Innovation Fund to target early stage ideas and widen access

Ofwat has proposed launching an additional competition to better support early stage ideas as part of its innovation fund.

The new competition will be worth £4m, to support early stage idea development. Under it water companies will not need to lead entries; there will be minimal eligibility criteria (for example no IPR conditions or mandatory financial contributions); and the entry process will be streamlined.

Ofwat said water companies could support the launch by providing data to help test ideas, help to select winners and champion a challenge to help develop solutions.

The new competition was unveiled in a consultation open until 17 May on how to adjust its innovation fund for 2022-5, following the pilot year. As well as the early stage award the regulator has proposed:

• splitting the remaining £120m of the fund into three annual awards each of about £40 million a year;

• the Transform stream of the existing competition will continue, with a requirement for water companies or NAVs to lead entries –  some £30m will be available for pots of between £1m and £10m;

• the Catalyst stream of the existing competition will also continue but anyone will be able to lead entries. £6m will be available for pots of between £250,000 and £1m;

• for both existing streams, owners of background IPR will be allowed to charge a licence fee at a fair, reasonable and non-discriminatory rate and entrants will be expected to make a 10% mandatory financial contribution;

Ofwat also said it proposed to refine the themes the innovation fund will target, to four:

• responding and adapting to climate change including achieving the sector ambitions of net zero carbon, zero waste and zero leakage;

• protecting and enhancing the environment and natural systems, to protect current and future customers from the impacts of extreme weather and pollution;

• delivering long-term operational resilience and understanding infrastructure risks to customers and the environment, finding solutions to mitigate these in sustainable and efficient ways; and

• testing new ways of conducting core activities to deliver the services customers and society need, expect and value both now and in the future.

There could be more specific, targeted challenges within the themes.