of the project goals
  • how the partners will finance their contributions to the project
  • any additional public funding
  • any uncertainties and contingencies in costs, and how these will be managed
  • how this project represents value for money for you and the taxpayer, and how it compares to what you would spend your money on otherwise
  • the distribution of costs and grant across the project partners
  • any sub-contractor costs and why they are critical to the project
  • at least 2 funding continuation stage-gates linked to timely achievement of milestones and deliverables

3. Finances

The finances section asks each organisation in your project to complete their own project costs, organisational details and funding details. Projects requesting more than £13 million in grant funding must contact Innovate UK, to discuss their proposal before 18 June 2018. You may need to adjust the grant percentage to be lower than the maximum permitted in order to reflect the amount you are contributing to the project. Academics will need to complete and upload a Je-S form. For full details on what costs you can claim please see our project costs guidance.

Background and further information

Prospering from the Energy Revolution fund

The Prospering from the Energy Revolution (PFER) Industrial Strategy Challenge Fund (ISCF) was announced in the government’s Industrial Strategy. PFER ISCF aims to prove by 2022 that new, smarter, local energy approaches can deliver cleaner, cheaper energy services. They can do this by integrating new technologies, smart systems, market solutions and consumer engagement into business models that are investable in the long term. This should lead to more prosperous and resilient communities, and a more efficient energy system.

The world is embarking on a $2 trillion a year energy revolution that will transform the way energy is delivered and used. This is driven by the need to decarbonise, and new opportunities from cheap, clean technologies such as renewables and storage, as described by the International Energy Agency. These technologies are converging with emerging digital enablers such as artificial intelligence (AI), big data, internet of things (IoT) sensing and machine learning. This creates an opportunity for smart systems to revolutionise energy delivery, putting the consumer’s needs at the heart of the system.

These smart systems hold the promise of intelligently linking supply, storage and demand patterns across power, heating and transport. This results in a dynamic energy system that can dramatically improve efficiency, resilience, and service to consumers and the wider system, as captured in the Future Power System Architecture (FPSA) project.

Currently innovations happen in isolation, and the market and regulation are structured in silos of electricity, gas (heat) and transport. This setup is unlikely to produce the hoped-for benefits, and will likely result in overinvestment in incompatible systems, more expensive services, imported, niche and less resilient solutions, and a continuing uncompetitive market.

We aim to piece together the future UK energy system to maximise socio-economic and environmental benefits, as set out in the Royal Academy of Engineering report to the Council of Science and Technology, while creating sustainable advantage for the UK through new products and services, and joined-up expertise.

The challenge is to develop and prove new ways of combining distributed energy technologies with novel market arrangements that deliver consumer-centric (designed around end user needs) business models that are scalable, investable and resilient for the long term. Without government intervention to co-ordinate learning and stimulate cross-silo activity in a highly complex system, the market is likely to continue to produce fragmented solutions. These combine into expensive systems that do not give the consumer what they want and decarbonise slowly.

Recent evidence has suggested smart local energy system demonstrators are an important missing link. They can stimulate development and prove the benefits of locally integrated systems. This competition seeks to fill that gap.

Extra help

If you want help to find a project collaborator, contact the Knowledge Transfer Network.

If you need more information, call the competition helpline on 0300 321 4357 or email us at

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