Ofgem Strategic Innovation Fund Round 4 Discovery C3

Overview

Innovate UK, in partnership with Ofgem, is delivering the Discovery Phase of the Strategic Innovation Fund to support collaborative projects that help accelerate the UK’s journey to net zero energy networks. With up to £150,000 in funding available per project, this early-stage competition targets innovative ideas that address one of four key challenges: faster network development, greater heat flexibility, embedded resilience, and accelerating progress towards net zero.

Successful applicants will be invited to progress to the Alpha and Beta phases for further development and commercialisation.

Scope

This competition is delivered by Innovate UK 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.

Each Round 4 Innovation Challenge as listed in the Strategic Innovation Fund - Round 4 Innovation Challenge document has different aims. These challenges are based on previous rounds of the competition.

You must select which challenge your Project is working on.

Challenge 1: Faster Network Deployment represents a greater focus from:

• Whole System Integration
• Preparing for a Net Zero Power System
• Whole System Network Planning

Challenge 2: Greater heat flexibility represents a greater focus from:

• Whole System Integration, Heat
• Accelerating Decarbonisation of major demands
• Unlocking Energy system flexibility to accelerate electrification of heat

Challenge 3: Embedding resilience represents a greater focus from:

• All Challenges from Round 1
• Three of the four challenges from Round 2 (excluding Preparing for a net zero power system)
• Power to Gas for system flexibility

Challenge 4: Accelerating towards net zero energy networks, represents a greater focus from:

• Accelerating Decarbonisation of major demands

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, for example, in 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 in the Beta Phase.

Key themes and topics

Innovation Challenge focus themes

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

Challenge 1: Faster Network Deployment:

• Theme 1: novel methods to increase electrical capacity from existing assets or support faster and more efficient connection methods including using digital innovations
• Theme 2: regional balancing approaches to accelerate low carbon technology deployment

Challenge 2: Greater heat flexibility:

• Theme 1: flexibility solutions to reduce peak electricity demand from heat decarbonisation

Challenge 3: Embedding resilience:

• Theme 1: cross vector approaches to decarbonise rural communities in a resilient manner
• Theme 2: transition planning for an energy system with reducing natural gas demand

Challenge 4: Accelerating towards net zero energy networks:

• Theme 1: innovation to improve efficiency of network operations

Any proposed project against the point above must also consider contributing to four key cross cutting areas:

• inclusive development: ensuring the solution is applicable and accessible to diverse customer and consumer segments through relevant stakeholder engagement and user centric design principles
• skills and capability: consider throughout the project where upskilling and new capability development is needed and signalling those needs to relevant third parties like academics, training institutes and key supply chain partners
• supply chains: assess the deliverability and scalability of the solution across the GB network from a supply chain perspective including maturity of supply chains, potential vulnerabilities such as labour requirements, logistical and environmental risks
• data and digitalisation: harness digitalisation and implementing Energy Data Best Practice across all areas

Project duration

Up to 5 months

Must start after 1 September 2025

End by 21 January 2026

Award value

£150,000, exclusive of VAT

Funding rates

Up to £30 million (ex. VAT) is available for the Discovery Phase across all four challenges. Projects must contribute at least 10% matched funding, with higher contributions viewed more favourably. Additional private or public funding should be considered where appropriate. Final funding decisions rest with Ofgem, who may reallocate funds or apply a portfolio approach to ensure balanced investment across technologies and sectors.

Eligibility criteria

Lead organisation

• Must be an Ofgem licensed:
  • gas/electricity distribution network
  • gas/electricity transmission network
  • electricity system operator (ESO)
• Must collaborate with at least one other organisation.

Project partners

• Must fulfil specific partner requirements by challenge/theme (e.g. regional energy modelling or rural consumer groups).
• All partners must:
  • Be invited via Innovation Funding Service (IFS)
  • Enter their own project costs
  • Be responsible for at least one deliverable
• Collaboration rationale and structure must be clearly stated.
• Additional partners encouraged: SMEs, start-ups, researchers, academics, disruptors, suppliers, other licensed networks.

Collaboration and funding rules

• Project must meet ‘No Subsidy’ criteria under the Subsidy Control Act 2022
• In some cases, EU State aid rules may apply under the Windsor Framework
• Lead must ensure all collaborators remain compliant with subsidy rules
• Projects should consider using external funding for assets where consumer funding is not appropriate

Reapplication and past projects

• Resubmissions from previous SIF rounds must:
  • Align with Round 4 scope and challenges
  • Be materially changed based on prior feedback
  • Be pre-approved by Innovate UK and Ofgem

Other

• Ofgem will not fund any activity linked to sanctioned entities or regions.