ENA and its members are committed to Research & Development (R&D) initiatives that will provide benefits to customers, the electricity industry and stakeholders. Our approach is to identify emerging technologies and opportunities that could increase the efficiency of operations, enhance overall safety and provide a reliable network that delivers a high quality of supply.
Since 2004 Ofgem have introduced a number of funding mechanisms to help promote R&D, drive innovation and develop new and existing technologies. These mechanisms include:
- Innovation Funding Incentive (IFI)
In April 2013, Ofgem replaced the Innovation Funding Incentive (IFI) with the Network Innovation Allowance (NIA) for operators of the gas and electricity transmission networks and gas distribution networks.
The IFI remained active for operators of the electricity distribution networks until April 2015, when Ofgem replaced it with the NIA.
- Low Carbon Networks (LCN) Fund
As part of the electricity distribution price control that ran until 31 March 2015, Ofgem established the Low Carbon Networks (LCN) Fund.
The LCN Fund allowed up to £500m to support projects sponsored by the Distribution Network Operators (DNOs) to try out new technology, operating and commercial arrangements. The aim of the projects is to help all DNOs understand how they can provide security of supply at value for money as Britain moves to a low carbon economy.
There are two tiers of funding under the LCN Fund. The First Tier allowed DNOs to recover a proportion of expenditure incurred on small scale projects. Under the Second Tier of the LCN Fund, Ofgem ran an annual competition for an allocation of up to £64 million to help fund a small number of flagship projects.
- Network Innovation Allowance (NIA)
As part of the RIIO price controls Ofgem introduced the Network Innovation Allowance (NIA). The NIA is a set allowance each RIIO network licensee receives as part of their price control allowance.
The NIA provides limited funding to RIIO network licensees to use for two purposes:
- To fund smaller technical, commercial, or operational projects directly related to the licensees network that have the potential to deliver financial benefits to the licensee and its customers; and/or
- To fund the preparation of submissions to the Network Innovation Competition (NIC) which meet the criteria set out in the NIC Governance Document.
- Network Innovation Competition (NIC)
As part of the RIIO price controls Ofgem introduced the Electricity Network Innovation Competition (NIC).
The Electricity NIC is an annual opportunity for electricity network companies to compete for funding for the development and demonstration of new technologies, operating and commercial arrangements. Funding will be provided for the best innovation projects which help all network operators understand what they need to do to provide environmental benefits, cost reductions and security of supply as Great Britain (GB) moves to a low carbon economy. Up to £70m per annum is available through the Electricity NIC.
- Benefits Reporting Framework
Under the ENA Gas Innovation Governance Group (GIGG) and Electricity Innovation Managers (EIM), Gas and Electricity Networks have worked collaboratively in preparation for RIIO-2 to inform the wider industry of the adoption of a benefit tracking methodology that delivers a wide range of benefits to network customers and wider stakeholders. This has been designed to increase transparency on the benefits of network innovation projects.
You can download a copy of the proposed approach here.
If you have any comments or questions, please contact [email protected]
As a part of the Transmission and Distribution Licences, the Electricity and Gas Networks are required to produce a joint innovation strategy. The plan for the Electricity Strategy, which is known as the Electricity Network Innovation Strategy, can be found here.
ENA understands the importance of stakeholders in the development of this strategy, and hence we have built a significant amount of engagement opportunities into the plan. We will be posting more information about how to get involved in the development of the strategy on this page across the next year.
For further details, please contact Randolph Brazier ([email protected])