As part of the Clean Industrial Deal, a new call has been launched under the Innovation Fund: the IF25 Heat Auction. This pilot programme aims to support the decarbonisation of key industrial heat processes. The grant uses a competitive bidding system, hence the term “Auction”, meaning that the most cost-effective projects will receive funding. The IF25 Heat Auction supports projects that replace fossil-based heat in industrial processes with electrified systems or renewable heat, such as heat pumps, electric boilers, plasma heating, solar thermal energy, or geothermal systems. The programme has a budget of € 1 billion for this round, and the Auction is expected to open on 3 December 2025 for biddings.

What projects are eligible?

This Innovation Fund auction is designed to accelerate the industrialisation of low-carbon technologies in Europe. The IF25 Heat Auction specifically targets industrial process heat, or in other words, the heat required for industrial activities such as heating, melting, cooking, drying, and electricity generation. Projects focusing on replacing fossil-based heat with electrified or renewable heat may be eligible for funding under the IF25 Heat Auction. Examples include heat pumps, electric boilers, plasma heating, solar thermal energy, or geothermal systems.

Who can apply for the IF25 Heat Auction?

The auction is open to a wide range of industrial companies. Large industrial enterprises, medium-sized companies, and smaller businesses can all participate, provided that the project is located within the European Economic Area (EEA).

How does the auction process work?

The process of an Innovation Fund Auction differs from regular Innovation Fund calls. Interested parties can submit a bid indicating the amount of funding they require per tonne of CO₂ reduced through their project, as well as their expected heat production. Bids are then ranked, with the lowest bids per tonne of CO₂ reduced, so the most cost-efficient projects, placed at the top of the list. Funding is then awarded in this order until the total budget is allocated.

Applicants at the top of the ranking will receive a fixed premium for the CO₂ reduction achieved. Setting this premium yourself when submitting your application presents both opportunities and challenges: your premium must be low enough to secure a high ranking, yet high enough to ensure project feasibility.

Bidding categories – the ‘Auction Baskets’

When participating in the IF25 Heat Auction, you must submit your bid under one of three ‘Auction Baskets’:

Medium temperature (100–400°C)

• Project size: 3–5 MWth
• Budget: € 150 million

Medium temperature (100–400°C)

• Project size: ≥ 5 MWth
• Budget: € 350 million

High temperature (above 400°C)

• Project size: ≥ 3 MWth
• Budget: € 500 million

When will the IF25 Heat Auction open?

The IF25 Heat Auction is expected to open on 3 December 2025. Applications/bids can likely be submitted until February 2026, although exact dates have not yet been confirmed. On 10 October 2025, the final general conditions were published, meaning that you can now start preparing your bid.

New opportunities for the European industry

For the European industry, this auction presents new opportunities to invest in innovative decarbonisation technologies. It paves the way for European funding for companies involved in heat-intensive processes and contributes to:

• An accelerated heat transition in industry;
• Collaboration with various European partners;
• A greater focus on cost-effectiveness, resulting in higher-quality projects.

While the scheme offers many opportunities, thorough preparation is essential to secure funding. For instance, a bank guarantee of 6% of the maximum grant amount is required to ensure that the project is delivered within five years, and applicants must demonstrate that their project is technically and financially mature.

Explore your IF25 Heat Auction opportunities

If you are focusing on low-carbon heat technologies within industry, the IF25 Heat Auction is an excellent opportunity for your organisation. However, it requires careful preparation and the right bidding strategy to maximise your chances of success. Would you like to discuss your project with a specialist to make the most of your application? Contact us via info@hezelburcht.com or 088 495 20 00 to schedule a meeting. Our specialists are happy to assist!