Fraunhofer Institute for Systems and Innovation Research ISI
Fraunhofer Institute for Systems and Innovation Research ISI

Project

Implementation and financing of the heat transformation

The heat transformation is an essential part of the energy transition in Germany and plays a crucial role in achieving the legally established climate and energy targets. According to the Federal Climate Protection Act, Germany has set itself the goal of becoming climate-neutral by 2045. To achieve this, a comprehensive transformation is needed in all sectors, particularly in the heating and cooling sector, which currently accounts for over half of Germany's total final energy consumption and is largely based on fossil fuels.

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At the national level, the Heating Planning and Decarbonisation of Heating Networks Act (WPG) and the Building Energy Act (GEG) provide the legal framework for expanding renewable energies in the heating sector and improving energy efficiency. These legal foundations are complemented by various funding programmes that support investments in efficient district heating networks, energy-efficient buildings and energy-saving measures.

However, the transformation of the heating sector is associated with significant challenges. In addition to the technological switch to renewable energies and efficient heat generation, comprehensive infrastructure development is necessary, particularly in urban areas where district heating networks can play a central role. Furthermore, a suitable legal and economic framework must be created that offers investment security and promotes acceptance.

A central element of the heat transformation is financing. The expansion of renewable energies and the adaptation of the heating infrastructure require considerable financial resources that exceed previous investment frameworks. The challenge is to realise these investments without placing a burden on social and economic structures. It is necessary to develop viable business models for heating and cooling supply and to identify suitable financing models that involve both private and public actors.

 

 

The project aims to provide scientific support for the creation of the legal, instrumental, institutional and financial framework conditions for the heat transformation. The work is divided into six thematic areas:

Topic 1: Targets and pathways 2045

Topic 2: Further development of heating planning

Topic 3: Consumer protection and regulation of grid-based heating and cooling supply

Topic 4: Financing the heat transformation

Topic 5: Further development of district heating network funding

Topic 6: Cross-cutting activities

The combination of technological innovation, political governance and strategic planning is crucial to achieving national and international climate targets. Therefore, a cross-thematic focus of the project is on analysing the interactions between the different instruments of the heat transformation and their integration into the energy policy framework.

Eleven institutes have formed a consortium to address the complex techno-economic, legal, instrumental and financial issues of the project. The Institute for Energy and Environmental Research (ifeu) is managing the project. As a project partner, Fraunhofer ISI is coordinating the work in Topic 4: Financing the heat transformation. Among other things, it is drawing up an overview of the existing financing and funding framework and developing and evaluating new and innovative financing models.

 

Duration

from December 2024 until November 2027

Client

  • Federal Ministry for Economic Affairs and Climate Protection (BMWK)

Partners

  • Institut für Energie- und Umweltforschung (ifeu) (Projektleitung)
  • Prognos
  • Öko-Institut
  • Hamburg Institut
  • Fraunhofer IEG
  • Institut für Ressourceneffizienz und Energiestrategien (IREES)
  • Becker Büttner Held (bbh)
  • Prof. Dr. jur. Stefan Klinski
  • Hochschule für Technik Stuttgart (HFT)
  • Bundesverband Öffentlicher Banken Deutschlands (VÖB-Service)
  • GEF Ingenieur