Boost for green district heating: Federal funding for efficient heat networks (BEW) begins

The federal funding programme for district heating’s transition to renewable energy sources took effect today. In the period up to and including 2026, around €3 billion will be made available for renewable heat generation using geothermal energy, solar thermal energy, large-scale heat pumps and further heat network infrastructure. The BEW backs the building of new heat networks where renewable energy and waste heat sources will constitute a share of at least 75%, as well as the decarbonisation of existing networks.

Federal Minister for Economic Affairs and Climate Action Robert Habeck said,
“Green district heating is contributing to energy security and reducing our dependency on fossil energy imports. With this new funding, the Federal Government is investing in stable heating costs and a climate-friendly energy supply. If we want to make our heating greenhouse gas neutral, heat networks are key. They tap into climate-friendly heat sources that cannot be used via the decentralised heating systems in buildings, including deep geothermal energy, which can supply high temperature heat all year round, on a reliable basis and in any weather. We are rolling out forward-looking energy policies.
“Geothermal energy is among the heat sources that we have to substantially strengthen in order to replace the burning of fossil fuels. We also have to integrate much more waste heat from industry and commerce into heat networks that would otherwise be released into the environment unused. Large-scale heat pumps, which can feed into heat networks with a high output, are also a key technology. The Federal funding for efficient heat networks scheme (BEW) makes this process economically viable for heat network operators and keeps them moving forward.”

In cities in particular, connecting to the increasingly climate-neutral district heating is the instrumental path to leaving oil and gas heating behind. In rural areas in particular, new climate-friendly local heat networks are being formed, which are replacing old oil and gas-fired heating in buildings.

Currently, the heat supply in Germany predominantly relies on the burning of fossil fuels. Almost half of German households still heat using fossil gas, a quarter using heating oil. “The funding is intended not least for energy suppliers, municipalities, municipal utilities and registered associations/cooperatives, which can receive subsidies for investing in heat networks via this new funding. In this way, a municipality or a cooperative, for instance, can receive subsidies in the future if they build a local heat network in a new residential area, or if a municipal utility whose district heating has thus far been operated using coal-based CHP then transitions to renewable energy and waste heat.

Details of the funding:

With the BEW, the Federal Government is promoting the building of heat networks where at least 75% of the heat supply is generated by renewable energy or waste heat, as well as the expansion, concentration and decarbonisation of existing networks.

As a first step, funding will be allocated to a phase of feasibility studies for new heat networks and transformational plans for the transition of existing networks to renewable energy and waste heat.

The core of the BEW will be pursued in the next step, i.e. the funding of investments, and in some cases, even the operating costs, if the measures described in the feasibility studies and transformation plans are implemented.

A maximum of 40% of investments in generating facilities and infrastructure will be backed by funding. Funding will go to heating systems that use renewable energy (deep geothermal energy, solar thermal energy, large-scale heat pumps that use ambient heat, biomass etc.), the integration of unavoidable waste heat, infrastructure projects for heat distribution and the optimisation of network operation.

Additional funding to support operating costs will be provided for the generation of heat from electricity-based heat pumps and solar thermal systems over a period of ten years. Where individual measures can be implemented quickly, e.g. solar thermal systems, heat pumps, biomass boilers, thermal energy storage, pipes and district heating substations, funding can be applied for according to simplified requirements: in such cases neither a feasibility study nor a transformation plan is necessary.

Applications can be submitted from 15 September via the website of the Federal Office for Economic Affairs and Export Control. You can find the link here.

Using the available budget of €2.98 billion, the installation of an average of up to 681 megawatts of renewable heat generation capacity is to be funded every year until 2030, and investments averaging around €1,174 million will be mobilised.

You can find a link to the official publication of the funding guideline in the Federal Gazette here.