The Energy Transition in German homes

Germany has set itself the target of making its building stock virtually climate-neutral by 2050. This means improving energy efficiency in buildings as well as using a greater proportion of renewable energy for heating and hot water. The Federal Ministry for Economic Affairs and Energy is supporting the work to make buildings sustainable through a whole range of different funding programmes.

Person holding piggy bank and model house on each hand.© Alexander Raths/

The Energy Transition is a project spanning an entire generation. It is Germany's path into a secure, environmentally friendly, and economically successful future. A lot of work has already been done. Renewable energy is now Germany’s most important energy source for electricity. However, the aim is not only to generate cleaner energy, but to use energy more efficiently. After all, there's nothing cheaper or more environmentally friendly than not having to produce so many kilowatt hours of energy in the first place.

Energy efficiency has a key role to play when it comes to buildings. Almost 40 per cent of Germany’s final energy consumption is used in buildings – mostly for heating and hot water. Over the next 20 years, half of the 19 million residential buildings in Germany will need to be modernised. We need to use this opportunity to identify and to close efficiency gaps, as well as other areas of weakness in energy efficiency in houses and flats. This will enable each and every person not only to save money, but also to help mitigate climate change.

Whether it's ceiling insulation in the basement, putting in new windows, or changing the boiler, improving energy efficiency in the home has many advantages. The first of these relates to cost. Using less energy means costs for heating and hot water also fall – and that they remain lower in the long term. Carbon emissions also decrease, helping to protect the climate and mitigate climate change. The only things to increase are all positive: the home becomes more snug and the value of the property rises once it has been modernised.

What makes a building energy-efficient?

In simple terms, an energy-efficient house is one in which adequate heating and hot water is provided using as little energy as possible. Here, the building envelope has an important role to play. This includes all of the building components that separate inside from outside – i.e. walls, ceilings and floors, as well as windows and doors. A well-insulated building envelope keeps the heat wherever it should be: it prevents it from getting inside in the summer, and stops it escaping in the winter. Part of improving the energy performance of buildings includes installing efficient heating and using this on the right setting – and, ideally, operating it using renewable energy.

Energy consulting: There’s always room for improvement

If you want to reduce your energy consumption, you need to know where you are using your energy. The best way to identify efficiency gaps in the home is to have a specialist look round and advise you on what needs to be done. Anyone who wants to gain an initial idea of how much energy could be saved or to pick up general energy-saving tips can draw upon a whole range of different sources of information – as well as state funding.

For basic information on energy efficiency in buildings, the consumer advice centre can help. The centre provides information on different aspects that are relevant to private households, be it through online or telephone advice, personal advisory sessions, or visits to look at and assess the home. All of these services are part-funded by the Federal Ministry for Economic Affairs and Energy and are therefore most affordable. Low-income households may also be eligible to use these services free. In addition to this, an online building assessment tool launched by the Federal Ministry for Economic Affairs and Energy can be used to assess how much energy could be saved in a residential building by taking a range of different modernisation measures.

Getting a detailed assessment: the On-site Energy Consulting programme offered by the Federal Ministry for Economic Affairs and Energy

Anyone wishing to go one step further and carry out an energy-efficient retrofit of their home can take advantage of the On-site Energy Consulting programme offered by the Federal Ministry for Economic Affairs and Energy. This involves having an independent energy advisor come round to analyse the state of the house and identify areas where energy efficiency is poor, and who will then develop a tailor-made modernisation plan. The advisor also undertakes a cost estimate, assesses the financial benefits of various different measures, and provides advice on what funding opportunities are available.

Since 1 March 2015, funding may be granted for up to 60 per cent of the advisory costs and home-owners can also choose whether they want the advisor to draw up a whole-house modernisation plan or to develop a roadmap for incremental modernisation work based on carefully coordinated measures or sets of measures.

Energy-efficient construction and retrofitting made simple

The Federal Ministry for Economic Affairs uses funds from the CO2 Building Modernisation Programme to finance KfW's successful energy-efficient construction and retrofits schemes.

  • Loan or grant: Support for retrofits

    KfW is offering support for residents in Germany wishing to undertake energy-efficiency retrofits. The more energy-efficient a building is to be made, the higher the level of support available. There are two main models of support: low-interest loans for residents wishing to finance the retrofit by means of a loan, and investment grants for residents who can finance the retrofit without a KfW loan. In addition, KfW is also providing grants for energy-related planning and consultations during the retrofitting phase.

  • Build and save: Energy-efficient housing

    Anyone wishing to fulfil their dream of having their own house built should think about energy efficiency right from the outset. As part of KfW's scheme to support energy-efficient construction, anybody who is having their own house built not only can benefit from top loan conditions but, if the property meets the KfW 40 and 55 efficiency standards, is also eligible for a repayment grant. On top of the support offered for property construction, KfW also provides financing for advisory services, planning, and consultations during the building phase.

  • Clever house-buying – using money from the government

    Anyone planning to buy a property should not only think about location, size, and fittings, but should also make sure that the energy balance is right. Those buying an efficiency house or a property that has undergone an energy-efficiency retrofit are eligible to apply for government loans and grants – with attractive conditions. Two different financing options are available. Anyone buying an energy-efficient new-build can take advantage of the KfW support programme for energy-efficient construction, just like those having their own house built. Those purchasing a newly renovated house or flat can take out a low-interest loan as well as receive a repayment grant or investment grant as part of the KfW support programme for energy-efficiency retrofits.

  • A successful funding instrument which is now set to achieve even more

    The CO2 Building Modernisation Programme is already an important scheme that is helping to drive the Energy Transition forward. Since 2006, the funding provided has helped to support the construction / energy-efficiency retrofitting of 3.8 million homes. This is equivalent to one in three retrofits and half of all new-builds. A total of over 196 billion euros have been invested and carbon emissions have been reduced by over 7.7 million tonnes per year.

But now the programme is set to become even more effective. As part of its National Action Plan on Energy Efficiency (NAPE), the German government has decided to top up level of funding available from 2015 by a further 200 million euros – raising the total funds to 2 billion euros a year. From the middle of 2015, there will also be funding programmes available to support energy-efficiency retrofits in commercial buildings, as well as for the construction of new energy-efficiency buildings to house municipal and community establishments. KfW is also continuing to simplify the online application and approval process for loans. Property-owners receive a decision shortly after the application has been made, enabling those who receive a positive response to gain planning security as quickly as possible.

More than just being efficient: Grants for renewables-based heating

More than two thirds of all heating systems used in Germany waste energy, and around 10 million boilers in the country are more than 15 years old. If the energy transition is to also move forward in our homes as well, this obviously needs to change. Having a new boiler installed helps make progress in saving energy. But using heat that has been generated from renewable energy is even better in terms of reducing the climate footprint. The Federal Ministry for Economic Affairs and Energy has therefore set up what is known as the Market Incentive Programme to fund renewable energy used for heating in order to motivate even more people to switch to using solar power, geothermal energy, or biomass for their heating.

The Market Incentive Programme consists of two components, depending on the size and scope of the investment:

  • Firstly: grants for smaller systems, particularly those used in private households, as well as in some companies. Funding is provided for solar thermal collectors, pellet-fuelled heating systems, and efficient heat pumps.
  • Secondly: low-interest loans and repayment grants for larger systems, particularly those used in a commercial setting; these might be used, for instance, by hotels or laundries which are investing in process heat from renewables, or by municipalities which build biomass cogeneration power plants or heating networks / storage facilities that run on renewables.

The Market Incentive Programme is having effect. Since 2000, it has provided loan-support for more than 1.6 million systems.

On 1 April 2015, the Federal Ministry for Economic Affairs and Energy improved the Market Incentive Programme even further. One of the new features here is what is known as the optimisation bonus. In the future, anyone who switches to a system based on the use of solar thermal energy or wood pellets etc. will receive support not only for the costs of the boiler or collector, but also for work undertaken to optimise the heating system – such as grants for modern radiators. Those who are already using renewable energy to generate their heating can now apply for support for the readjustment of their older system that was financed via the Market Incentive Programme.

Energy Efficiency Incentive Programme

Investing in your own home is set to become even more attractive. The Federal Ministry for Economic Affairs and Energy is now providing even greater support to those having their own house built, those undertaking an energy-efficiency retrofit, as well as those buying a property. As part of the National Action Plan on Energy Efficiency (NAPE), the time-tested support programmes have been considerably increased and further developed. There is also a new Energy Efficiency Incentive Programme – a package consisting of funding of 165 million euros per year. The measures of the incentive programme are lending a fresh stimulus to innovation and investment. For example, the "heat transition in the boiler room" aims to provide investment grants towards the market launch of highly innovative fuel-cell heating. A whole range of measures aims to force inefficient heating systems out of people’s basements. These include thorough maintenance checks, an efficiency label for boilers, and higher funding when boilers that are particularly inefficient are replaced.