Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €2.98 billion scheme will contribute to greening the district heating sector in Germany, by supporting the construction of more efficient district heating systems and the decarbonisation of existing ones. With this measure, Germany will be able to increase the share of renewable energy and waste heat in the heating sector, thereby considerably decreasing its emissions. The German aid measure we have approved today will contribute to achieving the EU Green Deal objectives and help Germany meet its environmental targets, while limiting possible distortions of competition.”

The German scheme

In June 2022, Germany notified the Commission of its intention to introduce a scheme to promote green district heating based on renewable and waste heat.

The scheme, which will run until 30 August 2028, will be open to district heating network operators and operators not currently providing this service on the market. The aid will take the form of direct grants. The measure will support feasibility studies and transformation plans respectively for the construction and the decarbonisation of district heating networks. Under the scheme, district heating network operators will also be able to receive investment aid for:

• the construction of new district heating systems with a share of renewable and waste heat of at least 75%
• the decarbonisation and upgrade of existing district heating systems to operate on the basis of renewable energy and waste heat
• the installation of renewable heat and solar thermal generation facilities, heat pumps and heat reservoirs, as well as the integration of waste heat in district heating systems.

In addition, district heating network operators will be able to receive operating aid for the generation of renewable heat through solar thermal installations and heat pumps.

Support for feasibility studies and transformation plans will cover up to 50% of their costs. When it comes to investment aid, the aid amount per beneficiary will cover up to 40% of the eligible investment costs. In the case of operating aid, the aid will be calculated based on the amount of renewable heat produced. The granting authority will ensure that the aid does not exceed the funding gap (i.e. the aid amount necessary to attract the investments that otherwise would not take place).

This nation-wide scheme is expected to support the installation of approximately 681 MW of renewable heat generation capacity per year, reducing greenhouse gas emissions by approximately 4 million tonnes of CO2 per year.

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