Germany needs to invest €43.5 billion in district heating by 2030

The planned expansion of district heating in Germany will require investment of 43.5 billion euros by 2030. This is according to a report by the analytical and consulting firm Prognos AG, which takes Germany’s current climate targets into account in its analysis.

District heating is one of the key ways to achieve a climate-neutral heat supply for buildings. Alongside improving the energy efficiency of buildings, it therefore plays a key role in decarbonising heating in Germany.

The report assessing investment requirements for expanding district heating in Germany, available in full here, was commissioned by the German Association for Energy Efficiency in Heating, Cooling and CHP (AGFW) and the German Association of Local Utilities (VKU).

The report says that expanding district heating will require investment of 43.5 billion euros by 2030. Most of the funds (60%) will be needed to expand heating networks, with the rest going to heating plants using renewable energy sources and their connection to the networks.

The report stresses that annual government support of 3.4 billion euros would be needed for investment in and operation of district heating in the years up to 2030. However, only 3.5 billion euros in total has currently been allocated for public support for district heating through 2028, the VKU said.

“The report illustrates the high volume of investment the industry will have to manage in the coming decades. The main requirement is an appropriate financing framework,” said Werner Lutsch, managing director of AGFW.

According to the report, 3.6 million buildings will be heated by district heating by 2045, equivalent to 14 million residential units. That is more than double the current 6 million residential units supplied by district heating.

The aim is to gradually shift the energy mix to climate neutrality by the same date through a combination of renewable energy sources and unavoidable waste heat, for example from industrial processes. Municipalities must draw up plans by 2028 at the latest outlining how German cities can be heated in the future.

District heating already supplies more than a third of homes in Germany’s three largest cities: Berlin, Hamburg and Munich. The government has previously set a target of connecting 100,000 buildings to district heating every year. AGFW says that this could enable around half of German households to be heated in a climate-friendly way.