Ofgem pledges £450m for innovations to decarbonise energy networks

Ofgem has stated that the fund will help businesses and households to decarbonise

Called the Strategic Innovation Fund, the scheme replaces Ofgem’s previous Network Innovation Competition. Funding will be allocated over five years.

Ofgem has today (31 August) outlined the four “major strategic challenges” that the fund will address. Eligible projects will need to prove they are addressing at least one. The challenges are decarbonising heat, decarbonising transport, improving whole-system integration and accelerating digitisation/ improving data.

Technologies set to benefit, Ofgem said in a statement, include battery energy storage, which can combat the intermittency of renewable electricity generation; electric heat pumps; heat networks and software which can assess how to prepare whole energy systems for low-carbon solutions at scale.

In the first instance, funding will only be available to projects led by electricity and gas distribution networks, as well as the National Grid Electricity System Operator (ESO). Then, from April 2023, other parties including businesses, academic groups and other network operators will be able to apply for a share of the funding.

Funding will be awarded by Ofgem and managed in partnership with Innovate UK, with allocation planned in three stages. Ofgem has stated that it may choose to increase funding levels in the future.

“The Strategic Innovation Fund means cutting-edge ideas and new technologies become a reality, helping us find greener ways to travel, and to heat and power Britain at low cost,” Ofgem’s chief executive Jonathan Brearley said.

“Britain’s energy infrastructure will play a pivotal role in cutting to net-zero greenhouse gas emissions, and this fund will help make sure our energy system is ready to deliver that.”

The National Grid ESO is notably striving to ensure that electricity production in the UK reaches net-zero by 2035.

As for gas, more clarity is expected through the forthcoming Heat and Buildings Strategy, which is due in September. Major gas distribution networks are working towards net-zero by 2050, as is the wider gas sector, but questions remain about how decarbonisation will be delivered.

Under the most ambitious scenario in the National Grid ESO’s Future Energy Scenarios analysis for 2021, the UK’s whole power sector reaches net-zero by 2047.

Sarah George