Home Articles FROM AMBITION TO ACTION – How Germany intends to use Heat Planning for its ambitious Green Agenda

FROM AMBITION TO ACTION – How Germany intends to use Heat Planning for its ambitious Green Agenda

by Linda Bertelsen
Action goal

Seven years, seven months, and counting down – That is how long is left until 2030, a crucial year in German climate and energy policy. By then, Germany wants to have decarbonized half of its heating sector. A task for which the German Federal Government attributes district heating a decisive role. A Danish perspective on the German transformation: the strategy, the benefits, and challenges to the heating sector.

By Christian Bjerrum Jørgensen, Energy Counsellor, Embassy of Denmark, Berlin
and 
Willy Winkler, Energy Policy Advisor, Embassy of Denmark, Berlin 

The German energy transition (“Energiewende”) is a success story. Within only t il fuel-based to being almost halfway towards climate neutrality. This is a major achievement, especially in light of the electricity sector’s central role in the pursuit of overall decarbonization.

Final energy consumption in Germany in 2020 after electricity, heating. and transport

However, a look at Germany’s heating sector reveals some significant challenges still lie ahead. Accounting for more end 50% of final energy demand, it does not take advanced statistical skills to realize that there will be no complete energy transition without a heating transition in Germany (“Keine Energiewende ohne Wärmewende”) (Figure 1).

While this has become an idiomatic expression in the German energy policy debate, triggering a dynamic comparable to the transformation in the electricity sector has been notoriously difficult (Figure 2). Throughout the last decade, the share of renewable energy within the German heating mix has more or less remained the same.

Share of renewable energies in gross electricity consumption, in final energy consumption for heating and cooling and in final energy consumption in the transport sector

What does it take to advance the heating transformation? Germans like to say: Awareness is the first step to improvement. A notion that the new Minister for Economic Affairs and Climate Protection (BMWK), Robert Habeck, took seriously while taking stock of Germany’s climate protection status. “We are currently a very long way from where we need to be,” Minister Habeck said at a press conference. “We can predict that we will fall short of our climate targets in 2022 and 2023. But we are doing our utmost to catch up.” The Green Party politician is eager to triple Germany’s annual rate of CO2 reduction to bring the country back on track to reach its ambitious climate goal of reducing emissions by 65% compared to 1990 levels.

For the heating sector, the minister plans an unprecedented transformation. By 2030, the share of renewables in the heating mix shall be 50%. Considering that the share has been stuck at about 15% for the last seven years, it is hard to downplay the ambitious goal Germany has set itself (Figure 3).

To rise to the challenge, the Federal Government has identified district heating (DH) as the crucial puzzle piece. “Heating grids are the key to an affordable heating transition. They rank high on the government’s agenda for this legislative period”, explains Christian Maaß, Director General for Energy and the key regulator for the heating transition in BMWK.

Benefits to district heating

However, affordability is only one aspect of DH in which the new government sees great value. An article recently published by BMWK praises the degrees of freedom DH brings as an infrastructure. Not only does the diversity of possible heat generation technologies (large-scale heat pumps, solar thermal, geothermal) allow adapting to local circumstances with unmatched efficiency. DH enables the utilization of sources such as industrial surplus heat or deep geothermal heat. The ministry’s conviction is that a mix of these technologies should replace the vast amount of fossil-fuelled combined heat and power (CHP) plants that currently dominate the DH landscape in Germany. The future CHP will be climate neutral; they will play a part as a peak load provider and create security of supply.  

Furthermore, the diversified generation portfolio shall be combined with heat storage of all shapes and sizes (days, weeks, months underground, and above). This shall provide the heating sector with more flexibility and independence from dramatic price shocks like those currently keeping gas consumers in suspense.

A look towards Denmark indicates that this is a reasonable line of argumentation. According to Dansk Fjernvarme (Danish District Heating Association), due to the multitude of sources in the Danish systems, 90% of DH consumers have not experienced an increase in prices despite the dramatic developments in the global energy markets.

The advantages that district heating offers in terms of efficiency, diversity, flexibility, local value creation, and security of supply are nothing fundamentally new. Therefore, and in light of the stagnating progress in recent years, one can question if this actually could be a tipping point in Germany’s efforts to decarbonize its heating sector. However, it is not just the well noticeable drive of the new German Federal Government that should nurture optimism. In fact, there are several reasons to assume that Germany means business in the heating transition and that district heating is at the core of the government’s strategy.

Germany’s strategy for the heating sector

First, climate protection recently gained constitutional status in Germany. In an infamous ruling last year, the Bundesverfassungsgericht, Germany’s constitutional court, declared its climate policy partially unconstitutional as its lack of ambition violated inter-generational justice. The Federal Government ramped up its climate goals in response to this decision. Instead of a CO2 reduction by 55% by 2030, the new aim is set to 65%. And instead of aiming at achieving climate neutrality by 2050, the new end goal is already the year 2045.

Besides the higher ambition, the architecture of the climate law itself should lead to changes in the heating sector. The law breaks down the overarching goal for 2030 into separate annual emission budgets for every CO2-related sector (industry, buildings, energy, etc.) to create accountability. Should a sector exceed its budget, it cannot hide in the mix. Instead, the responsible ministry is obliged to take immediate action to bring the numbers back on track. In 2020, all sectors except the building sector reached their goal. Hence, immediate action is required in this sector.

Second, we can see that several alterations are already underway. Many of the German local utility companies (“Stadtwerke”) have taken on the responsibility and adopted the climate goals from the federal level or created more ambitious goals. They have started to create their own roadmaps to climate neutrality by drawing up transformation plans. A study commissioned by AGFW, the German DH Association, estimates that investments by the magnitude of 33 billion Euros are needed for DH to support Germany’s 2030 goal adequately.

A federal support scheme for efficient heating grids (Bundesförderung effiziente Wärmenetze, BEW) will soon come into operation to supply the Stadtwerke with funding. The scheme will cover investments connected to the expansion, densification, and decarbonization of heating grids. Furthermore, the scheme includes an operation bonus (payment per kWh) for solar thermal plants and large-scale heat pumps. To be eligible for any funding, companies either need to present a transformation plan for an existing grid or a feasibility study regarding a planned grid – a pre-requisite the support scheme also partly finances, which is quite noteworthy.

Moreover, the planning does not stop at the company level. Germany increasingly looks towards heat planning as a pivotal instrument to prepare the heating transition at the municipal level. The states of Baden-Württemberg and Schleswig-Holstein have already made it mandatory for their larger municipalities to engage in heat planning. In addition, Minister Habeck announced that his ministry would work towards a nationwide rollout.

This new focus is all too understandable. Heat is a predominantly local commodity that can hardly be traded across vast distances. In light of this, the heating transition can be understood as a mosaic consisting of a great myriad of local transitions, each unique in their preconditions. Therefore, putting the municipalities as the true experts of the particular local circumstances into the driver’s seat makes sense. But let us not ignore the challenges of delegating this kind of responsibility down to the lowest level of governance.

Challenges and possible first solutions

By a rough estimate, Germany’s plans for mandatory municipal heat planning could confront about 700 German municipalities with a new task. For some of them, especially the medium and small-sized ones, this could mean serious capacity issues. To alleviate this problem, a new competence center for the heating transition (Kompetenzzentrum Wärmewende, KWW) took up its work in the city of Halle at the beginning of the year. The center will pool expertise on heat planning and offer guidance to municipalities on how to approach the manner.

This is a thoughtful initiative, but the municipalities are still in charge of producing the heat plans. They may, of course, choose to source this task out. However, the combination of mandatory heat planning and transformation plans being a requirement for access to funding will probably fill up the order books of the consultancy companies quite quickly.

Additionally, the complexity of heat planning needs to be borne in mind. As an excellent tool to solve various technical issues using a holistic approach, heat planning combines scanning the local building stock, identifying potential heat sources, and developing measures that lead to optimal matchmaking of supply and demand. But technical feasibility does not automatically result in pipes in the ground. In other words, heat plans need to be more than accurate technical drawings and neat mathematical calculations.

The Danish approach to heating plans

In Denmark, stakeholder involvement and partnerships across sectors have proven to be crucial for the successful implementation of heat plans. Bringing together local administrations, utilities, housing companies, and citizens to chip in with ideas and concerns alike can significantly increase the acceptance of heat planning.

Of course, inviting different interest groups to sit at the same table can spark disagreements. To limit the possibility of conflict, the Danish Energy Agency maintains a technology catalog comprising a set of common assumptions regarding general aspects of planning, such as the development of fuel prices or technical components. The state Baden-Württemberg is introducing a German technology catalog, which might develop over time to a nationwide catalog. Without having to get lost in these kinds of discussions, heat planning can be a strong tool for municipalities to take matters into their own hands, strengthen communal ties and promote local empowerment. Furthermore, pursuing a bottom-up approach and involving different perspectives leads to a better quality in planning and ultimately to greener and more affordable communities.

All of the above shows that there are many boxes to be ticked off to lift the great potential in heat planning. However, it appears that Germany has come to a pivotal realization:  Awareness and ambition can only be the first steps to improvement. Eventually, change is needed, and actions need to be implemented – in this case, rather sooner than later. The time for action is now.

For further information please contact: Christian Bjerrum Jørgensen, chrjor@um.dk

Meet the authors

Christian Bjerrum Jørgensen
Energy Counsellor, Embassy of Denmark, Berlin
Willy Winkler
Energy Policy Advisor, Embassy of Denmark, Berlin
“From ambition to action – how Germany intends to use heat planning for its ambitious Green Agenda” was published in Hot Cool, edition no. 2/2022. You can download the article here: