With the official implementation of the Building Energy Law on January 1, 2024, Germany will accelerate its heating transformation. The current heating methods dominated by fossil fuels such as natural gas and oil will gradually be replaced by cleaner, low-carbon, efficient, and economical renewable energy heating technologies. In this transformation process, the German government will provide corresponding subsidies for renewable energy heating systems using the existing “German Federal Energy Efficient Building Funding Program” (BEG).
Subsidies Related To Renewable Energy Heating Systems
At present, the latest revised “German Federal Energy Efficient Building Funding Program” (BEG) will provide investment subsidies for replacing old fossil fuel heating systems with renewable energy heating systems, with a basic subsidy rate of 30% of the investment cost; In addition to the basic subsidy, BEG also provides additional subsidies based on different specific conditions, including:
- To promote efficient heating technology, the use of efficient heat pump systems can also receive an additional 5% energy efficiency subsidy; Low emission biomass heating systems can receive a one-time unified subsidy of 2500 euros;
- Owners who replace their old fossil fuel heating systems earlier than the legal deadline can receive a maximum climate acceleration reward of 20%;
- For self occupied homeowners whose annual taxable income does not exceed 40000 euros, BEG provides up to 30% income subsidy for the first time.
The above subsidies can be accumulated, and overall, the use of renewable energy heating systems can receive up to 70% of investment subsidies.
Other Individual Energy-Saving Measures
In addition to replacing with renewable energy heating systems, BEG also provides subsidies for other individual energy-saving measures, such as strengthening building exterior wall insulation, which can receive up to 20% investment subsidies: the basic subsidy rate is 15%, and if the owner develops a separate housing renovation plan, they can also receive a 5% reward.
The German government’s support for building energy-saving renovation is not limited to providing financial subsidies, and owners can also obtain supplementary loans from banks to replace heating systems and take other energy-saving measures. The prerequisite is to obtain approval from KfW (for replacing heating systems) or BAFA (for other energy-saving measures). All applicants can obtain loans at a preferential interest rate lower than the market rate. Homeowners with an annual household income of no more than 90000 euros can receive additional interest rate preferential loans provided by federal government funds.
Although the target of BEG funding is building owners who invest in renovating their heating systems. But tenants can also indirectly benefit from it, as landlords will receive basic subsidies for replacing heating systems, implementing energy-saving measures, and conducting comprehensive renovations of the house. The cost reduction achieved by landlords through subsidies will not directly benefit tenants through rent, but will suppress rent increases caused by energy-saving renovations.
The new sustainable heating subsidy policy also sends a signal to the public that the German federal government supports its citizens’ investment in green and low-carbon heating systems. The new funding subsidy is also socially oriented, benefiting more low-income groups.
