Is energy networks’ innovation funding working? Ofgem asks for feedback as it develops new ‘strategic funding’ with bigger role for third parties

Is Ofgem’s innovation framework working? The regulator’s Network Innovation Allowance (NIA), introduced in 2013 has provided funding to over 1000 small technical, commercial or operational projects directly related to the gas and electricity networks. Its Network Innovation Competition (NIC), also introduced in 2013 but as an annual competition, has funded 44 projects developing and demonstrating of new technologies, operating and commercial arrangements.
Now it is introducing the Strategic Innovation Fund (SIF) which aims to “find and fund ambitious, innovative projects with the potential to accelerate the transition to net zero”. It encompasses networks and other parties and sets out broad challenges, seeking projects theat should help shape the future of the gas and electricity networks “and succeed commercially where possible”. As it launches the SIF it has sought input on what further improvements could be made to the design and operation of the NIA, and whether there are any early views on the operation of the SIF.
It has invited “issues or observations” on the past and current operation of the NIA and NIC, including:

• What improvements, if any, should be made.

• Early views on the planned future operation of the SIF.

• How third parties should be involved in innovation funding and what issues arise relating to third party involvement.

• Whether and how third parties be allowed to apply directly to the innovation funds.

• Examples of innovation projects that should have proceeded but did not, because they failed to qualify for the innovation funds.

• Alternative approaches to incentivising and funding innovation by licensed energy companies – and whether they have been used elsewhere and would complement or replace existing funds.

Ofgem wants responses by 7 January, full details here.

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