EU awards €400 million to 65 industrial heat projects in auction

The European Commission has selected 65 projects across 10 European countries to receive a combined €400 million in grants under the Innovation Fund’s first industrial heat auction. The scheme is designed to accelerate the deployment of electrified and renewable heat technologies in energy-intensive industries.

The selected projects span Austria, Belgium, Czechia, Denmark, France, Germany, Hungary, Portugal, Slovenia, and Spain, and cover technologies including heat pumps, direct and indirect resistance heating, solar thermal, electromagnetic and dielectric heating, and hybrid systems. Industrial sectors represented include pulp and paper, glass, ceramics, construction materials, iron and steel, food and beverage, textiles, and pharmaceuticals – sectors the European Commission said have been underrepresented in Innovation Fund support to date.

Together, the 65 projects are expected to avoid more than 6.6 million tonnes of CO2 emissions over 10 years and produce approximately 16.3 TWh of decarbonized 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 over five years.

The auction was structured across three categories by temperature level and installation capacity. Five projects were awarded under a high-temperature heat topic, receiving €62.1 million. Forty-four projects were awarded under a medium-temperature topic above 5 MW, sharing €286.5 million. Sixteen projects were awarded under a medium-temperature topic for smaller 3 MW to 5 MW installations, receiving €47.9 million.

Funding comes from EU Emissions Trading System (ETS) revenues. The European Climate, Infrastructure and Environment Executive Agency will now begin preparation of grant agreements with selected projects. Grant agreements are expected to be signed in the second half of 2026, with projects required to reach financial close within two years of signature and enter operation within four years.

The auction attracted 85 applications requesting 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 funding vehicle under the Clean Industrial Deal. A second round with a budget of €1 billion has been announced for 2026, with draft terms and conditions to be published by the end of May 2026.

The award closes a process that began when the European Commission finalized the auction’s terms in November 2025. Bidding opened in December, with applications closing in February 2026.