We have established a £200 million Innovation Fund to grow the water sector’s capacity to innovate, enabling it to better meet the evolving needs of customers, society and the environment.
We are delivering a series of innovation competitions that water companies and others can enter.
Different rounds of the competitions to run until 2025, but our goal is that the Innovation Fund’s impact will continue well beyond this.
Competitions are focused on funding initiatives in line with the aims of the Fund, that deliver innovation aligned with our four strategic innovation themes.
Led by us, the Innovation Fund is being delivered by Challenge Works, in partnership with Arup and Isle Utilities.
- Latest innovation competition and how to enter
- Future of the Ofwat innovation fund: tell us what you think
- Get regulatory advice or contacts for your business or innovation
- Get latest news on the next innovation competitions
- Background on the fund and water innovation competitions
Our Water Breakthrough Challenge 4 competition opened to entries on 5 September 2023
We will award up to £40m to bold and innovative cross-sector collaborations that are solving challenges facing the water sector.
Water Breakthrough Challenge 4 will favour highly collaborative entries with the greatest focus on generating and sharing knowledge, and rolling out successful innovations.
The Ofwat Innovation Fund has been running for three years and continues to fund innovation in the water sector. There are now 77 projects that are developing solutions to address problems the water sector currently face or will face in the future.
We have confirmed that for 2025-30 the Ofwat innovation fund will be at least £300 million. However, we are starting to consider the future development of the Ofwat Innovation Fund. We would welcome your thoughts on how the Innovation Fund can develop to continue to support innovation over the period 2025-2030 and beyond. This will feed into our design thinking for the next Innovation Fund.
The Drinking Water Inspectorate, Ofwat and the Environment Agency have launched StreamLine which provides advice to help innovators and businesses understand and navigate through water sector regulations.
You can sign up to get the latest news at waterinnovation.challenges.org
Below you can find some background about the competitions.
- Future competitions 2022-25 and beyond 2025
- Previous winners of our competitions
- Our four strategic innovation themes
- How we’re building the sector’s capacity to innovate
- Further reading and resources
- Water company maps
Future competitions 2022-25
We’ll be running a Water Breakthrough Challenge competition for water company-led entries in Autumn 2023 and 2024
Our ‘Innovation Fund consultation decision document – Approach for 2022-25’ , sets out the headline decisions on the approach we will take for the innovation fund for 2022-25 in July 2022. We set more detail in ‘Innovation fund – approach for 2022-25 companion decision document‘ in October 2022.
Our decisions took into consideration the feedback provided by stakeholders in our recent consultation and wider feedback we received during the pilot period of the innovation fund.
Future competitions beyond 2025
We extending the innovation fund and running more innovation competitions in 2025-2030. The fund will be worth at least £300m.
Find out more in our final methodology for the 2024 price review
Previous winners of our competitions
So far we’ve awarded funding to many different projects to develop innovations that benefit customers, society and the environment.
- In July 2023, we announced the 20 finalists of our Water Discovery Challenge competition, who each won up to £50,000 to develop their innovation. Ten winners will then win up to £450,000 to develop their innovation even further.
- In May 2023, we announced the 16 winners of our Water Breakthrough Challenge 3, who won a share of £40 million
- In April 2022 we announced the seven winners of our Water Breakthrough Challenge 2 Transform stream competition, who shared £20 million of funding
- In March 2022 we announced the 13 winners of our Water Breakthrough Challenge 2 Catalyst stream competition, who shared £5.1 million in funding
- In September 2021 we announced the nine winners of our Water Breakthrough Challenge 1 competition , who won a share of £36 million
- In April 2021, we announced the 11 winners of our Innovation in Water Challenge. who won a share of £2.1 million
You can read about previous rounds and winners of our competitions at waterinnovation.challenges.org
Our four strategic innovation themes
There are four key areas that we have identified that are big challenges for the sector, which would benefit from additional innovation.
Through the competitions, the Innovation Fund will support initiatives that can deliver significant value for customers, society and the environment aligned with one or more of these themes.
- Responding and adapting to climate change including achieving the sector ambitions of net zero carbon, zero waste and zero leakage
- Protecting and enhancing the environment and natural systems, to protect current and future customers from the impacts of extreme weather and pollution
- Delivering long-term operational resilience and understanding infrastructure risks to customers and the environment, finding solutions to mitigate these in sustainable and efficient ways
- Testing new ways of conducting core activities to deliver the services customers and society need, expect and value both now and in the future
How we’re building the sector’s capacity to innovate
The four strategic innovation themes highlight some of the needs of customers, society and the environment. The Innovation Fund has been established to help the England and Wales water sector grow its capacity to innovate and meet these needs, and the needs of future generations.
The Innovation Fund aims to achieve this by supporting ambitious water company initiatives that demonstrate bold new approaches to innovation. Through the innovation competitions, it will support initiatives going beyond the sector’s business-as-usual innovation practices that can create significant value for customers, society and the environment.
We have identified some innovation enablers that we believe are, and will continue to be, critical to growing our sector’s capacity to innovate. Across the competitions, the Fund will support initiatives that demonstrate and strengthen these enablers, including:
- Collaboration: building and strengthening collaboration and partnerships across companies, the supply chain and outside the water sector.
- Openness: to sharing data, insights and ideas within the water sector and with other sectors.
- Adaptability: flexibility and openness to trying out new ways of working.
- Innovation risk management: delivering value from all innovation projects, particularly more experimental projects, even if they fail.
- Scalability and Deployability: improving the ease of scaling up and rolling out of proven innovations within the sector.
- Long-term view: taking both a longer-term and broader perspective to better meet the evolving needs of customers, society, and the environment.
Impact of the fund
To support evaluating the impact of our Innovation Fund in future, we commissioned the Centre for Strategy and Evaluation Services (CSES) to produce an ‘Innovation baseline in the water sector’ report for the level of innovation in the water sector in England and Wales, covering water companies and their supply chains.
The ‘Innovation Fund end of pilot period report’ sets out what the sector, supported by the Fund, has achieved during the pilot period. It sets out recommendations for how to improve the Fund over the next three years. The evaluation informed our consultation and decisions on the future of the fund for 2022-25.
In July 2023 we published our first ‘Ofwat innovation fund: annual report‘ to reflect on the progress of the Ofwat Innovation Fund since its launch in 2021, with case studies and analysis showing where the fund has made an impact and changes in the water sector. It also seeks to highlight where further improvements could be made in innovation performance in the water sector and outlines our next steps to continue enabling a culture of innovation through the fund.
We will be doing further evaluation on our approach for 2022-25. The evaluation will build on the findings from the pilot period report and the innovation baseline report and will include both process evaluation and impact evaluation as we look at in more depth the outcomes and impacts of projects as they progress.
Further reading and resources
About the water sector in England and Wales
|Water sector overview, webpage||An overview of the water sector in England and Wales, the organisations involved and some history|
|Innovation in the water sector||Our main webpage about encouraging innovation in the sector|
|Time to act, together||Ofwat’s strategy for regulating the water and wastewater sector in England and Wales|
Innovation by water companies
|UK water company priority areas for innovation||An alliance of 19 UK water companies and their stakeholders (‘UK Water 2050’) have produced their list of priority areas where innovation is needed in the sector.|
|Spring||The water sector’s innovation centre of excellence. Expected to launch in December 2021.|
|UK 2050 Water innovation strategy||The strategy from an alliance of 19 UK water companies and their stakeholders (‘UK Water 2050’). The strategy seeks to guide innovation investment across the sector and will provide insight for Ofwat in rolling out the £200m innovation fund. It also signals new opportunities for partners and suppliers of all sizes to innovate and collaborate more easily and efficiently across the whole sector.|
More on our themes
|Net Zero 2030 routemap||UK Water companies’ plan to deliver a net zero water supply for customers by 2030.|
|Resilience webpages||Ofwat’s approach and view on resilience|
|Public value in the water sector: a supporting set of principles||Our position on public value – and our principles|
|Open data in the water industry||Our position on open data in the water industry|
Key documents about the fund
|Water Breakthrough Challenge 3 innovation competition decision document||This document sets out the process we have followed for our Water Breakthrough Challenge 3 innovation competition (Breakthrough 3) and the reasons for our funding decisions.|
|This report seeks to reflect on the progress of the Ofwat Innovation Fund since its launch in 2021, with case studies and analysis showing where the fund has made an impact and changes in the water sector. It also seeks to highlight where further improvements could be made in innovation performance in the water sector and outlines our next steps to continue enabling a culture of innovation through the fund.|
|Innovation fund – approach for 2022-25 companion decision document||This document sets out more detail about the approach we will take for the innovation fund for 2022-25, including details of our Water Breakthrough Challenge and Water Discovery Challenge|
|Innovation fund consultation decision document – approach for 2022-25||This document sets out the headline decisions on the approach we will take for the innovation fund for 2022-25.|
|Innovation Fund end of pilot period report||This sets out what the sector, supported by the Fund, has achieved during the pilot period. It sets out recommendations for how to improve the Fund over the next three years.|
|Innovation baseline in the water sector report||The report assesses the level of innovation in the water sector and its supply chain before we introduced our £200m innovation fund. We are using the report to help measure the impact of our fund.|
|Water Breakthrough Challenge 2 innovation competition decision document||This document sets out the process we have followed for our Water Breakthrough Challenge 2 innovation competition (Breakthrough 2) and the reasons for our funding decisions.|
|Innovation fund consultation – Approach for 2022-25||Our consultation on our proposed approach for the innovation fund over the next three years (2022-25), which we published 5 April April 2022|
|‘Innovation funding and competition: decision on design and implementation’||Our decisions on the design and implementation of the fund, which we published in August 2020|
|Innovation in Water Challenge round 1 decisions||This document sets out the process we followed to select the winners of round 1 of our ‘Innovation in Water Challenge’ innovation competition – and the reasons for our decisions.|
|Innovation fund: Decision on intellectual property rights policy amendment for Breakthrough 2||Our decision on changing our intellectual property rights (‘IPR’) policy for part of the catalyst stream within the Water Breakthrough Challenge 2 competition. This change will enable owners of background IPR to charge a licence fee at a fair, reasonable and non-discriminatory rate for the use of the background IPR solely to the extent necessary for water companies to receive the benefit of the foreground IPR.|
|Water Breakthrough Challenge 1 Decision Document||This document sets out the process we followed to select the winners of round 1 of our ‘Water Breakthrough Challenge’ innovation competition – and the reasons for our decisions.|
|Transfer of funds||This document sets out the payments between water companies to pay the funds awarded through all of the competitions to date|
Water company maps
Ofwat produces a digital representation of the water and sewerage undertaker boundary as GIS shapefiles. The shapefiles are designed for geospatial analysis only. The definitive legal record of water supply and sewerage services areas remains the maps and other information set out in the appointments of companies as water and/or sewerage undertakers and subsequent area variations. The GIS shapefiles have been digitised from the legal records by Ofwat with support from Ordnance Survey. They are published under the Open Government Licence.
You can download the shapefiles from the House of Commons Library website. You can also access a map that shows which water companies serve different UK Parliament constituencies across England and Wales.