Ofgem’s $450m Strategic Innovation Fund to help businesses and households go green

Written by Kunal Sawhney, CEO, Kalkine Media

Ofgem, the energy regulator, rolled out a £450 million fund for projects that will help the country fulfil its net-zero targets. The UK has pledged to achieve net-zero emissions target by 2050, significantly lowering the current level of carbon emissions. The proceeds of the campaign by Ofgem would be made available to energy network companies that are helping businesses and households to go green. These could include new and sustainable means of storing energy generated from renewables, heating homes, or transporting people and goods using electric vehicles in “vehicle-to-grid” systems. The fund is open for applications starting 31 August 2021 and will be initially valid for five years and could be later extended.

Strategic areas of Innovation Fund

The funding is expected to play a vital role in lowering carbon emissions by 68% by 2030 and 78% by 2035, with an ultimate goal of reaching net-zero carbon emissions by the year 2050. The regulatory body identified four strategic areas for its Strategic Innovation Fund – “whole system integration”, transport, heat, and data and digitalisation. Ofgem will offer funds to disruptive project ideas that cover the entire electricity journey from plant to plug, which can be rolled out at scale across the entire country upon completion.

 Ofgem’s fund aims to support businesses that offer innovative and new technology launches to lower greenhouse gas emissions and reach net-zero targets. Some of these projects may include developing battery storage technology, green travel, addressing power and heat requirements of the country at low costs, installing heat pumps that consume less energy to heat homes compared to gas-fired boilers, and better electricity transmission and distribution networks.

Ofgem would play a pivotal role in ensuring that the current and future consumers are offered the best services alongside encouraging innovation and competition.

Government initiatives

The government also expressed its intentions to commence carbon reduction workshops and “practical net-zero advice” to several UK-based businesses from 31 August 2021. During the COVID-19 lockdowns, researchers reported a 12.4% decline in carbon emissions from global businesses across 30 countries as people stayed away from energy-intensive offices and shops and continued to work remotely from homes. On the contrary, the ULI Greenprint Center for Building Performance reported only a brief decline in emissions during the pandemic, followed by a quick rebound, thus imposing tremendous pressure on homes and businesses to undertake further steps to go green.

The government workshops will be run by Planet Mark, the net-zero certification body, which works with companies and tours across the country in an electric bus. Further, the Department for Business, Energy and Industrial Strategy is raising awareness among businesses about the urgent need for companies to reduce carbon emissions.

Greenpeace criticism

The government workshops aimed at raising climate awareness are expected to continue running until the end of the Cop26 Climate Conference in November 2021, and this has sparked tremendous criticism from climate activists at Greenpeace, expressing unhappiness over government’s commitment to climate action.

The senior climate adviser at Greenpeace UK, Charlie Kronick, said that the government is failing to deliver real climate action and is undermining the requirements to decarbonise the British economy by giving it’s ‘go ahead’ to new oil exploration activities in the North Sea, withdrawing green homes energy efficiency grant, taking no action on clean building heating, and offering no or inadequate support for public transport or active travel.

To sum up, it can be said that the initiative from the regulator will ensure that money is not a constraint for network companies who would be addressing its named four major challenges and encourage innovation. The fund will support nation’s wider ambitions to reduce 68 per cent of emissions by 2030, with bigger and bolder ideas getting preference for clean and affordable energy.