EUR 1 Billion for the Decarbonisation of Industrial Heat
Innovation Fund
2026 Heat Auction
Planning to reduce fossil fuel use in industrial heat production? The Innovation Fund 2026 Heat Auction may provide EUR 100–250 million in funding per project for electrified, direct renewable or innovative nuclear heat generation investments.
Megnézem nekem szól-eInnovation Fund 2026 Heat Auction
Companies planning to decarbonise industrial heat production may have access to a significant new EU funding opportunity under the Innovation Fund 2026 Heat Auction (IF26 Heat Auction). With a planned budget of EUR 1 billion, the scheme is particularly relevant for industrial companies considering investments to replace fossil fuel-based heat generation with electrified technologies, direct renewable heat or eligible innovative nuclear solutions.
For potential applicants, the Innovation Fund 2026 Heat Auction can support sizeable industrial investments: projects must have a minimum CAPEX of EUR 2.5 million, while maximum support can reach EUR 100–250 million per project, depending on the applicable temperature category. The programme is open to industrial sectors across the European Economic Area, subject to the relevant technological, geographical, capacity and project maturity requirements.
Unlike conventional investment grants, however, securing support will depend not only on project eligibility and technical readiness. The scheme operates through a competitive auction mechanism, under which applicants determine their requested support premium in EUR/MWhth. Projects are then ranked primarily according to the resulting EUR/tCO₂ emission reduction cost, taking into account any applicable 25% bid bonus.
This makes early financial and technical preparation particularly important. Companies considering an application should assess not only whether their planned technology and capacity are eligible, but also whether the project can achieve the required level of maturity and support a competitive yet financially sustainable bid.
| Call information | Key details |
| Programme | Innovation Fund 2026 Heat Auction (IF26 Heat Auction) |
| Objective | Decarbonisation of industrial heat production |
| Planned budget | EUR 1 billion |
| Project location | European Economic Area (EEA) |
| Form of support | Non-repayable, output-based fixed premium |
| Support period | Up to 5 years following Entry into Operation |
| Minimum CAPEX | EUR 2.5 million |
| Minimum new heat capacity | 3 or 5 MWth depending on the temperature category |
| Maximum support | EUR 100–250 million per project depending on the category |
| Planned opening of the call | December 2026 |
| Planned application deadline | February 2027 – the exact date will be determined by the official Call for Proposals |
Objective of the Innovation Fund 2026 Heat Auction
The programme aims to achieve the cost-effective reduction of direct greenhouse gas emissions resulting from the generation of industrial process heat, i.e. heat required for industrial production processes.
Support may be available for the decarbonisation of heat used in industrial processes such as drying and evaporation, steam generation, heating of raw materials or products, melting, heat treatment and chemical reactions. The scheme may therefore be relevant to production processes in industries including plastics, glass, metals, paper, food and chemicals.
The call is open to all industrial sectors, provided that the project meets the applicable technological, geographical and minimum project size requirements.
Who can apply and what types of projects are eligible?
Projects must be implemented within the European Economic Area (EEA). Support can be requested for the installation of new eligible industrial heat generation capacity.
The new heat generation capacity must be installed at a single physical location. The capacities of multiple units located at the same site may be aggregated, but virtual aggregation of capacities across different sites is not permitted.
The project’s total investment cost, or CAPEX, must amount to at least EUR 2.5 million.
Which technologies are eligible?
The Innovation Fund 2026 Heat Auction supports three main groups of technologies.
Electrification of industrial heat production
Eligible technologies may include:
- industrial heat pumps;
- mechanical vapour recompression (MVR);
- direct and indirect electric resistance heating;
- electric boilers;
- electromagnetic and dielectric heating;
- plasma heating;
- related thermal energy storage.
Direct renewable heat generation
Eligible solutions may include:
- solar thermal heat generation;
- geothermal heat generation.
Innovative nuclear heat generation
The programme also identifies technologies including:
- small modular reactors (SMRs);
- advanced modular reactors;
- microreactors;
- other innovative nuclear and fusion technologies specified in the call.
Certain hybrid combinations of eligible technologies may also be used, subject to the applicable conditions.
Which projects are not eligible?
The scheme does not support, among others, electric arc furnaces used in steelmaking, aluminium and other electrolytic processes, heat generation for space heating in buildings, or heat sold to district heating systems.
Biomass- or hydrogen-based heat generation is also not eligible, nor, as a general rule, is new fossil fuel-fired heat generation capacity. Heat generation primarily serving conventional fuel production from non-recycled fossil feedstock is also excluded.
Partial electrification is possible. This means that an existing fossil fuel-based heat generation system may continue to operate in certain cases, but support cannot be claimed for heat produced from fossil fuel sources.
Auction categories and budgets
The IF26 Heat Auction is divided into three separate temperature categories.
| Category | Temperature | Minimum new capacity | Planned budget |
| Low temperature | 80–100 °C | At least 5 MWth | EUR 100 million |
| Medium temperature | 100–400 °C | At least 3 MWth | EUR 600 million |
| High temperature | Above 400 °C | At least 3 MWth | EUR 300 million |
In the 80–100 °C category, only certain technologies are eligible, in particular heat pumps with a COP of at least 1.5, direct renewable heat generation, innovative nuclear heat generation and appropriate combinations of these technologies.
If the full budget allocated to a particular category is not used, the European Commission may transfer the remaining amount to another category.
How much support can be requested?
Support is provided as a non-repayable, output-based fixed premium. It is therefore not determined as a fixed percentage of the project’s investment costs. Instead, support is linked to the amount of eligible industrial heat actually produced and verified by the new system.
When submitting an application, the applicant determines:
- the requested support premium in EUR/MWhth;
- the nominal MWth capacity of the new system;
- the expected annual eligible heat production in MWhth.
The basic formula for calculating the maximum support amount is:
Requested EUR/MWhth × committed annual MWhth × 5 years
The support period is 5 years following Entry into Operation, and the support premium is not indexed to inflation or any other indicator.
Maximum support per project
| Category | Maximális támogatás / projekt |
| Low temperature | EUR 100 million |
| Medium temperature | EUR 100 million |
| High temperature | EUR 250 million |
How does the auction work?
The Innovation Fund 2026 Heat Auction is not a traditional scoring-based funding scheme. The support requirement submitted by the applicant in EUR/MWhth is converted into a support requirement expressed in EUR/tCO₂, using a uniform reference emission factor.
The applicable reference is:
0.224 tCO₂/MWhth
This corresponds to a reference value for natural gas-based heat generation operating at 90% efficiency.
Within each temperature category, eligible projects are ranked – following the application of any applicable bid bonus – from the lowest to the highest EUR/tCO₂ bid.
The auction is:
- single-stage;
- static;
- pay-as-bid.
Applicants therefore submit one final bid. If successful, they receive the support premium they themselves offered in their bid.
Maximum bid price
The maximum ranking value after taking the bid bonus into account is:
| Category | Maximális rangsorolási bid |
| Low temperature | 400 EUR/tCO₂ |
| Medium temperature | 400 EUR/tCO₂ |
| High temperature | 800 EUR/tCO₂ |
There is no minimum bid price.
25% bid bonus
The call may provide a 25% ranking bonus for projects that meet certain energy efficiency or flexibility requirements.
The bonus may apply, among others, to:
- appropriately sized electricity or thermal energy storage;
- heat pumps with a COP of at least 1.5;
- direct renewable heat generation;
- qualifying innovative nuclear heat generation.
Where energy storage is used, as a general rule it must be capable of replacing at least 20% of the project’s electricity consumption or the process heat demand for at least 4 hours, and it must be capable of being activated within one hour.
Importantly, the 25% bonus only reduces the bid value used for the auction ranking. It does not reduce the actual support premium awarded to the project.
What level of project maturity is required?
Compliance with eligibility and quality requirements is assessed on a pass/fail basis. Projects must demonstrate an adequate level of technical, financial and operational maturity.
Project preparation must cover, among other areas, the technology concept and technical sizing, project site, energy and feedstock supply, expected annual heat production, technology availability, CAPEX and OPEX, financing, permitting, grid connection and heat use.
Projects must also have an appropriate implementation schedule and risk assessment. For projects with a capacity of 5 MWth or more, cybersecurity measures must also be addressed and presented. In addition, projects must comply with the applicable Do No Significant Harm (DNSH) requirements.
Important conditions
1. Start of works
The programme aims to support the creation of new capacity where implementation has not yet reached an irreversible investment stage at the time the application is submitted.
The start of works may include, for example, placing a binding order for the main technological equipment or the actual commencement of construction works.
By contrast, the purchase of land, preparation of a preliminary feasibility study, preparatory work related to permitting or preparatory activities associated with grid connection do not, in themselves, constitute the start of works.
2. 6% completion guarantee
Projects selected for support must provide a completion guarantee equal to 6% of the maximum support amount.
The purpose of this guarantee is to ensure that a selected project actually proceeds to implementation. The guarantee may become callable, among other circumstances, if the project does not reach Financial Close within 2.5 years of signing the Grant Agreement or does not achieve Entry into Operation within 5 years.
Project period and key milestones
Following the signing of the Grant Agreement, two major deadlines apply:
Financial Close: within a maximum of 2.5 years. By this point, the project must have reached a level of financial and contractual readiness that ensures the investment can be implemented.
Entry into Operation: within a maximum of 5 years. By this point, the nominal thermal capacity and eligible temperature level committed to in the application must be operational and available.
Following Entry into Operation, the supported production period of up to 5 years begins.
How is the support paid?
As a general rule, support payments are made annually. A consortium including at least one SME may, subject to certain conditions, opt for a six-month payment cycle.
Payments are not based on the investment cost. Instead, they are based on the amount of eligible industrial process heat actually produced and duly verified during the relevant period.
Both the quantity and temperature of the heat produced must be measured, and the data must be verified by an independent third party. The monitoring system must be EMAS- or ISO 50001-compliant and use appropriately calibrated measuring equipment.
Expected timeline of the Innovation Fund 2026 Heat Auction
| Milestone | Expected date |
| Publication of Final Terms & Conditions | 24 September 2026 |
| Planned opening of the Call for Proposals | December 2026 |
| Planned application deadline | February 2027 |
| Financial Close | Within a maximum of 2.5 years after the Grant Agreement |
| Entry into Operation | Within a maximum of 5 years after the Grant Agreement |
| Supported production period | Up to 5 years following Entry into Operation |
The exact application deadline will be determined in the official Call for Proposals.
This summary is based on the Final Terms & Conditions published on 24 September 2026. The final and legally binding requirements of the Innovation Fund 2026 Heat Auction will be set out in the Call for Proposals and its annexes.
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