June 16, 2023, 3:06 am | Read time: 7 minutes

Millions of homeowners and tenants are expected to gain more clarity this summer about the requirements for switching to climate-friendly heating systems. The traffic light coalition has significantly relaxed the heating law. In most regions of Germany, property owners will now have more time for the heating system replacement. Initially, municipalities must deliver. However, key questions, especially for homeowners and tenants, remain unresolved after the agreement on heating system replacement–and could lead to new crisis meetings within the coalition.

Agreement on Heating System Replacement–What Applies to New Buildings?

According to the traffic light plans, starting January 2024, the rule in new development areas will be that newly installed heating systems must be operated with at least 65 percent eco-energy. This could mean installing a heat pump, connecting to a heat network, or other options like direct electric heating. Heating systems powered by wood and pellets will also be allowed. According to the Federal Association of the Energy and Water Industry, a heat pump is already installed in every second new building.

Those building outside a new development area may still be allowed to connect to an existing gas network. However, this will only apply if the municipality does not yet have a municipal heat plan or if a climate-neutral gas network is planned, meaning a network through which climate-friendly gases can also flow. Only gas heaters that can technically be converted to climate-friendly hydrogen at some point may be used.

Also interesting: Heating System Replacement! 6 Financing Options

What Happens in My Existing House?

In general, even after the agreement on heating system replacement, the rule is: Functioning heating systems do not need to be replaced, and a broken heating system can be repaired. “There are no further interventions in existing property,” states a paper from the FDP.

When switching to a climate-friendly heating system, the principle should be: A municipal heat plan must be in place first. Otherwise, owners do not have all the information to choose the most cost-effective heating option for them. The state must deliver first, emphasizes the FDP in particular. This is aimed to be achieved by 2028 at the latest.

In some municipalities, such a heat plan already exists, so the law will apply there as early as 2024. Where there is no municipal heat plan yet, gas heaters that can be converted to hydrogen may still be installed for the time being. Once the heat plan is in place, this will only be allowed if a climate-neutral gas network is planned or if the heating system is powered by biomass. Heat pumps, connections to a heat network, pellet heaters, and similar systems are allowed everywhere.

Why Does Heat Planning Play Such a Key Role?

Connecting to a heat network like district heating is the simplest option for homeowners–though not necessarily the most cost-effective. However, one must know what the municipality is planning. “Heat planning first, that is the right order for the heat transition,” said Helmut Dedy, chief executive of the German Association of Cities.

Therefore, after the agreement on heating system replacement, states and municipalities are to present concrete plans on how they intend to convert their heating infrastructure to be climate-neutral. Whether there will be a mandatory connection to district heating is uncertain but quite possible. The decision does not lie with the federal government but with the states. This could be supported by the fact that such an investment is only worthwhile with secure customers–for residents, however, it may be associated with high prices due to the monopoly situation.

Also interesting: Can Rent Be Increased After Heating System Replacement?

How Do I Know if My Municipality Already Has Such a Heat Plan?

A spokesperson for the municipal utilities association VKU said: “Whether there is already a municipal heat plan or how far it has progressed can be inquired about at town halls or the local energy supplier. The energy supplier can also provide information on whether and when a connection to a district heating network is possible.”

Currently, about 70 percent of the energy for district heating still comes from climate-damaging fossil fuels, mainly coal and gas. By 2045, however, they are to be greenhouse gas neutral.

Why Is the Use of Hydrogen-Convertible Gas Heaters Controversial?

Those who opt for such a heating system take several risks, according to experts. If the municipality does not plan a climate-neutral gas network, operating these heaters in an environmentally friendly manner will be very difficult. Most likely, one will have to convert–within a “reasonable transition period,” according to the traffic light paper, which has not yet been agreed upon.

Moreover, gas, like oil, will become significantly more expensive in the coming years due to the rising CO2 price. Currently, the CO2 price is still 30 euros per ton of gas, but by 2026 it is expected to be about twice as high. Environmental groups warn of an “unpredictable cost trap.” At the same time, large quantities of hydrogen will likely be needed for the climate-friendly transformation of the industry. It is controversial how much will be left for heating residential buildings.

He himself assumes “that hydrogen will play a rather subordinate role in the heating sector because we primarily need hydrogen in the industrial sector,” said SPD climate expert Matthias Miersch. However, it is also possible that hydrogen will become the ideal solution in some areas of Germany in the future. Therefore, it is good to keep this option open. The VKU estimates that in the future, up to 20 percent of heating in Germany will be done with hydrogen, mainly through district heating. Heat pumps would account for about 40 percent.

Before installing a convertible gas heater, homeowners should be mandatorily informed about the risks according to the coalition’s plans. Kerstin Andreae from the Federal Association of the Energy and Water Industry emphasized that companies would not recommend a heating system that would become permanently expensive during such a consultation. On the other hand, there are also areas with permanent gas supply, for example, because companies are also located there.

More on the topic

Energy Transition What Homeowners Should Know About Connecting to the District Heating Network

Gaining Popularity Using District Heating: Key Questions and Answers

Where Is There Still a Need for Political Clarification?

The heating law is still far from complete even after the agreement on heating system replacement. Before a decision, which is aimed for by July 7 at the latest, the Bundestag committees and possibly higher levels of the factions must still be involved. Transition periods are still open. It is also unclear up to what age the replacement obligation should apply. Older owners may no longer receive the necessary loans for this.

The biggest points of contention in the coalition are likely to be tenant protection and the design of state subsidies. The agreement paper mentions an “additional modernization levy.” Homeowners should be able to pass on the costs of a new heating system to their tenants–but only if they also benefit financially. Details are completely open. It is also unclear how much money the state will provide for the replacement. Just like the question of whether one is only entitled to subsidies up to a certain income.

What Does the Agreement Mean for Climate Protection?

Here, too, the coalition’s outcome is interpreted differently. Green Party parliamentary group leader Katharina Dröge emphasized: “We maintain the high standards for climate protection.” Environmental groups, on the other hand, spoke of “climate policy madness” that pushes the achievement of climate protection goals “far into the distance.”

The main criticism: Gas heaters may still be newly installed for years to come. “If the municipal heat planning is to be completed first, then climate-damaging gas heaters will continue to be installed in most municipalities until 2028,” said Andree Böhling of Greenpeace. The Environmental Aid criticized that the climate- and environmentally harmful burning of wood would be enabled.

with material from dpa