Ofwat opts for a staggered start to £200m innovation competition

There will be a staggered start to the new £200m innovation competition, Ofwat has confirmed.

The regulator last week published a decision document on how it will design and implement the new fund. This said in light of Covid pressures, will include

• a £2m "innovation in water" challenge fund will open in Q4 2020-21, open to all; and

•the main competition, open only to water companies and their partners, will be allocated £40m a year, starting in Q1 2021-22.

Proposals that help facilitate innovation, such as the Centre of Excellence proposed in the industry’s Innovation Strategy, can be funded through the main competition. Round two will open before the end of 2021-22.

Elsewhere, Ofwat confirmed most of the other policies it had previously consulted on, with some clarified. These included that:

1. companies must stump up 10% of bid costs;

2. the competition will be "open by default";

3. there will be no Outcome Delivery Incentive derogations; and

4. unused funds will be paid back to customers at the end of the 2020-25 period, or rolled over to any future competitions held.

Ofwat plans to appoint a partner to run the fund in late autumn and has opened a tender process for this. Some matters will be finalised once the partner is in place, including the application process for bids, the bid assessment process, selection of an advisory panel, and project monitoring.