Background information

The Federal Climate Protection Act stipulates that Germany will become climate-neutral by 2045. Already the last federal government had set up several funding programmes to help achieve this target. Amongst other things, installing climate-neutral heat supply and heating networks were deemed important if Germany wants to meet its climate targets by 2045. To provide incentives to build new or update old heating networks, a new funding guideline was set up. The programme is called the Federal Funding for Efficient Heating Networks (BEW) and provides subsisdies to support the construction of new heating networks with a high share of renewable energy as well as the decarbonisation of existing networks.

The BEW creates incentives for heating network operators to invest in new networks powered largely by renewable energy and to decarbonize existing ones. The funding follows a systemic approach that considers the heating network as a whole and aims to reliably support both the time-consuming transition of existing networks to renewable energy and waste heat, and the construction of new networks primarily supplied by renewables

Content of measure

The new funding guideline provides financial support for heating network operators to invest in new networks that are powered mostly by renewable energy. Grants to decarbonise existing heating networks are also made available through the funding programme. For example, municipalities can receive grants for installing local heating networks using a high share of renewable energy when developing new areas, or for converting existing district heating systems to renewable energy and waste heat. In detail, the funding programme is divided into four modules:

Module 1: funds 50% of the costs for setting up transformation plans or providing feasibility studies on new or updated heating systems working with renewable energies (at most to €2 million per project can be funded) Module 2: funds 40% of the costs for setting up new heating networks or updating old networks. To receive funding, new or updated systems need to use at least 75% renewable energies and waste heat in the end. At most €100 million per project can be funded. Module 3: funds 40% of the costs (up to €10 million) for individual measures, such as solar thermal systems or heat pumps. Module 4: provides subsidies on operating cost when generating renewable heat from solar thermal systems or electrically powered heat pumps and feeding the renewable heat into heating networks.

Companies, municipalities or municipal companies/associations as well as registered associations and registered cooperatives can apply for funds. Funds are only granted for measures that supply more than 16 buildings or more than 100 residential units.

Use of measure

In 2023, there were 1,075 applications made under the funding guideline. Application numbers increased in the following year: In 2024, a total of 1,558 applications were submitted across all four modules. As of May 2025, another 535 applications have been submitted.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds National Recovery and Resilience Facility

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Consulted
Form	Not applicable	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Peak or cross-sectoral level

Involvement

Business and other organisations were invited to provide their input during the parliamentary hearings on the draft law on heat planning and the decarbonisation of heating networks.

Views and reactions

Business and employer organisations welcomed the draft law as well as the funding to be provided for new heating plans and networks. However, organisations also highlighted room for improvement during the first hearing of the draft law. For example, the municipal employer organisation VKA as well as the umbrella organisation for the skilled crafts ZDH stated that the draft law on heating planing and decarbonisation of heating networks should be linked more stronlgy with the Building Energy Act (GEG). Further suggestions from VKA, ZDH but also other organisations, included to provide for a longer realisation period and more funding to install new heating planning and networks.

Sectors and occupations

This case is not occupation-specific.

Sources

• 16 October 2023: Parliamentary hearing on draft law heating planning (www.bundestag.de)
• 21 July 2025: BAFA: Federal Funding for Efficient Heating Networks (www.bafa.de)
• 21 July 2025: BAFA: Statistics (www.bafa.de)