Funding
Funding
Our industry regulator Ofgem provides essential backing for innovative projects to make energy networks smarter, accelerate the development of a low carbon energy sector and deliver financial benefits to customers. The projects help develop crucial knowledge and expertise which is being shared across the industry.
Strategic Innovation Fund
The Strategic Innovation Fund (SIF) is a competitive funding mechanism run by Ofgem that will replace the NIC for distribution licensees from 2023. The SIF will make £450 million available over the course of RIIO-ED2 for network innovation projects that have the potential to accelerate the transition to net zero.
The SIF will comprise several phases:
- Discovery – will identify project feasibility and enhance understanding of the problem.
- Alpha – will experiment with different solutions to the problem, test key assumptions and use learning to determine whether to move projects on to the next phase.
- Beta – will deploy solution in a real-life environment, making improvements along the way.
For more information, please visit Ofgem’s website.
Network Innovation Allowance
The Network Innovation Allowance (NIA) provides limited funding to electricity network companies for two purposes:
- To fund smaller technical, commercial or operational projects directly related to our network that have the potential to deliver financial benefits to our company and our customers
- To fund the preparation of submissions to the NIC.
Ofgem introduced the NIA in 2015 to replace the first tier of the Low Carbon Networks Fund. You can find information about our NIA projects here.
Previous Funding Mechanisms
Network Innovation Competition
Ofgem introduced the Network Innovation Competition (NIC) for electricity in 2015 as part of the RIIO-ED1 price control. This funding mechanism came to an end for electricity distribution network licensees in 2022.
The Electricity NIC was an annual opportunity for electricity network companies to compete for funding for the development and demonstration of new technologies, operating and commercial arrangements. Funding was provided for the best innovation projects which help to provide environmental benefits, cost reductions and security of supply as Great Britain moves to a low carbon economy. Up to £81m per annum is available. NIC replaces the second tier of the Low Carbon Networks Fund.
Funding for our first NIC project, Celsius, was announced in November 2015, and our last, BiTraDER, was announced in November 2021.
Low Carbon Networks Fund
Ofgem established the Low Carbon Networks (LCN) Fund as part of the electricity distribution price control that ran until 31 March 2015.
The LCN Fund allowed up to £500m to support projects sponsored by electricity network companies to try out new technology, operating and commercial arrangements. The aim of the projects is to help all network companies understand how they can provide security of supply at value for money as Britain moves to a low carbon economy.
Ofgem granted us funding for a number of low carbon research projects ranging from £1.3 million on small-scale first tier projects to multi-million pound trials (second tier projects). Our second tier projects are Capacity to Customers, CLASS, Smart Street and Respond.