At the conference European leadership in renewables — funding innovation on 22 June 2017, the EC confirmed that “on 19 May 2017 Member States approved, in the Climate Change Committee, a relevant amendment to the NER300 Decision, which is now subject to a three-month scrutiny period by the European Parliament and Council.” The scrutiny period has now ended and the amendment is adopted.

The amendment concerned NER300 awards made to projects that, because of project withdrawal or underperformance, will remain unspent. The money committed to them will be re-allocated to two schemes. It “should become available under InnovFin EDP towards the end of 2017,” confirmed (now ex-) DG CLIMA Policy Officer Kerstin Lichtenvort. The negotiations for channelling funding to “CEF Debt” should begin in H2 2017, she continued, with new money available under that facility “towards next year.”

A part of the transferred funds may be used as grants. A source has said these will be for project development assistance akin to the services already available from Innovfin Advisory. The cost of in-depth front-end engineering designs (which can be in the tens of millions for large projects) will be eligible.

Blended instruments

The Commission was also asked at the conference about NER300’s relationship between another important funding programme for energy, Horizon 2020. Lichtenvort suggested that “about a third of NER300” projects had their origins in a project funded by the European Commission’s Framework Programme for Research and Innovation. EIB representative Inocencio Figaredo Pire acknowledged that “Innovfin falls under Horizon 2020, the EU framework for research and innovation.”

DG Research Head of Unit G.2 Piotr Tulej, who is one of several people closely involved with Innovfin EDP, discussed its future at the RHC-ETIP Annual Event Innovation in the renewable heating and cooling sector on 20 June: “We want to complement that financial instrument with the option of a grant that might come from Horizon 2020, in other words to blend the financial instrument with grants from our programme,” he said. A source said DG Research’s contribution to Innovfin EDP would be flexible in the kind of costs it could cover, including, for example, costs incurred the operational phase. The idea is “revolutionary” said another EC source, “For the time being it is too early to say anything else regarding whether in the end we will have this blending, and when, and what form it will take.”

The EC does not refer to blending in the Horizon 2020 spending plan for 2018-2020, but it is being discussed intensely. One sign of this is in the wording of the section on Innovfin EDP in the spending plan. Referring to two headings in the overall Horizon 2020 budget, Access to Risk Finance and Societal Challenge Energy, it says, “European Commission has decided to double the financial support to this facility from EUR 150 million to EUR 300 million (with EUR 250 million channelled from Horizon 2020 Access to Risk Finance and EUR 50 million from the 2016 budget of this Societal Challenge).” Later, however, it indicates that the Societal Challenge will also provide 50 M EUR funding to Innovfin EDP in both 2019 and 2020. This would therefore be more than a doubling. Details are in the table below.

The suggestion is that it is this 100 M EUR that could, following deliberations in 2018, be re-routed to a grant scheme that complements Innovfin EDP loans. Provisions for 2019 and 2020 in the 2018 version of the three-year spending plan are not set in stone.

Doubling Innovfin EDP is a pledge made in this EC policy document. The fact that the doubling will be achieved even without the supplement from NER300 adds to the impression that ample resources will be available and that the Societal Challenge Energy money can be used to try something new and daring.

Easier for EC to offer grant + debt support than equity + debt

Equity + debt blended finance is also under consideration, but the obstacles are greater. “The Commission cannot provide direct equity,” said a source, due to legal reasons. So far, EU-sponsored equity support has been at arm’s length, via endowments to the European Investment Fund.

Table: Endowments to Innovfin EDP from the Horizon 2020 budget. To reconcile this table with the line in the Horizon 2018 spending plan that the Innovfin EDP budget will be doubled to 300 M EUR, the money from Societal Challenge Energy in 2019 and 2020 must be neglected. Possibly it will be put towards complementary grants or, conceivably, complementary direct equity support.