Improved funding for municipal heat plans

Heating and cooling account for around half of Germany's final energy consumption. This means that we will only be able to achieve our ambitious climate targets if we manage to realise the heat transition. Municipalities can now receive subsidies of up to 100 per cent towards developing their heat plans.

Bauteile einer Heizung auf einem technischen Plan.©

What heating requirements will cities, municipalities and districts have in the future? How can they lay the foundations for a secure, affordable and climate-friendly heat supply? For questions like these, municipal heat planning can provide the answer. These plans are used to develop the strategic direction of the local heat supply and the work to draft them can now be subsidised based on improved conditions.

This follows an amendment to the Local Authorities Guideline (applicable from 1 November 2022), which is considered to be the largest national broad-based funding programme for municipal climate action and falls under the umbrella of the National Climate Initiative. The new funding priority for municipal heat planning enables municipalities to pay external experts to draw up tailored heat plans. Up until 31 December 2023, they can receive up to 90 per cent in subsidies. This can be raised to 100 per cent for municipalities that are financially weak or lie in former lignite-mining areas.

Subsidy rates to fall again from January 2024

For applications submitted from 1 January 2024, subsidies will be fall to 60 per cent of the eligible total expenditure; for financially weak municipalities, it will drop to 80 per cent. Importantly, a municipality can only receive funding if it does not already have a key or climate-action sub-concept in place for the use of heating and cooling.

Speaking about the new funding priority, State Secretary Dr Patrick Graichen said: „In the current energy situation in particular, it is more important than ever to put the right policies in place for a secure, affordable and climate-friendly heat supply. The heat supply of the future will be renewable, and will make us less dependent on imported fossil fuels. Especially given the higher prices, I am delighted that we are able to offer such attractive funding. I encourage all municipalities to make use of this offer.”

Heat planning is used to determine the future heat demand of a municipality and to develop a strategy for switching to a climate-friendly heat supply. In addition to analysing the current situation, this process may also investigate the municipality’s energy and GHG footprint as well as its potential for saving energy.

The Federal Government has been supporting local climate action via the Local Authorities Guideline since 2008. From 2008 until the end of 2021, the National Climate Initiative provided approximately €965 million in funding to some 21,500 projects in more than 4,450 municipalities under this Guideline. This has triggered investment of around €2.5 billion.