Applications from Czech district heating companies for modernization subsidies exceed program capacity by CZK 16bn

Operators of district heating plants in Czechia have submitted 67 projects to the HEAT program for modernizing district heating operations, seeking subsidies totalling more than CZK 93 billion. That is CZK 16 billion more than the program’s current funding capacity. Petr Holub, senior director of the Climate Protection Section at the Ministry of the Environment, said this today in Olomouc at the Heating and Energy Days 2025 conference. According to an estimate by the Czech District Heating Association last year, modernizing district heating plants whose operators will have to replace old coal-fired technologies with new heat sources and distribution networks by 2030 will require investment of more than CZK 200 billion.

The transformation of district heating plants is funded by subsidies from the HEAT fund, which receives part of the proceeds from emissions allowances purchased by district heating companies. Experts initially expected the HEAT fund to make CZK 100 billion available to the companies. „The HEAT fund’s allocation depends on the price of allowances, which is falling, so the fund’s resources are shrinking,“ Holub noted. Looking ahead to 2030, the Ministry of the Environment is working with an average price of emissions allowances of EUR 80, meaning that under the program’s current terms, district heating companies could have CZK 76 billion to CZK 77 billion available.

Holub said the current excess of applications from district heating companies seeking subsidies under the HEAT program should gradually shrink, as some projects are unlikely to go ahead. The actual costs of the planned modernization of district heating plants will be lower than current estimates suggest, thanks to public tenders. The ministry will also seek funding from the Modernisation Fund for projects worth CZK 5 billion to CZK 6 billion that district heating companies were unable to submit in previous HEAT program calls.

The modernization and decarbonization of district heating plants is one of the Modernisation Fund’s main areas of support. According to current estimates, the fund will have a total of CZK 370 billion to CZK 380 billion available. Subsidies are intended for district heating projects, the construction of photovoltaic systems, and energy savings in energy-intensive industries.