Funding

How we fund our innovation programme

We fund our innovation programme through a variety of sources, with three key funding streams playing a central role: the Network Innovation Allowance (NIA), the Strategic Innovation Fund (SIF) and the Net Zero and Re-opener Development Fund, Use it or Lose it (UIOLI).

FUND STREAM 1

Ofgem Network Innovation Allowance

NIA is a core driver of our innovation activity. This funding supports a broad range of projects selected and approved by NGN, all aimed at delivering tangible benefits, particularly for vulnerable customers and supporting the journey to net zero.

In this report, you’ll find highlights of some of the inspiring projects we’ve delivered this year with NIA support.

FUND STREAM 2

Ofgem Strategic Innovation Fund

Managed by Ofgem via Innovate UK, the SIF provides up to £450 million in funding to electricity and gas networks from 2021 to 2026. Unlike NIA, SIF funding focuses specifically on projects with strong evidence that they can accelerate the transition to net zero and position the UK as a global leader in clean energy innovation.

The fund operates in three stages, from initial concept to full-scale delivery, with increased investment at each phase. One of our exciting SIF-funded projects is featured later in this report.

Read HyScale case Study

FUND STREAM 3

Use it or Lose it Fund

In its RIIO-2 Final Determination, Ofgem established a Net Zero and Re-opener Development Fund Use It or Lose It allowance (UIOLI). The purpose of the UIOLI is to enable network licensees to fund small net zero facilitation projects, and to allow for early development work on projects that network companies intend to bring forward at a later stage through other RIIO-2 net zero-related mechanisms. At RIIO-2 Final Determination, NGN were awarded £4.6m* (18/19 prices) under the UIOLI.

*17/18 price base.

FUND STREAM 4

Additional funding sources

Beyond the funding streams referenced above, we also support innovation through alternative channels, including Total Expenditure (TOTEX), third-party partnerships, and other business investments. These sources help us drive operational efficiencies, refine high-readiness technologies, and embed improvements across NGN.