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2026-08-04 10:24 UTC → 2026-08-13 02:03 UTC ·
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German energy cost pressures and heating law reforms
A late‑June Following a late-June heat wave across Western Europe pushed electricity demand to record levels. 350.org calculated that German power bills rose by about €371 million and French bills by €360 million in the week of 21‑27 June, as drove wholesale electricity prices jumped from €86 to €566 /MWh. The surge was linked to higher oil €566/MWh, Germany’s energy landscape is being reshaped by new heating and gas prices after Iran closed the Strait of Hormuz, prompting the AfD to call for a return to cheap Russian energy. In July carbon pricing legislation. Under the Schwarz‑Rot Schwarz-Rot coalition’s new heating law came into force. An Institute of and the German Economy (IW) study warns that a typical partially renovated apartment will see heating costs climb from roughly €1,080 accompanying Building Modernisation Act, the requirements for renewable energy in 2026 to €1,952 by 2040 and €2,366 by 2045 if a gas or oil boiler is used. The law cuts existing boiler‑subsidy grants but still allows new fossil‑fuel units, provided they increasingly use alternative fuels. Installing a heat pump would keep costs stable and could save about €1,000 per year. Key cost drivers are heating systems have been eased, repealing the mandated green‑gas quota (“Biotreppe”) – at least 10 % previous mandate for 65% renewable gases from 2029, rising to 60 % by 2040 – adding roughly €643 annually, energy. However, new cost-sharing rules will take effect on 1 January 2028, requiring landlords and a 50/50 cost‑sharing rule for tenants to split CO₂ levies charges and gas‑network gas-network fees on 50/50 for newly installed boilers effective 1 January 2028. fossil-fuel boilers. From 2028 2029, landlords must also bear half of these charges, and from 2029 cover half of the extra blending costs for climate‑friendly fuels, raising blending climate-friendly fuels. For a typical 80 m² apartment, the annual burden for landlords could rise from €330 in 2029 to between €761 and €1,194 by 2045. An Institute of the German Economy (IW) study notes that operating a gas system in a typical 80 m² 10,000 kWh-per-year Altbau apartment could cost up to €761‑€1,194 €2,000 annually, rising to €2,366 by 2045. Separately, This is driven largely by the “Biotreppe” green-gas quota, which mandates renewable gas levels of at least 10% by 2029 and 60% by 2040. To mitigate these costs, KfW launched a subsidy programme on 21 July 2026, offering up to €28,000 (up (covering up to 80 % 80% of eligible costs) for households that replace oil or gas replacing fossil-fuel boilers with renewable systems, subject systems. Additionally, the government approved a CO₂ price reform for fuels, maintaining a price corridor of €55 to income limits €65 per tonne of CO₂ for 2027 to stabilize costs for gasoline, diesel, heating oil, and approval. natural gas ahead of the EU’s ETS 2 expansion in 2028.