Germany's New Heating Law May Double Gas Boiler Costs, Study Finds

Germany's new heating law, backed by the Schwarz‑Rot coalition, permits the installation of new gas and oil boilers but also reduces existing subsidies for many owners. An unpublished study by the Institute of the German Economy (IW) warns that, for a typical household in a partially renovated apartment, annual heating costs could rise from about €1,080 in 2026 to €1,952 in 2040 – almost a doubling if a gas or oil boiler is fitted.

The study says that installing a heat pump instead would keep heating costs largely stable and could save roughly €1,000 per year in such apartments. It also notes that biomethane is expected to become the main cost driver from 2029 onward. IW criticises the law for creating uncertainty and conflicting with Germany’s 2045 climate‑neutrality target, warning that households may be led into investments that become uneconomic or unsustainable.

In addition, the law changes the heating‑subsidy scheme: the previous generous grants for new installations are cut, and new funding rules make most owners receive less financial support, while still allowing gas and oil boilers provided they increasingly use alternative fuels.