The Commission is awarding €400 million to European projects aimed at decarbonising heat production

The European Commission has selected 65 projects under the Thermal Energy Innovation Fund auction, the first EU-wide auction aimed at accelerating the roll-out of innovative clean heating technologies across European industry. 

Across ten countries in the European Economic Area (Austria, Belgium, the Czech Republic, Denmark, France, Germany, Hungary, Portugal, Slovenia and Spain), the projects will utilise a wide range of technologies to decarbonise industrial heat production and accelerate the market uptake of electrified heating solutions and heat produced directly from renewable sources.

Thanks to the use of innovative technologies, the selected projects will prevent the emission of more than 6.6 million tonnes of CO2 over 10 years by replacing natural gas-fired heat production systems. Together, they are expected to generate around 16.3 terawatt-hours (TWh) of decarbonised heat during their first five years of operation, with a thermal capacity of 766 megawatts (MW). This is equivalent to replacing more than 1.5 billion cubic metres of natural gas over five years, a quantity comparable to the annual consumption of 4 million households in the EU. 

The projects will receive a total of approximately €400 million in grants from the Innovation Fund. The money comes fromthe EU Emissions Trading System (ETS).

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

Selected projects

The projects cover a wide range of technologies and sectors. Most are based on direct or indirect resistance heating. Others include technologies such as heat pumps,solar thermal energy, electromagnetic and dielectric heating, and hybrid technologies. 

In terms of industrial buyer sectors, the projects cover pulp and paper, as well as glass, ceramics, construction materials and iron and steel, sectors that have so far been under-represented in the Innovation Fund’s portfolio. Other sectors benefiting from the Energy Auction include food and drink, textiles and pharmaceuticals. 

The auction was structured around three “themes”, based on temperature level and installation capacity:  

• Five projects have been selected under the high-temperature heat theme, with funding of €62.1 million. 

• Forty-four projects have been invited to tender under the medium-temperature heat theme, with a capacity exceeding 5 MW, with a total budget of €286.5 million. 

• Sixteen projects have been selected under the medium-temperature heating theme, with a capacity of between 3 and 5 MW, totalling €47.9 million. 

Next steps

TheEuropean 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 the award of financial support. The grant agreements are expected to be signed in the second half of 2026.  

The selected projects must achieve financial close within two years of the grant being signed and become operational within four years. These commitments are backed by a completion guarantee that the projects provide to the Commission. CINEA will continue to monitor progress during implementation to ensure that projects proceed as planned and that the support is used in accordance with the agreed terms. The final list of projects awarded under the Innovation Fund (IF25) thermal energy auction is expected to be published in the fourth quarter of 2026.  

In addition, preparations for the Innovation Fund 2026 have begun, with the announcement of a second round of the 2026 Heat Auction, with a budget of €1 billion, at theCleantech 2026 Conferenceheld on Tuesday. The Commission plans to publish the draft Terms and Conditions for the Innovation Fund 2026 Heat Auction by the end of May 2026, and ageneral consultation with Innovation Fund stakeholderswill take place on 19 June 2026.

Fund

The IF25 heat auction is the first EU-wide auction to harness the significant decarbonisation potential of heat production in industry. It is a pilot project for the futureIndustrial Decarbonisation Bank. Whilst there is considerable potential across all industrial sectors, the uptake of decarbonised solutions for process heat production remains 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 the sector. The size of the projects and the grant requests for the 65 selected 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 2020–2030. This fund creates financial incentives for businesses and public authorities to invest in cutting-edge technologies to achieve net-zero emissions and support Europe’s transition to climate neutrality. The Innovation Fund has already awarded grants to around 260 innovative projects across the European Economic Area (EEA). 

More information: European Commission.