Ofgem and Innovate UK have revealed the strategic challenges that they are asking innovators to help solve for Round 5 of the Strategic Innovation Fund (SIF).
The SIF was launched in 2021, with the aim of transforming gas and electricity networks to be suitable for the future of the UK’s energy needs. It funds innovative projects that could help hasten the net zero transition at the lowest cost to energy consumers, with each funding round focusing on a specific set of challenges.
For Round 5, the SIF is asking businesses, academics and innovators to develop projects related to advanced energy transmission and networks, dynamic modelling, high-energy demand point integration, consumer-centric grid solutions, enhanced system visibility and control, green gas and whole system optimisation. Ofgem says that these seven challenges were chosen as they reflect “the most urgent opportunities for innovation where targeted investment can drive the most meaningful transition across the energy system.”
This fifth round of the SIF will run until the end of 2026. Three funding cycles will take place per year between summer 2025 and December 2026, during which time creators of projects that address the Round 5 innovation challenges can apply for SIF funding to support the development of their projects.
Between now and September 2026, Ofgem and Innovate UK will also engage with energy sector innovators in order to ensure the creation of strong ideas for projects, helping innovators to understand network needs and fill knowledge gaps while supporting their idea development, and to connect innovators to each other to form influential consortia to boost collaboration and idea development. Information on how innovators can participate in these processes will be revealed in April of this year.
Over the course of the four previous rounds of innovation challenges, £235 million of investment has been delivered across 246 projects.
The future of the SIF
The launch of the new challenges comes at an important juncture as Ofgem evaluates the direction the SIF will take in the coming years.
The SIF was launched as a RIIO-2 funding mechanism by Ofgem in 2021, with the intention of running for five years and providing £450 million of funding over its lifetime. Last month, Ofgem opened a consultation on potential changes in governance for the scheme, including changes in terminology, evolving and defining a more detailed application, assessment and project delivery process, and ensuring its additional dissemination portal meets standards of quality and accessibility.
Last August, Ofgem changed its approach to the SIF programme in order to open three application windows each year and allow projects at any stage of development to apply based on their current progress, as opposed to the previous system wherein project developers would have to apply for the very earliest stage of the programme, often creating unnecessary delays. This has considerably sped the timeline for SIF-funded developments; projects can now complete the SIF process in as little as 23 months, a full eight months faster than the current record.
