As part of the Innovation Fund, the European Commission is launching a competitive auction process to award up to €1 billion of support decarbonisation of industrial heat process. This is the first pilot auction designed to support projects that transition industrial heating from fossil fuels to electrified and renewable technologies. The auction provides output-based, fixed premium subsidies for projects that replace fossil-based industrial heat with electrified or renewable heat solutions.
What are the details of IF Heat Auction?
The European Commission will commence the auction process in December 2025 to support adoption of electrified and renewable industrial heat solutions. Projects will receive a fixed premium subsidy linked to CO2 abatement per tonne achieved over a five-year period.
Scope:
i. Electrifying industrial process heat via technologies such as heat pumps, direct and indirect resistance heating, electromagnetic and dielectric heating, plasma heating.
ii. Using direct-renewable (solar thermal or geothermal) heat for industrial heat processes and hybrid projects of the above-mentioned technologies.
Features of the IF25 Heat Auction
- Fixed premium subsidy (€ /t CO2 abated) for direct GHG abatement achieved through electrified or direct renewable process heat technologies
- Total Budget of €1 billion funding is split in the below baskets
o Medium-temperature (100 – 400°C, 3–5 MWth, €150M)
o Medium-temperature (100 – 400°C, ≥5 MWth, €350M)
o High-temperature (>400°C, ≥3 MWth, €500M)
- Maximum budget of 250million to any one project
- A minimum of 3 MWth in newly installed capacity is required, focusing on electrified or direct renewable processes. Projects must provide evidence of decommissioning fossil fuel-fired capacity at the same site, including relevant reports and a thorough decommissioning summary upon entry into operation
What is the timeline?
First auction is expected to take place in December 2025, with grant duration set to end 5 years after the entry into operation of the project. The maximum time to reach financial close is 2 years after grant agreement, and maximum time to reach entry into operation is 4 years after grant agreement.
What are the eligibility criteria for IF25 Heat Auction?
Proposals are expected to cater to the below criteria
- Proposals must be for projects located in the EEA
- Proposals must concern the deployment of industrial process heat electrification technologies or directrenewable heat technologies
- The electrified or direct renewable process heat needs tobe produced by new capacity
- Projects must align with the applicable ‘Do No Significant Harm’ technical screening criteria outlined in the EU Taxonomy ‘Climate Delegated Act‘
- Projects that install new capacity without decommissioning existing capacity must not install fossilfuel-fired capacity at the same site
Excluded Scope
- Electric arc furnaces are not eligible
- Heat production for space heating or sale to district heating is not eligible.
- Electrolysis processes (e.g. in the aluminium sector) are not eligible
- Process heat below 100°C as is not eligible
How can we help?
We assist decarbonisation project developers to access funding and facilitate overall project execution.
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