Ofgem’s Strategic Innovation Fund is a £450 million programme to drive down UK energy’s carbon footprint, at lowest cost to consumers. Innovate UK’s Matt Hastings and Chris Coonick introduce us to energy network innovation. We also hear from Ofgem’s Francis Mosley and Graeme Barton on the urgency of decarbonising, and we visit one exciting example of innovation in practice – Energy Superhub Oxford. The Strategic Innovation Fund (SIF) is delivered for Ofgem by Innovate UK: www.ofgem.gov.uk/sif

Episode 1 – Introducing Energy Network Innovation

A very, very warm welcome to the very first edition of Bright Spark... a podcast shedding light on energy network innovation and the work of Ofgem’s Strategic Innovation Fund.

We’ve got 28 years to decarbonise the UK’s energy systems.

More renewable generation, more wind and solar are critical to allowing us to get to that zero-carbon objective that we all have.

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You can’t have an energy system without the energy networks. You can’t get electricity without the energy networks. You can’t heat your home or your business without the energy networks. They are the almost silent but most significant part of the energy system.

We’ve really only just scratched the surface of what we need to do. What is the art of the possible? How far can this be taken?

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My name is Matt Hastings. I work at Innovate UK where we’re partnering with the energy regulator Ofgem to deliver the Strategic Innovation Fund. This series is all about the huge challenge and massive opportunity that transforming our energy networks will have and how this fund will really help deliver benefits to consumers. We’ll get into that in more detail soon but because this is our very first episode, I wanted to start with a real basic prima on the exciting work we’re doing and particularly the opportunities on offer to those that want to get involved. We want the bravest and most ambitious businesses, entrepreneurs, innovators and investors to get stuck in alongside the energy networks in this push to innovate, both for net zero and for the consumer. What is the Strategic Innovation Fund? Well, it’s a £450 million network innovation fund. That means it’s really focused on electricity networks and the gas networks that bring heat and electricity to your homes. We’ve set it up in a completely new way whereby we are very challenge-led and what challenge-led means is that at the beginning of each year, we try and set three or four key strategic challenges which are going to really move the dial in terms of energy networks. So this year, we’ve set a heat challenge, a data and digitalisation challenge, a zero-emission transport challenge and a whole system integration challenge which is basically how all of this different stuff comes together. We’re really trying to encourage high-risk, ambitious, big, bold ideas that can fail but they fail at 150k. We’re really trying to zone in as we move through this process to make these high-risk projects into low-risk products and services. That’s really what we’re trying to transition into.

So that is really what the Strategic Innovation Fund is. It also has two key strategic objectives. The first one is to deliver net zero at the lowest cost to consumers. That’s me, you and everyone who pays an electricity or a gas bill. But the second phase is really to try and create what we’re calling the UK Silicon Valley of energy. What that means is making the UK the best place in the world to be an energy consumer. That means you’ll get the best products, you’ll get the best services, you’ll have the most cost-effective rates potentially and crucially, you will hopefully get a lot more value out of the energy system than simply heat and light. But it also means making the UK the best place in the world to run an energy business and so whether you’re a start-up, whether you’re a scale-up or whether you’re an existing business, we’re hoping to really put rocket boosters onto the UK business community to help them to grow and scale nationally but also internationally. That means working with a lot of international partners as well, helping to bring those businesses into the UK so that they see the UK as the place to demonstrate their capability.

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So that’s got us off to a flying start but it really is just that; a start with much more to come. This series will take us deep into energy network innovation. We’ll meet the people leading the most exciting projects. We’ll flag up where the most interesting opportunities are and we’ll take time to celebrate and showcase those people and teams who are already striding ahead and making big, important changes in this critical energy network space. Don’t panic; it’s not just going to be me droning on. In each episode, I’ll share the stage with a brilliant member of our Innovate UK team, running the Strategic Innovation Fund for Ofgem, each stepping up, in turn, to steer us through an aspect of this fascinating work. It’s time to introduce the first one of those right now. Right, let’s get into this. Now the real excitement starts. I’m absolutely delighted to be joined by my fellow co-presenter and colleague, Christine Coonick. Hello, Chris.

Hiya, Matt. How are you doing?

Extremely well. Chris, do you want to just start by maybe giving a quick introduction to yourself, your role and a bit about your background?

Yeah, absolutely. I am Matt’s Programme Manager on the Strategic Innovation Fund programme as led by Ofgem. I am an electrical engineer by trade. When I had the opportunity to come on board with this new programme, I just couldn’t resist really.

It’s too exciting, isn’t it? That’s the problem.

[Laughter] Absolutely.

Well, that’s awesome and, look, thanks very much for joining us today, Chris. I’m really keen, in this first very exciting episode of our new podcast series, just to get underneath the skin really of energy network innovation and why we’re doing what we’re doing. I wondered maybe if I could just start by asking you a quick question in terms of what is energy network innovation. How does it work? Why is it here? What’s it all about?

That’s a really good question, Matt, and it’s one that certainly a number of people have struggled to get their heads around because what we’re not talking about is just energy innovation. There’s loads of fantastic stuff that’s happening across the whole energy innovation space but specifically, the Strategic Innovation Fund is looking at the network side of that innovation. So imagine, if you will, you’re a local authority, for example, and you want to roll out a fleet of electric vehicles or you’re maybe perhaps even looking at hydrogenising your bus fleets, HGVs or something within the transport space. To do that, you require a huge amount of electricity to come to your particular area. It needs to be connected, it needs to be controlled and it needs to be available at the times that you need it. Now as we all know, we’re all connected by this amazing network of pipes and wires across the UK but there are pinch points. As we’re trying to move over to renewable energy, we don’t necessarily have the availability of that renewable energy exactly when we need it, whether the sun isn’t shining at that particular time or the wind isn’t blowing in the right direction. We have this need for flexibility within our grid. A part of network innovation is looking at that. We have a particular issue with regard to requiring a new carbon-free way of powering transport systems but how do we tally that up with the demand, the need and the generation potential of low-carbon energy coming up the other side? This network innovation is the bit that happens in the middle. It’s the magic that makes these things work.

I think we should quote you on that, Chris; the magic that makes these things work. I think that’s spot on. I find it quite interesting and I don’t know if you’re the same. As a customer, whether you’re a domestic customer or a business customer... more so on the business side of things where, let’s say, you want to increase the amount of capacity that you’ve got or you want to build a new factory or whatever, then you’ve got a relationship with a part of the energy network but as a domestic customer or a householder, you tend not to have much of a relationship with your network unless, let’s say, there has been a bad storm and some infrastructure has blown down. You might have a tree across a line, for example, and you’ve had a power cut and then you get these heroes who arrive to reconnect your electricity. Indeed, if you smell a gas leak or whatever, then you hear from your energy network. I think what’s so exciting about this programme is we’re really starting to find out what it is that makes the networks tick and how they’re going to need to tick for the future. Exactly like you say, it’s got massive high penetration of electric vehicles coming around the corner. We’re completely electrifying a lot of the heating, whether it’s through heat pumps or whatever it may be and this big hydrogen transition and moving to a hydrogen grid and trying to reinject and blend hydrogen with the existing gas network. So I think a lot of this is, I suppose, maybe just trying to bring the networks to life a little bit for a lot of people, do you think?

Yeah, and I think it’s tying all these things together. It’s such a massive strategic piece, isn’t it? I mean you think of all of the control and just the planning side of things. How do you actually get to net zero? It’s not just gadgets and gizmos. I mean we’ve got gadgets and gizmos aplenty. It’s pulling everything together in the right direction, at the right time and in the right way. It’s a massive movement piece of just coordination across a huge amount of players and stakeholders from everything from Mrs Jones next door who needs to install a heat pump because her gas boiler has come to the end of its time and the government are leading us towards the electrification of heat. It’s the whole supply chain that goes from that all the way up to how we connect offshore wind in a better way to make sure that we aren’t losing energy under the seabed. It’s just such a massive scale of whole things.

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You are listening to Bright Spark, a new podcast series from the Innovate UK team, managing the Strategic Innovation Fund for the UK energy regulator Ofgem. Thanks for being with us. To find out more about the Strategic Innovation Fund, check out the link in the episode description on your podcast player or just google Ofgem SIF.

We’ve been hearing from Innovate UK’s Matt Hastings. I’m Chris Coonick. I’m a Programme Manager at the Strategic Innovation Fund. Shortly, we’ll bring in some of our Ofgem colleagues to find out what excites them about the potential of the SIF. But if there’s one thing this Bright Spark series is going to be about, it’s bringing you the voices of innovators, the people and teams across the UK doing exciting things, working to drive energy network innovation for consumers, for net zero and to push the UK ever closer to that key goal of becoming the Silicon Valley of energy.

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Hi, I’m Rob Saunders, Challenge Director for Prospering From the Energy Revolution programme and I’m here at Redbridge Park and Ride in Oxford, the site of a new supercharging hub which is part of Energy Superhub Oxford and I’m here with Tim Rose. Tim, what’s your role?

Hi, Rob. Yeah, I’m the Project Manager for this project, the Energy Superhub Oxford project. I work for a company called Pivot Power. We’re the lead partner in this project. It’s a really exciting project looking at ways of bringing together electrification of power, transport and heat to help us all on the journey to net zero.

It’s great to see it starting to go up. We can see the construction teams starting to build the canopy over the supercharging hub as we speak. Just down the road from here is a huge hybrid battery at the point where it connects to the National Grid. Can you talk a bit more about that battery and the innovation in it, Tim?

Yeah, the battery is very exciting. It’s a very large battery – a 50-megawatt battery – and that means it can provide power to about 11,000 homes for an hour but it’s unique in a number of ways and the first of its kind, firstly, because it’s the first battery to be connected directly to National Grid’s overhead transmission network, the main lines we see running up and down the country, and also it’s the first of its type. You mentioned the hybrid battery and that means it’s a combination of two different chemistries; firstly, the lithium-ion chemistry that we’re all familiar with in our phones and computers but also, something called vanadium flow technology which is a completely different chemistry. By combining these two types of chemistries, we hope to be able to extend the life of the overall battery and that will improve the economics. So it really is the first of its kind in lots of areas. We’ve been learning about working with the National Grid as well and lots of different relational challenges and benefits that were coming out of that.

It’s a really interesting project and I think it would be remiss of us not to mention the smart aspects as well, wouldn’t it? So this battery is being controlled by an artificial intelligence system, I believe.

Absolutely. That’s right. So a system that’s been developed by a start-up company here in Oxford called Habitat Energy. Absolutely, artificial intelligence and a machine learning-based system that’s going to control the trading of the battery, how and when it decides to trade on which markets in the energy system and also when it provides services to the National Grid. Those are really important because that’s all about helping stabilise the grid to allow us to bring more renewable generation, more wind and solar, into the mix and that’s critical to allowing us to get to that zero-carbon objective that we all have. We hope that’s going to be a real opportunity to show some benefits. Beyond Oxford, we’ve got another 35 of these projects that we’re hoping to build. We’re already building the first two of those. So there are real benefits coming out of this project already. Oxford has helped us promote and progress that programme of sites. We really do think that can make quite a substantial impact up and down the country.

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Thanks to Rob Saunders, one of my colleagues here at Innovate UK, who leads the Prospering From the Energy Revolution programme, focusing on Smart Local Energy Systems. Thanks also to Pivot Power’s Tim Rose. I loved hearing that. It’s just one example of one type of innovation but it illustrates, in practice, a lot of things that we’ve found are vital when it comes to driving innovation in energy networks.

You’ve got collaborative partnerships working and people getting out of their silos to solve problems. You’ve got cutting-edge technology; incredible, new, quick-charging batteries but also clever thinking about hybridisation and combinations of technologies and, in this case, two battery types used in parallel to offset each other’s weaknesses and shortcomings. You’ve also got the use of artificial intelligence to make those decisions quickly and efficiently. It’s also a great real-world example of local partners, businesses and academic institutions coming together not just with their own area and community in mind but with the ambition to scale up and spin out and to place similar systems in locations around the UK and who knows, in time, even around the world.

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Hi, Chris. I’m Francis Mosley. I’m a Senior Innovation and Systems Engineer at Ofgem.

I’m Graeme Barton. I work in the Ofgem Network Price Control Team. I’m a Senior Manager leading on policy.

Why do you think we need energy network innovation? It’s not going to happen on its own. Why do we need to intervene with programmes like the Strategic Innovation Fund?

Absolutely and some might say that 50% reduction is almost the low-hanging fruit. The next 50% is going to be really, really difficult for us to work our way through and bring on heat and transport’s full electrification. It’s just such a massive challenge. It’s going to change significantly the way our energy infrastructure works.

Yeah, I think community energy has got a massive role to play and having everyone on board and being a part of something that traditionally has been a bit more arm’s length. People don’t think about the pipes and the wires. They just think, ‘What’s my bill going to be at the end of the month?’ So shifting that relationship between consumers and the energy networks is going to be a real critical part of getting community support with projects, etcetera. I think that we need to look at the role of the innovators and there’s a whole host of innovative ideas out there, whether they come from a small community group or whether they come from a start-up in the tech sector. Graeme, what would you say really is the role of innovators in SIF?

Yeah, the role of the innovator is really important. I see their role as threefold, I think. It is working with and partnering with the networks to deliver projects. Networks are the ones who are at the centre of the energy transition and they’re the ones who own and operate the pipes and wires which transport gas and electricity around the country. But the innovators are the ones who bring the new ideas to those entities and help to test new innovative products. That means that a lot of the innovators will be bringing these new ideas to the networks and taking forward the projects with those networks.

Getting those third-party creative ideas is really essential to getting us to net zero but zooming out, I think traditionally, one of the main strengths of the UK has been that we’ve got some of the highest R&D output in the world, especially relative to our country’s size. One of the common issues with all that is that we sometimes struggle to commercialise that R&D. I think America has obviously got this very strong example in Silicon Valley where they take these ideas, commercialise them and create things like the big tech giants. Innovation is really key in taking those research and development ideas and then translating them into the business-as-usual so that companies can use them and that we can use them as a nation. The SIF is going to play a really key part in that in translating some of the stuff that’s coming out of universities and some of the new ideas into innovation projects and getting them into the energy system’s business-as-usual as soon as possible.

Yeah, exactly, Chris. That’s Ofgem’s main interest. It’s just to protect the interests of existing and future consumers. Our ultimate aim is to deliver net zero at the lowest cost to the consumer. That ultimately means we hope the Strategic Innovation Fund delivers reduced operational costs running the network, delivers reduced environmental damage, the networks have a lower carbon footprint and ultimately, enables the energy system transition to happen. Those are massive consumer benefits. They will take some time to realise but by enabling projects to get off the ground, via this new funding mechanism, we really do hope that this change of approach amplifies those benefits which we’ve had compared to previous innovation funds.

So, again, we are a world leader in research and development, although, as a nation, we emit globally quite a small percentage of greenhouse gas emissions. I think we make up something like 1% of worldwide emissions but the technologies and the strategies that we’re going to develop here through the Strategic Innovation Fund can be used by other nations to decarbonise their economies and that’s really going to position the UK as a world leader in this area. Just another final point which interests me is using innovation to support the levelling up agenda. Often, the projects that are funded through energy networks are in quite disparate geographical areas of the country. If you can strategically build energy innovation capacity, you can help regions that currently lacking in economic performance and really pull them into comparable performance with other regions across the UK.

That coordination point is key. We kind of always refer to holistic approaches, energy transitions and the whole systems approach but to do all of that, you need everyone at the table. We can’t just work in silos and say, ‘Okay, this is only a gas problem,’ or ‘This is only an electric problem,’ or ‘This is a transmission problem.’ It’s everybody’s problem. I think what’s been really lovely to see in the Strategic Innovation Fund so far is the willingness and appetite for the networks to collaboratively work together on projects. We’ve got one project that’s come through that I think has got five different networks across electricity, gas, distribution and transmission all involved, looking at the same problem. I think it’s when we start to get that kind of collaborative approach to say, ‘This is bigger than just one network. This is a whole infrastructure problem that we need to tackle,’ then actually, we might start to get the sorts of solutions that can come out and, as you said, move into business-as-usual and make those significant changes.

Yeah, one of the trends I’ve noticed in my time working in government has been, and this isn’t a proper word, this desilofication when it comes to net zero. I think many departments, in the past, maybe had a bit too much of a lens on exactly what comes under their jurisdiction and leaving other areas for other departments but when it comes to net zero, as you say, it’s a shared problem. There are mechanisms within government to look at this from a holistic point of view and I think the Strategic Innovation Fund, again, is really linked to all those different areas. It’s very closely linked with the Net Zero Innovation Board which brings together some of the key departments that are tackling net zero, like BEIS and DEFRA. Again, I’m just really encouraged to see this wider systems view across the SIF.

Yeah, and I guess that’s one of the reasons why Ofgem and Innovate UK are working together in the first place. It’s that whole alignment piece. There is so much going on in the energy innovation landscape. So thank you so much, Francis and Graeme, for speaking with us today. It’s been really interesting and really great insights from Ofgem. A lot of people don’t necessarily understand and appreciate what you guys do, so thank you very much for joining us today.

No problem. It’s been a pleasure.

Yeah, my pleasure. Thanks very much, Chris.

Francis Mosley and Graeme Barton. We are coming to the end of this first episode of Bright Spark. I hope you’ve enjoyed being with us. There’s just time to bring back Matt Hastings for a final catch-up, focused on why all this really matters and why we need people in the energy sector and beyond pulling together to drive energy network innovation right now.

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We can do this right, Chris? We’ve got this.

It’s a big mountain to climb, isn’t it, Matt? There’s just so much to be done but it’s such an exciting place to be and I’m just so pleased to be involved in it and see innovation at this scale. It’s completely unprecedented. I don’t think there’s another energy network internationally in any other country that a) invests this much in innovation and b) really tries to hone in on those real specific strategic issues that will really open the networks up and make them just so much more accessible, useable and affordable for everybody.

When we look back ten years plus, there’s been a lot of investment in network innovation and we’re taking all of those learnings from what was done previously and really shaping them up into this incredibly dynamic and new approach to network innovation which is the Strategic Innovation Fund and we’re doing things which have never been done before which is kind of cool.

It’s exciting! It’s really exciting and I think we are kind of standing on the shoulders of giants. There has been some fantastic stuff, as you said, Matt, that has happened before but we’ve really only just scratched the surface of what we need to do to get where we need to be. I think that, for me, is one of the more exciting parts of the programme. What is the art of the possible? How far can this be taken? What do we need to do? We’ve been talking before about the sorts of organisations that might be involved in delivering the projects for the Strategic Innovation Fund. We’re really keen to open the net as wide as possible. There may be some fantastic organisations that are in the defence space, or aerospace, or have developed something amazing for NASA that works on a spaceship that orbits the sun but actually, reusing that technology and that approach for the energy systems may suddenly be a complete game-changer on how things work, how efficient we are and how accommodating we can be to these future changes.

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This is the Bright Spark podcast from Innovate UK, working with Ofgem. We have reached the end of episode one. I hope you’ve enjoyed being with us. My name is Matt Hastings. Huge thanks to Chris Coonick who has done a brilliant job of opening up this big conversation and getting the ball rolling on all of these exciting themes. I hope it’s clear that we are opening this whole thing up. We want to bring in as many people as possible; technologists, entrepreneurs, academics, businesses, investors and anyone and everyone who can help us make these necessary innovations for consumers, for net zero and for driving us towards this vision for the Silicon Valley of energy. We’ve only touched a little on the mechanism of the SIF, how people get together to pitch ideas, get their projects funded and how these projects can grow and move towards commercial reality. That’s where we’re going next time in episode two of Bright Spark.

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I’ll be joined by another brilliant member of the team. This time, David Richardson, our Head of Innovation. As we’re recording this, the first tranche of SIF money has just been allocated to a total of 40 exciting projects. David and other members of the team are going to be taking us through some of them and what they could mean for the future of the energy networks.

To find out more about the Strategic Innovation Fund and how you might want to get involved, go to Ofgem.gov.uk/SIF. We’ve also put that link in the episode description. Go check it out. There are also videos from all 40 projects on YouTube. They’re only one minute long. Search Strategic Innovation Fund to find more.

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Bright Spark is a Bespoken Media Production for Innovate UK working in partnership with Ofgem. Looking forward to seeing you next time.

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