Innovation aid for shipbuilding

Ongoing call: The Innovation Funding Agency Business Finland (Funding Agency) processes applications and makes decisions on an ongoing basis.

Innovation aid for shipbuilding is a government grant intended for companies operating in the shipbuilding sector. The goal of the grant is to encourage development projects for ship-based or offshore solutions that will lead to innovations that are new to the industry or surpass the current state of the art.

Applications for innovation aid must be submitted before a shipbuilding order is placed. Aid may be granted only after the company has received the shipbuilding order in question.

Funding is competitive and discretionary.

Companies registered in Finland can apply for funding. ‘Company’ refers to all entities, regardless of their legal form, that engage in economic activity, but does not include natural persons. For the aforementioned reason, funding is not granted to self-employed individuals or sole proprietorships.

The company must engage in shipbuilding, ship repair, ship conversion or build floating and mobile offshore structures.

Funding is provided in the form of a grant. The grant may be up to 25% of the eligible costs defined in Government Decree (364/2015) on state grants for innovations in shipbuilding. 

The maximum grant awarded for a single project is EUR 25 million. 

The amount of funding to be granted is set in the Government’s annual budget.

Aid may be granted to projects that include:

• Experimental development in which existing knowledge is used to develop new or improved products, processes, services, prototypes and pilot projects, including digital products, processes or services. Experimental development does not include improvements to existing products that can be classified as ‘normal and necessary development’.
• Shipbuilding that involves the construction of self-propelled merchant ships incorporating innovative features.
• Ship repair, in which repairs to self-propelled merchant vessels are carried out using innovative methods.
• Structural alterations to vessels, in which the structure of self-propelled merchant vessels is substantially modified (gross tonnage > 1,000).
• The construction of floating and mobile offshore structures intended for the exploration, exploitation, or production of oil, gas, or renewable energy.

Eligible projects are described in the standard terms and conditions for innovation aid for shipbuilding. The aid is limited directly and exclusively to investment, design, and testing costs related to the innovative part of the project. 

Only purchases and work covered by a written contract or purchase order and carried out after the funding application was submitted may be approved for the project. A binding purchase agreement should not be entered into before the application is submitted.

The elements related to the innovation aid must be separated from the rest of the construction project, and the development component receiving the innovation aid is monitored during the project under its own cost centre or work order numbers. Any expenditure arising from an order placed before the start of the project period cannot be charged to the project, unless the order includes a cancellation clause linked to the start of the project.

The following conditions must be met at the time the funding application is submitted: 

• The applicant must be a company operating in Finland with a Finnish Business ID.
• The company must have a project planned to experimentally develop an innovative product or process. The project involves the experimental development of innovative products and methods that are technically new or significantly superior to the current state of the art in the European Union’s shipbuilding industry and involve a risk of technological or industrial failure.
• The company has a credible total funding plan for the duration of the project. In addition to the company’s self-funded share of the development project, it must be able to cover the costs incurred by the development project before receiving the grant from Business Finland. Funding from Business Finland is disbursed retrospectively based on reports and expense statements, with the exception of a first advance payment in cases of loan funding. At least 10 per cent of the awarded grant will only be paid after the final report has been approved and if the project has incurred sufficient eligible costs. The company must have the financial capacity to commercially exploit the results of the project and continue operations after the project ends.
• The applicant must have sufficient human resources to implement the project. 

General obstacles to granting and payment of funding: Funding obstacles

Funding will also not be granted if:

• The applicant is a sole proprietor or operates under a trade name 
• The applicant is a company registered in the Åland Islands that does not have a permanent establishment and operations in mainland Finland.

Funding is competitive and discretionary.

In addition to the overall assessment, applications will be assessed according to the following criteria, provided that there are no obstacles to funding as mentioned in the previous paragraph:

Company resources

• The company's resources to implement the project in addition to other business activities
• The share of public funding in the company's R&D investments from previous years, as well as the implementation of previous projects and the utilization of their results.

Innovativeness of the solution

• The product or process is technologically new or significantly superior compared to the current state of the art in the European Union’s shipbuilding industry.
• The product or process carries a risk of technological or industrial failure.

Finnish interest 

• The applicant is a company registered in Finland and has a place of business in Finland.

The incentive effect of funding on the company’s innovation activities

• The incentive effect can be considered to be met for the first vessel in a production series. However, if new innovative solutions that have not yet been incorporated into the first vessel are tested and implemented in subsequent vessels in the series, the sister vessel may be treated as a new project in this regard.
• The applicant’s ability to maintain a profitable business.