Digital, Green and Social Transition in the Ostrobothnia Region

Summary: The Ostrobothnia Region is home to a strongly business-driven energy cluster consisting of innovative technology providers for electricity grids, the maritime industry, renewable energy production, and energy efficiency. Accordingly, Energy Technology and System Solutions for Renewable Energy Production together form a priority area in the Strategy for Innovation and Growth in Ostrobothnia 2022-2025 (RIS3). Merinova, as a leading actor in the EnergyVaasa cluster, has played a major role in designing and implementing the RIS3, especially with regard to the priority area of the energy ecosystem in the region. The foundation for this has been a long-standing, trusting and informal cooperation with the Regional Council, as the responsible body of the RIS3, and with VASEK, the municipality-owned business and development company in the Vaasa region. Moreover, thanks to EnergyVaasa’s very close relationship with its member companies and the high level of mutual trust, the smart specialisation strategy and the entire related regional industrial transition process relies strongly on business needs. All in all, this has been the breeding ground for innovative green and smart solutions that have been realised through joint projects and are now also being used for the purpose of a sustainable urban transformation in the city of Vaasa towards a carbon-neutral ecosystem.

EnergyVaasa

Ostrobothnia is located on the west coast of Finland. It has a population of approximately 176,000 inhabitants, spread over a total of 14 municipalities and three sub-regions. The city of Vaasa is the regional centre. It borders the regions of Central Ostrobothnia in the north, South Ostrobothnia in the east and Satakunta in the south. The region has traditionally been strongly characterised by entrepreneurship, has the largest number of companies per capita on the mainland of Finland and also one of the lowest unemployment rates in the country. The economy of Ostrobothnia is very export-oriented, with a share of approximately 71% and a sophisticated energy cluster at the core of the export base. A large number of regional suppliers and other downstream effects contribute to making Ostrobothnia one of Finland’s leading economic regions. For this reason, regional development strategies and in particularly the strategy for innovation and growth focus primarily on maintaining international competitiveness.

The outward-oriented innovation system of Ostrobothnia is driven by large businesses but also seeks to integrate SMEs in regional value chains.

Ostrobothnia is part of the NUTS 2 region West Finland (FI19) which is, according to EU’s Regional Innovation Scoreboard, an innovation leader with increasing innovation performance over time (+19.7% between 2014 and 2021). The region shows relative strengths compared to Finland and the EU in the indicators ‘Individuals with above basic overall digital skills’, ‘Employment in innovative enterprises’ and ‘Sales of new-to-market and new-to-firm innovation’.

 

Reg_Inno Ostrobothnia

The Strategy for Innovation and Growth in Ostrobothnia 2022–2025 is based on smart specialisation, thereby focusing on the manufacturing industry and on activities that benefit several sectors. As indicated above, large companies from the energy sector play a pivotal role within the regional innovation system as they account for a large part of R&D activities. In addition to the energy sector, Ostrobothnia also has leading companies with large downstream effects, e.g. in the boat building industry, where companies use composite technology (e.g Baltic Yacht and Nautor) and have a long and successful history as exporters on a global market. In the industry, abrasive technology innovations play an important role in Ostrobothnia, with leading companies such as Mirka Ltd. being a niche-market leader. Despite the fact that large companies are the main drivers of the regional innovation system, the regional economy consists of many SMEs. The large firms use sub-contractors extensively and up to 30% of the value added from the export is created in these SMEs, which are often in a relationship of dependency with the large companies. A central development task at the heart of the regional strategy of smart specialisation is therefore to deepen and broaden the export base. Thus, one of the outlined goals of the strategy is for SMEs to achieve technological advancements and move up the value chain to become independent exporters.

The Ostrobothnian Strategy for Innovation and Growth 2022-2025 highlights four thematic priority areas to enable green growth through innovation and thus pave the way for digital and green transition of the regional economy:

  • Advanced Production Methods
  • Digital Solutions
  • Energy Technology and System Solutions for Renewable Energy Production
  • Circular Economy and Carbon-Neutral Economy

The priority areas are built on existing strengths in industry, research and development, and education. At the same time, these focus areas strongly address three global trends that affect Ostrobothnia’s innovation system and future growth opportunities through innovation. These are: digitalisation, climate change and renewable energy, and industrial modernisation (industry 4.0).

 

The thematic areas have been deliberately designed with a horizontal character, which means that they can benefit not only the competitiveness of the predominant manufacturing sector, but also have a positive impact on other sectors such as agriculture and means of transportation and superstructures. At the interfaces between different sectors, key enabling technologies like robotics, 5G, cybersecurity, AI, IoT, 3D printing and AR are of particular importance. This form of diversification is intended to strengthen the innovation system in the long term and make it more resilient.

A great asset of the Ostrobothnian region is its strong sense of collaboration between business, education and public sector which has been established over decades. Measurements of gaps in cooperation conducted recurrently within the smart specialisation strategy work even show that the companies’ perceived importance of HEIs and the public sector as innovation partners has increased due to new skills, knowledge and new types of cooperation models needed in light of the green and digital transition. Large companies invest approximately 200 million EUR per year in R&D projects and many of them are conducted jointly with other players in the region, e. g. the universities. This strong economic base and the culture of cooperation are indeed very favourable for future projects targeting green and smart transition. What is more, international collaboration and transnational learning is to be amplified in order to acquire new expertise and find complementary partners from global value chains. The priority areas of the strategy can serve as thematic links for new partnerships, especially at European level.

On the other hand, at the level of SMEs, the big challenge remains to sensitise, support and motivate them when it comes to innovation processes, technology development and knowledge transfer from universities.

In the end, innovation and technology development will only be feasible, if talent and skilled workforce is available in the long term – especially for regional SMEs. The demographic change is already palpable and will not be compensated by automation alone. Therefore, the potential of a strong university landscape in Ostrobothnia needs to be leveraged even more in this regard in the future.

The vision formulated within the smart specialisation strategy for Ostrobothnia until 2025 is to become a

world-class innovation system in which education, research, businesses and inhabitants come together to jointly create conditions for globally competitive products and services that allow Ostrobothnia to become a leading region of sustainable development.

By focusing on the above-mentioned four thematic priority areas, the Ostrobothnia strategy pursues the following strategic goals in order to accomplish its vision:

  • Improve the innovative and competitive capacity of SMEs and, consequently, enhance the operating conditions of large global businesses in the region’s ecosystem.
  • Improve the region’s higher education institutions’ ability to support the innovation activities of SMEs and complement research done in large businesses.
  • Create a versatile business life and foster the birth of new functions and export industries in the region.

The Regional Council of Ostrobothnia is responsible for designing the Regional Strategy that contains diverse areas of action for the regional development. It is broader and more comprehensive compared to the Strategy for Innovation and Growth and thus not only addresses innovation promotion. However, both strategies are strongly interconnected and updated every four years. From 2025 onwards, the goal is to prepare the Regional Strategy and the Strategy for Innovation and Growth simultaneously in order to be more efficient and to make better use of synergies – within the region but also at national level. The regional business and development company Vasek, in cooperation with Merinova, has been responsible for the drafting of the ecosystem agreement with the Ministry of Economic Affairs and Employment, which was led and signed by the city of Vaasa. The central government has concluded long-term agreements with university cities regarding the strategic allocation of public and private RDI funds to strengthen globally competitive ecosystems. The agreement is also a way to deepen the Ostrobothnian innovation strategy in areas strongly connected to the energy cluster within the Vaasa region, and to tap into national policies for developing innovation ecosystems in Finland and thus funding.

The Strategy for Innovation and Growth in Ostrobothnia 2022-2025 (RIS3) is the main programme for innovation in the region. There is no separate cluster policy approach. Within the smart specialisation strategy, clusters are referred to as Ecosystems and seen as integral key elements and partners to engage with businesses in the entrepreneurial discovery process, to capture their needs, and to match them with expertise and solutions from other partners, e.g. universities in the region or international partners. It is important to note that the context for implementing the entrepreneurial discovery process in Ostrobothnia supports very well a green and digital transition. Ostrobothnia is fortunate to have forerunners in the field of energy technologies that recognise opportunities for transformative innovation. Besides, ecosystem-related organisations have been strongly involved in discussions with regional and national polilcy makers, especially regarding the design of funding programmes. At the operational level of the strategy, these ecosystems are key drivers for new projects funded through these regional or national programmes.

 

Further reading:

  • Strategy for Innovation and Growth in Ostrobothnia 2022–2025: Smart Specialisation (not yet published online in English)

Energy Technology and System Solutions for Renewable Energy Production together form a priority area in the Strategy for Innovation and Growth in Ostrobothnia 2022-2025 (RIS3). The region is home to a strongly business-driven energy cluster consisting of innovative technology providers for electricity grids, the maritime industry, renewable energy production, and energy efficiency. Since 90% of Finland’s R&D investments in electricity and automation take place in the region of Ostrobothnia, the development of new solutions in the mentioned application fields is of utmost importance. Therefore, the strategic priority area in the RIS3 focuses on building new expertise and the successful implementation of innovative technologies, e.g. in system solutions, smart electricity grids, and energy storage systems.

Merinova, as leading actor in the EnergyVaasa cluster, has played a major role in designing and implementing the RIS3 – especially with regard to the priority area of the energy ecosystem in the region. For example, in 2017/2018, the Regional Council of Ostrobothnia and Merinova together conducted 52 personal interviews with business actors in the energy cluster as part of the RIS3 work. These interviews sought to: map technological needs, measure and discover gaps in regional cooperation as well as to develop a common view on relevant development actions and R&I priorities. The interview material formed an important basis for the strategy and development work of the two organisations. All in all, the foundation for this is a long-standing and informal cooperative relationship with the Regional Council as well as with VASEK, the municipality-owned business and development company in the Vaasa region.

ENERGYVAASA – THE NORDIC ENERGY CAPITAL

EnergyVaasa

The industrial base of the EnergyVaasa cluster goes back to developments that originated over 100 years ago. EnergyVaasa, today the leading cluster in energy technology in the Nordic region, was launched in 2001 by Oy Merinova AB, a neutral background actor and technology centre, together with ABB and the city of Vaasa. The initial goal was to establish contacts with industrial decision makers in Vaasa, which at the time were not Merinova’s owners, and to create new ideas for the Finnish Energy Technology Programme OSKE. Besides, the group aimed at initiating pilot projects, such as small wind power demos, some small wind turbines at the University of Vaasa, and an electric car at Technobothnia. Merinova’s long-term mission has been to successfully develop the energy cluster in the Vaasa region. The fact that the cluster has acted successfully in this regard right from the beginning is shown by benchmarking processes during the German-Nordic-Polish benchmarking initiative (NGP Excellence) in 2011 and again in 2018 (ECEI Bronze Label).

In 2017, a full strategy process was started. Due to changing political frameworks and the pandemic situation, this process lasted nearly four years. It started with about 50 company interviews. The Low Carbon Roadmap for Finland, the RIS3 for Ostrobothnia and other strategy documents were taken into account. Finally, the strategy now covers 2021 until 2027 and with the following thematic pillars

  • smart grids
  • marine solutions
  • sustainable energy production
  • energy efficiency
  • energy storage

The last aspect being new in comparison to the previous strategies – and four cross-cutting aspects (development of the innovation ecosystem; system level expertise, digitisation and circular economy, and human resources).

The EnergyVaasa cluster currently represents approximately 160 companies in the industry, some of which are global market leaders of their niche. Currently, the cluster has nearly 70 committed cluster participants, with all elements of the triple helix represented in the cluster organisation.

With around 9.9 Full-Time Equivalents (FTEs) working for EnergyVaasa, as a cooperation between Merinova and Vasek, the team is very well placed to handle ambitious projects and measures together with cluster actors and in alignment with the Regional Council of Ostrobothnia. The work of the cluster management under the roof of Merinova is mostly privately financed without charging member fees. Merinova itself is mainly hold by companies (70%) and receives further means from the regional development fund and from Vasek. Besides, EnergyVaasa regularly acquires funding for projects through innovation programmes in collaboration with the Regional Council.

In 2022, the EnergyVaasa energy cluster has been granted the ECEI Gold Label certificate, which demonstrates first-class cluster management. The Gold Label certificate of the Vaasa cluster is the first of its kind in Finland.

EV Service Portfolio

The strategic priorities of EnergyVaasa go perfectly in line with those of the Strategy for Innovation and Growth in Ostrobothnia 2022–2025. Solving business-related challenges in the region through smart, green and overall more efficient approaches is at the core of the cluster activities.

The cluster management operates along strategic areas of action with corresponding services and projects (see above table).

EV Impact

For many years, Merinova, with the EnergyVaasa cluster at its core, has been a crucial player within the regional innovation system, facilitating environments where business actors can meet, exchange ideas and initiate joint projects. Due to inceasing transition challenges at business as well as regional level the need for strong and coordinated collaboration within the regional ecosystem has become bigger and bigger. The probability of creating successful projects and marketable green and smart solutions will be increased through a systemic, integrated and collaborative approach within a smart specialisation strategy.

The regional innovation ecosystem of Ostrobothnia can build upon a long history of cooperation and high levels of trust between stakeholders like the Regional Council, VASEK, Merinova, universities and businesses. These relationships have always been very informal, very hands-on, and strongly oriented towards implementation and jointly solving challenges. This culture of pragmatic and solution-oriented cooperation got even stronger during the last years due to higher importance of integrated strategy building in the context of smart and green transition.

In the course of the development of the Strategy for Innovation and Growth in Ostrobothnia 2022–2025, EnergyVaasa provided valuable input in terms of deeper descriptions of the main technological fields in the energy ecosystem. Their proximity to and trustful relationship with member companies paved the way for actively incorporating business perspectives and needs into the design of the smart specialisation strategy. When it comes to the implementation of the strategy, EnergyVaasa plays a crucial role in the development of collaborative innovation projects. In this context, Merinova identifies suitable project partners, builds consortia and works very closely with the Regional Council for the acquisition of funds.  

Through EnergyVaasa’s involvement in the development and implementation of the RIS3, new green and smart solutions could be brought into life through joint projects. For example, EnergyVaasa significantly contributed to the development of the world’s most environmentally friendly cargo and passenger ferry in the world. In addition, the strong participation of cluster companies enabled the development of new technologies that are now being used to build a carbon-neutral urban system in Vaasa. Within the next few years, the goal is for Vaasa to function as an integrated living lab and demonstration site for a carbon-neutral city. Altogether, EnergyVaasa cluster is making a valuable and effective contribution to achieving the vision formulated in the smart specialisation strategy.

Lessons Learnt and Transferability

A strong sense of trustful hands-on collaboration and a shared vision of the direction has been an integral part of the regional DNA of Ostrobothnia. This is also due to local closeness of its stakeholders in the ecosystem. Against this background, the EnergyVaasa cluster has been able to establish itself as a key driver for business and innovation development within the regional industrial ecosystem. It has actively and effectively contributed to both the successful development and implementation of the Strategy for Innovation and Growth in Ostrobothnia 2022–2025. Thanks to the cluster’s very close relationship with its member companies and the high level of mutual trust, the smart specialiation strategy and the entire regional industrial transition process associated with it builds strongly on business needs. On the other hand, it is the informal, pragmatic and trust-based interplay between Merinova as coordinator of the EnergyVaasa cluster and public authorities (mainly Regional Council, VASEK, the city of Vaasa) in strategically steering the regional industrial transition towards a greener and smarter future. Due to the fact that the challenges related to the transition have become bigger, the already existing cooperation culture has grown even stronger.

Based on the experiences in the Ostrobothnia region, the key to a successful industrial transition lies primarily in building trust between the intermediary actors in the ecosystem and between companies, research and universities. It enables open exchange and facilitation of joint innovation projects within an entrepreneurial discovery process. Of course, the regional context and culture provides the basis for this – in Ostrobothnia, there is a long history of trusting partnerships, which is proving to be very favourable today and in the future with regard to effectively shaping the green and smart transition process. Furthermore, a strong involvement of professionally managed clusters helps not only to better understand the needs and challenges of businesses, but also to translate them into a strategic regional development approach where all intermediary institutions of the respective ecosystem maintain a close and open exchange relationship.  

The case of EnergyVaasa and the Ostrobothnia region highlights the importance of mutual trust and a strong sense of cooperation among stakeholders from public and private sectors for integrated, strategic and hands-on econonomic development. Since trusting partnerhsips have been built up within the region for a long time, there is no need to further formalise existing cooperation structures, but rather to continue to use the short communication paths for effective measures in the context of smart and green transition. Moreover, the example of Ostrobothnia and EnergyVaasa illustrates very well that it is not only a matter of strong cooperation within the region, but that expertise from outside is also needed to master the challenging task of green and smart transition. Thus, international partnerships and projects have always played a central role in cluster and innovation-based regional economic development, too.