Renewable energy industry losing confidence in EU’s Innovation Fund

Several European renewable energy associations have united to call for changes to the EU’s Innovation Fund as its award criteria ‘puts renewable energy projects at a structural disadvantage’.

Associations – including Ocean Energy Europe, WindEurope, and the Association of European Renewable Energy Research Centers – have written a joint letter to the European Commission’s vice president Frans Timmermans, voicing their concerns about Innovation Fund not advancing the European renewable energy technology.

Namely, the associations see the lack of support for renewable energy generation projects in the first call for projects within the Innovation Fund as ‘contrary to the original policy intent’, stating also that this ‘undermines the REPowerEU objective of substituting fossil fuels with renewables’.

As a result, the number of renewable applications for the second large-scale call plummeted in both absolute and relative terms, with just 10% of proposals relating to renewables, compared to 20% of proposals in the first call, according to the signatories of the letter.

“It is a clear sign that the renewable sector has lost confidence in the Fund. The limited prospects of success mean that companies cannot justify the substantial resources needed to apply.

“Renewables will always be the fundamental driver of the energy transition. The decarbonization of industry, transport, heating and cooling – including hydrogen production – must be built upon primary energy sources which are renewable,” the associations have said.

In light of the twin decarbonization and energy security challenges facing Europe, the industry argues that it is critical that renewable technologies continue to become ever more performant, efficient and diverse, with a wider range of generation profiles, dispatchability and market applications.

The Innovation Fund is one of the world’s largest funding programs for the demonstration of innovative low-carbon technologies, and EU’s most impactful tool to drive clean energy innovation.

The Fund aims to bring to the market industrial solutions to decarbonize Europe and support its transition to climate neutrality. For the period 2020-2030, the Innovation Fund will allocate around €38 billion from the auctioning of allowances under the EU Emissions Trading system, subject to the carbon prices.

In this regard, the renewable energy associations of Europe have called the Commission to dedicate the third large-scale call to renewable energy categories only – to restore confidence in the Fund within these sectors and correct for earlier calls.

Also, the associations are urging for the adjustment of the rules of future calls so renewable energy projects may compete, and also for the creation of calls for intermediate-sized projects – with capital expenditure of between €7.5 million and circa €60 million.

The associations have also pointed out the issues identified in the Innovation Fund’s award criteria by representatives of the renewable energy sectors.

According to industry, the Innovation Fund rewards the scale of individual projects above all else, to the detriment of a technology’s longer-term scalability, while also underestimating the volume of greenhouse gas emissions (GHG) avoided from renewables.

Also, the assessment of projects’ ‘maturity’ has tended to be very exacting – particularly on measures of financial maturity, according to the signatories of the joint letter, which have also stated that the Fund does not appropriately separate different renewable technologies.

Finally, the industry has underlined that greater sector-specific expertise is needed to inform the assessment of ‘Degree of Innovation’, as ‘there have been instances where clearly innovative elements of proposals have not been scored as being particularly innovative’.

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