Ofgem announce challenge challenge areas for second funding round

Ofgem energy transition

Ofgem and Innovate UK have announced the challenge areas for the second round of innovation funding under the Strategic Innovation Fund (SIF), which opens for applications in early September 2022.

The SIF aims to find and fund ambitious, innovative projects with the potential to accelerate the energy transition to net-zero at the lowest cost to consumers. Now, four innovation challenge areas have been identified as the priorities that this year’s project proposals should address.

The four challenge areas were chosen in consultation with the energy industry and consumers, and incorporate a focus on transport, heat, data, and integration across the whole gas and electricity system.

Challenge areas include supporting a just energy transition, incorporating new ways to identify and support vulnerable customers, and preparing for a net-zero power system by improving support for low-stability systems and using new sources of energy supply and demand to help manage grids

Other areas of consideration include improving energy system resilience and robustness, such as innovation in developing multi-energy systems and making them more resilient, and accelerating the decarbonisation of major energy demands via managing and integrating large-scale demands from heat and transport.

The programme will open an initial ‘discovery’ phase, whereby innovators working with energy companies can apply for £150,000 to further develop their ideas.

After the discovery phase, those projects judged to have the greatest potential will be awarded up to £500,000 to further develop their ideas. Another selection process will follow, with successful projects receiving more funding and able to carry out large-scale demonstrations of their technologies. The aim is to develop innovations that can be rolled out across all UK energy networks, making them fit for the future and delivering benefits for both consumers and the planet.

Neil Kenward, Ofgem Director for Strategy and Decarbonisation, said: “Ofgem set up the Strategic Innovation Fund to harness the power of innovation to help accelerate a fair, affordable and inclusive transition to low carbon energy.

“The challenge areas that have been announced will address some of the most pressing issues on this journey, and we encourage energy networks and innovators to consider how they can develop the best ideas with the greatest potential for this year’s competition.”

Matt Hastings, Deputy Director of the Ofgem SIF programme at Innovate UK, said: “We believe we can make the UK the best place in the world to be an energy entrepreneur. The first round of the SIF produced 40 innovation projects across a wide range of themes, showing that the sector is ready to join in this ‘giant leap together’ to decarbonise the energy networks.

“With the next challenge areas now clear we expect that many dynamic new collaborations will form this year, as energy networks get together with other innovators – inside or outside the energy sector – to take part in the SIF.”

The Strategic Innovation Fund is a five-year programme with up to £450m available to promote energy network innovation.

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