News – Innovation in Water ChallengeOfwat Innovation FundWater Breakthrough Challenge
April 17, 2024
The Ofwat Innovation Fund recently published our first public dataset of winning projects, showcasing awarded projects up to and including Breakthrough 3. This dataset will be updated over time to reflect new competitions and findings from the Fund.
Alongside this, a series of discussion snapshots using the Fund data are being created to inform and prompt discussion on the future of the Fund. We aim to adapt and improve its long-term impact for customers, society, and the environment.
The first of these snapshots examines how our awards have been allocated across the different challenges up to Breakthrough 3:
This analysis uses additional final submission data from entrants to provide a static baseline data source.
The Fund has awarded projects across all water companies in England and Wales, but we do see more common lead parties.
Chart 1: Matrix plot showing lead water companies and challenges, sized by the amount of funding received.
100% of water companies in England or Wales have participated in the Fund – either by partnering on or leading an entry to one or more competitions.
The matrix plot (Chart 1) illustrates the lead water company award data across the different Challenges, with the awarded funding denoted by the size dimension of each square across the 56 projects. The chart reveals that several water companies have been very active as lead partners historically – specifically United Utilities, Severn Trent Water, Northumbrian Water and Anglian Water accounting for 80% of funding on 34 projects. Additionally, it indicates a greater variation in successful lead partners during the Catalyst streams, which, with its smaller funding amounts (up to £2 million per project) may appeal more to smaller companies.
A more in-depth review of partner approaches and project teams will be looked at in a future data snapshot.
Funded projects range across the water cycle, but in general, more tangible assets have been awarded relatively higher allocations of funding.
We have aligned each project and its allocated award value to water cycle topics, this is shown in the Sankey diagram (Chart 2, below).
The Transform stream typically funds a smaller number of larger projects and although no single water cycle topic dominates, the awards are imbalanced towards certain topics. Whereas our Catalyst streams consist of a greater number of smaller projects, with greater spread across the water cycle topics.
Chart 2: Sankey plot highlighting how funding is allocated to water cycle topics – suggested from project summaries.
Three topics (Wastewater Treatment, Recycling & Reuse, Water Networks & Rivers, Catchments & Groundwater) received nearly 70% of the allocated funding in Breakthrough 1 to 3, and they account for 50% of the number of projects.
A future phase of work will consider and analyse these past and current project trends into more detailed key challenge areas contained within project monitoring to inform the Fund’s future activities.
Certain partner types are more commonly attached to particular aspects of the water cycle, showing a varied sector involvement depending on project themes.
Chart 3: Correlation heat map between partner types and water cycle for each unique project.
Across the challenges, water companies have collaborated with a diverse range of organisations, including academic research institutions, solution providers (companies generally providing technologies, products or innovative services), consultancies and contractors (who tend to be more common water sector suppliers) non-profits (including charities, NGOs, industry bodies and wider public sector organisations).
When examining the number of partners involved in projects related to the different water cycle topics (Chart 3), we observe a varied distribution of contributions. While “water network” projects receive substantial funding, they also tend to involve many partners, particularly from organisations from the more traditional water supply chain, who provide services to the water sector. These projects are then delivered with partner organisations that they already work with.
Non-profit organisations play a significant role in “River, Catchment, and Groundwater” as well as “Customer” projects. On the other hand, academic and research institutions are most commonly involved with “Water Network” and “Wastewater Treatment” initiatives. Notably, the “Customer” topic features a larger number of solution providers, who often bring fresh ideas, technology, and diverse services to the water sector.
Entrant’s partner costs profiles have changed over time and between challenges.
Chart 4: Bar charts showing claimed costs in projects by partner type for each challenge as a percentage of the total project cost from entries.
The charts above display the accounted project costs in the final entry submissions, split by high-level partner types, to enable summarised analysis between challenges.
We can see that Catalyst projects are primarily led by solution provider costs, with water company costs being lower and a mix of other partners involved. It appears that Catalyst projects split the cost of their projects through a wider range of partners (although at lower levels due to the amount of funding available in this stream).
In contrast, the Transform projects show a higher attribution of costs to water companies, but also involve increasing consultancy and contractor costs to reflect the larger delivery scale of these projects. Equally this could also be due to not showing all partners contributions in the entry submissions, and not accounting for the non-financial contributions of said partners. Solution providers continue to contribute significantly to the remaining costs, with a mix of non-profit organisations, academia, research institutions, and other bodies representing an average of 15% of the project cost.
The overall ratio between claimed cost and contributions to projects varies across partner types.
Chart 5: Overall funding awarded and ratios for financial contributions in the analysed Breakthrough challenges, split by the summarised partner types.
To enter one of the Water Breakthrough Challenges, water companies need to contribute to at least 10% of the total cost of their project. The entry must be funded from sources other than the Ofwat Innovation Fund, as long as it is not funded by charges to water customers in England and Wales.
The bar chart illustrates the overall awarded and contributed amounts in pounds (£) for each partner group across the three analysed Breakthrough challenges. The summary provides the overall ratio of every £1 awarded to the contribution. We are not presenting the data for IWC as we did not ask for a breakdown of how the 10% contribution was allocated amongst partners. This was changed for subsequent rounds, starting with Breakthrough 1.
Chart 6: How the cost to contribution ratio for different types of partners varies across challenges.
The line chart shows how the contribution has evolved over time and across the challenges. Water companies have generally experienced gradually increasing contributions1 . At the project level, this data becomes highly variable, but it is generally uncommon to see non-water company partners contribute at a ratio exceeding 0.2 per £1 of forecast project cost.
It’s important to note that this analysis does not include submitted non-financial contributions by partners, as there are differences in how projects account for this input. Non-water company partners often provide in-kind contributions, which may lead to an underestimation of their relative contribution.
Closing remarks
This first snapshot shows how the first four competitions in the Fund have supported entrants to create innovation projects across the water cycle, combining varied participants and lead water companies.
Future snapshots will focus on the developed partnerships within the funded projects, consider their relative outcomes and innovation maturities they are seeking to address. We’ll also aim to incorporate new data from our more recent challenges.
