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July 7, 2025
Jake Parry, Ofwat Innovation team
Innovation in the water sector isn’t always headline-grabbing. It often happens behind the scenes: in treatment works, in buried pipes, in labs and data centres. But when it works, the impact is real and tangible. Better services. Lower emissions. Fewer leaks. Cleaner rivers.
As we publish the Ofwat Innovation Fund Annual Report 2024-25, we celebrate some of these successes, while acknowledging the long journey still ahead of us. What began in 2020 as a new approach to enabling innovation in the water sector is now a key part of how the sector identifies and addresses complex challenges.
Below, we share ten key things for you to take away from this year’s report.
1. A growing innovation portfolio
Since launching in 2020, the Fund has supported 109 projects and involved 286 delivery partners and awarded close to £200 million.
You can find details of each of the projects on our winners pages on the fund’s website: Winners – Ofwat Innovation Fund
2. We awarded £42.7 million to our 16 Breakthrough 5 winning project teams
The fifth Water Breakthrough Challenge round received a record 64 entries, funding 16 that our expert independent judges selected. These include efforts to improve cryptosporidium detection, repurpose sludge for hydrogen generation, and use machine learning to model environmental risk. With this funding, we’re not aiming to play it safe. We want to take real and calculated risks to support long-term value for customers, society and the environment.
3. More projects have reached completion
Eight further projects completed this year, taking the total to 37. Completed projects now offer toolkits, working prototypes, and validated solutions ready for scale-up.
Case studies in the report include:
Each one shows how the Fund is helping to move ideas from trial to sector-ready solution.
You can find completed projects by using the ‘Delivery stage’ filter on our winner’s pages: Winners – Ofwat Innovation Fund
4. Independent evaluation is underway
We have engaged ICF to lead a full evaluation of the Fund’s impact from 2020–25. Interim findings are due in March 2026, with final reporting scheduled for November 2026.
Our most recent consultation was published in March 2024 and can be found here.
5. The Fund has doubled for 2025-2020
We have confirmed that the size of the Innovation Fund for 2025-30 will be £400 million for 2025–30: doubling the original £200 million commitment.
6. Future funding rounds confirmed
We’re opening our £50 million Water Breakthrough Challenge 6 competition on 8 September this year. The Water Efficiency Lab will launch in autumn, followed by the second round of the Water Discovery Challenge in January 2026.
7. Water Efficiency Fund
As mentioned above, in Autumn 2025, the Water Efficiency Fund will be launching in an aim to support water demand reduction. It includes a £25 million Water Efficiency Lab for innovative solutions.
8. Further new programmes in development
We have begun design work on new collaborative challenge, implementation, and cross-sector working programmes. We’ll be sharing more details and next steps in the autumn – with the first rounds of new funding available during 2026.
9. A model for growth
Earlier in 2025 the fund was highlighted by the Chancellor of the Exchequer as a promising vehicle for promoting economic growth. And HM Treasury highlighted the fund as a key regulator pledge in its new strategy for pro-growth regulation.
10. Engagement is expanding
All eligible water companies took part in at least one winning Breakthrough 5 project. Meanwhile, Spring, (the water sector’s innovation centre of excellence), hosted 30 showcase events, reaching over 4,000 participants across the sector.
We believe the Innovation Fund is not just a set of competitions: it is a platform for long-term change in a sector under high scrutiny. In the face of mounting environmental pressures, rising public expectations and the need for infrastructure renewal, innovation is no longer optional. It is essential.
We are grateful to the many project teams and collaborators who helped make this year possible. And we look forward to welcoming even more as part of the expanded fund in 2025-30. If you’d like to learn more about how you can get involved or about our work, please contact: [email protected]. You can also sign up to receive the latest news in our regular newsletter.
The Ofwat Annual Report is available to read in full. For our full open data on our funded projects release, please see here.
