Promoting sustainability: Funding opportunities for high-temperature heat pumps for process heat generation

Funding objective

• Energy- and resource-related optimization of plants and processes

Eligible measures

• Electrification of processes, including the installation of high-temperature heat pumps
• Measures for waste heat utilization, efficient heat/cold generation, process heat integration, thermal storage technologies
• Optimization of heating and cooling networks and/or conversion to renewable energy sources

Prerequisites

• Submission of a savings concept developed as part of qualified energy consulting; use of the BAFA-provided form is mandatory
• Reduction of greenhouse gas emissions by at least 30 %; depending on company size, absolute savings values may also be possible
• Payback period of the project without funding: at least 3 years

Funding rates

• Small enterprises: up to 45 %
• Medium-sized enterprises: up to 35 %
• Large enterprises: up to 25 % 

Absolute funding amounts

• Small enterprises: up to 1,600 euros/tonne CO₂
• Medium-sized enterprises: up to 2,200 euros/tonne CO₂
• Large enterprises: up to 2,600 euros/tonne CO₂
• Maximum 20 million euros per project

Particularities

• Up to 10 percentage points bonus for decarbonization, e.g., through electrifying processes with green electricity, for example via
  • On-site power generation (e.g., PV)
  • Green power PPA – pure green electricity tariffs from a supplier are not permitted
• GWP must not be higher than 150 unless the efficiency criteria from Module 2 are met

Funding objective

• Decarbonization of industrial process heat
• Electrification of process heat generation through heat pumps that predominantly use renewable heat sources (aerothermal, geothermal, hydrothermal, solar)

Eligible measures

• Installation of high-temperature heat pumps including necessary plant peripherals
• Development of heat sources
• Process heat storage
• Planning and concept development

Prerequisites

• At least 50 % of the heat generated must be used as process heat
• The heat pump must predominantly use renewable energy sources
• The heat pump must have an effective coefficient of performance (COPeff) of at least 2.0 and an efficiency factor of at least 0.4
• Electricity or heat meters are required in order to be able to provide real-world data from at least 3 years of operation

Funding rates

• Small enterprises: 60 %
• Medium-sized enterprises: 50 %
• Large enterprises: 40 %

Absolute funding amounts

• Maximum 20 million euros per project

Particularities

• The electricity used must be fully from renewable energies; proof can be provided via:
  • On-site power generation, e.g., PV
  • Green power PPA
  • Green electricity / green power contract
• Electricity meters or heat meters are mandatory, and at least 3 years of data must be verifiable

EEW Module 4 or funding competition: Which funding module is the right one for my heat pump project?

Funding objective

• Long-term decarbonization of energy-intensive industrial processes
• Securing investments in climate-friendly technologies against cost risks
• Rapid and continuous market ramp-up of key technologies to achieve climate targets by 2045

Eligible measures

• Electrification of industrial process heat, e.g., through:
  • High-temperature heat pumps (also based on waste heat)
  • Electric steam generation
  • Conversion of fossil process heat generation to climate-friendly alternatives
  • Other decarbonization technologies, e.g., hydrogen applications, CO₂ capture and storage technologies (CCS/CCU), provided they are part of the overall project

Prerequisites

• Large investment volume (minimum 15 million euros)
• Significant and permanently verifiable CO₂ reduction co mpared to a fossil reference – from the third funding year at least 60 % compared to the reference system
• Savings of at least 5,000 tonnes of CO₂ equivalents per calendar year
• Use of the technology in energy-intensive industrial processes
• Participation in a competitive auction procedure
• Long-term commitment to emission reductions over the contract term
• A greenhouse gas emission reduction of at least 90 % compared to the reference system must be technically possible and must be achieved in the final 12 months of the climate protection contract term

Funding logic and amount

• No classic funding rate
• Payment of a CO₂ difference premium:
  • Compensation of the difference between the costs of the climate-friendly solution (e.g., industrial heat pump using waste heat) and the fossil reference
  • Both investment and operating costs (CAPEX and OPEX) can be taken into account
  • Contract term of up to 15 years
• Funding volume to date between 100 and 500 million euros per project
• Total budget: several billion euros until 2030

Particularities

• Particularly relevant for large companies and energy-intensive sectors (e.g., chemicals, steel, glass, paper, basic materials industry)
• Waste-heat-based industrial heat pumps are in principle eligible, provided they are an integral part of a comprehensive decarbonization concept
• Comparatively high effort for application, economic and emissions documentation
• Not a replacement for classic EEW grants, but a complementary instrument for very large transformation projects

Notes

As a prerequisite for participation in climate protection contracts, the BMWK states that the fossil reference system has, or would have, annual greenhouse gas emissions of at least 5,000 tonnes of CO₂ equivalents. By contrast, a fixed minimum amount of emissions to be saved is not defined. Selection is also competitive here, via an auction based on the costs per avoided tonne of CO₂ “bid” by the company. As a result, projects with larger absolute emissions reductions often have better chances of winning in practice.

Funding objective

• Supporting companies in planning their transformation towards greenhouse gas neutrality
• Preparing a transformation plan with a concrete catalog of measures to significantly reduce GHG emissions

Eligible measures

• External consulting and study services for preparing the plan, such as:
  • Data collection/measurements and GHG accounting (site-specific baseline analysis)
  • Costs for certification/verification of the GHG balance
  • Development and assessment of energy efficiency and climate protection measures
  • Target setting for greenhouse gas neutrality in 2045 with definition of a concrete 10-year GHG reduction target of at least 40 % reduction compared to the balance year of the baseline analysis

Prerequisites

• Private or municipal company with an establishment or independent branch in Germany
• The transformation plan must include:
  • Baseline analysis incl. GHG balance
  • Target setting: commitment to GHG neutrality by 2045 at the latest and a 10-year GHG reduction target (minimum target: 40 % GHG reduction compared to the base year of the GHG balance)
  • Plan of measures to achieve the target
  • Anchoring of climate targets within the company
• No premature start – planning and consulting services may only be commissioned after receipt of the grant notice

Funding rates

• Small enterprises: 60 %
• Medium-sized enterprises: 50 %
• Large enterprises: 40 %

Absolute funding amounts

• Maximum 60,000 euros per transformation plan

Particularities

• 10 percentage points bonus for participation in a network of the Initiative for Energy Efficiency and Climate Protection Networks (IEEKN)
• Preparation period: the transformation plan must be created within 12 months after the grant notice; extension possible in exceptional cases
• Application not via BAFA/KfW, but via the project sponsor of the funding competition (VDI/VDE-IT)
• Application must be submitted by the company itself; external consultants may assist, but may not act in place of the company as applicant
• Can be used as a savings concept for funding in EEW Module 4 Premium and in the funding competition

Funding objective

• Permanent reduction of industrial greenhouse gas emissions

Eligible measures

• Investment projects for the decarbonization of industrial production processes, in particular measures for electrification in energy-intensive sectors (steel, chemicals, cement, glass)

Prerequisites

• Establishment/branch in Germany and implementation in Germany
• Minimum investment volume 500,000 euros (SMEs) or 1 million euros (large companies)
• The project must reduce direct GHG emissions of the funded plant or process steps by at least 40 % compared to the situation before funding
• For projects that do not replace an existing plant, 40 % less GHG emissions must be generated than in comparable reference plants
• Technology readiness level 4 or higher
• Projects that fall under the EU Emissions Trading System (ETS) are only eligible if GHG emissions through the project fall below the benchmark values for free allocation
• No premature start – an early start without prejudice to funding may be possible upon request in certain cases

Funding rates

• 40 % of eligible costs
• In the case of a 100 % reduction of direct greenhouse gas emissions: up to 50 % of eligible costs

Absolute funding amounts

• Maximum 30 million euros

Funding objective

• Supporting projects in which fossil process heat generation systems are replaced by emissions-free alternatives

Eligible measures

• Conversion to district heating or use of heat pumps

Prerequisites

• Companies with an establishment in Hamburg
• Capacity limit: up to 1 MW electric for heat pumps
• Funding period: up to 5 years

Funding rates

• Determined individually based on differential calculations
  • Calculation: difference between fossil fuel costs and electricity costs for the heat pump
  • Funding is granted for the additional operating costs that arise over a period of 5 years compared to an existing fossil system
  • maximum funding quota is calculate

Particularities & bonusses

• Combination possible with federal investment funding (e.g., BAFA Module 2 or 4 / 4 Premium)

Funding objectives

• Financial support for achieving the greatest possible reduction of greenhouse gas emissions from the (direct) combustion of fossil fuels and from industrial production processes
• Strengthening Austria’s industrial base and decarbonizing industry by 2040

Eligible measures

• Investments in climate-friendly technologies that directly contribute to GHG reduction in industrial production processes, including electrification of industrial processes with high-temperature heat pumps
• Funding applications for GHG reduction measures may also be submitted by consortia

Prerequisites

• The applicant must be a legal or natural person carrying out activities pursuant to Annex 1 UFG
• Submission of a transformation plan
• Funded measures must demonstrably contribute to a measurable reduction of greenhouse gas emissions in the industrial process
• Mandatory reference installation: the measure may not be implemented at a new installation without a reference
• Competitive funding: projects are evaluated based on defined criteria; selection/order according to efficiency and impact of the project
• Project implementation in Austria
• No premature start of measures

Funding rates 

• Investment grant of up to 80 % of eligible investment costs
• In certain cases additional absolute caps per measure
• Transformation grant for increased ongoing costs associated with the changeover possible

Absolute funding amounts

• Maximum funding: 80 million euros at a maximum funding intensity of 80 % (July 2025 call round)
• Maximum 1,000 euros per reduced tonne of CO₂ equivalent
• Caps and rates vary depending on the call round

Particularities

• Companies can submit multiple measures
• Funding via regular calls in which submitted projects are ranked by efficiency, impact and technical criteria
• Funding decisions are based on the recommendation of an environmental support commission

Funding objectives

• Reduction of greenhouse gas emissions from industrial facilities with process supply temperatures up to approximately 400 °C

Eligible measures

• Investments in system solutions that combine efficiency improvements with a switch of heat and/or cooling generation to renewable energy sources, for example:
  • Use of waste heat or waste cooling
  • Retrofit and upgrade of production facilities
  • Replacement of heat and cooling generation equipment
• No restriction to individual technologies: funding is possible for innovative combinations of measures and system solutions
• Distinction between Module A (concepts) and Module B (investments): for plant and process optimizations, Module B is relevant

Prerequisites

• At least 50 % of the energy generated by the heat/cooling system must be used for in-house supply for production/services
• No predominant feed-in to networks or use as space heating/cooling
• Within the defined system, a maximum of 10 % annual final energy share from fossil energy sources (e.g., energy coverage of maintenance windows or other process-inherent, unavoidable reasons)
• Efficiency improvement within the defined system must be at least 10 %; proof must be provided as part of the final accounting by a planner
• Supply temperatures up to max. 400 °C; an exceedance of up to 10 % is possible in justified exceptional cases
• No premature start of the project

Funding rates

• In Module B: funding may amount to a maximum of 50 % of the environmentally relevant investment costs
• Module B – Energy efficiency measures:
  • Small enterprises: max. 50 %
  • Medium-sized enterprises: max. 40 %
  • Funding base (non-SMEs): max. 30 %
• Distinction between environmentally relevant investment costs and environmentally relevant incremental investment costs

Absolute funding amounts

• Maximum funding: 4.5 million euros per project

Particularities

• Time-limited implementation: measures must be completed no later than 36 months after the funding approval is granted
• Planning costs may be recognized up to 10% of the environmentally relevant investment costs (other funding excluded)
• Competitive selection procedure: evaluation and selection of measures by an expert jury
• Not combinable with additional federal funding for the same measures or investment components

Funding objective

• Funding of novel technologies and measures that save at least 1,000 tonnes of CO₂ annually (direct and indirect emissions under Scope 1 and 2)
• Supporting companies that want to implement measures from net-zero roadmaps

Eligible measures

• Provision of process heat for industry: e.g., food, chemicals, or metals
• Electrification of processes or use of renewable heat sources
• Waste heat utilization to increase efficiency

Prerequisites

• Submission of a net-zero roadmap pursuant to Art. 5 KlG (no more than five years old)
• Meeting the thresholds for emission reduction depending on development phase and scope:
  • At least 1,000 tonnes of CO₂ equivalents/year at market approval or market introduction
  • At least 5,000 tonnes of CO₂ equivalents/year at market diffusion
  • Demonstration phase is not funded for Scope 1 and 2
• Achieving the thresholds in the year following commissioning
• No premature project start
• No combination with other federal funding possible

Funding rates

• Maximum 50 % of eligible costs for investment and operation (over a maximum of 7 years) 

Absolute funding amounts

• No flat upper limits, but reduction to incremental costs for projects >20 million CHF
• Funding level is derived individually from eligible costs, the financing gap and program conditions

Particularities

• Operating subsidies are paid out annually (by 2038 at the latest)
• High-temperature heat pumps are generally considered a novel technology if they are in the following development phases:
  • Market approval & market launch (Phase 5): at least one reference installation in CH/EU
  • Market diffusion (Phase 6): implemented multiple times, but still with substantial implementation risks

Funding objective

• Accelerating industrial decarbonization in the EU
• Market ramp-up of innovative climate-friendly technologies
• Focus on cost-efficient reduction of greenhouse gas emissions in energy-intensive applications

Eligible measures

• Projects to electrify industrial process heat, including:
  • High-temperature heat pumps
  • Electric process steam generation
  • Use of renewable heat sources and industrial waste heat
  • System solutions to convert entire process chains or parts of installations

Prerequisites

• Implementation in an EU Member State
• High and transparent CO₂ savings compared to a fossil reference system
• Industrial scale (typically several megawatts of thermal capacity)
• Participation in a competitive selection process
• No premature project start

Funding rates and funding amounts

• No fixed funding rates
• Funding is awarded competitively (IF25 Heat Auction) under the reverse-auction principle:
  • Award to projects with the lowest funding requirement per avoided tonne of CO₂: companies submit a “bid” for the cost per avoided tonne of CO₂ or the cost per generated megawatt-hour of process heat.
  • Funding form depending on the call:
  • one-off investment grants or performance-based premiums (e.g., euros/MWh process heat or euros/tonne CO₂)
• High absolute funding volumes per project possible (1 billion euros budget) – divided into three “auction pots” with different budgets:
  • Temperature range 100 to 400 °C, 3 to 5 MW capacity: 150 million euros
  • Temperature range 100 to 400 °C, more than 5 MW capacity: 350 million euros
  • Temperature range above 400 °C: 500 million euros
• Funding cap: no fixed cap per project, but the indicative value for heat pump projects from an earlier draft is 250 euros/tonne CO₂
• Budget and maximum grants are defined per call round
• Performance-based payout over several years, not a classic CAPEX grant (for max. 5 years from commissioning)
• Total volume of the Innovation Fund: double-digit billion amount until 2030, financed from the EU Emissions Trading System

Particularities

• EU-wide competitive
• Particularly relevant for energy-intensive industry, large process heat demand and high full-load hours
• A maximum of 70 % of full-load hours per year are funded – this limit does not apply to high-temperature heat pumps such as the ThermBooster™ because it achieves a COP of more than 2
• Generally not suitable for smaller or standardized waste-heat heat pump projects
• Comparatively high effort for application, economic and emissions documentation
• Time-limited: only projects that have reached a certain level of maturity in planning are funded
• 6 % security must be provided