Innovation Fund industrial heat auction
Competitive grants paid against verified low-carbon industrial heat production in the EU and EEA. Applicants finance delivery before payments begin; the 2025 auction is closed.
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The Innovation Fund heat auction supports new electric, solar-thermal, geothermal or hybrid installations that cut direct greenhouse-gas emissions from industrial process heat. CINEA administers the competition. It covers heat used to transform materials or make products, rather than building heating. All industrial sectors can qualify; the operator need not be covered by the EU Emissions Trading System.
The grant pays a fixed premium for verified output during five years of operation. Applicants state the subsidy they need per megawatt-hour of heat; the official calculator converts it into a bid per tonne of CO₂ avoided. Lower bids rank first within each topic, subject to eligibility, quality and the available budget. There is no bid-price ceiling. The grant is not an upfront reimbursement of a percentage of installation costs.
The documented 2025 auction has three categories, all for new capacity at one heat-production site:
- Medium-temperature heat from 100°C to 400°C, with at least 3 MW but less than 5 MW of thermal capacity: up to €100 million per project.
- The same temperature range with at least 5 MW of thermal capacity: up to €100 million per project.
- High-temperature heat above 400°C, with at least 3 MW of thermal capacity: up to €250 million per project.
The requested maximum is calculated from the bid, expected eligible annual production and five years of support. Actual payments depend on verified production and cannot simply be assumed to reach that maximum. There is no advance: the first payment follows the first six months of operation, with further payments every six months. The applicant needs credible financing for construction and any operating cash shortfalls before and between payments.
A bank or approved financial institution must guarantee 6% of the requested maximum grant. This is a commitment to pay the granting authority if the project fails the agreed completion conditions; the consortium pays the guarantee’s costs. It must be issued in euros by an EU/EEA institution meeting the call’s minimum credit-rating requirements, rather than merely holding money in a blocked account. Submit the issuer’s letter of intent with the bid and the actual guarantee within two months of the invitation to prepare a grant agreement. It must remain valid until six months after the maximum deadline for entering operation and is released after approved entry into operation if not called.
The default payment cap is the heat equivalent of running at nominal capacity for 70% of the hours in each six-month period. Select any alternative when bidding and prove it at entry into operation: flexible electricity use without equipment damage or product-quality loss raises the limit to 80%, and requires proof that the installation consumed electricity during no more than 80% of the hours in each six-month monitoring period. Running continuously at lower output does not meet that operating-hours condition. Qualifying storage removes the restriction; heat pumps with a coefficient of performance of at least 2.0, or direct renewable heat, also remove it. A coefficient of performance of 2.0 means two units of heat output per unit of energy input. Storage must replace 20% of the project’s grid-electricity consumption or process heat demand within one hour and sustain that replacement for four hours. A hybrid producing only part of its heat from qualifying heat pumps or direct renewables retains the default 70% cap on that basis.
If claimed storage is not delivered, payments revert to the 70% limit. Exceeding the flexible-ramping limit reduces the heat volume that can be paid. Over any three consecutive operating years, average production below 30% of the expected annual volume can lead to grant reduction or termination.
Eligibility
Public or private legal entities established anywhere in the world can apply, alone or in a consortium, but the heat installation must be in an EU Member State, Norway, Iceland or Liechtenstein. Overseas Countries and Territories are not eligible project locations. Heat-production units at the same site can be combined to meet the threshold; units at separate locations cannot be pooled. Electricity supplies and heat customers can be elsewhere. Under a heat-as-a-service arrangement, the entity constructing the assets and producing and delivering the heat must join the applicant consortium; the heat customer may be inside or outside it.
Individuals are ineligible except self-employed sole traders whose business has no separate legal personality. International organisations are eligible. An entity without legal personality may exceptionally participate if its representatives can undertake legal obligations and offer equivalent protection of EU financial interests. EU bodies are excluded except the Commission’s Joint Research Centre. For a membership organisation applying as one beneficiary, members implementing the action must participate as beneficiaries or as legally linked affiliated entities to receive part of the grant.
Have the staff, experience and financial resources to build and operate the project, including enough capacity for every project if submitting several. There is no minimum technology-readiness or novelty threshold, but the technical and financing plans must credibly deliver the required capacity and heat. For installations of at least 5 MW, describe cybersecurity measures keeping operational control with an entity established in the EEA and data stored in the EEA.
Do not make an irreversible commitment to the capacity being bid before submitting the application: ordering equipment or starting construction can count as starting work. Buying land, obtaining permits and preliminary feasibility studies do not. Reach financial close within two years of grant signature—meaning the necessary project and financing agreements are signed, their conditions met and the final investment decision taken. Enter operation within four years of signature with at least the full thermal capacity stated in the bid, then operate for at least five years. Missed completion conditions can terminate the grant and trigger the guarantee.
Excluded uses include space heating, sale to district-heating networks, biomass or hydrogen heat production, electrolysis and electric-arc furnaces for steelmaking. Direct nuclear heat is also outside the call. Heat pumps may recover industrial waste heat, including heat from a fossil-fuelled process outside the project boundary, but fossil fuels may not directly preheat their source. Waste heat from combined heat-and-power plants, power generation, district heating or waste incineration is not an eligible source. The electricity itself need not be renewable.
Installing new fossil-fuel capacity as part of the same installation is normally excluded. Glass furnaces have an exception because of technical or safety barriers to full electrification; other applications must evidence comparable barriers and a path to climate-neutral fuel. Fossil-produced heat never earns the premium. Merely replacing already-decarbonised heat equipment without a significant increase in decarbonised output does not qualify. For a replaced boiler burning a biomass/fossil mixture without such an increase, the Q&A requires at least 70% fossil-fuel use in the preceding two years.
The default emissions benchmark is 0.170 tonnes of CO₂ per MWh of heat. To use the call’s alternative fossil-fuel factors, provide evidence of the existing unit and decommission at least the corresponding thermal capacity at the same site by the end of the first year of operation. Mixed-fuel replacement uses the default benchmark. Failure to prove required decommissioning can terminate the grant and require repayment.
The project cannot combine the auction grant with other public support for its investment or operating costs. This includes applicable national State aid—selective public assistance to businesses—and EU programme funding, whether or not the State aid requires individual notification. Prohibited State-aid reductions include network charges, capacity-mechanism charges and electricity taxes outside the allowed policy-levy exception. For this 2025 round, reductions in electricity levies financing energy or environmental objectives under the cited EU State-aid provisions are allowed. Earlier research, feasibility or front-end engineering support, previously supported capacity outside the bid, and support for connected infrastructure not dedicated to this project can also be allowed. Support to equipment suppliers, electricity-generating suppliers or customers is not automatically excluded. General tax measures that are not State aid fall outside these combination rules; the other scheme’s own rules still apply.
Compensation for carbon-emission costs passed through in electricity prices needs a specific check. The Q&A prohibits covering the same electricity consumption with both that compensation and the auction grant: an electrified-heat project using the fallback electricity-consumption benchmark needs separate metering and an appropriate reduction in compensation, or can forgo it during the five supported years. The Q&A permits full compensation for direct-renewable heat and for compensation based on product-output benchmarks. Free EU emissions allowances are also permitted. All consortium partners must remain free of an unfulfilled obligation to repay incompatible State aid.
Identify and meet the applicable EU environmental “do no significant harm” criteria: the project must avoid the prescribed harm to climate, water, circularity, pollution and biodiversity objectives. The criteria in force at the call deadline apply throughout the project. Apply them to the relevant activities inside the project boundary, not unrelated operations; justify in the application if no criteria exist for an activity. The separate test of making a substantial positive contribution to an environmental objective is not required for this assessment.
EU sanctions exclude affected entities from participation. Hungarian public-interest trusts established under Act IX of 2021 and entities they maintain cannot participate in funded roles, including subcontracts. Bankruptcy, tax or social-security breaches, serious misconduct, fraud, significant failures on earlier EU contracts or grants, misleading information and unresolved conflicts of interest can also prevent an award. Financial support onward to third parties is not allowed.
How to apply
- Estado
- cerrada
- Abre
- Cierra
- Condiciones de la convocatoria
- Closed pilot auction. Selected projects entered grant preparation; later rounds require a separate published call.
The 2025 auction opened on 4 December 2025 and closed on 19 February 2026 at 17:00 CET. The Commission subsequently invited 65 projects to prepare grant agreements; selection is not confirmation that an agreement was signed. Use the official CINEA and Innovation Fund pages for published developments and future calls.
For the documented round, register each participant and obtain its Participant Identification Code, then submit through the EU Funding & Tenders Portal using the correct topic. Submit administrative Part A, technical Part B, Part C and required annexes. Part B is limited to 50 pages and the feasibility study to 60. Any official EU language is accepted, with an English abstract; the call recommends English throughout.
The evidence must show a deliverable project, not just a heat-technology concept. Include the official financial calculator, feasibility study, participant/team information, timetable, equipment procurement evidence, permit strategy and evidence that grid-connection requests have begun where relevant. Provide signed preliminary commercial terms for at least 60% of both the required electricity and the heat output over the project period; these documents and equipment terms must be no more than one year old. Internal electricity supply or self-consumed heat can instead use the specified letter signed by a director or senior executive. Investors providing equity—capital in return for ownership—must give executive/board-level signed support covering at least 60% of projected equity funding, confirming available resources. This is evidence of financing commitment, not a requirement that equity finance 60% of total project costs.
Eligible bids rank from lowest to highest price per tonne of CO₂ avoided. Those within the funding and reserve-list range receive pass/fail relevance and quality assessment. Equal-price bids prioritise the smaller support request, then projects whose beneficiaries and affiliated entities are all qualifying SMEs with a positive registered SME self-assessment no more than two years old, then projects in countries with less funding awarded in earlier Innovation Fund calls. Passing selection leads to legal and financial checks and grant preparation, not an automatic award. For projects in a country with a national funding window, an opt-in route may consider bids excluded for budget reasons, subject to passing assessment, fitting that budget and the national conditions; leaving the EU reserve list for that route ends consideration for this auction’s EU funding.
Before payments, provide evidence of financial close and operational readiness, including approved permits, relevant supply and financing contracts, equipment completion and full-capacity performance tests. Monitor heat and temperature using calibrated instruments and an EMAS environmental-management or ISO 50001 energy-management system, or a system shown to meet the equivalent ISO 50001 requirements. Heat pumps and direct-renewable technologies use measured heat flows; the specified electric-heating technologies use electricity consumption converted to heat under the call’s method. Each six-month report must independently verify eligible heat volume and the temperature required by the topic. Keep the underlying records.
Plan for annual progress reporting before operation, operating-period reports, environmental-compliance evidence and knowledge sharing. Publish project information and share lessons on delivery, performance and costs, with safeguards for confidential information and intellectual-property protection. Successful bids’ price, project identity, capacity and production/emissions information will be published.