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Market analysis··2 min read

Heating Network Package: Framework Conditions for Decarbonisation and Expansion Defined

The Federal Cabinet has agreed on key principles for a heating network package, which aims to support the expansion of district heating and its decarbonisation, as well as create investment security.

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Heating Network Package: Framework Conditions for Decarbonisation and Expansion Defined. Illustrative image generated using artificial intelligence (AI). The image does not depict a real property, person or event and is not a documentary photograph. Labelled in accordance with Article 50(4) of the EU AI Act.

The German government has adopted key principles for a heating network package, which aims to accelerate the expansion of district heating networks and advance their decarbonisation. The package is designed to improve the existing framework conditions for investments in renewable heat, thereby creating increased planning certainty for stakeholders in the sector. The German Renewable Energy Federation (BEE) emphasises the necessity of an immediate and practicable implementation of the defined measures, while ensuring social compatibility. In this regard, the interests of consumers and tenants are to be equally considered.

A significant new provision stipulates that heat supply companies will in future be able to pass on investment costs resulting from decarbonisation or network expansion measures to end customers. This right to unilateral price adjustment is legally regulated but requires that the new renewable energy plant in question has already been put into operation. This regulation aims to enable a cost allocation that is fair to the originator, without burdening consumers before the actual service provision.

Supplementary measures are planned to protect consumers. These include the introduction of binding notice periods for impending price changes and the establishment of a special right of termination. The latter becomes relevant if customers wish to switch entirely to renewable energies and the existing heating network does not meet the legally defined decarbonisation requirements. However, if the special right of termination is exercised within a period of ten years, a compensation claim by the supplier may arise, balancing the interests of both parties.

To ensure transparency and fair pricing, the establishment of a sector-specific consumer arbitration board is planned. This will be complemented by a mandatory price transparency platform, which should enable consumers to objectively compare offers. Furthermore, official, ex-post price supervision is envisaged, strengthened by extended accounting and bookkeeping obligations for suppliers. An evaluation of the social and practical effects of these measures is planned for 2030 to review the effectiveness and appropriateness of the regulations.

The German Renewable Energy Federation (BEE) points out that the share of renewable energies in annual net heat generation should reach 50 percent by 2030. Currently, this figure is approximately 30 percent. The key principles now adopted have the potential to support this goal and facilitate its achievement. The importance of avoiding excessive burdens on customers is emphasised to ensure the long-term acceptance and market penetration of decarbonised heating networks. The precise design and practical implementation of the measures will be crucial for the success of this initiative and have direct implications for property owners and developers, particularly with regard to infrastructure investments and operating costs.

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