New subsidy program for 4th generation district heating in Germany

 A district heating network 4.0 has a maximum supply temperature of 95°C. Innovations like long-term thermal energy storages or coupling of the electricity and heat sector via large heat pumps or electric boilers are promoted. Via a fundamental orientation towards low-temperature district heating networks, the German Federal Ministry for Economic Affairs and Energy aims at enabling a large range of technologies. Support is foreseen for so-called cold district heating networks with 20°C supply temperature as well as for classic district heating systems as long as the supply temperature does not exceed 95°C. However, no more than half of the renewable heat supply should be generated from biomass. Therefore, most of the projects realized so far with 20% of solar heat and 80% of biomass wouldn’t be eligible as pilot project in the framework of this new funding guideline.

The objective at political level is to prove the economical and technical feasibility in at least twelve cases thanks to feasibility studies. Moreover, at least six district heating networks should be built or fundamentally transformed by 2020. The district heating networks should have at least 100 connections or a minimum heat supply of 3 GWh per year.

Cost efficiency has high priority: The heat supply from supported networks should be as competitive as heat supply from fossil fuels. Support is foreseen for new construction or transformation of existing networks but low-temperature sub-networks are also eligible. Two stages are planned. In a first step, feasibility studies are supported up to 60%. In a second step, the realization of the networks can be financed up to 50 %. In addition, an allowance up to 80% for information activities to potential users is foreseen, in order to reach a high connection rate. Moreover, the participation of local research organizations is sponsored up to 100 %.

The gradation of the subsidy is new. The district heating grid gets a subsidy of 20 % (or 30 % if the applicant is a Small or Medium Enterprise). In addition, there is a ‘sustainability bonus’ of up to 10 percent: One can receive 0,2 % for every full percentage point of renewable energies or waste heat fraction exceeding the minimum requirement of 50 %.

Another innovation is the ‘cost efficiency bonus’ for especially low heat prices. If the heat price falls below 10 cents per kilowatt hour, this bonus increases step by step. For a heating price of only 5 cent the maximum subsidy of 10 % of eligible costs would be reached. Long-term thermal energy storages are considered standard for district heating networks 4.0 unless it can be demonstrated that their implementation in the system is not economically feasible.

The previous KfW subsidy program for renewable district heating networks is not replaced by this new program and is still valid. A combination of both programs is despite a general non-combination rule possible, if a project is split in several subprojects.