Portugal net-zero grants
The Portuguese flag flies alongside the flag of the European Union. Source: Linas Krisiukenas for Shutterstock.

Heat Pump Makers Among Those Eligible for €350 Million in New Portuguese Net-Zero Economy Transition Grants

The European Commission has approved the aid package, which must be dispersed by December 31, 2025.

The European Commission has announced its approval of a €350 million ($379 million) aid scheme for Portugal that will provide funding in the form of direct grants to companies producing equipment “necessary to foster the transition toward a net-zero economy, in line with the Green Deal Industrial Plan,” which includes heat pumps and heat pump components.

In addition to heat pump manufacturers and components makers, companies producing batteries, solar panels, wind turbines, electrolyzers and carbon capture usage and storage equipment are also eligible to receive funding. Companies involved in the recycling of related “critical raw materials” can also receive grants under the scheme, which must be dispersed no later than December 31, 2025.

Tapping the Recovery and Resilience Facility: Funding for the plan comes from the Commission’s Recovery and Resilience Facility, a temporary funding instrument used to disperse grants and loans from the NextGenerationEU plan.

  • NextGenerationEU is a €723.8 billion ($786 billion) economic aid program designed to help EU member states recover from the Coronavirus pandemic.
  • Of that sum, €338 billion ($367 billion) has been earmarked for grants.

Changing the narrative: The Commission’s approval of Portugal’s aid scheme provides a much-needed win for the European heat pump industry, which has recently suffered political and commercial setbacks.

  • The European Heat Pump Association (EHPA) reported in December 2023 that the European Commission had postponed the release of its Heat Pump Action plan. The EHPA said the plan’s release, originally scheduled for early 2024, was pushed back until after European Union elections in June.
  • Shortly thereafter, the EHPA released sales data showing that heat pump sales had fallen 5% in 14 different European countries. The EHPA said 2.64 million heat pumps were sold in in 2023 compared to 2.77 million in 2022.

What it means for NatRefs: While it’s a win for the heat pump industry overall, heat pump companies that specialize in natural refrigerants will probably like their chances at winning these grants compared to competitors that work with HFCs.

  • The revised EU F-gas Regulation goes into effect on March 11, 2024, and specifies a bloc-wide phase out of HFCs by 2050. For example, from 2032, HFCs will be prohibited for use in small monobloc heat pumps with a capacity of less than 12kW (3.4TR).

The Commission’s quote: “This €350 million Portuguese scheme is funded through the Recovery and Resilience Facility,” said Margrethe Vestager, Executive Vice-President in charge of competition policy at the Commission. “It will provide key support to the production of strategic equipment needed for the transition towards a net-zero economy. The scheme will support these investments without unduly disturbing competition.”

“[The grants] will provide key support to the production of strategic equipment needed for the transition towards a net-zero economy.”

Margrethe Vestager, EVP of Competition Policy, European Commission

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