The fund has two tiers of funding:
The LCN Fund will be replaced by the Network Innovation
Allowance and the Network Innovation Competition.
The IFI is intended to provide funding for research and
development (R&D) projects focused on the technical development of
distribution networks to deliver value (ie financial, supply quality,
environmental, safety) to end consumers. IFI projects can embrace any aspect of
distribution system asset management from design through to construction,
commissioning, operation, maintenance and decommissioning. A network operator
is allowed to spend up to 0.5% of its Combined Distribution Network Revenue or
up to 0.5% of its Base Transmission Revenue on eligible IFI projects.
Open reporting (ie available in the public domain) of IFI
projects is required by Ofgem; this is intended to stimulate good management
and promote sharing of innovation good practice.
Registered Power Zones are intended to encourage DNOs to
develop and demonstrate new, more cost effective ways of connecting and
operating generation that will deliver specific benefits to new distributed
generators (DG) and broader benefits to consumers generally.
The RPZ incentive applies for five years to generation
projects with a connection start date between 1st April 2005 and 31st
Innovation Competition was introduced by Ofgem as part of the RIIO: T1 price
controls. Under this incentive, gas and
electricity network companies compete for funding for research, development,
and trial of new technologies, operating systems, or commercial arrangements.
Up to £27m
is available annually through the Electricity NIC.