EU Heat Auction: Solar Thermal at the Heart of Industrial Decarbonization

2025-11-10

The European Union will launch its first Heat Auction in 2025, a €1 billion pilot scheme to cut emissions from industrial process heat. Solar thermal stands out as the solution that delivers both immediate and long-term climate impact.

Innovation Fund deadline: 19th February!

PREPARE YOUR BID

Watch our latest seminar about the Heat Auction submission process that took place 5th of February.

Topics covered:

How solar thermal can be positioned in EU heat auctions
Practical do’s and don’ts in the submission process
Key considerations for eligibility, design, and project setup
Lessons learned from real industrial heat projects

Watch the event recording here >>

WHAT IS THE EU HEAT AUCTION?

The Heat Auction is part of the EU Innovation Fund, supporting industrial projects that replace fossil fuels with solar thermal, geothermal, high-temperature heat pumps, or electrification.

More than €1 billion in operational support will be awarded to projects that achieve measurable CO₂ reductions. Funding is structured into three categories:

Funding	Effect	Temperature
€150 million	3–5 MWth	100–400 °C
€350 million	≥ 5 MWth	100–400 °C
€500 million	≥ 5 MWth	>400 °C

Winning projects will receive payments over five years, based on verified CO₂ reductions – turning climate goals into measurable economic returns.

KEY FACTS

€1 BILLION TOTAL BUDGET
This is the total EU budget

€150–500 MILLION PER TEMPERATURE CATEGORY

CONVOCATORIA COMPETITIVA
Grants awarded through competitive bidding
(€ per tonne CO₂ abated)

5 YEARS PAYMENT
Based on verified CO₂ savings

• ELIGIBLE TECHNOLOGIES
Solar thermal, geothermal, high-temperature heat pumps, and electric boilers

• INDUSTRIAL FOCUS
Medium- and high-temperature heat ≥100 °C

WHY THIS MATTERS FOR EUROPEAN INDUSTRY

Across Europe, industrial heat represents almost half of industrial energy use and around three-quarters of industrial CO₂ emissions. Most of this heat is still generated using natural gas.

The Heat Auction gives industries a direct way to:

Accelerate solar and renewable heat projects in key industries.
Strengthen energy security and reduce fossil fuel dependence and volatile gas prices.
Gain competitive advantage for early movers.
Accelerate progress toward EU climate targets and Scope 1 emissions reduction.

HOW THE AUCTION WORKS

1. APPLY
Industrial companies or consortia submit projects through the EU Funding & Tenders Portal.

2. BID
Projects compete on the cost per tonne of CO₂ avoided.

3. AWARD
Winning bids receive a 5-year fixed payment based on verified emissions reduction.

4. IMPLEMENTATION
Projects must reach financial close within 2 years and start operation within 4 years.

Expected timeline:

Launch: October 2025
Submission deadline: Early 2026

SOLAR THERMAL IN FAVOR FOR LONG-TERM SOLUTIONS

While electrification offers short-term relief, its economics remain uncertain. For example, a brewery that installs an electric boiler may benefit during the five years of subsidy. But once the support ends, the cost of electricity and rising grid charges are likely to make natural gas cheaper again, forcing a return to fossil fuels.

By contrast, using the auction support to invest in solar thermal gives decades of free renewable heat. The funding can cover most of the upfront cost, while the installation continues to deliver CO₂ reductions long after the five years of subsidy are over. District heating networks already show how robust solar thermal can be, with installations still in operation after more than 30 years.

Industries can also combine solar thermal with other renewable technologies such as high-temperature heat pumps, geothermal systems, or electric boilers. This hybrid approach provides flexibility while maintaining a high share of solar heat in total energy production.

Absolicon’s T160 solar collector, certified and deployed worldwide, is designed to deliver high-temperature solar heat for industrial processes. With the Heat Auction, industries now have a clear path to invest in solar thermal, securing long-term energy savings and sustainable production.

Absolicon is ready to support partners and industries interested in making the most of this unique opportunity, ensuring solar thermal takes a central role in Europe’s industrial energy transition.

ABSOLICON’S SUPPORT FOR INDUSTRIES

Absolicon supports industries in every step of their decarbonization journey, from identifying opportunities under the EU Heat Auction to designing and delivering turnkey solar thermal systems adapted to each process.

Contact us to start your renewable heat transition today!