Climate Innovation Fund (DATGLOI) surgery event: summary

The Energy Service recently hosted a DATGLOI Surgery Session to support eligible organisations in developing strong applications for the new Climate Innovation Fund. The session built upon the launch briefing event and provided attendees with an opportunity to explore the programme themes in more detail, ask questions, and gain clarity on application requirements, procurement considerations and project delivery expectations.

DATGLOI, meaning "unlock" in Welsh, is the Welsh Government's Climate Innovation Programme for 2026-27. The programme provides £750,000 of funding to support innovative projects capable of generating practical evidence, testing new approaches and informing future climate policy and investment decisions. Projects can apply for funding of up to £125,000 under the lower funding scenario or up to £250,000 under the higher funding scenario, with delivery expected by March 2027.

The programme has been designed to support projects that:

• address significant climate delivery challenges
• generate practical evidence and learning
• develop new delivery models or implementation pathways
• inform future policy, investment and wider roll-out
• demonstrate meaningful collaboration across organisations and sectors

Applicants are invited to address one or more of four challenge areas identified through discussions with Welsh Government policy teams and stakeholders. These themes have been selected because they represent areas where innovation could unlock future large-scale decarbonisation opportunities across Wales.

1. Forestry and timber sector decarbonisation

This theme focuses on identifying practical pathways to decarbonise forestry operations and timber supply chains. Projects could explore how alternative fuels, electrification or other innovative approaches can replace diesel-powered machinery and vehicles while supporting the development of Wales' domestic timber industry. The objective is to deliver evidence, guidance and demonstrator approaches capable of supporting future investment and deployment.

2. Agricultural anaerobic digestion

This challenge seeks to better understand how agricultural anaerobic digestion can be implemented at scale within Wales. Projects are expected to explore delivery models, planning approaches, environmental considerations and governance arrangements that could support sustainable agricultural transition and nutrient management objectives.

3. Shared transport and charging hubs

This theme addresses barriers to electric vehicle adoption within the public sector. Projects are encouraged to investigate shared charging infrastructure, collaborative delivery models and place-based Confidential solutions that could be replicated across Wales. Applicants were reminded that innovation in this area lies not only in technology, but in overcoming coordination challenges and developing practical governance models.

4. Integrated carbon and climate data systems

The fourth theme focuses on improving the way carbon and climate data are collected, integrated and utilised across Wales. The aim is to support more effective decision making through better alignment of datasets, improved reporting systems and the development of integrated evidence frameworks that can support Carbon Budget 4 delivery and future policy decisions.

A significant part of the session was dedicated to the Contracts for Innovation (CfI) framework, which will be used as the procurement route for DATGLOI projects. Attendees received a presentation from Tom Doyle of Innovate UK, who outlined the purpose and practical application of the framework.
The Contracts for Innovation approach is designed for situations where existing market solutions are not sufficient and where further research, development or testing is required. Rather than funding traditional studies alone, the framework supports outcome-focused innovation projects that generate practical solutions to clearly defined challenges. Applicants were encouraged to engage procurement colleagues early and familiarise themselves with the framework before submitting applications.

Key points highlighted during the discussion included:

• projects are expected to deliver tangible outcomes rather than purely theoretical research
• contracts are awarded to a single lead organisation, which may subcontract specialist support where required
• lead organisations can recover eligible project costs but cannot generate profit through the funded contract
• subcontractors may include reasonable commercial profit within their services
• projects should demonstrate a clear route towards implementation, deployment or wider adoption

The session included an extended question-and-answer discussion covering practical aspects of project development, procurement and delivery. Key themes included:

Collaboration and partnerships

Attendees sought clarification on the level of partnership commitment expected within applications. Welsh Government and WGES representatives emphasised that collaboration is strongly encouraged and can strengthen project proposals. Applicants were advised to identify key delivery partners, supported organisations and stakeholders that will contribute to successful project delivery. While formal agreements are not necessarily required at application stage, evidence of meaningful engagement and support is beneficial.

Use of local expertise

Several participants asked whether local suppliers, universities and Welsh organisations would receive preferential treatment. The response highlighted that while no formal scoring preference exists, proposals that demonstrate local knowledge, local capability building and meaningful participation of Welsh organisations are likely to align strongly with the programme's wider objectives.

Procurement approaches

Attendees discussed the practicalities of appointing multiple suppliers, consortium arrangements and innovation procurement models. Organisers clarified that there is flexibility in how projects structure delivery, provided procurement processes remain compliant and capable of delivering the required outcomes within the programme timescales. Consortium approaches and collaborative delivery arrangements were welcomed where they add expertise, resilience and value.

VAT and financial considerations

Questions were also raised regarding VAT treatment and financial management. Applicants were advised to engage finance teams early in the application process and to ensure they understand their organisation's VAT recovery arrangements. Organisers confirmed that recoverable VAT is not an eligible grant cost and highlighted the importance of seeking finance department input before finalising budgets.

Demonstrator and pilot projects

Participants explored what constitutes an acceptable demonstration project within the relatively short programme delivery window. Organisers explained that higher-value projects should ideally go beyond study work and seek to test, trial or demonstrate practical solutions where feasible. However, expectations remain proportionate to the available timescales, with the overriding objective being to generate credible evidence that can inform future Welsh Government investment decisions.

The session concluded with several important messages for prospective applicants:

• be ambitious but realistic in designing projects
• focus on generating evidence that can influence future policy and investment
• think beyond organisational boundaries and consider opportunities for collaboration across Wales
• engage procurement and finance colleagues early in proposal development
• consider the long-term scalability and wider applicability of proposed solutions
• do not hesitate to contact the DATGLOI team to discuss ideas and seek clarification before submission

DATGLOI has been designed to unlock practical, collaborative and delivery-focused solutions to some of Wales' most complex climate challenges. The Welsh Government and Welsh Government Energy Service look forward to receiving innovative applications that can help accelerate progress towards Carbon Budget 4 and inform future climate action across Wales.