The European Commission has selected 65 industrial projects to receive funding under the Innovation Fund Heat Auction, marking the first EU-wide bidding process dedicated to accelerating the deployment of clean heat technologies across European manufacturing.
Distributed across 10 European Economic Area (EEA) nations—Austria, Belgium, Czechia, Denmark, France, Germany, Hungary, Portugal, Slovenia, and Spain—the projects will deploy electrified heat solutions and direct renewable thermal technologies to replace conventional fossil fuel infrastructure.
Supported by approximately €400 million in grants derived from EU Emissions Trading System (ETS) revenues, the successful initiatives are projected to mitigate more than 6.6 million tonnes of carbon dioxide emissions over a 10-year period. Operating with a collective thermal capacity of 766 megawatts (MW), the projects are expected to generate 16.3 terawatt-hours (TWh) of decarbonised heat in their first five years. This clean energy generation replaces more than 1.5 billion cubic metres of natural gas, a volume comparable to the annual energy consumption of four million EU households.
The selected project portfolio spans several hard-to-abate sectors previously underrepresented in the broader Innovation Fund, including pulp and paper, glass, ceramics, construction materials, and iron and steel. The food and beverage, textile, and pharmaceutical industries will also secure funding. Technically, the projects primarily leverage direct or indirect resistance heating, alongside heat pumps, solar thermal arrays, electromagnetic and dielectric heating, and hybrid systems.
The pilot auction was structured across three designated operational temperature and capacity categories:
- High-Temperature Heat: 5 projects selected, sharing €62.1 million in funding.
- Medium-Temperature Heat (Above 5 MW Capacity): 44 projects selected, with a total budget allocation of €286.5 million.
- Medium-Temperature Heat (3–5 MW Capacity): 16 projects selected, receiving a collective €47.9 million.
The European Climate, Infrastructure and Environment Executive Agency (CINEA) will now commence formal grant agreement preparations, with final contract signings anticipated in the second half of 2026. Developers must achieve financial close within two years of signing and bring the facilities online within four years, backed by formal completion guarantees. CINEA will publish the finalized list of signed contracts in the fourth quarter of 2026.
Building on the initial auction’s strong response—which drew 85 total applications—the European Commission announced a second round for the 2026 Innovation Fund cycle during the Cleantech Conference. The upcoming iteration will feature a significantly expanded budget of €1 billion, acting as a pilot for a future Industrial Decarbonisation Bank. Draft Terms and Conditions for the 2026 auction are scheduled for publication by the end of May 2026, ahead of a general stakeholder consultation event on 19 June 2026.
