€400 million to accelerate industrial heat decarbonisation across Europe
Today, the European Commission announced the selection of 65 projects under the Innovation Fund Heat Auction, the first-ever EU-wide auction dedicated to accelerating the deployment of innovative clean heat technologies across European industry.
The selected projects span 10 European Economic Area (EEA) countries — Austria, Belgium, Czechia, Denmark, France, Germany, Hungary, Portugal, Slovenia and Spain — and will support a broad range of technologies designed to decarbonise industrial heat production. The initiative aims to accelerate the market uptake of electrified heat solutions and heat generated directly from renewable energy sources.
Together, the projects are expected to avoid more than 6.6 million tonnes of CO2 emissions over a ten-year period by replacing natural gas-fuelled heat production systems. During their first five years of operation, the projects are projected to generate approximately 16.3 terawatt-hours (TWh) of decarbonised heat, supported by a combined thermal capacity of 766 megawatts (MW).
This level of clean heat production is equivalent to replacing more than 1.5 billion cubic metres of natural gas over five years — roughly comparable to the annual gas consumption of 4 million EU households.
The projects will receive approximately €400 million in grants from the Innovation Fund, financed through revenues from the EU Emissions Trading System (ETS).
The support is expected to strengthen Europe’s clean energy transition while contributing to energy independence, security of supply and industrial competitiveness.
Selected projects and technologies
The selected projects represent a diverse mix of technologies and industrial sectors.
Most projects rely on direct or indirect resistance heating technologies, while others utilise:
- Heat pumps
- Solar thermal systems
- Electromagnetic heating
- Dielectric heating
- Hybrid heat technologies
The industrial sectors covered include:
- Pulp and paper
- Glass manufacturing
- Ceramics
- Construction materials
- Iron and steel
- Food and beverage
- Textiles
- Pharmaceuticals
Notably, several sectors such as iron and steel, glass and ceramics have previously been underrepresented within the Innovation Fund portfolio.
Auction structure and funding allocation
The Heat Auction was structured around three thematic categories based on temperature level and installation capacity:
High-temperature heat
- 5 projects selected
- €62.1 million in support allocated
Medium-temperature heat above 5 MW capacity
- 44 projects selected
- €286.5 million in support allocated
Medium-temperature heat between 3 MW and 5 MW capacity
- 16 projects selected
- €47.9 million in support allocated
Next steps
The European Climate, Infrastructure and Environment Executive Agency (CINEA) will now begin preparing grant agreements with the selected projects.
The grant preparation process will confirm the final conditions for financial support, with grant agreements expected to be signed during the second half of 2026.
Selected projects will be required to:
- Reach financial close within two years of grant signature
- Begin operations within four years
These obligations will be backed by completion guarantees provided to the European Commission.
CINEA will continue monitoring implementation progress to ensure projects are delivered according to agreed timelines and funding conditions.
The final list of signed projects under the Innovation Fund 2025 Heat Auction (IF25) is expected to be published in the fourth quarter of 2026.
Looking ahead: innovation fund 2026
Preparations for the next phase of the programme are already underway.
At the 2026 Cleantech Conference, the European Commission announced a second round of the Heat Auction for 2026 with a significantly expanded budget of €1 billion.
The Commission plans to:
- Publish draft Terms and Conditions for the IF26 Heat Auction by the end of May 2026
- Hold a general Innovation Fund Stakeholders Consultation Event on 19 June 2026
Background
The IF25 Heat Auction is the first EU-wide auction specifically targeting the decarbonisation of industrial heat production. It serves as a pilot initiative for the future Industrial Decarbonisation Bank.
Although significant decarbonisation potential exists across industrial sectors, adoption of low-carbon process heat technologies has remained limited. The auction supports technologies including:
- Industrial heat pumps
- Electric boilers
- Electric furnaces
- Solar thermal systems
- Geothermal solutions
- Thermal energy storage
The first auction attracted strong industry interest, receiving 85 applications in total.
Among the 65 selected projects:
- Project sizes ranged from 3 MWth to 45 MWth
- Grant requests ranged from €444,000 to €37.1 million
The Innovation Fund itself has an estimated total budget of €40 billion for the 2020–2030 period, financed through the EU Emissions Trading System.
The Fund provides financial incentives for companies and public authorities to invest in cutting-edge net-zero technologies and supports Europe’s transition toward climate neutrality.
To date, the Innovation Fund has awarded grants to approximately 260 innovative projects across the European Economic Area. Photo by Vogone, derivate work of Alchemist-hp, Wikimedia commons.