Network innovation without the hot air
The Ofgem Strategic Innovation Fund (SIF) aims to unleash a new wave of innovation in our energy networks. Chris Coonick describes how the energy industry is stepping up to play its part.
Chris Coonick is Programme Manager for the Ofgem Strategic Innovation Fund at Innovate UK.
If you are involved in any way with the gas and electricity networks, you will probably know about the £450 million Ofgem Strategic Innovation Fund (SIF), which launched in 2021.
When I started out in this industry as a graduate electrical engineer working in research and development, this programme was the stuff of dreams. Climate change was a problem that kids received a Blue Peter badge for writing a poem on. A problem looming on the horizon that was not really front-of-centre in world political conferences, although it probably should have been. Those with a voice, such as the late great David MacKay, were writing books that made sense of sustainable energy and inspired the next generation of engineers, such as myself, to make better choices.
So now, many earth rotations later, and as the programme manager at Innovate UK helping to deliver the SIF in partnership with Ofgem, I am so excited to be here at the start of what feels like a major milestone for the UK energy networks. With the threat of climate change ever more present and real, we need to make significant changes to our energy infrastructure to help reduce emissions — and it really can’t happen fast enough.
But how do you even start to crack the nut? How do you get a whole energy system — mainly based on designs almost a century old, from before the term climate change had even been coined — ready to deliver a Net Zero energy service to network users and consumers (without costing the earth — literally and metaphorically)?
Agilely
We need those big, bold innovations; ideas that can quickly become products and services delivering tangible benefits to consumers and the planet. We don’t have time to tinker round the edges. That’s why Innovate UK has designed the SIF application process to be agile — we are encouraging innovators to take more risk and trial feasibility of initial ideas, and supporting those considered to be riskier to prove their credibility and capability to deliver value and impact, de-risking investment to protect consumers.
We have adopted a similar approach to the software sector, by breaking the process up into four phases:
- Innovation challenge-setting — setting the right priority themes to tackle the big network challenges
- Discovery phase — energy networks submit multiple two-month short, sharp, feasibility projects (up to £150,000 of funding)
- Alpha phase — those that prove their worth go on to six-month proof of concept projects (up to £500,000 of funding)
- Beta phase — those that can be taken forward to business-as-usual go on to become multi-million pound large-scale demonstrations that are delivered over a number of years.
Successful projects move through these stages. Those with the greatest potential will get to the Beta stage, with the ultimate aim of becoming a commercial reality to help transform our energy networks. Those that don’t make it that far and where there remains a clear potential opportunity will be supported by the commercial pillar of the programme, to overcome barriers and find suitable applications and investment.
The first call for SIF proposals for the Discovery phase of round one closed in November 2021 and the 40 approved projects started on 1 March 2022. You can find out all about the exciting innovations they are exploring via this announcement — and these 60-second videos.
But in this article I want to reflect on the overall response to the round one competition, and what we discovered in the process.
The four innovation challenge areas for this round were identified in consultation with the industry. They were:
- heat
- zero emission transport
- data and digitalisation
- whole system integration.
In this round, project proposals had to be led by an energy network operator (excluding distribution network operators for now), but also needed to include one or more third parties — these could be other networks, businesses or academic partners.
Through last autumn, we worked hard to tell the whole sector about the SIF and to encourage collaborations and partnerships to form and put in bids.
Attracting a high level of quality applications is not as simple as launching a competition and letting them flood in. Our delivery team handled hundreds of enquiries, and were busy driving engagement, running briefings, fostering collaborations, and supporting potential applicants along the way. The Energy Innovation Centre (EIC) and the Energy Networks Association (ENA) also played an essential part of the innovators journey, validating ideas and helping innovators and network companies to work together.
But we were still not sure how many conversations would translate into proposals. In the end, we were delighted to receive a total of 55 innovative applications from nine different network companies — 100% of those eligible to apply. And every energy network in the country was involved in some way in a project, either leading an application or as a partner.
What we learnt from round 1
To see if our approach had led to the desired outcomes, we analysed all the applications. We are an agile programme based on insights, after all. We found:
- The challenge most frequently targeted was data and digitalisation, with 26 applications. This was followed by whole system integration (15), zero emission transport (11) and heat (6).
- A number of sub-theme clusters are apparent from the proposals, including; new technological approaches, resilient and sustainable networks, flexible and stable networks, and consumers.
- Regulation is always a concern for innovators; around 10 projects flagged potential regulatory challenges. We will be supporting them to understand these in more detail over the coming months.
- Across the 55 proposed projects there are a total of 208 partnerships, whether involving innovative companies or energy networks joining other networks’ projects.
- The projects involve 104 different non-network partner organisations; most had pre-existing relationships with the lead network companies. 17% were small companies (<50 employees) and 18% medium (50–250 employees). There was a good geographical spread with representations from all regions of the UK and some international partners too.
- Bringing different, even unexpected, organisations together is a powerful force for innovation. This is reflected in the range of project partners across the proposals.
This is a great start, but we need to do more in future rounds to encourage new collaborators — especially ambitious high-potential SMES with great ideas. We aim to cast the net wide, encouraging participation by the best the UK has to offer from all sectors, not just those already involved with energy. So spread the word!
Finding new challenges
At the moment, we are setting the new innovation challenges for the next round. We have developed a dynamic new end-to-end process for the programme, with new levels of industry engagement to ensure the challenges are as relevant as they can be. We’ll write more about this soon.
But for now, do check out the projects under way. As well as the project videos, you can find out more from their presentations in two launch webinars, here and here. See which projects you think have real potential to become a commercial reality, and consider what part you could play in these or others on this great journey.
This marks the beginning of a significant ramp-up of energy network innovation, recognising the urgent need to deliver on Net Zero. Together, through the SIF, I believe we are going to make a huge difference to the energy networks in this country, create systems that work better for everyone and the environment, and help make the UK, as we say, into a ‘Silicon Valley of Energy’. I am proud to be playing my part. Bring it on!
Want to know more?
The Strategic Innovation Fund (SIF) is a major opportunity for innovative businesses and academics to work with energy networks on innovative projects that will deliver benefits to consumers. SIF is delivered by Innovate UK, part of UK Research and Innovation, in partnership with Ofgem. You can read more about the SIF, and sign up for future updates.
