The policy measures presented in this report demonstrate that governments can support clean energy technology start-ups in several valuable ways. At the outset of this study, we adopted an open attitude to the public sector’s role in innovation, beyond R&D programmes and generic support. Most countries already have extensive networks of private and university-affiliated incubators and accelerators, and financial resources ranging from angel and venture funds to private equity and corporate financing. However, our case studies show that there has been a burst of policy experimentation targeted specifically at identified market failures for clean energy technology commercialisation in the past five years. While this experimentation has yet to produce a consolidated catalogue of agreed best practices, it has shown the numerous ways taxpayer resources can be used to significantly boost innovation, beyond what conventional public and private sector support can do.

This chapter highlights how our case-study policies and programmes have addressed innovation support gaps. In general, these programmes help start-ups in their earliest stages (i.e. before they have products on the market), addressing the main financing, infrastructure, service and networking gaps identified in the dedicated chapters. We have not drawn conclusions on the effectiveness of direct versus indirect support for specific services, as both approaches have their advantages. However, it is vitally important in all cases that governments design programmes to build upon and amplify existing schemes and the work of private stakeholders. The way private foundation money helps US government laboratories provide services to private start-ups is a notable example of this.

The value of some services governments provide directly to start-ups far outweighs the financial cost to the taxpayer. This is especially true for granting access to laboratory infrastructure and using the government’s brand to unite stakeholders.

Clean energy technology start-ups generally need more time in laboratories with costly precision equipment than other new ventures do. In recent examples from around the world, governments have been finding ways to make their publicly owned energy laboratories and R&D staff available to entrepreneurs. Particularly noteworthy are the American-Made Challenges and IN² models, which offer vouchers for laboratory access, sometimes with the help of external funds from private foundations. Alternative approaches to this concept are Canada’s STAC method of embedding laboratory support in R&D grant calls and its inclusion of public laboratory access for all finalists in the Women in Cleantech Challenge.

In addition to equipment, extensive world-leading expertise is often to be found at public energy laboratories. An advantage unique to governments is their ability to call upon in-house experience and knowledge to evaluate proposals (especially for complex technologies) at minimal additional cost. For instance, what distinguishes the US Loans Program Office from commercial lenders is its ability to evaluate proposals for a wide range of technologies that the private sector is unable to process – from electric vehicle fast-charging equipment to small modular nuclear reactors.

In some countries, public universities are another source of high-quality expertise and laboratory equipment: Ecolabs-COI in Singapore and Green Innoboost in Morocco actively connect start-ups with these publicly-funded resources. Universities are also a common location for incubators in India and around the world, a situation that can be especially advantageous for clean energy, which relies on scientific advances that routinely emerge from government-funded university R&D. Governments in Belgium, the Netherlands, the United Kingdom and the United States support university-based incubation and acceleration emphasising clean energy technologies, while other university incubators include energy among other priorities for commercialising their core science. While results from university incubators have sometimes been mixed, good practices are emerging to help the public sector create value above and beyond that of private initiatives, including though scientific specialisation, regional collaboration and not over-extending support to firms with a low chance of success.

Governments can also organise stakeholder interactions relatively inexpensively, through events or online networks that build on the government’s reputation and profile. For instance, the European Commission, France, Germany and Norway all have energy-specific initiatives that use different approaches to bring participants together. Alternatively, governments can use public funds to launch more targeted networks for overlooked elements of the innovation system, for example the Incubatenergy Network in the United States, which unites clean energy incubators specifically.

While most governments design support programmes with the objective of national (or regional) economic growth, some programmes are more co‑operative and pursue long-term global goals as well. Germany’s Start Up Energy Transition and its energy dialogues seek to reward clean energy innovation wherever it is based, and India’s Clean Energy International Incubation Centre has a formal link with Mission Innovation that gives its start-ups international exposure and networking opportunities. Mission Innovation’s CleanTech Exchange, announced in 2021, also has similar goals. Meanwhile, flagship programmes in Canada, Korea and Singapore co‑operate to exchange services for each other’s participating start-ups. Start-Up Chile secures visas for the foreign start-ups it supports, requiring them to relocate to Chile for the programme, and EIT InnoEnergy Highway supports start-ups from around the world that can address EU objectives, helping them to establish European subsidiaries where appropriate.

Governments also have opportunities to exchange best practices in clean energy innovation policymaking. For instance, in 2021 the IEA co-hosted a working-level dialogue among emerging and developing economies on commercialising clean energy innovations, and Mission Innovation’s Insights Module also provides a platform for such exchanges alongside the IEA Committee on Energy Research and Technology. Global networks of private sector entities can also help disseminate good practices around the world if they are engaged in relevant public-private initiatives.

Additionally, governments can be instrumental in setting common standards if they work together. An area of emerging importance is the evaluation of future climate impacts of early-stage technologies. Although several government programmes around the world have already integrated climate impacts into ex ante or ex post evaluation criteria, they currently use very different approaches, so the method used by a start-up to quantify metrics for one application often cannot be used for applications to other programmes.

Developing common tools and practices may be particularly important for clean energy start-ups because investors and customers are increasingly using environmental, social and governance (ESG) reporting metrics to underpin their strategic decisions. However, many young companies often do not have adequate resources to measure and document their performance to the required standards. Targeted tools or support to ensure that start-ups meet standards may therefore be needed so that this does not become an additional barrier to market entry.

For early-stage technology start-ups, it is often more important to avoid running out of working capital in the immediate future than to secure a large or prestigious grant in 12 months’ time. Obviously, as start-ups pass through the successive stages of scaling up (if they are successful), their financial needs evolve and it is understood that governments need to calibrate their policies carefully to accommodate gaps in growth equity financing as well as the public sector’s risk appetite. Nevertheless, some countries (sometimes for legal reasons) have not tailored their R&D project funding processes to these considerations.

There are several ways to adapt R&D funding programmes to the needs of clean energy technology start-ups at different stages of development. While some of these examples imply the allocation of additional public resources, which in some countries is scarcer than in others, we do not recommend reducing research project funding as a result.

• Use permanently open calls and aim to complete evaluations quickly. Examples: European Commission, Norway, Singapore and Sweden.
• Pay grants as stipends that are less constrained in terms of eligible costs. Example: Canada’s Women in Cleantech Challenge offered its finalists stipends for three years while they competed for the larger prize.
• Tailor grant programmes and services to successive stages of scale-up. Examples: Morocco has dedicated programmes for different TRLs, and Singapore has a range of grants available for different purposes.
• Avoid dilutive funding for early-stage start-ups to differentiate public from private resources. Few governments seek equity shares in start-ups in hopes of reaping future returns, and this is likely to be more justifiable in the later stages of a company’s development. Examples: All case study countries provide grant funding, and Norway additionally offers loans.
• Ensure long-term budget consistency and allow successful applicants to transfer to successive tailored programmes. Denmark, Norway and Sweden have R&D programme variations that accommodate projects and applicants in different innovation phases. These programmes have been quite stable for many years and are not generally threatened by new budgetary cycles. After more than a decade of European Commission co-funding and development work by its operating company, EIT InnoEnergy Highway benefits from an extensive global network of support and knowledge,
• Use concessional grants or loan guarantees to help fast-growing SMEs delay selling ownership and avoid being bought out, giving them a better chance to take root and remain in the home community of their innovation activity.1Examples: Israel and Chinese Taipei.

Helping start-ups help each other has emerged as a particularly impactful service governments can provide. Among the public sector interests in this area is a special mission to raise the overall success of all entrepreneurs who have the potential to help solve clean energy technology problems. Participants in support programmes for clean energy start-ups are all rapidly learning how to overcome a wide variety of technology and business challenges at different speeds and stages, all focused on energy. They do not generally compete directly with one another, so are usually very keen to share their experiences on a reciprocal basis. Furthermore, the increased interaction among them confers other social benefits, as founders feel less isolated and more motivated by each other’s success.

Canada’s Women in Cleantech Challenge programme was particularly effective in this regard, as its cohort members all experienced similar non-technical gender-based challenges. However, almost all government programmes can incorporate peer-to-peer networking among participants, “alumni” and others in the energy innovation ecosystem at relatively low cost. For instance, NREL’s offer of small cash rewards for collaboration in the American-Made Challenges programme is an innovative way to raise overall effectiveness.

More generally, establishing a networking system can be a high-impact use of public funds to support start-ups, especially if it creates new configurations of innovators and other relevant experts to work on a common challenge. Such networks can reveal synergies and generate new intersectoral knowledge spillovers, for example by bringing together start-ups and companies that could become important parts of future value chains for emerging technologies but that have little awareness of the opportunities available. If a valuable bond can be forged among some like-minded peers with the means to maintain it independently, direct government support can end once the network is established. This was the case with the Incubatenergy Network of incubators and, subsequently, energy utilities that can facilitate market access.

Participation in a government programme confers a “badge of quality” that is not available from most private sector incubators or investors. As this recognition can be particularly helpful for start-ups seeking follow-on funding or customers, active promotion of participating start-ups is a core part of the services several initiatives offer. The awarding of prizes is particularly easy to communicate to the press and other stakeholders, and even though some prizes are similar in practice to grants, they can be much more attractive to entrepreneurs because of the publicity they generate. Start Up Energy Transition and EcoLabs‑COI therefore effectively integrate promotional activities into their prize-based support.

In addition to its advantages for start-ups, awareness-raising can benefit clean energy innovation overall. For example, Canada’s Women in Cleantech Challenge dedicated considerable effort to publicising its finalists and promoted examples of successful female energy entrepreneurs in general to inspire others. The Challenge completed just one cycle but evidently stimulated ongoing activity, as MaRS Discovery District is using its model and private sector funding to create further cohorts of female clean energy entrepreneurs.

Clean energy technologies span a wide variety of technology types, development needs and appropriate business models. Based on their R&D strengths, natural resources and other factors, most governments have identified priorities within these technology areas in which progress would be particularly desirable. By discriminating between technology areas based on policy priorities, governments distinguish their impact from that of the private sector.

Policy experience suggests that focusing start-up support on priority technologies can both advance their maturity and help governments to learn about the scope and status of the possible solutions. However, most of the initiatives reviewed in this report do not strongly prioritise the technologies for which start-ups can receive support. In some cases, this reflects a lack of resources to run parallel programmes for different technologies, and in others it is incompatible with winnowing the pool of potential applicants by non-technical criteria (such as location or gender). In general, there is often also a desire not to exclude unknown but high-potential innovations by setting the scope too narrowly.

Some programmes address these objectives by combining technology-specific calls with less restrictive ones. Alongside its general programme that is not energy-specific, Start-Up Chile has issued call for proposals in the areas of solar and energy efficiency management. EIT InnoEnergy Highway ran a call dedicated to batteries in 2018 that was successful in raising the number of start-ups they screened in a priority area for European investors and policy makers. Similarly, IN² has sought start-ups in the areas of agriculture and buildings technologies in some years, while keeping a broad scope in general. However, none of these examples are as systematic in their identification of priority technology calls as ARPA-E, which issues five to ten calls each year for new technology areas and around every three years it also issues open calls and unrestricted “special project” portfolios. Though ARPA-E is not exclusively designed to support start-ups, it has a distinctive approach to selecting technology areas that are underexplored but have potential strategic importance to the future US energy system. Structured scoping exercises are used to learn the state-of-the-art from external experts, usually through a public request for information. Start-ups have the opportunity to provide input and contribute to how the calls are defined to attract a range of solutions at different levels of maturity.

Other programmes always restrict the clean energy technologies that can receive support, but cover a variety of priority areas. For example, American-Made Challenges runs a range of contests in different technology areas simultaneously. In 2021, ten prizes were launched, each one sponsored and co-designed by technology policy experts at the US Department of Energy. These covered areas such as desalination, enhanced conductivity materials geothermal lithium extraction, interoperable commercial lighting systems and technologies for more inclusive energy systems. The approach of the SET Award is somewhat different: it dedicates categories within its prize structure to each one of a set of Germany’s priority technology areas each year. These categories are wider in scope than those of American-Made Challenges and currently include clean energy generation, demand-side innovation, energy distribution and storage, smart mobility and transportation, and quality energy access and Sustainable Development Goal (SDG) 7. In contrast, EcoLabs-COI and Green Innoboost set the scope of their support by publishing lists of eligible technology areas but do not evaluate applications in these areas separately. Green Innoboost has nine such areas, including biomass, digitalisation, solar energy and wind energy. Living Labs, which is dedicated to smart, energy-efficient residential technologies, is the most technology focused of our case studies as it responds to a narrower policy priority.

Helping start-ups set milestones and track progress is a routine exercise for many incubators, so it is frequently part of the services provided when governments channel support indirectly through incubators. Feedback from start-ups indicates that it is a highly valued service but can vary in quality. For example, it is most valuable when offered by experts familiar with the peculiarities and challenges of the relevant clean energy sector, and not by generalists or by experts in, say, digital business. It would therefore be helpful to integrate best practices from around the world into both direct and indirect support programmes. Two case study programmes that emphasise milestone-setting and progress-tracking are Canada’s Women in Cleantech Challenge and the EIT InnoEnergy Highway.

Nearly all our case studies offer combinations of financial and service-based support together. Some, such as American-Made Challenges, Breakthrough Energy Solutions Canada, EcoLabs-COI, IN² and the Women in Cleantech Challenge include all four support areas (financing, infrastructure, services and networking) in their programmes. Green Innoboost and Start-Up Chile also offer broad packages of services.

Meanwhile, Innovation Norway aims to become a one-stop shop for start-ups to access the Norwegian government’s various support measures adapted to different TRLs. Innovation Norway already provides start-ups with an adviser to guide them through its programmes.