Why projects in the EU Innovation Fund fail

The EU Innovation Fund is one of the EU’s main funding programmes for low-carbon technologies. With a budget of €40 billion, it is designed to accelerate industrial decarbonisation at scale. Yet in practice, a recurring pattern emerges: projects are delayed, require restructuring, or fail to reach implementation altogether.

For companies, this points to a critical reality: the primary challenge is not access to funding, it is execution.

Where projects lose momentum

Project failure is rarely caused by a single issue. More often, it results from a combination of structural weaknesses:

• Insufficient project maturity at the outset
• Financing structures that are not yet bankable
• Increasing regulatory complexity
• Rapidly evolving market conditions

The most critical phase lies between grant award and implementation, where the majority of execution risks materialise.

Project maturity as a key success factor

In practice, one factor consistently determines success: project maturity. This extends far beyond technological readiness and includes the overall project architecture:

• Bankable financing structures
• A credible permitting strategy
• Resilient supply chains
• A robust, scalable business model

Projects often underestimate this, particularly when transitioning from earlier-stage funding schemes to large-scale deployment.

Common pitfalls and how to avoid them

1. Overestimating implementation readiness

A compelling proposal does not equate to execution readiness. Critical parameters should be validated early:

• Cost assumptions
• Delivery timelines
• Technical feasibility

2. Delaying financial structuring

The absence of committed co-investors remains one of the most common bottlenecks. Best practice:

• Develop the financing structure in parallel with the application
• Engage investors early in the process

3. Misalignment with Innovation Fund criteria

Not every project is competitive within the Innovation Fund framework. Key success factors include:

• Relative CO₂ abatement potential
• Clear competitive positioning
• Strategic timing of submission

4. Underestimating the Grant Agreement phase

At this stage, adjustments are the rule rather than the exception. Projects that perform well:

• Resolve critical issues upfront
• Allocate sufficient resources for negotiations

5. Underestimating market exposure

Volatility in prices and demand can quickly undermine project viability. Strong projects:

• Model multiple market scenarios
• Apply conservative assumptions
• Maintain flexibility in their business model

What successful projects do differently

Successful projects are not defined by more innovative ideas, but by stronger preparation. They:

• Have a detailed understanding of the funding framework
• Assess risks early and realistically
• Integrate innovation into a bankable business case

They are not designed solely to secure funding, but to function as viable investment projects.

From eligibility to bankability

A common misconception is that funding eligibility equals implementability. In reality, success is determined after the award, by the ability to deliver complex projects under real-world conditions.

How we support companies

We support companies across the critical stages of the Innovation Fund lifecycle:

• Assessing project readiness prior to submission
• Positioning projects strategically within the funding framework
• Structuring bankable projects and financing models
• Supporting negotiations throughout the Grant Agreement phase

Our objective is to identify execution risks early, and mitigate them systematically.

The EU Innovation Fund remains a cornerstone of Europe’s industrial decarbonisation strategy. At the same time, one thing is clear: success depends less on the idea and more on the ability to execute.

For companies, this requires a shift in focus: from preparing applications to preparing for implementation.

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