- Supply and Retail Market
- Distribution Network
- Transmission Network
- Ofgem awards five projects up to £58m in one of the biggest funding rounds to date
- Projects focused on trialling hydrogen to heat homes as well as boosting flexibility and capacity of the grid
- Ofgem supports industry innovation which helps build a greener energy system at the lowest cost to consumers.
Ofgem has awarded up to £58m to five pioneering projects in the 2020 Network Innovation Competition to help support the transition to a net zero emissions economy at the lowest cost to consumers.
Winning gas innovation projects include a world first trial of a 100% “green hydrogen” network for 300 households in Fife to use hydrogen to cook and heat their homes instead of gas. (1)
Electricity projects which have secured funding are aimed at boosting the grid’s flexibility to better manage more intermittent renewable generation and surges in demand as well as its capacity, thereby reducing the need for expensive reinforcement. (2)
To meet the government’s 2050 target of net zero emissions, the UK needs to build a greener energy system which can support a massive increase in renewable forms of generation, charge millions of electric vehicles and replace gas boilers by supplying clean alternatives like hydrogen to heat our homes and businesses.
Cleaning up heating is a particular challenge. Almost a third of the UK’s greenhouse gas emissions come from central heating and around 85% of households use gas to heat their homes.
Innovation will play a vital role in helping to meet the country’s climate goals and in particular finding the most effective and lowest cost clean alternatives to gas heating.
As part of Ofgem’s current network price controls, companies bid for funding through the annual Network Innovation Competition to test new technologies and approaches which help cut both carbon emissions and costs for consumers. Funding is awarded through a highly competitive process, with assessments carried out by independent panels of experts. (3)
By developing crucial knowledge and expertise across the industry, innovation pioneered by previous winners has helped put the UK on the path to net zero and saved consumers millions of pounds on their energy bills.
Jonathan Brearley, chief executive of Ofgem, said:
“The high level of ambition shown by bidders in this year’s Network Innovation Competition is hugely encouraging and shows the energy industry getting behind the challenge of net zero.
“The winning projects were those which showed the most potential to make the game-changing leaps in technology we need to build a greener, fairer energy system at the lowest cost to consumers.
“Ofgem will continue to back the best of innovation, which will help drive the green recovery and enable consumers to reap the benefits up to 2050 and beyond.”
Kwasi Kwarteng, energy minister, said:
“The Government’s Ten Point Plan has set out a bold ambition for a green industrial revolution that will support a cleaner energy system and allow us to meet our net zero emissions targets.
“We must continue driving forward the new low-carbon technologies we need to achieve this and I’m delighted to see Ofgem supporting these projects through the Network Innovation Competition.” (4)
Paul Wheelhouse, Scotland’s energy minister, said:
“The Scottish Government provided £6.9m of funding towards SGN’s H100 Fife project and I am pleased that the project has now been awarded additional funding of up to £18m it needs through Ofgem’s Network Innovation Competition.
“I see this project as a critical step towards understanding our decarbonisation options for heat and will deliver a purpose built end-to-end hydrogen system, so I warmly welcome Ofgem’s investment in the project.”
Notes to editors
1. The two winning gas projects are:
- Delivering a first of its kind 100% green hydrogen generation, storage and distribution network to heat 300 homes. The hydrogen would be manufactured using offshore wind power – H100 Fife, awarded up to £18m (SGN). Ofgem’s decision triggers a further investment of £6.9million from the Scottish Government.
- Building a hydrogen test facility using decommissioned gas transmission infrastructure to better understand how hydrogen interacts with existing network transmission – HyNTS FutureGrid, awarded £9.07m (National Grid Gas Transmission).
2. The three winning electricity projects are:
- Developing new platforms to digitally upgrade electricity substations to better manage variable low carbon power generation and surges in demand, even when communication links to central systems are lost – Constellation, awarded £14.38m (UK Power Networks).
- Integrating standalone voltage control schemes into a single system to create a “self-balancing” network which unlocks capacity and reduces the need for network reinforcement – QUEST, awarded £7.95m (Electricity North West).
- Upgrading electricity transmission towers to carry higher voltages, boosting capacity and reduce the need to construct new overhead power lines – RICA, awarded £8.12m (National Grid Electricity Transmission).
Our decision document has full details about the projects and all Network Innovation Competition funding decisions.
3. This was the eighth and final year of the Network Innovation Competition for gas distribution, gas transmission, and electricity transmission sectors. In total, Ofgem has awarded £319 million funding to projects. We propose to increase the level of innovation funding to at least £630 million as part of Ofgem’s next price control framework, RIIO-2, which begins in April next year. These proposals include setting up a new Strategic Innovation Fund to drive research and development into key green energy projects, such as clean alternatives to decarbonise heat. Ofgem will publish more details when it announces the RIIO2 final determinations next month.
4. The UK government’s Ten Point Plan will mobilise £12 billion of investment and demonstrates the UK’s commitment to supporting hundreds of thousands of green jobs and tackling carbon emissions from electricity generation, as the country forges ahead to reach net zero by 2050. Find out more on the Ten Point Plan.
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