Q&A: Answers to the most important Innovation Fund-related questions

The first call of the new EU-programme Innovation Fund is open since July 3. In this Innovation Fund Q&A our specialist Jeroen Plantinga answers 10 of the most important questions for you.

Innovation Fund Q&A: Answers to the most important questions

1. What is the goal of the Innovation Fund?

The Innovation Fund aims to reduce CO2-emissions throughout Europe and contribute to a climate neutral Europe. The fund is one of the largest funding programmes in the world on the demonstration of innovative low carbon technologies.

2. When does the first call close and how long will the application process take?

Interested parties have until October 29, 2020, to submit an application (phase 1). Afterwards, all submissions will be evaluated. The results will be published somewhere in the first quarter of 2021. After the application period for phase 2 the definitive results are expected to be released in the second halve of 2021.

3. Which parties are eligible for the Innovation Fund?

Only a legal entity – be it a private, public or international organisation – or a consortia consisting of multiple legal entities can submit an application. In case of a consortium consisting of legal entities the subsidy will be granted to the consortium responsible for the implementation of the project. All parties of the consortium need to draft and sign a consortium agreement before signing the ‘grant agreement’ (grant agreement between the European Commission and the consortium).

4. What kind of projects qualify for the first call?

The first call is focussing on projects within one of the following areas:

  • Low-carbon technologies /processes in energy intensive industries
  • Carbon Capture, Utilisation and Storage (CCUS)
  • Renewable energy generation
  • Energy storage

The first call is available for projects with an investment size (CAPEX) of bigger than € 7.5 million. The project also needs to be carried out in an EU member state, Norway or Iceland. At the end of 2020 another call is expected to open for projects with an investment size (CAPEX) of up to € 7.5 million.

5. What will the evaluation process entail?

The evaluation process will be carried out by the EU-agency INEA (Innovative and Networks Executive Agency). During the process INEA will be supported by external experts. Each application will be reviewed by at least three external experts. Furthermore, every application will be held to the same criteria. After this review, the applications will be ranked and assessed by an internal commission, followed up with a definitive approval by the European Parlement.

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6. What are the selection criteria?

During phase 1, also known as the ‘expression of interest’, projects will be assessed based on the following three criteria:

  1. The effectiveness of GHG emissions avoidance
  2. The degree of innovation (relative to the current level of technology)
  3. Project maturity (based on its business model, financial and judicial structure, including making use of a Financial Investment Decision (FID) within the first four years after grant allocation).

Project Development Assistance (PDA) can be allocated to projects that meet the first two criteria, but not the third. This happens when projects would have met all selection criteria had they been further in the development process. Projects that are successful in the first phase are invited to submit a ‘full proposal’ in the second phase. Projects must also meet two new criteria in phase 2: Scalability (4) and cost efficiency (5).

7. What is the total Innovation Fund budget and what is the budget of the first call?

Depending on the carbon price, the total Innovation Fund budget for 2020-2030 will be approximately € 10 billion. The budget of the first call is € 1 billion.

8. What is the (maximum) funding per project?

Up to 60% of the additional capital (CAPEX) and operational costs (OPEX) of a project will be supported through funding. Regarding OPEX: this will be based on the first operational years of a project.

9. Which costs are eligible for the grant?

The relevant project costs are the additional costs which are the result of the implementation of technologies that reduce or avoid CO2 emissions. These costs will be calculated via a particular methodology in which the project costs will be held to certain reference scenarios (per focus area). A project may begin from the moment of signing the grant agreement.

10. Can a project also receive funding through another EU-programme?

A project that received funding through the Innovation Fund can also receive funding via other EU-programmes (such as Horizon 2020/Europe), on the condition that the funding does not cover the same costs. The cumulative funding cannot be higher than the total eligible project costs and the support via various EU-programmes can be calculated pro-rate.

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