by Ugo Farinelli

At the beginning of May 2013, the European Commission has released the text of a communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions, entitled Energy Technologies and Innovation [COM(2013)253 final]. It’s not easy reading (to make a comment, it is the document with the highest density of acronyms I have come across for a long time) and it fails to be exciting, which is a pity because its content would deserve to be. Let me try and explain what I have got out of it.


First of all, the main focus of the text, although never mentioned with its name, is the Valley of Death. This is a concept which is common in innovation literature, especially concerning energy technologies, although it is by no means specific to energy.
The so-called Valley of Death is where many promising sustainable technologies get stranded and eventually lost for an indefinite period of time - or, as often the case, forever. New ideas are generated in a research environment - universities, national laboratories, some advanced industrial labs. Although money invested in research of new concepts is scarce, both from public and private (“corporate”) sources, good ideas generally find a way to get funded and to surface in the cauldron. This is generally sufficient to bring them to the stage of the proof-of-concepts and to the construction of a prototype.


From a European perspective, this has been achieved mainly through the R&D Framework Programme, active since the mid-1970’s and now coming to the end of its seventh cycle (FP-7) to be replaced, starting from early 2014, by the new Horizon 2020, much along the same lines. And here comes the trouble. These new ideas do not seem capable of attracting the much larger investments necessary to bring them from the pilot scale to full commercialisation. This is the Valley of Death.
Most of the Communication is devoted to explaining what has been done at the EU level (the Commission and the other European Institutions) to overcome this obstacle, and what, in the view of the Commission, remains to be done. This is a very challenging and difficult task because of two reasons. The first is that the money available to the Commission is limited to about 10% of the projected investments in the energy innovation chain; at least 20% should come from the Member States, and 70% from private investments (industry).


The money available should therefore be used mostly as a leverage to steer the energy investments (public and private) in what is perceived as “the right direction”, a difficult but not impossible task (which to a large extent was achieved for the research segment during the previous and current Framework Programmes). The second and apparently more fundamental difficulty is that there is no Common EU Energy Policy, energy not being as such a part of the Treaties. Actually, there is enough common ground concerning the European single market for energy, the principles of sustainable development and the knowledge-based society to base decisions on energy policies even if important differences exist in the strategies adopted by the various Member countries.
The EU policies to bring new energy technologies on the market have been based so far mostly on a technology-bytechnology approach. The SET (Strategic Energy Technologies) Plan was established in 2008 to coordinate national and EU, Community, public and private efforts in a number of key technologies. The SET-Plan is based on a Steering Group, where the EU member states are represented; a number of industry-led European Industrial Initiatives (EII), which are built on the basis of the European Technology Platforms, proposing for each key technology a Roadmap with quantitative objectives and deadlines; and the EERA (European Energy Research Alliance) which groups the leading energy research establishments and implements joint R&D programmes sharing EU national capacities. The whole system is supported by the Commission’s Strategic Energy Technology Information System (SETIS), led and coordinated by the Joint Research Centre (much along the lines of the Energy Information Administration in the US, established by Congress already in 1977).


While the SET-Plan approach has already reached important results, there are indications that there may be merit in considering not only the single technologies according to their internal dynamics, and assigning some priorities, but also in looking at the interactions among various technologies, and in particular considering their relationships and complementarities. Efforts at the European level have recently indicated the importance of systems studies, in particular for the integration of non programmable renewable energy sources, distributed electricity generation, new types of loads such as electric cars, local storage, active involvement of consumers in creating an active energy market. This includes the most recent studies on smart grids and smart meters, but also smart houses and smart cities, as evidenced by the success of the Covenant of Mayors and the initiatives being carried out in thousand of cities and townships throughout Europe.
Another example is the consideration of a new roadmap on materials, of primary importance for the global energy and sustainability budgets and a key enabling technology for different applications. The final goal is to pass from single roadmaps for the single technologies to an integrated and comprehensive roadmap towards a sustainable future.


More directly geared to overcome the Valley of Death of technologies is the RSFF (Risk Sharing Finance Facility) set up by the European Investment Bank, supplying debt capital to small and medium industries in five sectors, one of which is energy. Geared to the initiatives of the SET-Plan, it provided 10 billion euro in loan commitments (with 1 billion euro of EU contribution), 15 to 20% in the energy sector.
Another initiative aimed at overcoming the financial barriers to the diffusion of new energy technologies is the ELENA Facility (European Local ENergy Assistance), a market replication also launched by the European Investment Bank, established in 2009, designed to support generation of a flow of bankable projects in the field of greenhouse gas emission reduction, energy efficiency and renewable energy sources at local and regional levels, by helping promoters to structure and implement projects.
A broad-front effort to facilitate the transition from the research labs to the market consists in identifying and possibly removing the non-technological, non-financial barriers, such as institutional, administrative and regulatory barriers. This effort is led by the Intelligent Energy Europe (IEE) programme which has been going on for many years under various denominations starting from the original THERMIE-B.


The present communication of the EU Commission aims at accelerating the process of bringing new sustainable energy technologies to the market by further extending and improving the many instruments that we have already mentioned. It is certainly difficult to disagree with most of the recommendations contained in the final part of the document. They include:
► extend and further improve the various instruments that we have mentioned;
► concentrate the efforts where the EU added value does make a difference (subsidiarity principle), giving priority to large-scale efforts beyond the possibilities of single Member States;
► look at the energy system as a whole and exploit synergies with other programmes (e.g. transport, biotechnology);
► strengthen the links with energy policies;
► use a broad portfolio of financial instruments, including EU structural and investment funds;
► look beyond 2020 (which is too early for the full deployment of many new energy technologies), concentrating on most promising technologies;
► consider “enabling” technologies, such as information and telecommunication technologies (ICT), materials, bioengineering;
► build up the capacity of market actors and public authorities to introduce policies and measures which draw technologies into the market;
► bring new stakeholders into the picture, including local actors, SMEs, ICT, regulators, network operators, financiers, consumers, research actors, etcetera.


At this point, one may wonder why there was the need of a communication of the Commission to the other EU institutions, if its purpose was to sum up the present situation as concerns the development and deployment of new energy technologies (a useful document anyway), plus the delivery of somewhat generic and commonsense recommendations for the future.
The answer is probably in the conclusions of the document (reported in the Box). The main message in my opinion is the claim that the SET-Plan and its structure should remain the focal point of the energy innovation chain, and should be restructured so as to serve a more general purpose: the development (by the end of 2013) of an Integrated Roadmap, inclusive of all the relevant energy technologies and the definition, by mid-2014, of an Action Plan to support such a Roadmap.