You must be a UK resident to enter (sorry), but entry is free, free, free. (I like free stuff!)(Especially good free stuff, like this).
Can students enter? Yes! There's a whole track devoted to "IT non-professionals" (who are "recent graduates, students or research students") (Plus there's a track for "IT professionals" if you're a better fit for that category :-))
Prizes? Prizes include a one-year membership to the British Computer Society, a mentor from industry to help you progress your idea, a week long internship at the National e-Science Centre at the University of Edinburgh, a Sony VAIO or Xbox 360 and a one-year limited subscription to The 451 Group’s EcoEfficient and Grid services research.
...so what are you waiting for? Get out there and win something while you work your brain to make the world a better place! Go grids!