Ofwat to launch new £4m open competition for water innovation

water engineer

Ofwat, the economic regulator of water services in England and Wales, has announced a new “open access” competition for innovators, in an apparent widening of the scope of its existing £200m Innovation Fund, and a bid to encourage more diverse ideas to transform water services.

The fund incentivises and rewards collaborative innovation in the water sector that meets key objectives for the industry around one (or more) of Ofwat’s four innovation themes:

  • adapting to climate change and achieving net zero emissions;
  • protecting and enhancing the environment;
  • delivering long-term operational resilience;
  • and improving the delivery of services for customers and society.

In its first year, the fund awarded £63m to projects, including multiple environmental engineering projects and environmental engagement projects. Ofwat says it is keen to encourage ambitious engineering solutions to environmental challenges faced by the water sector, promote a circular economy for bioresources and to engage customers in the health and wellbeing of the water system.

One example is Seagrass Seeds of Recovery – a consortium including the Environment Agency, University of Oxford, Natural England and Affinity Water – awarded £250k to restore seagrass meadows in the UK to capture carbon and nitrogen, improving water quality and marine habitats.

Meanwhile CECCU (CHP Exhaust Carbon Capture and Utilisation) was awarded £3.1m to capture 5 million tonnes of CO2 produced by the water-sector’s Combined Heat and Power plants and convert it into calcium carbonate to be used to make paint, fertiliser, and pharmaceuticals.

Engaging communities more broadly, Catchment Systems Thinking Cooperative (or CaSTCo) from the Rivers Trust, Zoological Society of London (ZSL) and nine water companies, was awarded £7.1m. It aims to revolutionise how data about the water environment is shared through citizen science programmes.

Ofwat has unveiled how the innovation fund will evolve to meet customer, environmental and industry priorities in the years ahead: a £38 million competition to open in autumn 2022, the first £4m open access competition to open in early 2023 – and continuing the fund to 2030. It follows a consultation by the regulator on the future direction of the fund – and work to review the fund and innovation in the water sector.

John Russell, Senior Director, Strategy, Finance and Infrastructure at Ofwat said:
“We need greater innovation in the water sector to tackle the significant challenges it faces. The Innovation Fund has inspired multiple collaborations between companies in and outside of the water sector. The ambition of the winning entries to date demonstrates the sector’s commitment to build a resilient water system that benefits the environment and customers. Over the next three years we will distribute approximately £120m to more innovative initiatives. I’m pleased to announce the return of the Water Breakthrough Challenge this autumn, plus an entirely new competition open to innovators from any sector with ideas capable of positive transformation for the water industry to follow early in 2023. We’re also currently consulting on continuing the fund to 2030. ”

The Water Breakthrough Challenge 3 will launch on 3 October 2022 – with an £8m Catalyst stream and a £30m Transform stream – and will run annually. Entrants to the Catalyst stream can bid for between £500k and £2m, while entrants to the Transform stream can bid for between £2m and £10m.

New open access competition coming 2023

Launching in early 2023, the open access competition element of the fund will be a new initiative launched in response to the post-pilot consultation. Unlike the Water Breakthrough Challenge, there will be no requirement for organisations to partner or receive sponsorship from a water company to enter the competition.

It will primarily target early-stage innovation, allocating approximately £4 million in funding annually, with up to £500,000 available for individual entries.

As with other entrants to the Innovation Fund, entries to the new open access competition will need to align with one or more of Ofwat’s four innovation themes.

Current timeline for the fund
Ofwat is proposing to continue the innovation fund until at least March 2030. This is subject to the regulator’s consultation on its draft methodology for the 2024 price review. Over the coming months Ofwat will work with the water sector and other innovators to look at how the fund could continue to stimulate innovation up to 2030.

Ofwat expects to publish a full consultation decision companion document in autumn 2022, which will set out further information on the headline decisions. It will include more detail on the new open access competition, which will be developed in further consultation with the water sector in the coming months. ​

To find out more about Ofwat’s Innovation Fund and to register interest in future competitions, visit waterinnovation.challenges.org