Following Ofwat’s consultation between May-June 2020, water sector regulator Ofwat has unveiled details of how it will design and implement its innovation fund using two types of annual competition.

Announcing the plans, Ofwat said there remain “significant untapped opportunities” for the industry to work together with the supply chain and those in other sectors to trial and adopt new practices and technology to transform performance.

The regulator commented;

"We recognise that alongside the innovation fund, companies will be considering what investments they can bring forward as part of the Government’s Green Recovery.

"The innovation competition complements this initiative, allocating up to £200 million of investment to identify, pilot and roll-out new transformational innovation opportunities beyond the Green Recovery’s scope."

Ofwat has now finalised the details of its innovation competition aimed at uncovering new affordable solutions to long term challenges. The regulator has made up to £200 million of funding available which will be accessed through a series of annual competitions during 2020-25.

After seeking feedback from a wide range of stakeholders, Ofwat has confirmed the following plans of how the fund and competition will work:

• The fund can be accessed directly by water and wastewater companies and new entrants. Other parties can access the funding indirectly through collaborative bids.
• There will be two strands of the competition – the innovation in water challenge and the main competition.
• The innovation in water challenge will be a Dragons Den-style competition for smaller projects, which will particularly interest supply chain businesses who might not always get the opportunity to pitch to big businesses.
• The main competition will be for larger, strategic projects involving cross-water company collaboration, as well as with other stakeholders in the water sector and beyond.

Commenting on Intellectual Property Rights (IPRs), Ofwat said that background and foreground IPR will be differentiated. However, it will introduce flexibility in the application process to accommodate requests for alternative IPR arrangements.

Typically, Background IP is pre-existing intellectual property that a party brings to a research project, while Foreground IP is intellectual property generated in the research project.

IPR arrangements will be as follows:–

• Foreground IPR will be made available royalty free to the water companies in England and Wales by all project participants (watercompanies, business retailers and other third parties)
• Foreground IPR royalties earned by water companies and water retailers in other sectors in England and Wales will be shared withwater company customers (in proportion to the funds that customers
• have contributed to the project). This includes where there are joint bids.
• All foreground IPR royalties earned by other third parties in other sectors in England and Wales, do not need to be shared with watercompany customers.
• All project participants may retain foreground IPR royalties earned in any sector outside England and Wales.

Ofwat expects the innovation in water challenge to open in January 2021 and the main competition in April 2021.

The regulator is now identifying an innovation fund partner through a tender process to help it run the competitions and will be releasing further details in the autumn. Ofwat will continue to work with the sector through the autumn as it finalises the application and assessment process.

John Russell, Senior Director at Ofwat said:

“The introduction of innovation funding and an innovation competition will act as a catalyst for change, encouraging new ideas and approaches to help address current challenges.

By emphasising the need for stronger collaboration and partnership across the sector and beyond, we believe innovation funding and the innovation competition will help accelerate change. I look forward to appointing an innovation fund partner to help us with the design, implementation and ongoing monitoring and administration of the innovation competition and make a real difference for customers and the environment for years to come.”

Click here to download Innovation funding and competition: decision on design and implementation