The IF25 Heat Auction will provide a fixed premium subsidy to projects that electrify industrial processes using technologies such as heat pumps, induction heating, solar thermal energy and geothermal heating systems. The bidding window is expected to open in early December.
The European Commission is organizing a €1 billion pilot auction across Europe to support industrial heat decarbonisation.
The IF25 heat auction, made available under the EU Innovation Fund, will focus on heat used in manufacturing sectors such as chemicals, steel and cement, supporting electrified and directly renewable heat technologies.
The bidding window will open in early December, with support for projects that electrify industrial processes using technologies such as heat pumps, induction heating, plasma torches, solar thermal and geothermal heating systems, as well as hybrid projects that combine various electrification and direct renewable heat technologies.
Projects from across the European Economic Area are invited to apply. The auction includes three categories that will share the €1 billion budget. The first concerns medium-temperature heat projects between 100 and 400°C with a size greater than or equal to 3 MW but less than 5 MW with a project budget of up to € 150 million.
The second category concerns medium-temperature projects between 100 and 400°C with a size greater than or equal to 5 MW and a project budget of up to €350 million, while the last group for high-temperature projects includes heat produced at a temperature above 400°C, with a size greater than or equal to 3 MW and a project budget of up to €500 million.
For projects falling under the first two tranches, a maximum award of €100 million can be awarded in the context of the auction, while in the last category a maximum award of €250 million is available.
The auction’s terms and conditions explain that successful bidders will receive a fixed premium subsidy, linked and proportional to each tonne of direct CO2 emissions reduced, for a period of up to five years after the project comes into operation.
Projects will have two years to reach financial closure after the grant agreement, while the maximum time to start operations after the grant agreement is set at four years.
A statement from the commission said that by reducing the risks of innovative projects, the auction will help increase the competitiveness of Europe’s clean industries, reduce greenhouse gas emissions, increase energy independence and security and improve the affordability of energy prices.
Last week, the European Commission launched a call for interest under its hydrogen mechanism, aimed at connecting potential suppliers with buyers of renewable or low-carbon hydrogen and derivatives, including ammonia, methanol, certain aviation fuels and e-methane.
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