Innovation Fund
The funding boost for low-carbon technologies
The Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies that significantly reduce emissions. It is a key funding instrument to deliver the EU’s commitments under the Green Deal, the Net-Zero Industry Act and the Paris Agreement.
It targets projects that show maturity in planning, business, and finances and have a TRL between 6-9.
Key features of the Innovation Fund
🟠The Innovation fund programme is destined to international single applicants and consortiums who are developing a project that they will implement in one of the EU Member States, Norway or Iceland.
🟠It offers funding of up to 60% of the eligible costs
🟠It focuses on energy-intensive industries, renewable energy, energy storage, carbon capture, use and storage, and net-zero mobility.
Topics and Budget breakdown
For the first time, the IF Grants are grouped into a single call with five distinct topics. Three address general decarbonization based on project size (large, medium, and small-scale), while two focus on specific areas: Manufacturing/Cleantech and Pilots.
The manufacturing topic centers on producing components crucial for renewable energy, energy storage, heat pumps, and hydrogen production.
The pilot topic aims at constructing and operating projects dedicated to validating, testing, and optimizing highly innovative, deep decarbonization solutions across all eligible sectors.
The call boasts an impressive total budget of €4 billion, marking a 25% increase from the previous call.
🟠General Decarbonization – Large-Scale:
- Total Budget: €1.7 billion.
- Projects with CAPEX exceeding €100 million per project.
🟠General Decarbonization – Medium-Scale:
- Total Budget: €500 million.
- Projects with CAPEX exceeding €20 million, up to €100 million per project.
🟠General Decarbonization – Small-Scale:
- Total Budget: €200 million.
- Projects with CAPEX exceeding €2.5 million, up to €20 million per project.
🟠Pilots:
- Total Budget: €200 million.
- Projects with CAPEX exceeding €2.5 million, up to €40 million per project.
- Total Budget: €1.4 billion.
- Projects with CAPEX exceeding €2.5 million per project (no maximum).
How does innovation fund work?
Proposal Structure:
The application process involves various documents, including application forms, detailed budget tables, participant information, feasibility studies, business plans, and more.
Key tools in the application process are the GHG Calculator, which evaluates greenhouse gas emissions and the Relevant Cost Calculator, used to determine the relevant costs of projects.
Amongst the changes in this new call, five GHG calculator models have been introduced, each designed for a specific type of industry, such as energy, storage, maritime, and aviation.
Moreover, the Relevant Cost Calculator now simplifies the methodology for all projects, eliminating the “levelised cost” approach. There are now two methods: “no reference plant” (default for all projects) and “reference plant” (an option when a reference plant exists).
Additionally, the new IF Grant Call simplified the Weighted Average Cost of Capital (WACC) computation.
Evaluation Criteria:
The five primary evaluation criteria and the cascade evaluation process remain consistent, but there are noteworthy adjustments in some criteria and scoring. The comments provided below are pertinent to the General Decarbonization topics:
Degree of Innovation (max. 15 points)
No changes for this criteria.
GHG Emission Avoidance Potential (max. 12 points)
Remains, but with sub-criteria adjustments emphasizing the importance of clear explanations for GHG evaluators: Absolute Avoidance (2 points), Relative Avoidance (5 points), and Quality of Calculation (5 points)
Maturity (max. 15 points)
No changes; still assessing technical, financial, and implementation maturity.
Replicability (max. 15 points)
Renamed from “scalability” and expanded to include the resilience of the EU industrial system and potential for multiple environmental impacts.
Cost Efficiency (max. 15 points)
Introducing a revised formula, 12 – (12 x (cost efficiency ratio / 200), the evaluation now employs a more rigorous threshold for the cost efficiency ratio. Proposals exceeding 200 EUR/t CO2-eq (2000 for Pilots) will receive zero points.
Bonus Points (max. 4 points)
Increased from 3 to 4 for Small, Medium, and Large projects, with an additional point specifically for maritime sector proposals demonstrating potential for decarbonization and reduced climate impacts.
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