The Ecosystem: the race is on to choose Europe’s Regional Innovation Valleys

The European Commission plans to designate 100 locations across Europe as Regional Innovation Valleys, in a bid to strengthen innovation in EU priority areas and encourage collaboration between more and less advanced regions. While the value of winning the label is still unclear, the underlying goal of coordinating EU research money with regional development spending on innovation - in a bid to to amplify the impact of both funding streams - is becoming increasingly evident.

The calls for proposals were published on 17 May. As the Commission is keen to point out, this represents an unusual alignment of EU research and regional development funding.

“For the first time, cohesion policy and Horizon Europe are organising a joint system of calls, for instruments that have different logics, different budgets and different rules,” said Nicola De Michelis, the director responsible for smart and sustainable growth in DG Regio, the Commission’s department for regional and urban policy.

Speaking at an information day for initiative, on 25 May, De Michelis said the calls are also intended as a reality check for the Smart Specialisation Strategies that have long set the agenda for each region’s research and innovation policies.

“Since the world has changed in the past few years, there may be a need to rethink whether the priorities identified in those strategies are still relevant,” he said.

In many cases, the strategies will be spot-on for emerging challenges such as semiconductors, renewable energies, net-zero technologies and the supply of rare materials. But others will require realignment to meet EU priorities.

“This is really the meaning of the Regional Innovation Valley concept,” De Michelis said. “It says there are new priorities out there, let’s see how the two calls we’ve put at your service help in readjusting things.”

The idea that the calls will have the effect of fine tuning the Smart Specialisation Strategies was welcomed by Pirita Lindholm, director of the European Regions Research and Innovation Network (ERRIN). “Smart specialisation is important, but you also have to adjust,” she said.

A similar process is happening under the Partnerships for Regional Innovation. “This is also making stronger links between cohesion policy and research and innovation policy, and this is something we fully endorse,” she said.

Filling the quota

The plan for Regional Innovation Valleys was set out in the European Innovation Agenda, published by the Commission last year. This was to be supported by a joint call for proposals involving Horizon Europe and the Interregional Innovation Investments (I3) instrument of the European Regional Development Fund. All the regions successful in these calls would automatically be named Regional Innovation Valleys.

Aware that this procedure would only partially fill the quota, the Commission issued a call in March for expressions of interest from regions which want to receive the Regional Innovation Valley label. These applications will be judged by a panel of experts and the label awarded, without additional funding, to regions that demonstrate a commitment to interregional collaboration and which have oriented their research and innovation policy and spending towards EU priorities.

These policies are defined as: reducing the reliance on fossil fuels; increasing global food security; mastering the digital transformation, including cybersecurity; improving healthcare; and achieving circularity.

While registering an expression of interest is not a precondition for applying to this month’s calls for proposals, the Commission is encouraging regions to use both approaches. Partly this is as a safety net for regions whch miss the cut because of the budget or because their proposals are not mature enough.

“If you apply for the call for expressions of interest and can demonstrate your commitment to become a Regional Innovation Valley, then you will receive the label,” said Anna Panagopoulou, director of the European Research Area and Innovation at DG Research.

The Commission also wants to draw on the information about thematic interests and financial commitments submitted through the expressions of interest to matchmake between regions. “We can help the different regions to recognise their partners, and to establish consortia, and to apply to these calls,” Panagopoulou said.

This will be challenging for a number of reasons, not least because the whole process has been accelerated, apparently to produce results before the end of the present Commission’s term. The call for proposals had been expected in January 2024, after the expressions of interest. Now it will run in parallel, with both closing to applications in mid-October. Evaluation will take place though the winter, before the results are announced in March 2024. Contracts should be signed in June.

Having to rush through applications will be particularly challenging for the call for proposals under Horizon Europe. Each bid must involve a minimum of five national or regional authorities from at least five different EU states or countries associated with Horizon Europe. At least two of these should be moderate or emerging innovator regions, and at least one a strong innovation leader region.

When responding to the call for proposals, each consortium must have an action plan in place to deliver at least three interregional innovation projects in its area of interest. These are expected to be similar to Horizon Europe’s existing Innovation Actions. They should last from three to five years, and distribute funds to third parties through open calls for proposals.

Crucially, the consortium members must explain how they will provide 50% of the total budget through co-funding. “The interest is there, the regions are ready, but co-funding is the big question. That will be the main barrier for applications,” Lindholm said.

It is particularly complicated where regions want to use structural funds for co-funding. This is permitted, but such synergistic use of cohesion and Horizon funding is largely untested. “In practical terms this is still a challenge, and has to be worked out with national authorities,” said Ewa Chomicz, ERRIN’s policy and engagement manager.

The task is daunting, even for organisations such as ERRIN that were waiting for the call. It has been preparing with its member regions since the end of last year. “We started early, because we knew the co-funding dimension would be very complicated, but now everything is happening much more quickly than planned, and the practical co-funding issues really need more time to be sorted out,” said Lindholm.

At the same time, having a practical test case may focus minds on finding a solution. “This call has raised a lot of interest, and it is potentially a good way to push for these practical synergies,” Lindholm said.

Expanding value chains

The calls for proposals under the I3 instrument are less demanding in terms of co-funding, but have also been hurried out, with little practical information available before the publication of the call texts this month. One I3 strand invites applications for interregional investment programmes that strengthen, connect, or expand existing value chains. The other supports interregional innovation investments that develop value chains in less developed regions and reinforce the integration of innovation actors in EU value chains.

Both strands aim to support innovation actors, including start-ups, whose investment ideas are ready to be developed into mature business cases.

The calls published on 17 May amount to €122 million, which covers the bulk of the €170 million committed for the whole Regional Innovation Valleys initiative. Further calls are envisaged in 2024 and 2025 to distribute the remaining €40 million.

ERRIN is encouraging its members to both register an expression of interest and apply through the calls for proposals. As well as increasing their chances of getting the label, the work involved is complementary. “Submitting an expression of interest is a way of doing the basic preparation for the calls,” Lindholm said.

The questions asked in the expression of interest process are similar to those that ERRIN has been asking in its efforts to prepare its community to respond to the calls. This has involved getting regions to think about how they will mobilise funding to take part, the topics they are most interested in addressing, and which of them are willing to coordinate a possible consortium.

“We have identified potentially eight or nine project consortia, with a lot of interest on the topic of reducing reliance on fossil fuels, especially with regard to hydrogen,” Lindholm said. These ideas are now being handed over to the potential coordinators to prepare formal bids.

In this context, ERRIN’s members see a lot of potential in connecting the Regional Innovation Valleys with the Commission’s Hydrogen Valleys initiative.

“The Hydrogen Valleys are very technology-oriented, and do not have the same kind of collaborative thinking as the Regional Innovation Valleys,” said Lindholm. The Hydrogen Valleys are also industry-led, whereas the Regional Innovation Valleys are based on local needs and have a focus on the demand side. “So, our colleagues who are active in hydrogen see this as an opportunity to further mobilise and connect with each other via this call.”

The emphasis on collaboration has the potential to foster alliances between regions with complementary capabilities. “This is quite interesting, and not really part of the current Hydrogen Valleys discussion,” Lindholm said.

The question that remains to be answered about the Regional Innovation Valleys is what value the label will have for those regions that don’t win funding. “Some regions might be interested in being recognised as a Regional Innovation Valley, to give them visibility at the EU and national level, but in practical terms, will the label open doors towards some further specific opportunities?” asked Chomicz.

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