Open Call for Projects on Renewable Heat and Steam – Innovation Fund Heat-PAC (Pilot Auction)

The European Commission, through the EU Innovation Fund, has launched its first call for support for projects producing renewable heat and renewable steam for industrial use.

Funding is provided through a so-called “fixed premium auction”. This means that project promoters compete with each other by indicating how much additional financial support (a premium) they need per megawatt-hour (MWh) of renewable heat or steam produced. The lower the requested premium, the more competitive the project.

The objective is to replace fossil fuels (coal, oil, natural gas) used in industrial processes with clean, renewable sources of heat and steam.

WHO can apply

Eligible applicants are:

• Legal entities, both public and private;

• Organisations from all over the world, including international organisations.

Not eligible:

• EU institutions and bodies, except for the Joint Research Centre (JRC) of the European Commission.

Applicants must:

• Have sufficient financial, technical and human resources;

• Possess the necessary experience and know-how to implement industrial energy projects.

Important territorial requirement: All project activities must take place in:

• EU Member States;

• Norway, Iceland and Liechtenstein;

• Under specific conditions, also in Northern Ireland (for the electricity sector).

WHAT is funded

Support is provided for installations producing renewable heat and steam based on:

• Geothermal energy – heat from the Earth’s interior;

• Solar thermal energy – using the sun to directly produce heat;

• Heat pumps using ambient energy – heat from air, water or the ground;

• Biogas and sustainable biofuels – energy from organic waste and biomass;

• Renewable steam for industrial processes.

Projects must:

• Produce heat or steam from renewable sources;

• Replace existing heat from fossil fuels;

• Deliver the heat directly to industrial processes (factories, production lines, etc.);

• Include a reliable MRV system (Monitoring, Reporting and Verification) to measure energy production and emission reductions;

• Comply with the “Do No Significant Harm” (DNSH) principle, ensuring no serious environmental damage.

Eligible activities include:

• Construction of new installations;

• Modernisation of existing facilities;

• Heat flow management and control systems;

• Infrastructure needed to integrate renewable heat or steam into industrial processes.

Minimum technical requirements

Each project must ensure:

• At least 1 GWh (1,000 MWh) per year of renewable heat or steam delivered to industry;

• Use of technologies that do not rely on fossil fuels (neither directly nor in blends);

• Accurate measurement of energy production and greenhouse gas emission reductions;

• Monitoring and reporting systems in line with EU rules;

• Compliance with the Renewable Energy Directive (RED III), which defines what qualifies as renewable energy.

The installation must be:

• New, or

• Upgraded so that it meets the RED III definition of renewable heat.

How the Heat-PAC auction works

The mechanism is a “reverse auction with a fixed premium”:

• Each applicant submits a bid indicating the premium (in EUR/MWh) they request for each unit of renewable heat or steam produced.

• Projects are ranked by the lowest requested premium, provided they meet all technical criteria.

The premium:

• Is paid only for actually produced and certified renewable heat or steam;

• Covers the gap between production costs and market revenues;

• Is paid for a maximum of 10 years.

Limits:

• Maximum bid price: up to 30 EUR/MWh (exact ceiling defined in the official call documents);

• Total call budget: EUR 250 million;

• Projects are selected based on lowest price and technical compliance (pass/fail).

Implementation timeline

• Construction completion: within 2.5 years after grant agreement signature;

• Start of operation: within 5 years after signature;

• Payment period: up to 10 years;

• Overall project lifetime: typically 10–15 years.

HOW to apply

Applications must be submitted via the European Commission’s:

Funding & Tenders Opportunities Portal

Applicants must be registered in the Participant Register.

Deadline

Final deadline for submission: 19 February 2026, 17:00 CET