This paper aims to discuss the peculiarities of innovation approaches in the energy sector and examines success stories on how alternative sources of funding (such as cascade funding deriving from EU-financed projects) can effectively promote the role of SMEs in this environment. As digitalisation and smartification of the energy sector are key goals of the European Commission (EC), relevant legislative packages like the European Green Deal and other initiatives are actively promoting these priorities as enablers of the green transition. However, while large energy companies can afford to make substantial innovation investments, the SMEs innovation scenario is often characterised by a selected portfolio of start-ups and SMEs that get funded by large players only when functional to their business, leaving a significant portion of innovative SMEs out of this investment trend. In this context, the EU-funded DigiFed project’s approach, supporting Application Experiments (AEs) for innovative products development, seems relevant to showcase alternative ways to support innovation in the energy sector. Indeed, in 2 years of implementation, DigiFed has structured and launched 3 Open Calls for AEs (cascade funding), succeeding in funding 71 companies and 46 AEs in several sectors, for an overall investment budget of € 3.6 M. The present paper focuses on two successful cases of TWIN AEs related to the energy sector, i.e., DYNAGRID and REDUXI. DYNAGRID aims at demonstrating an affordable, wireless and battery-free solution to digitise the New Caledonian electric grid, reducing maintenance and increasing grid capacity, representing a peculiar case of successful implementation with a long-distance collaboration. On the other hand, REDUXI is focused on developing a smart, plug & play building management system box, capable of forecasting energy consumption and its further redistribution, with high chances to quickly reach the market. Eventually, based on these success cases, the paper discusses the support provided by DigiFed and its benefits with respect to other forms of innovation financing.