How Ofgem’s Innovation Link supports low carbon projects

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Neil Barnes

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The energy sector, as you’ll know by now, is no stranger to change.

We hear at the start of every blog and speech that our energy system is undergoing a massive transformation – underpinned by an increasingly urgent need to decarbonise our economy. We’ve also been hearing more about what role innovation needs to play in this journey – not only in the context of achieving the target of net zero carbon emissions by 2050 target but also in making the energy market accessible to all and the costs and benefits of the energy transition are shared fairly. These areas are fundamental to Ofgem’s recently published strategy.

Innovation Link three years on

Almost three years since Ofgem set up the Innovation Link, the team has helped over 200 innovators looking to launch new products, services or business models. Many of these have the potential to help us decarbonise in the smartest, lowest cost way.

Plenty of the innovators we’ve engaged with tend not to have an obvious background in energy and, often, their first challenge is grappling with what can be quite complicated rules and regulations. So we help them to understand how the market works and what the rules might mean for them. Others might already have detailed knowledge of the sector so we can help by providing more specific support on the regulatory rules. This has given us invaluable insights into a range of innovations across a wide spectrum of business models. These insights are helping to inform our thinking, particularly on the future design of the energy market.   

Supporting low-carbon innovation

A great example of this is Ripple Energy. Their innovation is to give consumers a simple and affordable way to own part of a wind farm by establishing a Community Benefit Society – allowing members to jointly fund the setup of an onshore windfarm. We worked with Ripple Energy to help them understand how the rules may apply to their idea and navigate different regulatory options open to them. 

Following our support, Ripple Energy launched a crowdfunding campaign in April to raise £750,000 in order to launch their first pilot project. Having raised more than their target, they’re now aiming to launch their pilot wind farm project at the beginning of 2020, with a full-scale wind farm to follow.  This is just one example of the innovators we’ve supported.

The work we do with innovators like Ripple Energy is extremely important and this type of bilateral, confidential guidance is a cornerstone of the Innovation Link. Through these interactions and our  regulatory sandbox we’ve learnt that many firms just want to understand the rules so they can launch their business as soon as possible. With innovation underpinning some of our key priorities as a regulator we’ve been thinking about ways to assist more innovators and in a more efficient way.   

New service launched today

We want to take a more active role in opening up our services and knowledge as widely as possible. We have a lot of useful information – proactively passing this on could add value to innovators and reach more of them than we currently do. We’re launching this service today by publishing our guidance on selling electricity to electric vehicle users.

This guidance aims to answer questions we have received numerous times as a team and we hope it will be particularly useful to organisations such as chargepoint operators and local authorities. By explaining some of the main rules that apply, we hope we can stimulate further interest and innovation in this exciting area and support the take up of electric vehicles more generally. We intend to follow this up with guidance in other areas.

How to get in touch

We want innovators to keep talking to us if they need help and we’re also keen to hear any feedback on the new guidance paper and what else would be useful.

Please do get in touch with me and the team on innovationlink@ofgem.gov.uk.