Funding competition Ofgem R3D: Unlocking system flexibility to electrify heat

Organisations can apply for a share of up to £30 million exclusive of VAT, for collaborative Discovery Phase Projects that meet the Round 3 challenges. This funding is from the Ofgem Strategic Innovation Fund.

This competition is now closed.

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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 three phase competition:

  1. Discovery
  2. Alpha
  3. Beta

There are four challenge competitions in Alpha Phase:

  • Ofgem R3D: Whole system planning for faster asset rollout
  • Ofgem R3D: Novel approaches to deliver a secure power system
  • Ofgem R3D: Unlocking system flexibility to electrify heat (this competition)
  • Ofgem R3D: Enabling power-to-gas to provide system optimisation

The Round 3 challenges aim to achieve the Strategic Innovation Fund's two main visions, to deliver:

  • net zero at the lowest cost to the consumer
  • to place the UK as the 'Silicon Valley' of energy system innovation

Your Project must address one of the challenges for the initial Round 3 Discovery Phase. You must plan for the development of your Project to meet a Round 3 Challenge through to live testing in the Alpha and large-scale demonstration in the Beta phase.

It is the responsibility of the lead applicant to ensure that they are entering the appropriate challenge competition and theme 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.

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

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 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 March 2024
  • end by 31 May 2024
  • 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 CNI (Critical National Infrastructure).

Lead organisation

To lead a Discovery Phase Project for this challenge, you must be an Ofgem licensed electricity or gas distribution network, transmission operator, or Electricity System Operator (ESO).

Project partners

Each Discovery Phase Round 3 Challenge has specific project partner requirements in addition to the lead network licensee. The eligibility requirements for the Discovery Phase of this challenge competition are different for each theme:

Theme 1: You must partner with all organisation types in this list:

  • a relevant local government entity
  • an organisation with their primary expertise focused on data modelling, machine learning, or advanced statistical approaches
  • a large business consumer of energy or community energy groups, that can provide local energy generation or storage facilities

Theme 2: There are no specific partner requirements but all partners must be relevant to the project

Theme 3: You must partner with:

  • an organisation with a capability in developing and operating thermal storage

or

  • community energy groups, that can provide local energy generation or storage facilities

Theme 4: You must partner with a consumer representative group

You 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
  • micro, small or medium-sized enterprise (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 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 & 2 of the SIF are eligible to request permission to reapply into SIF Round 3 Innovation Challenges.

This is on the condition that your Project:

  • meets the Round 3 Innovation Challenge scope, eligibility, and partner requirements
  • acknowledges the focus of the Innovation Challenges’ changes with each round of the SIF
  • meets with the requirement set out in the Innovation Challenge it is applying to, rather than a previous round’s Innovation Challenge

If you are resubmitting a previously unsuccessful SIF 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.

You must provide an explanation as to how the Project has materially changed since it was last submitted and how the Project aligns with the current Innovation Challenge.

Ofgem is the decision maker on the SIF. It is at Ofgem’s discretion (on a case-by-case basis) whether Projects have materially changed since a Project was last submitted and are eligible to reapply.

Subsidy control (and State aid where applicable)

Ofgem competitions are not subject to subsidy control.

Funding

A total SIF funding of up to £30 million exclusive of VAT is allocated to the Discovery Phase across the 4 challenges.

Matched contributions that exceed the 10% mandatory minimum contribution will be assessed as delivering greater value for money. Projects must also consider the suitability of sourcing additional private or public funding where it may be unsuitable for consumer bill payers to finance assets or other equipment and resources.

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 will be invited to submit an application into the Alpha phase and a further assessment will take place.

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.

Each Round 3 Innovation challenge as listed in the Strategic Innovation Fund - Round Three Innovation Challenge document has different aims.

The aims of Innovation Challenge 3: Unlocking energy system flexibility to accelerate electrification of heat are to:

  • increase participation of thermal flexibility in DSO and ESO markets
  • reduce time to integrate heat decarbonisation in network planning
  • reduce heat led peak demand through flexibility
  • increase use of renewable power for electrified heat through flexibility
  • deliver evidence to support policy and charging mechanisms to enable more equitable sharing of reinforcement costs

Your Project must meet the eligibility criteria of the Strategic Innovation Fund (SIF), as stipulated in the SIF Governance Document.

Applicants must demonstrate that the Projects deliver a net benefit to consumers through:

  • financial cost reductions (operating the network, energy bills, users of network services)
  • emission reduction
  • access to revenues for network users
  • introducing new products, process and services to the UK energy market

Your proposal must focus on network innovation that can benefit GB energy network infrastructure, consumers, operation, and utilisation.

You 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. Successful applicants will be invited to apply for Alpha Phase.

The Discovery Phase of a Project will define the problem and the value in solving it. It will also facilitate a common understanding of consumers’ and network users’ needs from the innovation and identifying constraints.

The Alpha Phase will focus on preparing and testing solutions that are identified during the Discovery Phase, ahead of any large-scale demonstration of the Project.

Specific themes

Innovation Challenge focus themes

You must select the primary Strategic Innovation Fund (SIF) Innovation Challenge focus theme that your project is targeting.

Innovation Challenge 3: Unlocking energy system flexibility to accelerate electrification of heat:

  • Theme 1: improving local heat supply and demand analysis and coordination to support energy network planning
  • Theme 2: improving the value and capture of system benefits from heat flexibility
  • Theme 3: effectively managing peak demand and stability through increased flexibility including over longer periods (multi-day and seasonal)
  • Theme 4: equitable approaches to reinforcements costs driven by heat electrification including via improving visibility of constraints

Projects we will not fund

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

4 September 2023
Competition opens
22 November 2023 11:00am
Competition closes
26 January 2024
Applicants notified
16 February 2024
Project Direction issues

Before you start

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

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 for submitting an application on the Innovation Funding Service (IFS) before you start.

SIF Governance Document - terms and conditions (T&Cs)

The SIF Governance Document is specific to the Ofgem Strategic Innovation Fund (SIF). It is issued by Ofgem further to the SIF Licence Condition and sets out the governance and administration of the SIF. Network companies and the Electricity System Operator must comply with the SIF Governance Document.

The SIF Governance Document provides more information on:

  • eligibility criteria
  • application process
  • assessment of Projects
  • Project delivery and monitoring
  • funding arrangements
  • Project administration, including compliance and audits
  • intellectual property rights and royalties
  • learning and collaboration, including external stakeholder relationship development, information sharing and reporting

This list is not exhaustive.

If your application is successful, Ofgem will issue a Project Direction to the network licensee leading the Project, which confirms the deliverables, costs and milestones for which they are accountable during the upcoming Phase.

It is the responsibility of each partner in the Project to ensure that they have read the SIF Governance Document. By ticking the T&Cs box in IFS ahead of the application being submitted, you are confirming that you have read the SIF Governance Document and are satisfied that you understand the regulatory framework.

You can contact us if there is any aspect of the SIF you do not understand.

What we ask you

The application is split into 3 sections:

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

Accessibility and inclusion

We welcome and encourage applications from people of all backgrounds and are committed to making our application process accessible to everyone. This includes providing support, in the form of reasonable adjustments, for people who have a disability or a long-term condition and face barriers applying to us. Watch the video on how we are making our application process more accessible and inclusive for everyone.

You must contact us as early as possible in the application process. We recommend contacting us at least 15 working days before the competition closing date to ensure we can provide you with the most suitable support possible.

You can contact us by emailing support@iuk.ukri.org or calling 0300 321 4357. Our phone lines are open from 9am to 5pm, Monday to Friday (excluding bank holidays).

1. Project details

This section provides background for the Expert Assessors and is not scored.
We may ask for further information from you at the Project kick off stage if you are successful.

Application team

Decide which organisations will work with you on your Project and invite people from those organisations to help complete the application.

Application details

Give your project’s title, start date and duration.

Public description

You must provide a paragraph that summarises your Project proposal. Do not include any commercially sensitive information.

We will publish this short description in the recommendation report and on the Innovate UK and UKRI public database to provide an overview of the Project.

We will also use this information to assign experts to assess your application.

Your answer can be up to 100 words long.

Innovation Challenge aims

Select the primary Strategic Innovation Fund (SIF) Innovation Challenge aim that your Project is focusing on.

Innovation Challenge 3: Unlocking energy system flexibility to accelerate electrification of heat:

  • increase participation of thermal flexibility in DSO and ESO markets
  • reduce time to integrate heat decarbonisation in network planning
  • reduce heat led peak demand through flexibility
  • increase use of renewable power for electrified heat through flexibility
  • deliver evidence to support policy and charging mechanisms to enable more equitable sharing of reinforcement costs

Innovation Challenge focus theme

Select the primary Strategic Innovation Fund (SIF) Innovation Challenge focus theme that your Project is targeting.

Innovation Challenge 3: Unlocking energy system flexibility to accelerate electrification of heat themes:

  • Theme 1: improving local heat supply and demand analysis and coordination to support energy network planning
  • Theme 2: improving the value and capture of system benefits from heat flexibility
  • Theme 3: effectively managing peak demand and stability through increased flexibility including over longer periods (multi-day and seasonal)
  • Theme 4: equitable approaches to reinforcements costs driven by heat electrification including via improving visibility of constraints

2. Application questions

The Expert Assessors will score your answers for each question, apart from questions 1, 4, and 9. 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 from the SharePoint link in question 7. Once completed, this Excel spreadsheet must be uploaded in response to question 7.

Question 1. Lead Network (not scored)

You must select the Lead Network, who will be the funding recipient, for this application:

  • Cadent Gas Limited (Cadent)
  • Electricity North West Limited (ENWL)
  • National Grid Electricity Distribution (WMID): West Midlands Plc
  • National Grid Electricity Distribution (EMID): East Midlands Plc
  • National Grid Electricity Distribution (SWALES): South Wales Plc
  • National Grid Electricity Distribution (SWEST): South West Plc
  • National Grid Electricity System Operator Limited (NGESO)
  • National Grid Electricity Transmission Plc (NGET)
  • National Gas Transmission Plc (NGT)
  • Northern Gas Networks Limited (NGN)
  • Northern Powergrid (Northeast) Plc (NPgN)
  • Northern Powergrid (Yorkshire) Plc (NPgY)
  • Scottish and Southern Energy Power Distribution (SHEPD): Scottish Hydro Electric Power Distribution Plc
  • Scottish and Southern Energy Power Distribution (SSEPD), Southern Electric Power Distribution Plc
  • Scotland Gas Networks Plc (SGN)
  • Southern Gas Networks Plc (SGN)
  • Scottish Hydro Electric (SHE) Transmission Plc
  • SP Energy Networks: Distribution Ltd (SPD)
  • SP Energy Networks: Manweb Plc (SPMW)
  • SP Transmission (SPT)
  • UK Power Networks: London Power Networks Plc (LPN)
  • UK Power Networks: South Eastern Power Networks Plc (SPN)
  • UK Power Networks: Eastern Power Networks Plc (EPN)
  • Wales & West Utilities Limited (WWU)

Question 2. Problem statement

This is a two-part question.

You must provide a summary of the problem that you want to solve through your Project, along with a video lasting no longer than 60 seconds.

In your summary, you must explain:

  • the problem identified and how your Project will address the identified problem
  • how your Project meets the primary Innovation Challenge aim and focus area stated
  • if applicable, how your Project meets other Innovation Challenge aims and focus areas
  • the potential users of your innovation and how your Project addresses their needs
  • what other public or network innovation funded work have you already completed that is relevant or is contributing to this Project

You must complete the Investment worksheet in the Project Management template (PMT) to support your answer. The PMT must be downloaded from the link in question 7 and once completed, uploaded as an appendix in response to question 7.

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 2024.

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 the press release for this Phase.

Your submitted video must be:

  • suitable for representing your Project and company in public
  • an acceptable standard for Innovate UK's YouTube channel

Separate guidance on quality standards is available on SharePoint. If necessary, we may ask you to remake your video to a better standard before publication.

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.

This question covers Eligibility Criterion 1: Projects must address the Innovation Challenge set by Ofgem, as outlined in chapter 2 of the SIF Governance Document.

Question 3. Innovation justification

How does your Project demonstrate novel and ambitious innovation in the energy networks? Why is it suitable to be funded by SIF rather than other sources?

You must explain:

  • what the core innovative aspects of your Project are, including demonstration of the technical understanding relevant to the Project
  • how your Project activity or output is innovative compared to the most relevant state of the art product, process or service, quantifying this information where possible
  • how your Project builds on previous research and goes beyond incremental innovation
  • the current and estimated technology readiness levels (TRL), integration readiness levels (IRL) and commercial readiness levels (CRL) for your innovation at the end of this current phase
  • why the proposed size and scale of your Project is the most appropriate to achieve SIF objectives and the relevant Innovation Challenge
  • why your Project cannot be funded elsewhere within the price control or considered as part of business as usual activities
  • what counterfactual solutions and approaches have you considered, including how and why you have disregarded alternative approaches

The definitions of TRL, IRL and CRL for the purpose of this competition can be found here.

You can upload relevant supporting documentation in a separate appendix to support your answer. It can include images and diagrams, it must be a PDF, up to two A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

This question covers these Eligibility Criteria, as outlined in chapter 2 of the SIF Governance Document:

1: Projects must address the Innovation Challenge set by Ofgem

3: Projects must involve network innovation

5: Projects must be innovative novel and/or risky

Question 4. Impacts and benefits selection (not scored)

From the list below. you must identify all applicable SIF specific benefits which your Project is looking to deliver against a business-as-usual counterfactual and state them as your response to this question:

  • 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
  • Environmental - carbon reduction – indirect CO2 savings per annum
  • Revenues - improved access to revenues for users of network services
  • Revenues - creation of new revenue streams
  • New to market - products
  • New to market - processes
  • New to market - services
  • Others that are not SIF specific

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

Question 5: Impacts and benefits description

For all of the SIF benefits identified in question 4, you must:

  • describe what the current position (pre-innovation baseline) is, and the metrics that will be used to report on these
  • provide an initial forecast of the quantified or qualitied cumulative net benefits to energy consumers to be realised, calculated at a network partner level, should the innovation be implemented into business as usual
  • describe, quantify, or qualify any benefits already realised through project delivery

If you have stated ‘other’ in question 4, you must also describe any other impacts and benefits your Project is looking to deliver against a business as usual counterfactual, over and above those identified in question 4 (such as social, environmental or wider energy supply resilience benefits).

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

Question 6: Team and resources

Who is in the Project team and what are their roles and responsibilities?

You must explain:

  • why you chose your Project Partners and subcontractors, indicating if this is a new or pre-existing relationship
  • the roles, skills and experience of each Project Partner or subcontractor to deliver their part of the Project
  • the resources, equipment and facilities needed for the current phase of the Project and how you will access them
  • the details of any other external parties, network users or consumers who are vital for the successful delivery of the current phase of this Project

This question covers Eligibility Criterion 6: Projects must include participation from a range of stakeholders, as outlined in chapter 2 of the SIF Governance Document.

Question 7: Project management and delivery

How will you manage your Project effectively? What is your Project plan? What are your milestones? What are the risks associated with your Project?

You must explain:

  • your approach to project management, identifying any major tools and mechanisms you will use to get a successful and innovative Project outcome
  • any links or dependencies between work packages or milestones
  • your risk management strategy
  • any specific risks in relation to policy and regulatory challenges to deployment, derogations and requests for changes in regulation that the Project is aware of for the Discovery Phase and any future Phases
  • any planned or potential unplanned supply interruptions for consumers, the steps the Project has taken to avoid or investigate how to avoid supply interruptions, and how the Project will ensure consumers have access to the energy services they require
  • any interaction or engagement with energy consumers or any impact the Project may have on existing or future energy consumers and their premises

Using the Project Management template (PMT), outline your project approach.

You must download the PMT and complete all the worksheets:

Investment worksheet: to support your answer to question 2

Key Info worksheet: you must add a key contact for each Project Partner and subcontractors, where applicable.

Project Plan worksheet:

  • describe the objectives, tasks, milestones and deliverables for each work package of your Project
  • indicate which work package is meeting which of the Innovation Challenge aims and focus areas
  • indicate the lead partner or subcontractor, where appropriate, and the SIF Funding allocated to each work package
  • indicate the relevant success criteria for each stage-gate, milestone and deliverable, where applicable

Risk Register worksheet:

  • describe the main risks and uncertainties which may hinder the successful delivery of the Project, such as technical, political, policy, regulatory barriers, potential supply interruptions, commercial, managerial, and environmental factors
  • explain how you will mitigate these risks and who will be responsible for the mitigation actions

You must upload the completed Project Management template as an appendix to this question in support of your full application.

The template must be uploaded as an Excel spreadsheet no larger than 10MB in size. The font must be legible at 100% zoom.

You must also upload a Gantt chart as an additional appendix to support your response for this question. It must be a PDF or Excel spreadsheet, up to four A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

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: Key outputs and dissemination

What are the expected key outputs of your Project and your plan for disseminating them along with any lessons learned?

You must describe:

  • what you want to achieve by the end of your Project’s Discovery Phase
  • who within the Project team will be responsible for each key output and planned dissemination activity
  • how and where you intend to disseminate your key outputs and lessons learned
  • how your Project will not undermine the development of competitive markets

This question covers Eligibility Criterion 4: Projects must not undermine the development of competitive markets, as outlined in chapter 2 of the SIF Governance Document.

Question 9: Intellectual Property Rights (IPR) (not scored)

Although a default Intellectual Property Rights (IPR) arrangement is set out in the SIF Governance Document, Ofgem is willing to consider alternative IPR arrangements on a case-by-case basis.

You must state whether you are using the default arrangement or any alternative arrangement as your response to this question.

If applicable, you must set out and justify any proposed alternative IPR arrangements for the Discovery phase.

You can upload relevant supporting documentation in a separate appendix to support your answer. It must be a PDF, up to four A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

For information on the default Intellectual Property Rights for SIF Projects, see Chapter 9 in the SIF Governance Document.

Question 10: Value for money

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

You must describe:

  • the total Project costs, the amount of SIF funding requested and how the costs and SIF funding for the Project is balanced across the Project partners
  • how your Project will meet the minimum 10% compulsory contribution from private funds
  • how each Project Partner will finance their contributions to the Project
  • any subcontractor costs and why they are critical to the Project
  • any additional funding coming from other innovation funds
  • any use of pre-existing assets or facilities
  • any plans for commercialisation of the proposed innovation and how the Project can be moved into business as usual

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

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

Heating buildings accounts for about a quarter of UK carbon emissions.

The government aims to deploy 600,000 heat pump systems annually by 2026 (possibly increasing to 1.7 million per year by the mid-2030s), phase out fossil fuel heating in off-gas-grid homes, and decide on hydrogen's role in heating by 2026.

All heating systems should be net-zero compatible by 2035. Some regions have even more ambitious emission reduction policies for heating.

Heat pumps alone could add 14TWh of electricity demand in 2030, increasing peak demand by 50% in 2035 and doubling again by 2050. Flexibility measures such as thermal energy storage and long-duration storage can manage demand and supply, reducing system costs and boosting renewable consumption.

To support these challenges, and enable timely heat decarbonisation, better coordination and visibility are needed.

This will better inform network planning activities alongside increasing accessibility of flexibility solutions whilst meeting the needs of all consumers, especially the fuel-poor and vulnerable. In addition, where flexibility options have been exhausted and reinforcement must be pursued, fair cost distribution is essential to avoid disadvantaging late adopters due to socio-economic factors, housing conditions, or network status.

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, in coordination with Ofgem and the Department for Energy Security and Net Zero (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 the Department for Energy Security and Net Zero, 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 the Department for Energy Security and Net Zero 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 the Department for Energy Security and Net Zero 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 12pm and 2pm to 5pm, Monday to Friday (excluding bank holidays).

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