Sustainable Energy Week June 2013 Meeting the energy grand challenge with the EU Budget 27 June 2013 Panel 2: EU/ Horizon 2020 funding "RSFF and Access to Risk Finance" Martin Koch Policy Officer European Commission - DG Research and Innovation RTD C.3 Financial Engineering Unit Not legally binding

2 What does "Access to finance" mean in the Horizon 2020 context ?  Using part of the Horizon 2020 budget to stimulate more investment in research and innovation investments not through grants but in the form of risk-taking and risk capital ("Financial Instruments"), such as: Loan finance, i.e. risk-sharing loans to companies and for innovative projects introducing new technologies Guarantees to financial intermediaries (commercial and development banks) that provide loans to research- and innovation-driven SMEs and small mid-caps Equity, i.e. venture capital for newly created companies exploiting R&D results Not legally binding

3 Rationale for Horizon 2020 Financial Instruments  Addressing financing gaps: Horizon 2020 Financial Instruments will only intervene where there are financing gaps in the Research and Innovation delivery chain (notably due to high risk)  Leverage effect: Providing risk coverage (guarantees) or risk capital (equity, loans) will attract additional finance and multiply Horizon budget resources  Institutional co-operation: Horizon 2020 Financial Instruments will be implemented by the EIB/ EIF and other financial intermediaries as partners of the EU using their resources and expertise  Building a bridge from R&D to Innovation: Effective and cost- efficient way to complement grant funding under Horizon 2020 and translate R&D results to the market 3 Not legally binding

4 Risk-Sharing Finance Facility (RSFF): Loans and guarantees EU and EIB/ EIF share risks (FP7 budget can cover losses); EIB provides direct loans for RDI investments Demand-driven approach; market-based pricing of loans Eligible investments: From research to demonstration, development and innovation, notably made by midcaps and larger companies Loan finance also provided to stand-alone projects (SPV), research infrastructures and others (any legal entity that is able to borrow and repay a loan) Loan volumes for direct lending of EIB: From EUR 7.5 to 300 million So far: Signed loans of EUR 8.9 billion for more than 90 projects in 23 countries (EU/AC) From FP7 to Horizon 2020: Current risk finance support through the RSFF Not legally binding

5 RSFF loans provided to innovative energy technology projects and energy-related R&D investments Projects with innovative technologies (wind & solar): Solucar Solar Thermal Power/Spain, RSFF loan: EUR 50 m Borkum West II Offshore Wind Park/DE, RSFF loan: EUR 100 m Companies investing in R&D related to energy: Abengoa/ Spain, RSFF loan: EUR 49 m Gamesa Wind Power/ Italy, RSFF loan: EUR 200 m RSFF loans for innovative energy projects - examples Not legally binding

6 Guarantee facility under the RSFF for research-driven and/ or innovative SMEs and small midcaps (up to 499 employees) Pilot scheme (2012/2013) to test guarantees and counter- guarantees for loans/ leases for RDI investments; Implemented by the European Investment Fund (EIF), with FP7 budget support for risk-sharing (EUR 270 million) Loan amounts between EUR 25,000 and 7.5 million possible Significant leverage effect expected: Approximately EUR billion of EIF guarantees and total loans and leases of EUR 2.25 billion for the period  Important to know: RSFF and RSI are the "blue print" for the future loan and guarantee Financial Instruments of Horizon 2020 RSFF for SMEs and small midcaps: RSI guarantee facility Not legally binding 6

7 Two Financial Instruments: One for debt, one for equity  Debt: Loans and guarantees for investments in Research & Innovation; demand-driven; targeted at midcaps and larger companies, research bodies and stand-alone projects; ("RSFF II") Guarantee facility for research-intensive and innovative SMEs & small midcaps ("RSI II")  Equity (early-stage finance): Early stage finance for innovative enterprises (notably seed and start-up companies) Some growth-stage finance also possible  Implementation of the guarantee facility (debt) and the equity facility will be made in co-operation with COSME financial facilities for SMEs HORIZON 2020 Financial Instruments Not legally binding 7

8  HORIZON 2020 Financial Instruments may also comprise A dedicated support facility for technology transfer from universities and public research organisations to the market Targeted support for the SME Instrument (for Phase III following grant funding)  HORIZON 2020 also foresees accompanying measures (i.e. investor-readiness schemes including coaching and mentoring; technical assistance; networking) to the financing provided through the Financial Instruments Not legally binding 8

9 HORIZON 2020 – "Access to risk finance" EUR billion in total (might be reduced in line with overall Horizon 2020 reduction) No breakdown for equity/ debt so far 1/3 of the budget shall support RDI-driven SMEs and small midcaps Proposed budget is for the market-driven Horizon 2020 part Note: Budget top-up, from other parts of Horizon 2020 or other budgets of the Multiannual Financial Framework, possible, e.g. for particular policy goals or target groups HORIZON 2020: Proposed budget Not legally binding 9

10 More information  FP7 financial instruments ( )  RSFF RSI  Proposed Horizon 2020 financial instruments ( )  Horizon =home =home  General information on innovative financial instruments: vestment/innovative_financial_instruments/index_en.htm Not legally binding 10

Thank you very much for your attention! Not legally binding 11