The European Commission and the European Investment Bank have authorized a EUR 2.5B Fund package under the Modernisation Fund, committing €2.5 billion to clean energy investments throughout the European Union. The latest financing round will support 51 energy-related projects spread across 11 EU member states. The EUR 2.5B fund is financed entirely through revenues generated by the EU Emissions Trading System (EU ETS), which channels carbon market proceeds into climate and energy initiatives. Following this latest allocation, the Modernisation Fund has distributed a cumulative €23.2 billion since its launch in January 2021.
The investment is intended to help lower-income EU countries upgrade their energy infrastructure while accelerating renewable energy deployment, improving energy efficiency, and lowering greenhouse gas emissions. In addition to supporting climate objectives, the EUR 2.5B fund is expected to reinforce Europe’s energy security by reducing reliance on imported fossil fuels and strengthening industrial competitiveness through cleaner and more efficient energy systems.
Romania Receives Largest Allocation as Countries Advance Energy Transition
Romania secured the largest share of funding, receiving €636.9 million. Hungary followed with an allocation of €552.3 million, while Czechia was awarded €516.8 million. Greece, Poland, Lithuania, Croatia, Portugal Estonia, Latvia and Slovenia received €233.9 million, €180 million, €169 million, €109 million, €81.4 million, €44.8 million, €40 million and €20.2 million respectively.
Projects financed through this round of the Modernisation Fund are focused on expanding renewable energy generation, upgrading electricity networks, strengthening energy storage capacity, and improving energy efficiency. Several participating countries will also direct funding toward cleaner transport and heating systems.
In Czechia, financial support will be used to modernize district heating systems to improve efficiency and reduce emissions. Croatia intends to expand geothermal energy for regional heating projects. Estonia will replace diesel-powered public transport vehicles with zero-emission electric trolleybuses, while Latvia will introduce electric buses together with new charging infrastructure to support cleaner urban transportation.
Funding Programme Continues to Support Climate and Energy Goals
Portugal and Poland will allocate part of their funding to improve the energy efficiency of residential and public buildings, helping lower energy consumption and reduce emissions. Romania plans to invest in standalone battery energy storage systems to improve grid stability while supporting the growing share of renewable electricity in its energy mix.
The Modernisation Fund is designed to benefit 13 EU member states whose gross domestic product (GDP) per capita remained below 75% of the EU average during the 2016–2018 period. Although 11 countries received allocations under this funding round, Bulgaria and Slovakia also remain eligible for assistance through the programme.
Operating alongside other EU financial instruments, including the cohesion policy and the Just Transition Fund, the EUR 2.5B fund supports member states in achieving their climate and energy objectives. Eligible countries may submit applications for non-priority projects until 11th August 2026, while submissions for priority projects—which account for more than 90% of the fund’s portfolio—must be filed by 8th September 2026. Continued investment through the programme is expected to accelerate Europe’s transition toward a cleaner, more resilient, and sustainable energy system.
