Ofwat has launched a new consultation setting out its proposed approach for the innovation fund over the next price review period 2025-30.
The regulator said it is consulting on proposed changes to make the fund achieve an even greater impact, including doubling its size to £400 million for 2025-30 and introducing new competitions to develop the bold, transformational innovations that the water sector needs.
To date, Ofwat’s £200 million Innovation Fund 2020-25 has awarded £114 million to 77 projects since January 2021, with a further c£80 million to be awarded by end of April 2025. The fund has incurred circa £6 million in administration costs.
Ofwat is inviting responses to 19 detailed questions, including:
- Do you agree that the aims of the current Innovation Fund outlined above should continue into 2025-30?
- Do you support the continuation of annual competitions i.e. the Water Breakthrough Challenge led by water companies?
- Do we have the right approach on lead entrants, company contributions, IPR, and levels of funding?
- Do you have any further ideas on how we can improve the Water Breakthrough Challenge?
- Does our proposal to have two rounds of the Water Discovery Challenge get the balance right between ensuring water companies can provide effective support for finalists and winners and bringing new entrants into the sector?
- Should we introduce a funding stream for collaborative challenges to support all companies to work together on a strategically important area?
- Would you support allocating up to £40m of the Innovation Fund for funding cross-sector projects?
- Do you have any suggestions for which sectors to work with or cross-sector problems that the fund could support?
- Do you have any comments on the size of the fund or the allocation across proposed funding streams?
The proposed £400 million cost of the Innovation Fund for each company will be included in Ofwat’s draft determinations for the 2025-30 investment programme which will be published later this year. Following further consultation, the size of the innovation fund, and the cost to each company, will be confirmed in the regulator’s final determinations in December 2024.
The cost of a £400 million Innovation Fund will vary depending on the size of the company and number of customers but will be on average £2.45 a year on average or 4p a week.
Ofwat said it would like to hear from anyone who may be interested in applying for the fund or is interested in the outcome of the fund, including:
- consultancies;
- customers and customer representative bodies;
- industry bodies and associations;
- manufacturers;
- non-governmental organisations;
- other regulators;
- start-ups;
- supply chain organisations;
- technology providers;
- water companies; and
- water retailers.
Deadline to respond to the consultation is Tuesday 30 April 2024 – responses can be submitted via an online survey, by emailing This e-mail address is being protected from spambots. You need JavaScript enabled to view it or by post to Ofwat Centre City Tower 7 Hill Street Birmingham B5 4UA.
Click here to download the consultation document.
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