The energy transition is in full swing. The focus is on issues such as the switch to renewable energies, (energy) storage options, hydrogen technologies and sector coupling. With new technologies and a high level of digital expertise, energy start-ups are creating important innovations and are therefore making a major contribution to the successful implementation of the energy transition. At regional, national and European level, there are a number of government support programmes designed to support young businesses and start-ups and to further advance innovation for the energy transition. This article is intended to briefly present a selection of government support programmes relevant to energy start-ups.
There are several hundred energy start-ups in Germany, now. Ten of them made it into this year’s 2020 Global Cleantech 100, an annual market analysis by the US based Cleantech Group of the world’s most innovative and promising cleantech companies (see 2020 Global Cleantech 100 List). The path to this success is often not easy. After all, young companies not only those in the energy sector are facing major challenges, especially at the beginning of their business activities: in addition to product development and the establishment of a business model, the question of securing (the right) financing arises as well. Start-ups in the energy sector furthermore often face an additional challenge because they and their products operate in a highly regulated environment. At a very early stage, namely product development, but at the latest when developing their business model, young businesses should ensure that existing regulatory requirements are complied with. This can lead to significant additional costs for affected companies, be they product development or advisory costs, which can be difficult to manage particularly in the initial phase.
In addition to the usual equity financing through (corporate) VCs, business angels or family offices as investors or debt financing (if any), start-ups should also consider support programmes for financing. After all, support programmes often offer financial support (e.g. cash or materials, guarantees) and mutual exchange to create synergies, mentoring and access to investors, partners and mentors. Support programmes can therefore not only be considered in the pre-seed or seed phase of start-ups, but can also generate significant added value at later stages.
Government support programmes in the energy sector are offered in various forms by Germany’s federal states, as well as at a national and European level. The aim of these programmes is to provide comprehensive support for innovative energy technologies, including achieving market readiness. Numerous private accelerator or incubator programmes have also become established in the energy sector and individual (early-phase) investors have also specialised in energy projects. Which financing, and in particular which support programme is the best fit for the respective start-up, is a case-by-case question dependent on individual needs and should be thoroughly researched before applying.
Below we have briefly summarised a selection of current support programmes. A more detailed description of each programme can be found below the table.
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Support programme
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Support level
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Financial support
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Additional (non-financial) support offered
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7th Energy Research Programme of the Federal Government (7. Energieforschungsprogramm der Bundesregierung)
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National
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Yes
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Yes
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Breakthrough Energy Ventures
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European
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Yes
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No
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Energy Transition and Environmental Innovation – EUI (Energiewende und Umweltinnovationen – EUI)
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Federal state
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Yes
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No
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Innovative Start-ups (Gründung Innovativ) of the ILB
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Federal state
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Yes
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No
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Innovative SMEs (KMU-innovativ)
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National
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Yes
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No
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Programmes supported by the EIT
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European
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Yes
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Yes
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Science4Life Energy Cup
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Federal state
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Yes
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Yes
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SET-HUB
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National
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No
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Yes
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Bavarian Energy Start-up Competition (Wettbewerb Energie-Startup Bayern)
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Federal state
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Yes
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No
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A. Support programmes supported by Germany’s federal states
Who is eligible for support?
The “Gründung innovativ” (Innovative Start-ups) support programme of Brandenburg’s Ministry for Economic Affairs, Labour and Energy supports the creation of innovative companies or the growth of small and medium-sized enterprises (SMEs) in the first three years following their establishment. The company must have its head office or permanent establishment in Brandenburg.
What is supported?
Companies belonging to a support cluster, such as energy technology or transport/mobility/logistics, receive financial support through the programme for investments and the associated purchase and production costs, expenditure for advisory services and personnel costs.
How is support provided?
Under the current support guidelines for 2020, the Investment Bank of Brandenburg grants a start-up project or SME up to a maximum of 50% of the total eligible expenditure. The subsidy is between €25,000 and €100,000 at the most and does not have to be paid back.
Additional information can be found here: https://www.ilb.de/de/wirtschaft/zuschuesse/gruendung-innovativ/
Who is eligible for support?
Companies with their head office or permanent establishment in Schleswig-Holstein can benefit from this state’s economic development agency WTSH. SMEs receive preferential support.
What is supported?
Support is provided for new, original projects in the areas of energy transition and environmental innovations in Schleswig-Holstein. Feasibility studies, technical and scientific conditions for development, industrial research and experimental development, as well as pilot and demonstration projects, are funded to assess the viability of new products, processes or services on the market.
How is support provided?
Depending on the size of the company, the state of Schleswig-Holstein grants a non-repayable subsidy of up to 45% of the eligible costs in the case of experimental development and up to 70% of the eligible costs for industrial research. As a general rule, the project volume may not exceed €150,000.
Additional information can be found here: https://wtsh.de/foerderberatung/foerderprogramme/foerderprogramm-energiewende-und-umweltinnovationen-eui/
Who is eligible for support?
The Bavarian Energy Start-up Competition, which has been held every two years since 2016, is aimed at energy start-ups from Germany, Austria and Switzerland founded after 1 January 2016.
What is supported?
The competition seeks new business models and technologies to drive a secure, affordable and sustainable energy future in Bavaria. Each competition defines priority issues, such as digitalisation, security of supply and hydrogen for this year’s competition. However, applications from companies with other focus areas and concepts are also explicitly welcome and accepted.
How is support provided?
The first three places receive prize money of €15,000 (1st place), €10,000 (2nd place) and €5,000 (3rd place). The competition also provides an opportunity for networking with investors, partners and mentors from the energy sector.
Additional information can be found here: https://www.energie-startup.bayern/wettbewerb
Who is eligible for support?
The Science4Life competition, whose sponsors include the Hessian Ministry for Economic Affairs, has been addressing founders and start-up teams or young companies from the energy sector nationwide since 2017 with the special Science4LifeEnergy Cup.
What is supported?
The competition supports innovative business ideas for products, services and digital business models in the areas energy production, distribution, storage, efficiency, consumption, digitalisation, sector coupling and the Internet of Things.
How is support provided?
The competition is divided into three phases. The winners of each phase receive prize money totalling more than €20,000. In addition, the competition prepares start-ups for conceptualising their business idea and preparing a business plan in which financing options and opportunities are identified.
Additional information can be found here: https://www.science4life.de/energycup/
B. Support programmes supported by the federal government
Who is eligible for support?
The 7th Energy Research Programme of the Federal Government, which was adopted by the federal cabinet in September 2018 and financed by the Federal Ministry for Economic Affairs and Energy (BMWi), the Federal Ministry of Education and Research (BMBF) and the Federal Ministry of Food and Agriculture (BMEL), is aimed at enterprises including energy start-ups and in particular SMEs, to which it attributes a very high level of innovation.
What is supported?
In line with the energy research programme’s title “Innovations for Energy Transition”, support is given to the research and development of future-oriented energy technologies, innovation and demonstration projects as well as living labs or model projects. Eligible issues include energy system transformation in the consumer sectors (buildings, industry, mobility), energy production, system integration (networks, storage, sector coupling) and nuclear safety research. In particular, support is given to cooperation in networks between universities and research institutes and companies. In contrast to previous versions, the programme also supports innovations relating to technological innovations that are not purely technical (e.g. innovative business models).
How is support provided?
Project support is provided through grants. The federal government is providing around €6.4bn in total for the support period until 2022, with annual grants of just under €1.3bn planned. In addition, a platform, the Start-ups Research Network, was launched. This enables networking both with other young energy companies and with established energy transition players process from research, industry and politics. Of particular interest for start-ups is the support format of living labs, which allows almost market-ready products to be tested in a flexible environment.
Additional information can be found here: https://www.bmwi.de/Redaktion/DE/Publikationen/Energie/7-energieforschungsprogramm-der-bundesregierung.pdf?__blob=publicationFile&v=14
Who is eligible for support?
The Federal Ministry of Education and Research’s (BMBF) “Innovative SMEs” support programme, which has been existing since 2007, is aimed at SMEs with new products and processes in the area of efficiency and environmental technologies and services, above all when they apply for the programme for the first time.
What is supported?
Sometimes, energy start-ups with the support focus “energy efficiency and climate protection” can apply to receive grants for an innovative and at the same time risky industrial research or pre-competitive development projects. The chances for a start-up are all the better if its work also contributes to the Climate Protection Plan 2050 and the German Strategy for Adaptation to Climate Change. The project has to be cross-technological and application-oriented in order to open up environment-related markets or expand an existing position.
How is support provided?
Project support for commercially active start-ups is provided in the form of grants which, depending on how close projects are to being practically implemented, account for up to 50% of the project-related costs eligible for support and usually last for two years. Since the programme was set up, almost €1.3bn has been allocated to more than 1,700 individual and collaborative projects, benefiting approximately 2,900 SMEs. Project outlines can be submitted at any time by one of the two application deadlines (15 April/15 October).
Additional information can be found here: https://www.bmbf.de/de/kmu-innovativ-ressourcen-und-energieeffizienz-612.html
Who is eligible for support?
Support through the SET Hub, which was founded by the Federal Ministry for Economic Affairs and Energy (BMWi) together with the German Energy Agency (dena) at the beginning of 2020, is aimed at start-ups in the energy sector. Both start-ups in the start-up phase and established start-ups are eligible.
What is supported?
The SET Hub’s objective is optimising innovative business ideas of start-ups in the context of the energy market’s complex regulatory and energy policy environment.
How is support provided?
The SET Hub offers various information and advisory formats: between 12 and 15 selected start-ups per year can, for example, take advantage of dena’s individual “SET mentoring” programme, in which the business model is examined, questions on regulations are answered and financing and support options are presented.
Additional information can be found here: https://www.dena.de/set-hub/
C. Support programmes supported by the EU
Who is eligible for support?
InnoEnergy and Climate-KIC are both knowledge and innovation communities of the European Institute of Innovation and Technology (EIT), which also provide other services for start-ups. InnoEnergy focuses with its accelerator programmes on young and established start-ups from the energy sector. Through its accelerator programme, Climate-KIC supports cleantech start-ups with a founding team of at least two full-time employees and that have been founded less than five years ago.
What is supported?
These two initiatives support innovations in the energy sector (InnoEnergy) and climate-friendly technologies (Climate-KIC). InnoEnergy supports start-ups that often already have a proven prototype or proof of concept for an innovative product in the energy sector or those that have already been operating in the market for one and a half years with an annual turnover of €100,000 and want to drive their growth in a targeted manner. Climate-KIC’s accelerator programme, on the other hand, supports new technologies or services from the cleantech sector designed to improve the climate.
How is support provided?
InnoEnergy supports start-ups in particular in finding suitable investors and capital providers. Climate-KIC provides financial support of up to €85,000 in the German-speaking countries as part of its regular accelerator programme, without any equity participation on Climate-KIC’s part.
Additional information can be found here: https://bc.innoenergy.com/for-start-ups/ and http://www.climate-kic-dach.org/
Who is eligible for support?
The pilot fund was launched in May 2019 as a partnership between Breakthrough Energy Ventures (BEV) and the European Commission with the participation of the European Investment Bank and aims to promote companies with technologies for decarbonisation and reduction of greenhouse gas emissions.
What is supported?
The aim is to help innovative European companies in the energy-related sectors of electricity, transport, agriculture, manufacturing and buildings to develop low-carbon technologies.
How is support provided?
The fund has a total budget of €100m. More detailed information on eligibility conditions and the start of the support will be published soon.
Additional information can be found here: https://www.b-t.energy/who-we-are/breakthrough-energy-ventures-europe/
