2026 Innovation Fund auction for industrial process heat decarbonization

Energy Storage Europe  welcomes the publication of the Draft Terms and Conditions for the IF26 Heat Auction and the European Commission’s commitment to supporting industrial electrification through the Innovation Fund. Building on the IF25 Heat Auction, it represents a positive step towards a predictable and recurring EU framework for the decarbonisation of industrial process heat. Ensuring continuity of this instrument is critical to provide visibility to investors and industrial stakeholders. Energy Storage Europe  broadly supports the design simplifications introduced in IF26, including the single emission factor, bid bonus for flexible solutions, reduced completion guarantee threshold, and removal of letters of intent from electricity providers and heat off-takers.

However, Energy Storage Europe  highlights two priorities that remain unaddressed and are essential to ensuring the auction achieves EU decarbonisation goals:

1) Thermal energy storage (TES) is still not explicitly listed as an eligible primary technology. Energy Storage Europe  urges the Commission to include “combined electric heating and thermal storage solutions” as a named technology in the eligibility list and ensure the bid bonus appropriately recognises solutions that provide flexibility and decouple electricity demand from industrial off-takers’ needs.

2) Several structural barriers to broad participation remain in place. These include the five-year grant duration, which may be insufficient for capital-intensive, First-of-a-Kind and/or high-OPEX projects, and the requirement for a bank letter of intent for the completion guarantee, which may limit project bankability. Energy Storage Europe  calls on the Commission to address these points in the final Terms and Conditions.