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20 | DECEMBER 2020 | UTILITY WEEK Policy & Regulation Analysis Will the Innovation Fund make a splash? Ofwat has set up a £200m Innovation Fund, but what are its goals how likely is to succeed? At a Utility Week virtual roundtable, supported by CGI, senior industry figures discussed the issues. Utility Week reports. E ver since it was confirmed in December 2019 that Ofwat was setting up a new £200 million fund to bring transforma- tional innovation into the water sector, com- pany leaders have reacted with a mixture of excitement and trepidation. The excitement is elicited by the oppor- tunity the fund enables for companies to work together on tackling the biggest issues bearing down on the sector; the trepida- tion is because it's not entirely clear what is expected of them, and they're not totally confident they can cast off their competitive instincts in favour of greater collaboration. This mood music was again to be heard as chief executives and innovation lead- ers joined representatives from Ofwat for a roundtable event hosted by Utility Week in association with CGI. There was overwhelmingly positive senti- ment expressed during the 90-minute virtual discussion, but nevertheless hesitancy and puzzlement on a number of fronts. In addi- tion to the expected collaboration versus competition dilemma, participants flagged up worries over whether water companies with fewer resources would have the band- width to be able to participate in the fund. There were questions about how benefits would be communicated with customers. And the nub of the debate was the key ques- tion: what is "transformational" and what is the fund really for? The fund and how it's developing The discussion began with a recap of the fund and the delivery timetable, alongside the progress of an industry-wide innova- tion strategy which Ofwat had previously called for. Ofwat's latest thinking was published in a document in August setting out who is eligible, and time scales. In January next year Ofwat will open a bidding round with a funding pot of £2 million for smaller projects where bidders will be asked to make pitches in a Dragon's Den-type process. Then in April, £40 million will be put on the table for bids around a few key strategic themes, such as meeting climate change commitments and open data. Ofwat has been at pains to stress – as were its representatives at the event – that it's not just about funding ideas around new technology. The regulator is also "welcoming bids that aren't entirely a new idea but are about scale". It will put flesh on the bones of the bidding process this autumn, but gener- ally speaking it expects dialogue about the competition to continue to allow the pro- cesses to be honed, with the first year very much seen as a test bed. Another significant development will be the appointment of a delivery partner in January, for which it was reported there has been a high level of interest from national and international organisations. Ofwat said it is looking for a delivery partner to draw together insights from other industries and other countries. Key talking points: What counts as transformational? A common thread of the conversation was Soundbites "The UK is not seen as a hot bed for innovation in the water sector – it would be good to see us being viewed in that way by those outside the UK." "We've managed in the last six months to progress new ways of working – and if Covid had not happened all of that would have taken much longer." "Ofwat's involvement in the fund is useful and if it triggers us as an industry to become much more innovative then it's the right thing to do." "The make-up of the assessment panel will be critical. There needs to be a balance between water company knowledge, but also outside thinking to challenge us all." "We often find that smaller companies are the ones full of ideas but it can be hard to get them in to other organisations. We see our role as facilitating that and getting new ideas into the market."