In this month (March 2021) in our Making the Green Deal Happen Blog Series, we learn about the renewable energy cluster in Spain which has broadened its remit, brought in new stakeholders, local municipalities and is using national green recovery monies to create fifty local renewable energy communities. This demonstrates, there is plenty of innovation potential on the ground keen to make the green deal happen.
Bianca Dragomir is Chief Executive of AVAESEN which is the Valencian Region Energy Association encompassing more than 100 business partners, a total employment of more than 6.000 professionals and a total turnover of 3 billion euros.
Making extra-ordinary change in energy is possible
The scale of the pandemic has granted leaders the license to execute real change on climate action. Thirty percent of 1.8 trillion euros – the entire European budget over the next 7 years – is targeting climate action. How do we maximise these European Green Deal monies and navigate the change towards low carbon economy in a meaningful way?
Avaesen is an industrial cluster focused on renewable energies in the Valencia region of Spain. It leads a vibrant cleantech innovation ecosystem together with 300 public and private stakeholders: 160 businesses employing 6,000 staff in green jobs, cities of all sizes, innovation centres and universities, government and private investors.
Ten years ago, Spain had put a ‘tax on sun’. In the country with more than 300 days of sunshine per year, anyone who built a renewable energy installation had to pay the entire cost of it, plus a tax on what it generated. This literally was killing the industry.
The first step to bounce back was to shift the economic activity and perspective of the cluster so that it was more self-reliant rather than just waiting for subsidies. As a result, new business and innovation opportunities were opened internationally for more than 100 SMEs. This kept the sector afloat.
Secondly, we extended our agenda so that it encompassed policy work. By working with our regional government on the potential of the renewable energy sector and the need for new energy policies, such as decentralized solar power, we obtained a partial compensation of the ‘tax on sun’ for households and SMEs. Last year we worked with three different ministries on a law to create 3500 green jobs and attract €5bn investments over the next 5 years.
Thirdly, we re-ignited the sector by placing innovation at the core. In a joint partnership with two cities, investors, universities, corporates and EIT Climate-KIC, we launched the first climate accelerator in Spain helping 275 start-ups. This established the Valencia cleantech innovation ecosystem like a ripple effect and then it expanded the formula across 12 countries.
Fourth, we broadened scope further so that the cluster became the hub of a wider movement. We co-created sustainable energy plans for small and medium towns in the region and mobilized tenders for new clean energy projects. Last year, our Smart Cities Think Tank mobilized more than €49M by linking municipalities as problem owners with companies and universities as solution providers, and government, venture capitalists and business angels as funders.
The Need to Scale and Emerging Ecosystem Initiatives
Avaesen started as an ordinary network of SMEs specialized in renewable energy and has developed into a broader hub co-leading energy transition in the region and beyond.
Spain is now set to triple the amount of renewable energy by 2030 while creating 200.000 new green jobs. The share of renewables in the energy mix is due to grow from 18% to 43 %. The energy revolution is taking off.
Now money is not dribbling anymore as in the past. The flood gates have opened and green funding is pouring in. To speed up in one year what the sector should have done in the last ten is a challenge in terms of available raw materials, skilled workforce shortages and financial know-how. Shifting engineers towards clean energy from other sectors gridlocked by the pandemic like aerospace may happen over time but a significant acceleration in workforce re-skilling to catch up with the speed of change is needed now.
We know that the energy transition depends on how integrated the local networks are with cities, citizens, renewable energy producers, the flexibility in demand and supply and creation of energy cooperatives and local energy markets. These create a stabilizing effect on grid stability and energy prices, plus local jobs in the local economy and, therefore, more resilience. For this to happen we need to have renewable energies integrated into towns, villages and city districts. This would solve part of the European grid balancing and power storage challenges. This is a transition that requires orchestration, systemic change, with empowered citizens as prosumers.
On the other hand, governments need execution capacity to reach ambitious targets, fast. Experience so far shows that many European funds have been underspent or spent too slowly by regional governments across Europe. The low-hanging fruit for governments is to rely on the shortcut of the multinationals. Big giants are already claiming their turf, promising big operational capacity and unprecedented impact on energy and digital transition. The high-hanging fruit, however, is to foster new innovation champions ‘made by Europe’, namely alliances drawing together the capacities and expertise of big and small innovators, research institutes, clusters and city governments to drive change. This would create and spread new jobs across the territories, create resilient local economies and build innovation capacity for the longer term.
This is the approach to green transition that we are following at Avaesen. This March, we agreed to a mission-oriented project together with 70 towns and cities who we have been working with over the past years within our Smart Cities Think Tank. Together, along with the regional government and the Union of Consumers we shall promote at least 50 new local renewable energy communities. Each of these will connect citizens, SMEs, city councils, into green cooperatives; self-consumption hubs that will collectively generate and share renewable energy for local self-supply. This open, democratic renewable energy model unites and empowers the citizen as an active participant and owner of the energy system, changing radically their relationship with the electricity company. The project is due to mobilize €200 million and create 300 new jobs before 2023 in the Valencian Region. Part of the funds are private and part are due to come from the European Green Deal and the national recovery plan.
A lifetime opportunity has opened to us. But to affect real change, we need locally-based movements; systemic thinking; bold ecosystems orchestrating multiple stakeholders, making conscious choices to lead with shared purpose. This is the broad innovation model that can catch the winds of this ‘decisive decade’ for the long term.
This blog is produced by TIPC and partner, EIT Climate-KIC