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Germany Plans to Cut and Retarget Heat-Pump Subsidies

A Finance Ministry draft would trim eligible cost caps, concentrate larger support on low-income households, add bonuses for EU-made equipment, and project about €2.1 billion in savings by 2030.

Overview

  • The circulated Finance Ministry draft would lower the eligible cost cap for the basic 30% subsidy from €30,000 to €28,000 next year and then reduce that cap by €750 every six months.
  • Income-based bonuses would be reworked so households with taxable income up to €30,000 get a 40% boost, the 30,000–40,000 band stays at 30%, and the 40,000–50,000 band falls to 10%, with higher family thresholds for the top support level.
  • The plan adds a bonus of up to 15% for heat pumps mainly developed or made in the EU or in EU-associated markets, removes the 5% efficiency bonus, and bars subsidies for switches from district heating or replacement of an old heat pump with a new one.
  • The Klimageschwindigkeits‑ or abwrack‑bonus would be cut by four percentage points each year until it reaches zero, and the draft forecasts roughly €2.1 billion in budget savings to 2030 if enacted.
  • The proposal is under parliamentary debate and has drawn sharp responses with Greens warning it will slow decarbonisation, some providers welcoming clearer rules and EU focus, and analysts saying it could tighten deployment by raising the importance of upfront finance and changing market incentives.