Description
Please note that this PIN is issued to inform the market of an upcoming market engagement event. More information about the next steps and forward timeline will be provided in the meeting and in future notices. All information shared in this notice and at the event is indicative and subject to full and final approvals by the Department.
The UK Department of Energy Security and Net Zero is planning to procure a supplier to manage a new facility - the Climate Innovation Pull Facility. Through pull finance, this facility will support innovation, scale up and market building for climate change mitigation solutions for developing country contexts, focusing on innovative clean energy technologies and business models in a small number of specific applications/sectors, where the evidence shows support is most needed.
In public innovation financing, "pull mechanisms" create incentives for innovators and other actors by creating viable market demand. They seek to reduce viability gaps and induce innovation by signalling demand for solutions to specific problems. Mechanisms often cited include Advanced Market Commitments, Results or Outcomes Based Financing, Prizes/Challenges, innovation bulk procurements, Contracts for Difference, among others. By contrast, much innovation support has to date utilised "push mechanisms" directly subsidising up-front R&D costs.
In terms of climate mitigation solutions, the CIPF will support the development of innovation projects aligned to Ayrton Fund themes: industrial decarbonisation, sustainable cooling, smart energy systems and storage and clean transport Further details of Ayrton Fund thematic challenges are set out on gov.uk.
The procurement of this requirement will be in two parts:
i) A contract for a Facility Manager to manage the programme and identify, incubate, commission and oversee 6-10 climate pull projects of £10m - £50m each. This contract will also cover programme monitoring and learning.
ii) A separate contract for an Independent Evaluator of the programme, who will conduct a mid-term and end-of-term evaluation of the programme's achievement of its development objectives, theory of change and value for money. This procurement is subject to a separate procurement procedure.
The procurement for the Facility Manager is the focus of this notice and will be run as a competitive procedure with negotiation. The initial contract value is £183m over 5.5 years with options to extend by up to £317m and up to 3 additional years. Of the £183m initial contract value, at least £150m of this will be allocated for climate pull projects, the majority of which will be grant funding.