Commission awards €400 million to European projects to decarbonise heat production

May 22, 2026 by The Sting's Team Leave a Comment

EU agrees on a 2040 Climate target that sets a clear path towards a decarbonised and competitive economy — (Credit: Unsplash)

This article is brought to you in association with the European Commission.

Today, the European Commission has selected 65 projects under the Innovation Fund Heat Auction, the first ever EU-wide auction to accelerate the deployment of innovative clean heat technologies across European industry.

Across 10 European Economic Area countries, Austria, Belgium, Czechia, Denmark, France, Germany, Hungary, Portugal, Slovenia and Spain, the projects will use a wide range of technologies to decarbonise industrial heat production, and accelerate the market uptake of electrified heat solutions and of heat produced directly from renewable sources.

The selected projects, with their use of innovative technologies, will avoid more than 6.6 million tonnes of CO2 emissions over 10 years by replacing natural gas-fuelled heat production systems. Together they are expected to produce around 16.3 terawatt-hours (TWh) of decarbonised heat over their first 5 years of operation, based on a thermal capacity of 766 megawatts (MW). This is equivalent to replacing over 1.5 billion cubic metres of natural gas over five years, roughly comparable to the annual consumption of 4 million EU households.

The projects will receive a total amount of around €400 million in grants from the Innovation Fund. The money is coming from the EU Emissions Trading System (ETS).

The support from the Innovation Fund will allow these projects to contribute to the EU’s clean transition, energy independence and security and industrial competitiveness.

Selected Projects

Projects have a wide range of technology and sector portfolios. Most projects rely on direct resistance heating or indirect resistance heating. Others include technologies such as heat pumps, solar thermal, electromagnetic and dielectric heating, and hybrid technologies. 

In terms of industrial off-taker sectors, projects cover pulp and paper, as well as glass, ceramics and construction materials and iron and steel, which are sectors that have so far been less represented in the Innovation Fund portfolio. Other sectors that benefit from the Heat Auction are food and beverage, textiles and pharmaceuticals.

The auction was structured around three ‘topics’, based on temperature level and installation capacity:

5 projects are invited under the high-temperature heat topic, amounting to €62.1 million in support
44 projects are invited under the medium-temperature heat topic above 5 MW capacity, with a total budget of €286.5 million
16 projects are invited under the medium-temperature heat topic with 3-5MW capacity, with a total of €47.9 million.

Next steps

The European Climate, Infrastructure and Environment Executive Agency (CINEA) will now begin the formal preparation of grant agreements with the selected projects.

This process will confirm the final conditions for financial support. Grant Agreements are expected to be signed in the second half of 2026.

Selected projects will have to reach financial close within two years of grant signature and enter into operation within four years. These commitments are backed by a completion guarantee provided by the projects to the Commission. CINEA will continue to monitor progress throughout implementation to ensure projects are delivered as planned and support is used in line with the agreed terms. The final list of signed projects under the Innovation Fund (IF25) Heat Auction is expected to be published in the fourth quarter of 2026.

Moreover, preparations for the Innovation Fund 2026 have begun, with the announcement of a second round of the Heat Auction for 2026 with a budget of €1 billion announced at the 2026 Cleantech Conference on Tuesday. The Commission plans to publish the draft Terms and Conditions for the IF26 Heat Auction by the end of May 2026 and a general Innovation Fund Stakeholders consultation event will be held on 19 June 2026.

Background

The IF25 Heat Auction is the first EU-wide auction to tap the large potential for decarbonisation of heat production in industry. It is a pilot for the future Industrial Decarbonisation Bank. While there is considerable potential across all industrial sectors, the uptake of decarbonised solutions for process heat production is still slow. The auction covers technologies such as heat pumps, electric boilers and furnaces, as well as solar thermal, geothermal and thermal energy storage, and was open to projects from all industrial sectors.

With a total of 85 applications submitted, this first auction for the decarbonisation of industrial heat received a strong and encouraging response from industry.   Project size and grant requests from the 65 successful projects ranged from 3 MWth to 45 MWth, and from €444 000 to €37.1 million.

The Innovation Fund has an estimated total budget of €40 billion from the EU Emissions Trading System for the period from 2020 to 2030. It creates financial incentives for companies and public authorities to invest in cutting-edge net-zero technologies and support Europe’s transition to climate neutrality. The Innovation Fund has already awarded grants to around 260 innovative projects across the EEA.

For More Information

List of selected projects

News: Innovation Fund 2025 auctions attract almost €10 billion of bids from European industry for decarbonisation support 

News: Launch of three new funding opportunities under the Innovation Fund 

EU Funding and Tenders Portal

Innovation Fund projects dashboard

IF25 Heat Auction Call

IF25 Hydrogen Auction Call

Innovation Fund

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