Energy regulator Ofgem has opened a £450 million fund to encourage innovation that can help the UK reach its climate change ambitions.

The fund will aim to ensure that homes and businesses across the country can be powered in greener ways.

The UK has committed to becoming “net zero” by 2050, while Scotland has committed to achieving this target 5 years earlier – in 2045. This means cutting greenhouse gas emissions so much that the country absorbs as much as it emits.

This will require large-scale changes to how the UK’s economy is powered, including new ways of heating homes and transporting people and goods.

The £450 million will be available over the next five years – but can be extended for “strong plans,” Ofgem said.

“Ideas need to be big, bold and ambitious with potential to scale across the networks upon completion”

Money will be available for network companies that address the four major challenges that Ofgem identified.

They are: heat, transport, data and digitalisation, and “whole system integration” – which joins up the entire journey of electricity from plant to plug.

“The UK is leading the world in decarbonising our energy system, with our innovators playing a vital role in going further while ensuring consumers receive clean and affordable energy,” said energy minister Lord Callanan.

“The Strategic Innovation Fund will ensure the best projects and most talented minds have the grants available to reduce carbon emissions and enable bill payers to see the benefits of building back greener.”

The regulator suggested that projects could include ways of getting greener heating, such as heat pumps, into homes around the UK.

They can also include batteries and other ways of storing electricity.

“Ideas need to be big, bold and ambitious with potential to scale across the networks upon completion,” Ofgem said.

Jonathan Brearley, chief executive of Ofgem, said: “What we need, more than ever, to reduce greenhouse gas emissions and reach net zero is innovation.

“The Strategic Innovation Fund means cutting-edge ideas and new technologies become a reality, helping us find greener ways to travel, and to heat and power Britain at low cost.

“Britain’s energy infrastructure will play a pivotal role in cutting net zero greenhouse gas emissions, and this fund will help make sure our energy system is ready to deliver that.”