The European Commission, in its first Innovation Fund heat auction, has awarded €400 million ($465.7 million) to 65 industrial heat decarbonization projects in 10 European countries, focusing on electrification and renewable heat technologies in energy-intensive industries.
The European Commission has selected 65 projects in 10 European countries that will receive a total of EUR 400 million in subsidies as part of the Innovation Fund’s first industrial heat auction. The plan aims to accelerate the deployment of electrified and renewable heating technologies in energy-intensive industries.
The selected projects span Austria, Belgium, Czech Republic, Denmark, France, Germany, Hungary, Portugal, Slovenia and Spain, and include technologies such as heat pumps, direct and indirect resistance heating, solar thermal energy, electromagnetic and dielectric heating, and hybrid systems. The industrial sectors represented include pulp and paper, glass, ceramics, building materials, iron and steel, food and drink, textiles and pharmaceuticals – sectors that the European Commission has identified as under-represented in Innovation Fund support to date.
Together, the 65 projects are expected to avoid more than 6.6 million tonnes of CO2 emissions over ten years and produce approximately 16.3 TWh of low-carbon heat in their first five years of operation, based on a combined thermal capacity of 766 MW. The commission said this is equivalent to replacing more than 1.5 billion cubic meters of natural gas in five years.
The auction was divided into three categories, divided by temperature level and installation capacity. Five projects were awarded under the theme of high temperature heat, for which 62.1 million euros were received. Forty-four projects were awarded in the context of a topic for medium temperatures above 5 MW, worth a combined amount of 286.5 million euros. Sixteen projects were awarded under a medium temperature theme for smaller installations from 3 MW to 5 MW, for which € 47.9 million was received.
The financing comes from revenues from the EU Emissions Trading System (ETS). The European Executive Agency for Climate, Infrastructure and Environment will now start preparing grant agreements with selected projects. The grant agreements are expected to be signed in the second half of 2026, with the projects expected to be financially closed within two years of signing and operational within four years.
The auction attracted 85 applications, raising a total of €1.4 billion – more than three times the available budget. The Commission described the Heat Auction as a pilot for the future Industrial Decarbonization Bank, a planned financing instrument under the Clean Industrial Deal. A second round with a budget of €1 billion has been announced for 2026, the draft terms of which will be published at the end of May 2026.
The award concludes a process that began when the European Commission finalized the terms of the auction in November 2025. Bidding began in December and entries closed in February 2026.
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