After the Heating Act was passed in the Bundestag, future state funding will play a central role. Associations are calling for improvements to previously known key points. The new federal funding for efficient buildings is scheduled to come into force at the beginning of 2024 and involves billions in funding.

“Adequate funding for the installation of emission-free heating systems is essential for the success of the heating transition,” said the President of the House Owners’ Association

The Building Energy Act (GEG) – often referred to as the Heating Act – aims to make heating in Germany more climate-friendly by gradually replacing oil and gas heating systems. The law still has to pass the Federal Council at the end of September. The law essentially stipulates that every newly installed heating system in the future should be operated on the basis of 65 percent renewable energy. It is scheduled to come into force at the beginning of 2024 – but will initially only apply to new development areas.

Municipal heat planning should be the pivotal point for existing buildings. Owners should decide what to do on this basis. The heat planning should be available for large cities from mid-2026 and for the remaining municipalities from mid-2028.

The new funding

Heating replacement is already being promoted. A reform is now planned. According to the coalition factions, it should support people across the “breadth of society and ensure that the investment costs do not overburden anyone.” A success of the new funding program would be a central lever for the climate effect of the Heating Act: the sooner homeowners decide on climate-friendly heating, the more CO2 will be saved.

The new funding guidelines are to be presented to the Bundestag’s budget committee at the end of September. The funding is currently planned until 2030.

Associations demand speed. In recent weeks, the heating debate and announcements of a supposedly significantly increased funding have led to massive uncertainty and reluctance to buy among consumers, according to the Federal Solar Industry Association, the Federal Heat Pump Association and the German Energy Wood and Pellet Association.

Basic support and bonuses

In the future, there will be a basic subsidy of 30 percent of the investment costs of more climate-friendly heating systems for all residential and non-residential buildings. In addition, an income bonus of 30 percent of the investment costs is to be introduced – this should apply to all self-occupying homeowners with a taxable income of up to 40,000 euros per year, taking the respective household into account.

Speed ​​bonus

In addition, a speed bonus amounting to 20 percent of the investment costs is planned as an incentive for retrofitting as early as possible. From 2028 onwards, this bonus is to be reduced by 3 percentage points every two years. This bonus should be granted to all self-occupying homeowners whose gas heating is at least 20 years old at the time of application or who have an oil, coal, gas or night storage heating system.

Amount of funding

According to the key points, basic funding and bonuses should be able to be combined, but only up to a maximum funding rate of a maximum of 70 percent. The maximum eligible investment costs for replacing the heating system should be 30,000 euros for a single-family home or the first residential unit in an apartment building – the maximum investment cost subsidy available for replacing the heating system is therefore 21,000 euros.

There is currently a subsidy of up to 40 percent for the installation of a heat pump, with the maximum investment costs eligible for funding being 60,000 euros per calendar year – this applies to heating replacement and other efficiency measures. The subsidy for installing a heat pump in a single-family home is up to 24,000 euros.

In an apartment building, the eligible costs should increase for each additional residential unit, as stated in a paper from the Ministry of Economic Affairs. For non-residential buildings, limits should apply to the eligible costs based on the number of square meters. In addition to funding the replacement of heating systems, grants can also be applied for for efficiency measures – for example for insulating the building envelope. According to the ministry, the maximum eligible investment costs for such efficiency measures are 60,000 euros per residential unit if an individual renovation schedule is available – and 30,000 euros without a renovation schedule.

What is new is that the maximum limits for eligible costs for heating replacement and for efficiency measures can be linked. In total, a maximum limit of eligible costs of 90,000 euros applies. That is an improvement.

Loans through KfW

In addition to investment cost subsidies, low-interest loans are to be offered through the state development bank KfW. All citizens with a taxable annual household income of up to 90,000 euros should be able to use these – for heating replacement and other efficiency measures. According to the ministry, the offer should help to spread out and reduce the financial burden of replacing a heating system in the current period of high interest rates.

Criticism of the key points

The requirement that only owner-occupiers should receive the speed bonus has been particularly criticized. Warnecke criticized renting owners who should be put in a much worse position. “The government should change that as quickly as possible and treat both ownership groups equally.” Tenants’ Association President Lukas Siebenkotten also called for this. The speed bonus should also apply to the rented area and thus benefit tenants.

Siebenkotten went on to say that it is crucial that the funding program is adequately funded: “The funding for energy-related renovations should therefore be increased to 25 billion euros per year and made permanent.”

According to the coalition’s plans, around 19 billion euros will be spent on federal funding for energy-efficient buildings next year.

The Federal Heat Pump Association criticized that the maximum eligible costs for heating replacement should be halved to 30,000 euros. This would trigger new uncertainties as to whether the investment would be worthwhile in your own case. In the future, the eligible costs should be 45,000 euros for a single-family home. The Federal Association of the German Heating Industry also demanded this – otherwise citizens could ultimately receive less funding despite higher funding rates.