Modernization fund – support for clean energy projects

The Modernization Fund has disbursed another €2.17 billion to help modernize energy systems in nine member states. Information on earlier support for modernization was announced in June 2023. For more details on this topic, see a previous article: “Modernization Fund – €2.4 billion to accelerate environmental transformation.”

Investments subsidized by the Modernization Fund help lower-income member countries meet their 2030 climate and energy targets, and contribute to reducing greenhouse gas emissions in the energy, industry and transport sectors and improving energy efficiency. Since its launch in 2021, the Modernization Fund has disbursed a total of €9.68 billion in EU ETS revenues to help accelerate the green transition.

Modernization Fund – support for member states in 2023.

In 2023. The total amount disbursed from the modernization fund was €4.66 billion, and was allocated to 50 projects. Support was granted to Bulgaria (€197 million), Croatia (€88 million), the Czech Republic (nearly €1.85 billion), Estonia (€66 million), Latvia (€5 million), Lithuania (€11 million), Poland (€221 million), Romania (nearly €2.17 billion) and Slovakia (€60 million).

The funds, which were earmarked for the implementation of 50 projects, were directed to activities leading to the generation of electricity from renewable sources, the modernization of power grids, increased energy efficiency and the replacement of coal with fuels with lower emission intensity during energy production. Projects that received funding include:

• Modernizing Bulgaria’s electricity distribution network – accelerating the electrification of transportation, developing storage systems, and decarbonizing and decentralizing energy consumption and production;
• Photovoltaic power generation by municipal waste management service providers in Croatia;
• Achieving a higher energy standard for public buildings and replacing coal with gas in district heating systems in the Czech Republic;
• Improving the energy efficiency of public buildings in Estonia;
• The introduction of electric vehicles and appropriate charging infrastructure in Latvia;
• Development of renewable energy generation capacity in Lithuania’s large and medium-sized industrial sector;
• power grids for future electric car charging stations and high-efficiency cogeneration in Poland’s heating systems and industrial sector;
• renewable energy generation capacity, modernization of the electricity distribution network, rolling stock modernization and gas infrastructure for the replacement of coal in Romania’s electricity generation;
• Modernization of power grids, including ways to store energy, and improving energy efficiency in Slovakia.

The modernization fund is one of the key tools on the road to environmental transformation

The Modernization Fund, financed by proceeds from the auctioning of emission allowances under the EU’s Emissions Trading Scheme, is designed to help ten lower-income EU countries make the transition to a climate-neutral economy. The beneficiary member states are: Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia. Starting in 2024. Under the revised EU Emissions Trading System (EU ETS), the modernization fund will provide funding to three additional beneficiaries – Greece, Portugal and Slovenia.

The modernization fund supports investments in renewable energy generation and use, energy efficiency, energy storage, modernization of energy networks, including district heating systems, pipelines and grids, and equitable transformation in coal-dependent regions. The Modernization Fund complements other EU instruments, such as the Cohesion Policy and the Equitable Transformation Fund. It mobilizes significant resources that can help member states invest in line with the REPowerEU plan and the “Ready for 55” package. Its operation is the responsibility of the beneficiary countries, which work closely with the European Commission and the European Investment Bank (EIB).

Polish projects to be implemented in 2023. under the modernization fund

In 2023. In Poland, five projects received support from the modernization fund:

1. Use of alternative fuels for energy purposes – the overall goal of the program is to increase climate neutrality and the green economy by improving the efficiency of the energy sector and transforming it to reduce greenhouse gas emissions. This is achieved by optimizing heat and energy management using alternative fuels; amount of support more than 44 million euros.
2. Cogeneration for district heating – Part II – the main objective of the investment is to improve the energy efficiency of district heating through the use of high-efficiency cogeneration sources, reduce carbon emissions, increase the role of renewable energy sources, promote good practices in the modernization of generation sources, thereby reducing pollution levels and improving air quality. Increasing energy efficiency will lead to savings in primary energy consumption and reductions in greenhouse gas emissions; amount of support over €2 million.
3. Combined heat and power for energy and industry – sectors in energy transition – the investment aims to spread high-efficiency cogeneration and reduce primary energy consumption in order to support the achievement of the national energy efficiency target by 2030 and reduce_CO2 emissions; amount of support over 44 million euros.
4. CHP for power generation and industry; amount of support over €24 million.
5. Development of power grid for future electric car charging stations; amount of support €105 million.