New £450m Fund launched by Ofgem to Support Green Innovation in the UK

The UK’s energy regulator, Ofgem has announced a £450 million fund for green energy projects. The money will be made available to energy network companies to come up with innovative ideas that will help the UK meet its net zero climate targets and turn the UK into the “Silicon Valley” of energy. It is anticipated that the fund will support the UK’s ambition to slash 68% of emissions by 2030, and 78% by 2035, with the goal being to reach net zero greenhouse emissions by 2050.

In 2019, the UK committed to becoming ‘net zero’ by 2050, which means cutting greenhouse gas emissions so much that the country absorbs as much as it emits. Large-scale changes, to how the UK’s economy is powered, including new ways of heating homes and transporting people and goods, will be required to achieve this.

To apply for the first round of funding the energy network companies will need to address the four major challenges that Ofgem has identified.

The challenges are heat, transport, data and digitalisation and “whole system integration” which joins up the entire journey of electricity from plant to plug.

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The hope is that the fund will inspire network companies, system operators and the world’s leading businesses and researchers to find creative new ways to unlock greener modes of travel and to heat and power homes and businesses. The fund will be approved by Ofgem and managed in partnership with Innovate UK.

Indro Mukerjee, chief executive of Innovate UK, commented: 

“The ideas of the UK’s world-leading innovative businesses and researchers have the potential to reshape the gas and electricity networks for net zero, while generating commercial growth. We are delighted to be working with Ofgem to make sure the Strategic Innovation Fund brings maximum impact over the coming years.”

Ofgem has stated that the fund which opened for application on the 31st of August will be available for the next five years but could be extended if strong plans are presented to them.

Ofgem said the ideas put forward would need to be “bold and ambitious” and have the potential to be rolled out at scale across the UK. These ideas could be applied to a range of technologies from heat pump installations to developing battery storage technology.

Projects could include ensuring the networks are ready to roll out clean heating solutions such as heat pumps to the UK’s homes as well as developing ways for network companies to work together across transmission, distribution, system operation, gas and electricity.

Other projects could focus on developing new technologies for networks to support flexible energy solutions, such as battery storage technology, to ensure electricity is used and stored more effectively, thereby bringing down bills and emissions. Ideas need to be big, bold and ambitious with potential to scale across the networks upon completion. It is vital that ways are found to keep bills as low possible. As recently as last month Ofgem announced a 12% increase to wholesale prices which will feed through as a significant rise to energy bills.

Jonathan Brearley, Ofgem’s chief executive said:

“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.”

In a separate announcement the government has declared that it will start offering carbon reduction workshops and “practical net zero advice” to thousands of businesses this month.

Interestingly, researchers tracked a 12.4% drop in carbon emissions from global businesses in 30 countries during Covid lockdowns when people were kept out of energy-intensive offices and shops. However, the ULI Greenprint Center for Building Performance said that carbon emissions dipped briefly during the pandemic but rebounded quickly which has put pressure on companies and households to take further steps to go green.

The net-zero certification group Planet Mark will run the workshops and will travel across the country to work with companies in an electric bus. The Department for Business, Energy and Industrial Strategy has said it would help “raise awareness among the business community about the urgent need for firms to cut their carbon emissions”.

Energy Minister, Lord Callanan at the Department for Business, Energy and Industrial strategy, said:

“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. The Strategic Innovation Fund will ensure the best projects and most talented minds have the grants available to reduce carbon emissions and enable bill payers to see the benefits of building back greener.”

Despite the urgent need for the carbon reduction workshops, they are only due to run until the end of the Cop26 climate conference which has sparked criticism from climate campaigners at Greenpeace who believe it is further evidence that Boris Johnson’s commitment to climate action is “wafer thin”.

Charlie Kronick, Greenpeace UK’s senior climate adviser, said:

“It’s not just the half-hearted gimmicky bus tour which will end in November before the hard work of decarbonising the British economy will really start. It is the transparent hucksterism, the blatant hypocrisy and the almost criminally limited ambition that stands out.”

He went on to say that the government was “failing to deliver real climate action and is actually undermining it by approving new oil exploration in the North Sea, withdrawing the green homes energy efficiency grant, having neither a plan or even a clue for clean building heat, and providing completely inadequate support for public transport or active travel”.

On a final more positive note, Andrew Griffith, UK net-zero business champion, said:

“UK businesses have proved time and time again that our country is home to world-leading entrepreneurial talent, innovators and disruptors. As we approach the COP26 Climate Change summit in Glasgow the Strategic Innovation Fund is an example of how business can provide the solutions that will make our energy cleaner and tackle climate change.”

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