New funding scheme for climate-friendly heating systems

If you go for a climate-friendly heating system now, you stand to benefit from higher rates of funding.

New funding scheme for climate-friendly heating systems© Adobe Stock / contrastwerkstatt

Now that the new funding scheme for heating systems based on renewables and for measures to increase buildings’ energy performance is in place, energy-efficient retrofitting of residential and non-residential buildings really pays off. Under the new federal funding for energy-efficient buildings (individual measures) scheme, investment grants of up to 70% are available to those replacing old, fossil-fuel powered heating systems in existing buildings with systems based on renewables.

“This is key if Germany is to make progress on climate action in the buildings sector in a way that is feasible for people”, says Federal Minister Robert Habeck. The new funding scheme was launched on 1 January 2024, the day the Buildings Energy Act entered into force.

The funding guideline for the federal funding for energy-efficient buildings (individual measures) scheme has been reformed accordingly. The funding guidelines for other branches of the federal funding for energy-efficient buildings scheme remain unchanged. The funding for replacing heating systems and for other measures to improve buildings’ energy performance is made available from the Climate and Transformation Fund.

More about the new funding for individual measures in a nutshell:

Applications for funding for the heating systems scheme can be made to KfW (Reconstruction Loan Corporation). Applications for funding for other efficiency-related measures (such as insulation or the replacement of windows) can still be made to the Federal Office for Economic Affairs and Export Control (BAFA).

The new, uniform basic funding rate for heating systems based on renewables is 30%. It includes the cost of connection to a heating network or a network of 2 to 16 buildings with up to 100 housing units (‘buildings grid’). This funding rate is available to all applicants. The same is true for the efficiency bonus of 5%, which is granted for highly efficient heat pumps and a €2,500 grant for new and very low-emission biomass heating systems.

There is also a 20% climate speed bonus available up to 31 December 2028. It can be claimed by those living in their own property if they replace a highly inefficient old heating system (coal or petroleum based, self-contained gas heating, night storage heating) or a gas-fired or biomass heating facility that is more than 20 years old. As of 2029, the bonus will be 17% and then fall by 3 percentage points every two years.

A 39% income bonus also introduces an additional component for those living in their own property and whose taxable household income does not exceed €40,000. These bonuses can be combined with one another, raising up the share of the grant to a maximum of 70%.

In absolute terms, the eligible expense for replacing a heating system is €30,000 for a first housing unit, €15,000 for the second to sixth units, and €8,000 per additional housing unit.

Please note: KfW (Reconstruction Loan Corporation) is expected to be ready to accept applications for the new funding scheme for heating systems as of 27 February 2024. The new funding rates can already be claimed as of now.

Funding for additional efficiency measures

A grant of up to 20% will continue to be available for individual efficiency measures to improve a building’s energy performance (15%, plus another 5% upon presentation of an individual renovation road map).

The maximum eligible expenditure for efficiency measures is €60,000 per housing unit (if there is an individual renovation road map) and €30,000 without a renovation road map. Where a heating system is replaced and other efficiency measures taken at the same time (and on the basis of an individual renovation road map), total maximum eligible expenditure is €90,000.

For information about the new funding guideline, please click here (in German only).