EU greenlights Germany’s 3-billion euro district heating subsidy programme

The European Commission has approved the German government's new subsidy programme to make district heating greenhouse gas neutral and to build new climate-neutral distribution networks. A total of some 3 billion euros in government subsidy support will be made available to energy supply companies, municipalities, utilities and registered associations and cooperatives until 2026, as green district heating networks would be “key to a climate-neutral heat supply and crucial to reducing our dependence on fossil energy imports,” economy and climate minister Robert Habeck said. The heating networks will be supplied by renewable energy sources or waste heat from industrial processes, the Green Party politician added. Municipalities or cooperatives will be able to receive grants if they set up local heating networks in new development areas or if municipal utilities convert district heating networks previously operated via coal-fired combined heat and power (CHP) to renewable energy and waste heat. State subsidies will amount to a maximum of 40 percent of the investment cost in generation plants and infrastructure and supported heating networks will have to supply at least 75 percent of their heat from renewable energy and waste heat sources. For heat generation from electricity-based heat pumps and solar thermal systems, an operating cost subsidy is also offered over a 10-year period.

The utilities sector welcomed the move. “Federal funding for efficient heating networks is an important instrument for promoting the heat transition – especially in cities,” said Kerstin Andreae, head of the German Association of Energy and Water Industries (BDEW). “It is therefore a key milestone that the European Commission has finally approved the funding under state aid law.” The BDEW has been pushing for a new legal framework to accelerate the heating transition and expand district heating in urban areas in particular.