Brussels approves €50 million Spanish state aid plan for decarbonizing thermal energy

Julio García The European Commission has approved, under EU state aid rules, a €50 million Spanish program to boost the decarbonization of heat in industrial processes. According to the Commission, this will be done through the “Auctions as a Service” (AaaS) tool of the 2025 Innovation Fund Heat Auction. The Spanish program will support projects that decarbonize heat in industrial processes using innovative technologies, including electricity-based and renewable energy heating solutions. This is the first AaaS project outside the hydrogen sector. Under this program, the aid will consist of a fixed premium per tonne of CO2 avoided, awarded through a competitive bidding process. This aid will cover the additional costs arising from the transition from heat production using fossil fuels to heat production using electricity or direct renewable energy. Furthermore, the program includes various mechanisms to incentivize flexible electricity consumption and will be financed by the Recovery and Resilience Facility. The aid may be granted until 31 December 2026. Support will be linked to verified decarbonized heat production and will be paid semi-annually for a maximum of five years. The Commission assessed the plan in accordance with EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows Member States to support the development of certain economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy. Specifically, the Commission considered the plan necessary and appropriate to achieve the reduction of greenhouse gas emissions and the acceleration of the green transition. Furthermore, the plan is proportionate, as it is limited to the minimum necessary and has a limited impact on competition and trade between Member States. On this basis, the Commission approved the Spanish plan in accordance with EU State aid rules. The non-confidential version of the decision will be available under number SA.121923 in the State aid register on the Commission's competition website once the confidentiality issues have been resolved.

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