Ofwat, the economic regulator of water services in England and Wales, has announced a new “open access” competition for innovators as its £200 million Innovation Fund evolves to encourage more diverse ideas to transform water services for customers, the environment and society.

Ofwat’s innovation fund incentivises and rewards collaborative innovation in the water sector that meet 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;
• improving the delivery of services for customers and society.

In its first year, the fund awarded £63 million to projects ranging from bio-engineering solutions for ammonia and phosphorus pollution to remove pollutants from water whilst creating a circular economy for finite and useful chemicals, carbon capture initiatives to cut industry-related emissions to meet water industry targets of achieving net zero emissions by 2030, and cutting-edge research projects to develop green hydrogen from sewage, to create clean energy alternatives for the future.

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 £4 million 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 £120 million 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 £8 million Catalyst stream and a £30 million Transform stream – and will run annually. Entrants to the Catalyst stream can bid for between £500k and £2 million, while entrants to the Transform stream can bid for between £2 million and £10 million.

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.

Ofwat is also proposing to continue the innovation fund until at least March 2030 - 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. ​

​Click here to find out more about Ofwat’s Innovation Fund and to register interest in future competitions