Innovation Fund

Innovation Fund (small-scale)

Quick facts
Single applicant or multiparty	Both
Project duration	3 years
Number of pages in the application	70 pages
Maximum grant	EUR 4.5 million
Maximum capital expenditure of the project	EUR 7.5 million
Minimum capital expenditure of the project	EUR 2.5 million
Funding rate	Max. 60% of the capital costs
Type of application process	One-stage application
Supporting documents	Detailed calculation of GHG emission avoidance potential, Feasibility study and Business plan (max 100 pages all together for these 2 documents), detailed calculation of costs and cost-efficiency, list of relevant recent projects, profiles of key personnel

Focus of the instrument

The small-scale Innovation Fund focuses on low-carbon technologies and processes in energy-intensive industries including products substituting carbon-intensive ones. It encourages environmentally safe carbon capture and utilization (CCU) and storage of carbon dioxide (CCS), as well as innovative renewable energy and energy storage technologies. This instrument aims at the first sale of new technology to pioneer customers.

What is funded?

This instrument funds activities that support innovation in low-carbon technologies and processes in emission trading sectors and replacement products. Annex I to the Emission Trading System (ETS) Directive provides a detailed list of eligible sectors.

Environmentally safe carbon capture and utilization can be funded if the capture of CO2 occurs within one of the listed activities, or if the utilization of CO2 results in products substituting carbon intensive ones from the listed sectors, even if carbon is captured outside the activities of Annex I.

Preparing the application

Application preparation takes approximately 3 months, depending on how detailed project plan the company already has. The application preparation also requires expertise on greenhouse gas (GHG) emission avoidance calculations. This can be outsourced to GHG consultant, if needed.

Evaluation

Project proposals are first evaluated against eligibility criteria and if the proposal fills the eligibility criteria, it will be evaluated against award criteria which are GHG emission avoidance, degree of innovation, project maturity, scalability and cost-efficiency. The given points for each criteria are between 0-5.

a

GHG emission avoidance potential

Applicants have to provide a calculation for GHG emission avoidance which shows the absolute and relative GHG emission avoidance.
b

Degree of Innovation

The evaluation determines the degree to which the project goes beyond incremental innovation on a scale from intermediate to breakthrough innovation. The project is assessed with regard to the following indicators related to climate-neutrality: energy efficiency, circularity, deployment of renewable electricity, potential to deliver net carbon removals.
c

Project maturity

Project maturity is assessed with the following three sub-criteria:
(1) Technical maturity to assess the degree of technology readiness and technical feasibility of achieving the GHG emissions avoidance.
(2) Financial maturity to assess the financial and business viability of the project, including credibility of the project business model, the financing plan, commitment of project funders.
(3) Operational maturity to assess the commercial deployment or demonstration of the project, including credibility of the project implementation plan, the project management/team, state of play and the proposed plan for obtaining required permits and intellectual property rights, the strategy for ensuring public acceptance, the strategy for securing the key supply and off-take contracts.
d

Scalability

Scalability is assessed in accordance with the following three sub-criteria (1) Scalability at the level of the project and the regional economy, including plans for further expansion at project site and the possible technology transfer to other sites, cooperation with other actors of the regional economy, quality and extent of the knowledge-sharing plan. (2) Scalability at the level of the sector, including extent to which the technology of the project can be applied within the sector and the expected emissions avoidance, (3) Economy-wide scalability, including extent to which the technology of the project can be applied across the economy potential to create new value chains or reinforce existing ones.
e

Cost efficiency

The call provides a separate calculation method for cost-efficiency. The idea is to show how efficiently expected the grant is used for creating GHG reductions.

Innovation Fund (large-scale)

Quick facts
Single applicant or multiparty	Both
Project duration	10+ years
Type of application process	Two-stage application
Number of pages in the application (1st stage)	40 pages
Maximum grant	No upper limit
Minimum capital expenditure of the project	EUR 7.5 million
Funding rate	Max. 60% of the relevant costs
Supporting documents for the 1st stage	Detailed calculation of GHG emission avoidance potential, Feasibility study 80 pages, Business plan 25 pages and Implementation plan 25 pages (all maximum page limits)

Focus of the instrument

The instrument focuses on low-carbon technologies and processes in energy intensive industries including products substituting carbon intensive ones. It also emphasizes environmentally safe carbon capture (CCU) and utilization and storage of carbon dioxide (CCS), innovative renewable energy and energy storage technologies.

What is funded?

Also environmentally safe carbon capture and utilization can be funded if the capture of CO2 occurs within one of the listed activities, or if the utilization of CO2 results in products substituting carbon intensive ones from the listed sectors even if carbon is captured outside the activities of Annex I.

The focus of the large-scale Innovation Fund is on funding investments, in other words, establishing the first production plants. Development activities as such are not funded. Funded activities cover both capital expenditure (CAPEX) and operational expenditure (OPEX).

Furthermore, activities that help stimulate the construction and operation of projects that aim at the environmentally safe capture and geological storage of CO2 (CCS) are funded, as well as activities that help stimulate the construction and operation of innovative renewable energy and energy storage technologies.

Preparing the application

Application preparation in the first stage i.e. ”Expression of interest” takes approximately 4-5 months, depending on how detailed project
plan the company already has. The application preparation also requires expertise on greenhouse gas (GHG) emission avoidance calculations. This can be outsourced to GHG consultant, if needed.

Relevant costs

The relevant costs are the additional costs that are a result of the application of the innovative technology related to the reduction or avoidance of the greenhouse gas emissions. The relevant costs are calculated as the difference between the best estimate of the total capital expenditure, the net present value of operating costs and benefits arising during 10 years after the entry into operation of the project compared to the result of the same calculation for a conventional production with the same capacity in terms of effective production of the respective final product. Where the conventional production does not exist, the relevant costs are the best estimate of the total capital expenditure and the net present value of operating costs and benefits arising during 10 years after the entry into operation of the project.

In principle, the relevant costs represent the difference between project’s production costs and reference scenario of 10 years.

Evaluation

If the project is among the best ones in the first stage i.e. “Expression of interest”, it is entitled to submit a more detailed project proposal in the second stage i.e. “Full application”. The award criteria in the second stage are GHG emission avoidance, degree of innovation, project maturity, scalability, and cost-efficiency (see small-scale evaluation above). The given points for each criteria in both stages are between 0-5.