Research and innovation for transition of the energy system
– an analysis of the Swedish Energy Agency’s R & I activities
Growth Analysis assesses that the Swedish Energy Agency’s activities that are based on “energy research funding” generally work well, considering the given requisites. Improvements could be made in some
parts so as to increase the transparency of overarching prioritisations and facilitate a learning process for both the Energy Agency itself, its aid recipients and other interested parties.
The overarching goal is transition
Only energy research funding activities that were intended to result in the commercialisation of new or developed technology were evaluated. This meant that the evaluation focused primarily on two of the energy research goals: firstly, the goal of building up knowledge and new technology for the long-term transition to a sustainable energy system in Sweden, and secondly, the goal of developing technology and services that can be commercialised by Sweden's business sector.
The Swedish Energy Agency interprets these two goals as meaning activities are to focus on energy-relevant research and the commercialisation of new products and services that contribute to the development of an ecologically sustainable energy system with a high degree of supply reliability and competitive energy prices.
However, Growth Analysis finds that this creates an overly simplistic picture. The goals have the same focus but they imply that activities need to be conducted in two different ways. The goal of long-term transition is about choosing a small number of major societal challenges that are far away from the market and the short-term interests of the business sector. The goal of creating technology and services for commercialisation is instead a matter of picking up on strong initiatives that stand out in the current academic environment and the business sector.
Unclear how the Swedish Energy Agency prioritises the goals
It has not been possible to gain a clear overview of how the goals influence the prioritisation of resources between the different theme areas, i.e. between commercialisation and long-term transition. This is probably a consequence of the focus on creating a balanced project portfolio which is primarily created from below through dialogue between authorities and different players.
In the OECD’s inspection of Sweden’s innovation policy, it was stated that activities are very much ”bottom-up” driven and there were calls for a more balanced orientation with more political priorities for societal challenges. Growth Analysis notes that this conclusion also applies to the Swedish Energy Agency’s R & I activities. An overly strong ”bottom-up” approach implies a risk of conservatism since it reflects areas in the business sector and academic world that are already strong.
Proposal for the Swedish Energy Agency’s activities – goal-related feedback
The Swedish Energy Agency needs an overarching strategy that is based on the Agency’s current work with Fokus but that focuses on a concentrated prioritisation between activities conducted with a ”top-down” perspective towards societal challenges and a ”bottom-up” perspective towards the commercialisation of new energy-relevant products and services. This entails priorities between theme areas, individual projects and programme-governed activities, between the different goals and different societal challenges. This strategy would make it possible to assess how the Swedish Energy Agency is working towards the three goals.
To create the prerequisites needed to follow the Swedish Energy Agency’s contributions to goal achievement, it should be stated in the Energy Agency’s appropriation directions that the Agency’s annual report with feedback should state:
- how R & I aid is divided between the different goals for energy research and how changes influence goal achievement.
- how R & I aid is divided between programme funding and individual projects and how changes influence goal achievement.
Commercialisation is both an integrated and a separate activity
The Swedish Energy Agency supports energy research in the whole innovation chain, from basic research to commercialisation, which was a requirement stated in the 2005/06:122 bill. The activities are divided into different theme areas. For each area, there are individual projects and programmes that consist of basic research, applied research, development and demonstration. Commercialisation must be part of these areas. Commercialisation aid in the form of targeted business development aid, known as grants of limited royalties, is now also a separate activity under Business Development and Commercialisation (Affu).
Commercialisation as an integrated aspect of energy research
The evaluation revealed criticism of the fact that commercialisation has not been a sufficiently central part of the aid that has come from the different theme areas.
In the analysis, it has emerged that the Swedish Energy Agency’s funding of demonstration and pilot projects has frequently lacked a developed strategy for commercialisation and moreover, such a strategy has not been asked for either. This is true of both the application materials and the ongoing monitoring. The activities have instead focused on testing new technology on a rather large scale. The testing of new technology has also been the main goal of the project and, as a rule, this goal has been fulfilled.
Commercialisation in the form of a separate activity
The Affu process is both extensive and sophisticated. This means that the administrative cost of each aid project is higher than that of other government initiatives. The activities have worked well and it is rare for businesses that have received aid from the Swedish Energy Agency’s research activities to continue to Affu. It was not asked specifically whether applicants had had earlier funding from the Swedish Energy Agency’s research activities.
What distinguishes the Affu initiative from other government initiatives that offer financial aid for commercialisation and business development in companies is the focus on energy, the technical expertise and the scope of the funding. Most other initiatives have a broad focus on commercialisation in the entire business sector and cannot contribute as much money.
A socioeconomic analysis of the Affu activities was done in 2013 by the Swedish Energy Agency. This indicated that the activities do constitute minor positive benefit for society.
Growth Analysis believes that a new impact analysis should be done within three years. The impact analysis should not only be a socioeconomic analysis; it should also include an analysis of how the activities contribute to the energy research goals. Before doing such an investigation, Affu should develop its reporting so that the costs for the selection of aid objects can be distinguished from soft aid.
Proposal for the Swedish Energy Agency’s activities – set up a patent database
Growth Analysis suggests that the instructions to the Swedish Energy Agency should include the task of setting up a patent database with information about patents in the form of the patent’s application or publication number. It must include all patents that have been developed, directly or indirectly, with the help of funding from the Swedish Energy Agency.
The government needs to prioritise to give the prerequisites for long-term transition
The evaluation demonstrates a lack of policy instruments that create a demand for the technology and services that the Swedish Energy Agency supports – technology and services that are far from being competitive on a market but are needed for a long-term transition of the energy system. However, this falls outside the main question of the evaluation since the reason lies beyond the Swedish Energy Agency’s area of responsibility.
Growth Analysis believes it will be difficult for the Swedish Energy Agency to achieve the goal of using its R & I activities to contribute to the long-term transition that is needed by society unless the government provides the necessary prerequisites. The Swedish Energy Agency’s activities often need external co-funding in order to be permissible. However, it is more difficult to find co-funding for long-term societal challenges than for projects that are closer to commercialisation on an existing market, unless there are supplementary strategies and instruments that enable more expensive technology to be commercialised.
Growth Analysis is of the same opinion as the OECD that the government should create the prerequisites for the commercialisation of technology that is essential for long-term societal challenges in the field of energy. The government should prioritise a small number of areas that are of particular importance for Sweden’s transition, for instance, energy use in the steel industry. The measures that will be necessary will probably be in conflict with EU secondary legislation. However, through a well-planned strategy, it should be possible to use article 192 in primary legislation to implement the necessary measures.