Ofgem launches £450m climate innovation fund

Cutting emissions will require large-scale changes to almost every part of the UK economy, including the decarbonisation and improved efficiency of domestic and industrial heating. Heating accounts for 37 per cent of total UK carbon emissions.

Heating is one of four initial challenge areas identified by Ofgem. The other areas targeted by the innovation fund are transport, data and digitalisation, and “whole system integration” (which covers the entire journey of electricity from plant to plug). Further challenges will be announced in due course.

Projects could include new approaches to energy storage or rolling out heat pumps to UK homes, Ofgem said. It said that ideas must be “big, bold, and ambitious with potential to scale across the networks upon completion”.

The fund will be made available over the next five years, with the possibility of extension for some “strong plans”. It is to be run by Ofgem in partnership with Innovate UK. It is open to companies which operate in electricity transmission, gas transmission and distribution, and electricity systems.

“The UK is leading the world in decarbonising our energy system, with our innovators playing a vital role in going further while ensuring consumers receive clean and affordable energy,” said energy minister Lord Callanan. “The Strategic Innovation Fund will ensure the best projects and most talented minds have the grants available to reduce carbon emissions and enable billpayers to see the benefits of building back greener.”

According to Matt Hastings, deputy director of the Strategic Innovation Fund, the plan is to begin with a high volume of small or short projects, identify the best ideas quickly, and refine this to smaller volume or larger and longer projects. He wrote: “It’s not just about projects […] it’s about turning Great Britain into the Silicon Valley of energy and a global hub for energy innovation”.

Jonathan Brearley, CEO of Ofgem, commented: “What we need, more than ever, to reduce greenhouse gas emissions and reach net zero is innovation. 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.”

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