Zabala Innovation leads delivery of Portugal’s first Modernisation Fund call

Portugal’s first Modernisation Fund call marked a milestone for both applicants and the national energy landscape. It was also a decisive moment for Zabala Innovation, which led the preparation and submission of proposals from its Lisbon office under exceptionally tight timelines and evolving guidance. This combination of technical depth, structured methodology and agile collaboration across multiple European offices strengthened proposal quality and confirms Zabala Innovation’s leadership as companies prepare for upcoming 2026 opportunities.

Lisbon leadership and a ‘One Zabala’ model for a first-of-its-kind challenge

The inaugural Modernisation Fund call in Portugal unfolded in an environment of incomplete guidance, shifting interpretations and no existing reference points for promoters or evaluators. In this context, the leadership of Zabala Innovation’s Lisbon office became a defining factor, ensuring regulatory alignment and strategic coordination across all project submissions.

Equally decisive was the One Zabala mobilisation model: multidisciplinary teams from various European offices worked in parallel on several large-scale decarbonisation proposals, while the Lisbon team led and synchronised delivery. This structure enabled real agility — the ability to redistribute capacity, resolve bottlenecks quickly and sustain methodological consistency across all deliverables.

As Patricia Matos, Senior Consultant in Lisbon, explains: “This first call showed that when guidance is evolving and time is limited, what clients value most is clarity, structure and experience. Our integrated team turned uncertainty into a coherent, credible and high-quality submission.”

Understanding the Modernisation Fund: a unique tool within the EU’s financing architecture

The Modernisation Fund is financed through revenues from the EU Emissions Trading System (EU ETS) and supports thirteen lower-income Member States in modernising energy systems and improving energy efficiency. Its priorities reflect national climate strategies, REPowerEU and the European Green Deal.

For project promoters, success depends on demonstrating:

• clear and measurable greenhouse-gas reduction or energy-saving impacts,
• a robust and technically sound design,
• a credible financial structure with a defensible relevant-cost calculation and no double funding,
• realistic implementation timelines, typically within five years and before 2030,
• and solid performance indicators such as avoided CO₂-eq, additional renewable capacity, storage or flexibility.

Portugal’s Call No. 28099/2025/2 introduced even more restrictive conditions:

• only priority investments defined in Appendix 4 were eligible;
• applications could only be single-promoter individual projects;
• schemes were explicitly excluded;
• and non-priority projects will need to wait for a future state-aid framework, making them de facto ineligible in this cut-off.

For evaluators — DGEG, the European Investment Bank and the Investment Committee — project maturity remains the critical differentiator: permits, studies, financial transparency and realistic timelines heavily influence the overall appraisal.

What worked and what this call revealed

Three key success factors emerged from this first experience:

1. Rapid mobilisation backed by long-standing expertise

Zabala Innovation’s track record in comparable instruments — including twenty-six funded Innovation Fund projects, multiple IPCEI initiatives and several Strategic Expressions of Interest — enabled fast analysis, fewer interpretative gaps and stronger judgement under pressure.

2. Agility through coordinated cross-country work

The ability to deploy teams across different offices, under Lisbon’s leadership, created capacity and ensured that multiple complex proposals could be developed simultaneously without compromising quality.

3. Bringing structure where no playbook exists

With evolving criteria and no national precedents, one of Zabala’s greatest contributions was to create methodological clarity: defining technical and financial narratives, structuring assumptions and ensuring internally consistent interpretations.

Preparing for upcoming EU opportunities: a strategic advantage

Looking ahead, preparedness is the most powerful differentiator for upcoming Modernisation Fund windows. Companies that build advance assets — validated baselines, monitoring logic, standardised financial templates, modular DNSH components and documented permitting assumptions — will accelerate application readiness and enhance maturity.

Beyond the Modernisation Fund, 2026 will bring significant opportunities:

• Innovation Fund calls in February and April 2026, centred on first-of-a-kind net-zero technologies and highly competitive scoring grids.
• A potential new Modernisation Fund call later the same year.

Zabala Innovation’s distinctive strength lies in designing funding pathways, not isolated applications. In Portugal, this means connecting the Modernisation Fund with complementary instruments under Portugal 2030 — such as SICE, SITCE and STEP — which act as execution routes or scale-up mechanisms depending on the investment’s maturity and ambition.

A growing European instrument with long-term implications

Yesterday’s joint press release from the European Commission and the European Investment Bank announced €1.8 billion in new disbursements supporting forty-five clean-energy investments across twelve Member States — including the first ever investment approved in Portugal. Since 2021, the Modernisation Fund has committed €20.7 billion to 294 operations, with €5.46 billion disbursed in 2025 alone.

This confirms the Fund’s evolution into a central pillar of Europe’s climate-finance architecture.

As André Guimarães, Senior Consultant in Lisbon, emphasises: “The Modernisation Fund is scaling up rapidly, but its long-term legacy will depend on the types of projects selected in the next cycles. We know the direction — net zero, resilience, a just transition — but not yet which ideas will become tomorrow’s success stories. That uncertainty is precisely where the opportunity lies.”

Portugal’s first call demonstrates that, in emerging and highly technical funding schemes, experience, methodology and coordinated European delivery remain the factors that truly set projects apart. Zabala Innovation will continue to support companies in shaping credible decarbonisation investments and positioning themselves for the major instruments expected in 2026.

Planning large-scale decarbonisation investments or evaluating opportunities under the Innovation Fund or the Modernisation Fund? Our team can help you design a funding strategy that accelerates implementation and reduces risk.