Innovation Fund: the time for small-scale projects is now!

The Innovation Fund programme was designed by the European Commission with the aim of delivering the EU climate goals (the budget comes from the EU Emissions Trade System) and reinforcing the European competitiveness on clean technologies. Being the successor of the NER300 programme, the funding for innovative clean-tech projects was strengthened with the inclusion of the Energy Intensive Industries, due to its potential in the reduction of GHG emissions and in the European technological leadership.

The European Green Deal reinforces the strategic character of Innovation Fund, which may also be a key factor in the EU’s green recovery due to the mobilisation of private investments and its multiplier factor in the sectors of renewable energy, energy-intensive industries, energy storage, and carbon capture, use and storage.

Closure of the first stage in the call for large-scale projects

On 29^th October, INEA closed the first stage of the 2020 call for large-scale projects of Innovation Fund. “Large-scale” identifies the projects with CAPEX higher than €7.5 M. In total, 311 applications were submitted, which is a high number that goes beyond the expectations: this demonstrates the growing interest and the momentum that some of the clean technologies are gaining.

It must be highlighted that applications come from 25 countries, with Germany leading the list, followed by Spain, France, and the Netherlands, then Italy, Belgium, Sweden, Finland, Norway and Portugal. The density of proposals in Netherlands is remarkable compared with its population.

Per sector, 204 of the proposals correspond to the energy-intensive industries, 58 proposals are of renewable energy, 35 for energy storage and 14 for carbon capture, use and storage. Considering the numbers published by DG CLIMA, and comparing them with the numbers from the 15 proposals submitted by ZABALA on behalf of our customers, we see the following trends:

• In renewable energy projects, we see a growth in the hybridisation of technologies, in projects intensively using energy storage, and of course in projects for offshore wind technologies.
• Hydrogen is already here, reaching the industrial scale: 56 of the Energy Intensive Industries are for hydrogen, and also some of the energy storage proposals may be based on it.
• Circular economy is a key factor for a strong reduction of GHG emissions, with projects having inputs with zero or even negative values for emissions.
• And finally, energy storage shows that it can also be a business.

According to DG CLIMA, the applicants have committed to reducing around 1.2 billion tonnes of CO2 during 10 years of operation. If we calculate the annual equivalence of these savings, it is equivalent to more than 3% of the annual EU emissions. This shows the success of including Energy Intensive Industries in the programme!

The 311 applications are requesting € 21.7billion, which multiplied by 21, makes the €1billion available by the call. Just 70 of the proposals will be invited to the 2nd stage, and funding may reach only 15 of these proposals, according to the average requested funding per proposal. The numbers suggest that probably more money and new financial facilities for investment in innovative clean technologies may have a powerful impact on the European economy.

Now is the time for small-scale projects

The call for projects whose total capital costs is below EUR 7.5 million will be announced this week and is expected to open on 1 December 2020 and to close on 10 March 2021 in a single-stage procedure. The Innovation Fund call for small-scale projects will release €100 M.

The objective is to focus on innovative projects ready for market entry with European added value that can bring on significant emission reductions. Just as an example, it may be a pioneer installation with a pioneer customer. At the same time, the projects need to be sufficiently mature in terms of planning, business model and financial and legal structure.

More simplified methodologies and requirements are expected compared with the call for larger projects, together with clearer guidance and lower requirements on documents to be included in the proposal. Thresholds will be set for the criteria innovation, project maturity and GHG avoidance. The following table highlights the main differences between the call for large-scale projects and the call for small-scale projects:

Considering the minimum and maximum values for the requested grant (€1.5M to €4.5M), the new Innovation Fund call for small-scale projects is a nice alternative to projects that are too big for LIFE or FTI (the Fast-Track to Innovation). It is also a good opportunity for the first commercial application of the most innovative technologies, considering the weight that innovation receives in the evaluation.

More details from INEA and DG CLIMA will come on 19 November in an online session.

The ZABALA teams in France, Belgium and Spain are already working thoroughly in the preparation of proposals for this call!