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Ofgem 2021: Heat – Discovery


Organisations can apply for funding under the Ofgem – Strategic Innovation Fund to deliver projects that offer value to energy consumers and society through energy network innovation.

This competition is delivered in partnership with the Office of Gas and Electricity Markets (Ofgem). It is funded by the Ofgem Strategic Innovation Fund, which aims to deliver value to energy consumers and society through energy network innovation.

The aim of the Ofgem Strategic Innovation Fund is to decarbonise gas and electric energy distribution and transmission networks and benefit the consumer.

Discovery is the first phase of a three-phase competition:

  1. Discovery
  2. Alpha
  3. Beta

There are four challenge competitions in Discovery phase:

  1. Ofgem 2021: whole system integration
  2. Ofgem 2021: data and digitalisation
  3. Ofgem 2021: zero emission transport
  4. Ofgem 2021: heat (this competition)

It is the responsibility of the applicant to ensure that they are entering the appropriate challenge competition for their project.

Successful applicants from the Discovery phase will be invited to apply for the Alpha phase.

This competition will be supported with two briefing events:

  1. Licensed network briefing

A briefing for licensed gas distribution networks, transmission network operators, or electricity system operator that are eligible to be the lead applicant. This event will focus on the eligibility criteria, the application process, and the support available.

2. Competition launch briefing

An event for all organisations wanting to participate in the programme. This event will provide an introduction to the programme, focusing on the background of the competition, the eligibility criteria, the application process, and information on finding an eligible licensed network to work with.

In applying to this Discovery phase competition, you are entering into a competitive process.

Any adoption and implementation of a solution from this competition would be subject to a separate, possibly competitive, procurement exercise.

Discovery phase projects must last two months and have total eligible costs up to £150,000, exclusive of VAT.

Open Date:


Close Date:


The aims of this competition are to:

  • Decarbonise gas and electric energy distribution and transmission networks and benefit the consumer
  • Develop innovative products, processes and services for the planning, operation and delivery of energy networks that support low carbon heating solutions
  • Produce insights and findings to support decision making for low carbon heating by energy networks, industry, and government
  • Demonstrate how low carbon heating can be intelligently managed during operation to improve efficiency and reduce overall energy system costs

Your project must address the overarching requirements of the Strategic Innovation Fund (SIF), as stipulated in the SIF Governance Document.

Over the three phases, applicants must demonstrate that projects deliver a net benefit to network consumers through:

  • Energy bill cost reductions
  • Carbon emission reduction
  • Access to revenues for users of energy network services; or introducing products, process and services that are new to the UK energy market

Your proposal must:

  • Focus on network innovation that can be deployed or applied to benefit GB energy networks’ infrastructure, network consumers, operation, and utilisation

Your project must address:

  • Users and their context
  • Constraints affecting the problem or wider context
  • Opportunities for improvement
  • Environmental impacts

You should consider all the points listed here, but as a minimum you must directly address at least one as the primary focus of the proposed project:

  • Using smart approaches to manage large-scale electrified heat deployment in a local area, reducing the need for network reinforcement
  • Using smart meters with heat pumps to optimise usage and energy system flexibility
  • The commercial and investment case for financing heating technologies alongside energy network innovation
  • Working with partners on how deployment of low carbon heating solutions can be better coordinated to minimise gas and electricity network constraints at lowest economic cost

At this stage a project direction will be issued for the Discovery phase only. You must define your goals and outline your plan for the Alpha phase. Only successful applicants from Discovery phase will be invited to apply for Alpha phase.

The Alpha phase of a project will focus on preparing and testing the different solutions to the problem identified during the Discovery phase ahead of any future large-scale demonstration of the project. It will also include testing of the riskiest assumptions.

Your project must:

  • Start by 1 March 2022
  • End by 30 April 2022
  • Last two months

To lead a project, you must:

Subcontractors can include a variety of third-party innovators such as:

  • Start-ups
  • SMEs
  • Suppliers
  • Academics
  • Independent researchers
  • Disruptors
  • Other energy network companies

This list is not intended to be exhaustive.

For more information on company sizes, please refer to the company accounts guidance.

Project direction will be awarded to a single legal entity only.

This work will still be the responsibility of the lead applicant.

Innovate UK are looking for proposals that involve all the necessary stakeholders relevant to the proposed innovation, from a heat perspective.

A total of up to £3million, exclusive of VAT, is allocated to the Discovery phase.

Only successful applicants from the Discovery phase will be invited to apply to the Alpha phase.

Your project must primarily focus on the energy network aspects of innovation.

Components of the energy system which sit outside the regulated energy network infrastructure such as energy generation, storage, or in-home services are within scope if their inclusion delivers a net benefit to network consumers.

This list is not intended to be exhaustive.

The total funding available for the competition can change. The funders have the right to:

  • Adjust the provisional funding allocations between the phases
  • Apply a ‘portfolio’ approach based on technology, geography, innovation, markets, and participants

Ofgem reserve the right to make the final decision as to which projects are funded.

The project direction is fulfilled at the end of Discovery phase, and you are expected to exploit the developments and disseminate the learnings of your project.

Value Added Tax (VAT)

Your total costs must exclude VAT.

VAT is the responsibility of the invoicing business, and your application must list total costs exclusive of VAT.

Subsidy control
Ofgem competitions are not subject to subsidy control.

Innovate UK will not fund projects that do not meet the requirements of the SIF Governance Document.

Cresco Innovation works with companies to develop and implement innovation strategies. We help client companies identify opportunities to develop new products and services, and then create a package of support to ensure that the idea is turned into a commercial reality.

Our services include securing grants (as a team we have raised around £40million over three years), business planning, IP advice, access to finance and funders, project management and IP commercialisation support.

We regularly act as the interface with the funding bodies and help clients ensure that their projects are properly managed to ensure the best outcome for all.

Call to find out more

If you’d like to know more about this competition, please give us a call on 01509 261182 and one of our team will be delighted to help you access this funding opportunity for your business.