Modernisation Fund

What Modernisation Fund does

The Modernisation Fund is a European Union financing programme established under Article 10d of the EU Emissions Trading System (ETS) Directive and operational since 2021. It is financed by mandatory contributions from EU ETS allowance auctioning revenues — 2% of total allowances auctioned between 2021-2030 and 2.5% between 2024-2030 — supplemented by voluntary transfers from Member States. The fund is designed to support 13 lower-income EU Member States (GDP per capita below 75% of the Union average in 2016-2018): Bulgaria, Czechia, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Romania, Slovenia, and Slovakia. Its mandate covers investments in renewable energy generation, energy efficiency, energy storage, energy network modernisation, and just transition in carbon-dependent regions, with at least 70% of resources directed to these priority areas. The programme operates within the European Green Deal Investment Plan and complements REPowerEU, Fit for 55, and the Just Transition Fund.

The fund offers two core financing products: Priority Investments Financing (with no cost-coverage limit) and Non-Priority Investments Financing (capped at 70% of relevant costs). Beneficiaries access the fund through a structured governance model that prevents direct application by project proponents. Only national governments of beneficiary Member States may submit investment proposals, which are then assessed by the European Investment Bank (EIB) for priority investments, with the European Commission adopting disbursement decisions twice yearly following Investment Committee meetings. The Investment Committee comprises representatives from beneficiary Member States, three non-beneficiary Member States (Germany, Netherlands, Sweden), the European Commission (chair), and the EIB. The EIB transfers approved resources to beneficiary Member States within 30 days of disbursement decisions.

The programme's revenue and disbursement scale is substantial. Total projected revenues amount to €57 billion from 2021 to 2030, assuming a carbon price of €75/tCO2. As of July 2026, cumulative disbursements since January 2021 reached €23.2 billion across 345 confirmed or recommended investment proposals, with the most recent round alone delivering €2.5 billion for 51 projects spanning 11 Member States. Specific funded schemes include the Czech RES+ programme (photovoltaic power plants), HEAT (district heating), LIGHTPUB (public lighting), HouseEnerg (residential efficiency), TRANSGov (public transport electrification), ENERGov (public buildings), Bulgarian smart meter deployment (450,000 meters), and the GREENABLER grid reinforcement project (720 km of OHL upgrade from 220kV to 400kV).

Name

Modernisation Fund

Legal name

Modernisation Fund

Website

https://modernisationfund.eu

Company type

Private

Founded year

2021

Operating status

Operating

Short description

The Modernisation Fund is an EU financing programme, managed by the European Investment Bank, that channels revenues from EU ETS allowance auctions to 13 lower-income Member States to support renewable energy, energy efficiency, energy storage, grid modernisation, and just transition investments.

Ownership category

akta.pro rank

Product category

Public Climate Finance

NAICS

Funds, Trusts, and Other Financial Vehicles (525)

SIC

Federal & Federally-Sponsored Credit Agencies (6111), International Affairs (9721)

akta.pro primary industry

Renewable Energy & Energy Transition Funds (FSANAJAB)

akta.pro secondary industries

Energy & Power Infrastructure Funds (Generation, Transmission, Storage) (FSANAEAB), Climate / Clean Tech & Decarbonization Funds (FSANAJAA), Climate Finance Funds & Green Investment Facilities (BPADACAH), Sustainable Infrastructure & Resilient Cities Funds (FSANAJAC)

Keywords

• Public climate finance
• Energy transition grants
• EU ETS financing
• Renewable energy funding
• Green deal investments

GTM type

B2B

Offering type

Services

Cost components

Operations, Personnel, Others

Revenue model

1. EU ETS Allowance Auctioning Revenues: The Modernisation Fund is financed by revenues from the auctioning of emission allowances under the EU Emissions Trading System (EU ETS). Revenues come from: (1) 2% of total EU ETS allowances auctioned between 2021-2030, (2) 2.5% of total EU ETS allowances auctioned between 2024-2030, and (3) EU ETS allowances that Member States transfer to the Fund.
2. Member State Disbursements: The EIB transfers resources to beneficiary Member States within 30 days of the disbursement decision. The total revenues of the Modernisation Fund amount to €57 billion from 2021 to 2030, assuming a carbon price of €75/tCO2.

Go-to-market motion1 record

Distribution channels1 record

Marketing channels4 records

Core offering

The Modernisation Fund is an EU financing programme that provides grants to 13 lower-income EU Member States for energy system modernisation. It disburses revenues from EU ETS allowance auctions to fund priority investments in renewable energy, energy efficiency, energy storage, energy networks, and just transition in carbon-dependent regions, as well as non-priority investments that meet Fund objectives and demonstrate greenhouse gas emission reductions.

Product overview

The Modernisation Fund is a financing programme from the European Union operated by the European Investment Bank in cooperation with the European Commission. It offers two core products: Priority Investments Financing (covering renewable energy, energy efficiency, energy storage, energy networks, and just transition) with no cost-coverage limit, and Non-Priority Investments Financing covering up to 70% of relevant costs. The Fund supports various named investment schemes including the RES+ Programme (photovoltaic), HEAT Programme (district heating), LIGHTPUB (public lighting), HouseEnerg (residential energy), TRANSGov (public transport), and ENERGov (public buildings). Individual projects such as smart meters infrastructure and large-scale grid modernisation projects like GREENABLER are also supported. All investments are funded by revenues from the EU Emissions Trading System, with total disbursements reaching €23.2 billion since January 2021.

Differentiator

Problem solved

Functional benefit

Products and services

• Priority Investments Financing Financing for investments that fall into at least one priority area (renewable energy, energy efficiency, energy storage, energy networks, just transition in carbon-dependent regions). Benefits from a simpler, faster pathway to funding with no cost-coverage limit. Available to beneficiary Member States.
• Non-Priority Investments Financing Financing for investments that do not fall into a priority area but meet Modernisation Fund objectives and demonstrate reduction of greenhouse emissions. The Fund can cover up to 70% of relevant costs, with the remaining financed from private sources. Available to beneficiary Member States.
• RES+ Programme Czech national programme supporting photovoltaic power plants with installed capacity up to and above 1 MW, including elements of active energy management and electricity storage systems. Targeted at Czech energy projects.
• HEAT Programme Czech national programme for modernisation of energy sources, pipelines in district heating and cooling (DHC), and thermal energy supply systems. Targeted at Czech district heating infrastructure.
• HOUSEENERG Programme Czech residential programme for energy efficiency, energy savings, and modernisation of energy sources in houses and buildings. Targeted at Czech residential building owners.
• TRANSGOV Programme Czech programme for modernisation of public transport through electrification of railways, buses, trolley buses, and tramways. Targeted at Czech public transport operators and municipalities.
• ENERGOV Programme Czech programme for energy efficiency and energy savings in public buildings, including new buildings for the public sector. Targeted at Czech public sector entities.
• GREENABLER Project Bulgarian Grid REinforcement ENABLing Full-Fledged Clean Energy Rollout — reconstruction and upgrade of about 720 km of overhead lines from 220 kV to 400 kV and upgrade of 8 adjacent substations. Targeted at Bulgarian grid infrastructure.

Quantifiable outcome

• 345 confirmed or recommended investment proposals
• +4 more outcomes

Named customers13 records

Segments1 record

Ideal customer profiles1 record

Technology focussed No

API detail

Has API

No

API docs

API detail

Core technology

AI maturity

App detail

Partnerships

Five partnerships are on record, tiered core and flagship.

• European CommissioncoreStrategic or Co-development Partner · 1 January 2021European Commission chairs the Investment Committee, adopts disbursement decisions, makes proposals for rules of procedure, reviews and evaluates Fund performance, and performs information and communication actions. One of three governance pillars of the Modernisation Fund.
• European Investment BankcoreStrategic or Co-development Partner · 1 January 2021EIB auctions carbon allowances, manages revenues, assesses investment proposals submitted by Member States, and provides secretariat of the Investment Committee. Transfers resources to Member States within 30 days of disbursement decisions. Also manages the proceeds in a single portfolio.
• Beneficiary Member StatescoreStrategic or Co-development Partner · 1 January 202113 lower-income EU countries (Bulgaria, Czechia, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Romania, Slovenia, Slovakia) responsible for implementing the Fund in their territory, selecting and submitting investment proposals, managing disbursements, and monitoring implementation.
• European Green DealflagshipStrategic or Co-development Partner · 1 January 2021Key part of the European Green Deal Investment Plan. Supports investments aligned with REPowerEU Plan and Fit For 55 package objectives.
• Investment CommitteecoreStrategic or Co-development Partner · 1 January 2021Composed of 13 representatives from beneficiary Member States, 3 from non-beneficiary Member States (Germany, Netherlands, Sweden), 1 from European Commission (chair), and 1 from EIB. Meets twice yearly to assess non-priority investments and provide recommendations.

Scale indicators6 records

Recent moves5 records

Expansion highlights5 records

Direct peers

• Just Transition Fund: The Just Transition Fund is a parallel EU financing instrument targeting carbon-dependent regions with a similar focus on social and economic transition. The Modernisation Fund explicitly lists it as a complement, and there is partial overlap in just-transition investment categories and Member State beneficiaries (e.g. Poland, Czechia, Romania).
• EU Innovation Fund: The EU Innovation Fund is the most direct peer: also financed by EU ETS allowance auctioning revenues, also managed in cooperation with the EIB and European Commission, and also focused on clean energy and decarbonisation investments. It complements the Modernisation Fund by targeting large-scale, low-carbon technology demonstration projects across all EU Member States.
• InvestEU Programme: InvestEU is the EU's flagship investment programme mobilising public and private finance for sustainable infrastructure, including energy. The Modernisation Fund explicitly lists it as a complement, and both share EIB involvement, overlapping eligibility criteria, and blended finance characteristics.
• Cohesion Fund: The EU Cohesion Fund finances environmental and trans-European transport projects in Member States with GNI below 90% of the EU average — substantially overlapping with Modernisation Fund eligibility. Both instruments fund renewable energy, energy efficiency, and clean transport in the same lower-income Member States.
• Connecting Europe Facility (CEF): CEF is an EU funding instrument that co-finances trans-European energy, transport, and digital infrastructure. It overlaps with Modernisation Fund priorities in energy networks (e.g. cross-border grid projects, Projects of Common Interest) and is explicitly listed as a complementary instrument.
• REPowerEU Plan: REPowerEU is the EU's response to the energy crisis, with significant new financing for renewable energy and efficiency. The Modernisation Fund explicitly supports REPowerEU objectives, and the two programmes are intended to be deployed in coordination across beneficiary Member States.

Broad incumbents

• European Investment Bank (EIB): The EIB is both the operational manager of the Modernisation Fund and a much larger peer institution. It deploys tens of billions annually in climate and energy lending across all of Europe and globally, overlapping significantly with Modernisation Fund priorities in renewable energy, energy efficiency, and clean transport.
• Green Climate Fund (GCF): The GCF is a global multilateral fund under the UNFCCC that channels climate finance to developing and emerging economies. Comparable as a large-scale, mandate-driven climate finance vehicle with grant and concessional instruments, although operating globally rather than EU-specifically.
• European Bank for Reconstruction and Development (EBRD): EBRD is a major European public development bank with a strong focus on energy transition, renewables, and green infrastructure across Central and Eastern Europe — the same geography as many Modernisation Fund beneficiaries. Comparable in deploying concessional and commercial capital for clean energy projects.
• KfW Group: KfW is Germany's national development and climate bank, operating a similar financing model for energy transition (e.g. KfW Energy Transition Programme, building refurbishment programmes). Comparable in its public-mandate, grant-and-loan blended structure, though at a national rather than multi-country scale.

Market position

Strengths5 records

Weaknesses5 records

Competitive moat3 records

Key risks1 record

Key highlights6 records

Customer concentration

Revenue estimate

Valuation estimate

Number of profiles

Funding overview

Funding rounds

Investors

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M&A

Investments1 record

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Frequently asked questions about Modernisation Fund