News - July 17, 2023

Financing Pre-Industrial Demonstrators

Written by Cleantech Alps 2 min read

In order to advocate for green policies and legislation that promote the adoption of cleantech solutions, it is crucial to have strong business cases in place. This article, part of a series on effective advocacy in Switzerland, emphasises the need for successful business cases to demonstrate the viability and potential of cleantech. Financing pre-industrial demonstrators plays a key role in creating these business cases, as it enables cleantech start-ups and SMEs to establish reference plants and pre-series production that showcase the effectiveness and economic viability of their technologies. By highlighting the importance of financing demonstrators, this article contributes to the overall goal of advocating for policies that benefit the adoption of cleantech in Switzerland.

Switzerland's cleantech start-ups and SMEs are struggling either to set up reference plants/pre-industrial demonstrators, or to realise pre-series before mass production. One of the difficulties is the high cost of building the first installation unit at industrial scale, or the first few products before moving to a systematic production or bigger production lines. The investment can easily cost several dozen millions, and before any significant sales or revenues are generated.

This is an important issue as it slows down the whole process for large-scale deployment of cleantech. Indeed, this phase is a real gateway to credibility with industry players. This phenomena is well known for infrastructure projects and our colleagues from the UK even call it the Double Valley of Death.

In France and in the USA, co-financing programs at regional or national level support pre-industrial facilities. Israel is working to address this problem with specific programs and instruments like the Cleantech Growth Fund or pilot programs with state-owned companies. 

Switzerland faces a real challenge with the “Ordnungspolitik’s concept” that prevents funding programs to invest significant amounts of public money (financing of up to 8 digits) in few big pre-industrial installations, arguing it should be fully financed through private money. Eric Plan, Cleantech Alps’ Secretary General sees a great opportunity for Switzerland in reframing its legal framework but for him:

“The main bottle neck still lies with decision makers that always bet on corporates, and are not ready to take the risk to bet on a few new promising ventures. Our culture still does not encourage decisions with risk attached… that have the chance of failure!”

The current financial instruments available to companies developing cleantech solutions in Switzerland are not adequately suited to support industrialisation and mass deployment. There is a clear lack of an instrument that provides patient money for infrastructure and production process investments, which is essential for the growth of the sector. To address this issue, it is necessary to foster more dialogue and exchanges between the various players in the wider world of investment, both from the private and public sectors. By unlocking potential synergies between cleantech companies and their customers, Switzerland can bridge the financing gap and expedite the industrialisation and mass deployment of cleantech solutions. This not only strengthens the viability of cleantech but also reinforces the case for advocating green policies and legislation. By overcoming the challenges and reframing the legal framework to embrace promising ventures, Switzerland can position itself as a leader in cleantech innovation and take increasing ownership over its 2030 agenda.

Written by Cleantech Alps on July 17, 2023

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