Homeowners considering a heat pump are facing an important decision. The federal government is planning to gradually reduce subsidies for heat pumps and other climate-friendly heating systems as part of wider budget savings.
At the same time, support is set to become more closely linked to household income, with lower-income households receiving greater assistance.
The move has surprised some observers. In February, CDU/CSU parliamentary group leader Jens Spahn said subsidies would remain “as they are”. Federal Environment Minister Carsten Schneider (SPD) had said the same in November last year.
The government now argues that savings are necessary because maintaining the current system would leave a €4.2 billion funding gap by 2030. The planned reforms are expected to save around €2.1 billion.
Critics, including the Greens and parts of the heating industry, warn that changing the rules creates uncertainty. But supporters argue that subsidies should be focused more heavily on households that need them most, rather than being spread broadly across all income groups.
How will the subsidies change?
A heat pump is a heating system that uses electricity to draw heat from the air, ground or water and transfer it into a building. They are seen as a lower-emission alternative to traditional oil and gas heating systems and have been heavily promoted under Germany’s heating transition policies.
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At present, homeowners can combine different support programmes to receive substantial grants towards installation costs. In some cases, subsidies can cover up to 70 percent of eligible costs.
Under the government’s plans, however, support would gradually be reduced. The cap on eligible costs is due to fall from €30,000 to €28,000 next year, before being reduced by a further €750 every six months.
The existing “climate bonus” for replacing an older heating system early is also set to become less generous, falling by four percentage points every six months from next year and disappearing entirely in 2029.
Other proposed changes include the abolition of the efficiency bonus for heat pumps. A separate bonus of up to 15 percent for systems produced within the EU and certain partner countries is also under discussion, although the details haven’t been finalised yet.
Will everyone be affected equally?
Support is expected to become much more closely linked to income.
Households with annual incomes of less than €30,000 are set to receive more generous support than they do now. Under the plans, they could qualify for subsidies of up to €22,400 for a climate-friendly heating system.
Families with children could also benefit. A proposed child bonus would raise key income thresholds by €10,000, allowing more households to qualify for higher levels of support.
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By contrast, many middle and higher-income households are likely to receive less. For households with annual incomes above €30,000, the maximum subsidy is planned to fall to €19,600 later this year and then gradually decline to €13,200 by 2030, according to reports by ARD.
For higher earners, the reductions could be more significant still. For households with incomes above €50,000 a year, the maximum subsidy could fall to as little as €6,600 by 2030.
Should you wait or act now?
For most homeowners, the current plans suggest that delaying a heat pump installation could mean receiving less financial support later.
Lower-income households may be protected from some of those reductions, but for many others, earlier action could result in a larger subsidy.
According to Martin Sabel, managing director of the German Heat Pump Association, homeowners considering a heat pump are “well advised not to wait too long”.
Speaking to MDR, he also added there was “no reason to panic” because the reductions would happen gradually rather than overnight.
Commentators have also argued that homeowners with older gas or oil heating systems will still have a strong financial incentive to switch to a modern heating system even without the subsidies – simply because of rising energy costs.
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