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The Ultimate Guide for Germany Heat Pump Subsidies

Federal Germany heat pump subsidies are intended to enable the phasing out of natural gas and coal in heating systems. This is to ensure that renewable energy is used at home. The transition period is lengthened, and subsidies are still being debated, but promises are made to phase out fossil fuels and enable eco heating.


Germany has been a leader in the use of renewable energy, taking significant steps to reduce its reliance on fossil fuels. In an effort to promote the use of heat pumps as an alternative to conventional oil and gas heating systems in Germany, the nation has established a market incentive program. In this blog post, we’ll go over the specifics of the program as well as the advantages and effects of heat pumps in Germany.


Understanding the Market Incentive Program Germany

  • The German government established the market incentive program, commonly known as the “Marktanreizprogramm” (MAP), as a financial aid scheme to promote the widespread adoption of heat pumps.
  • The program’s objective is to persuade businesses and homes to transition from conventional oil and gas heating systems to more environmentally friendly substitutes like heat pumps.
  • The program offers financial incentives and subsidies to eligible applicants, increasing the accessibility and allure of heat pump installations.
  • The German Federal Office for Economic Affairs and Export Control (BAFA) oversees the effort, which is supported by the German Federal Ministry for Economic Affairs and Energy (BMWi).


Benefits of Germany heat pumps and heating in Germany

  • In comparison to conventional heating systems, heat pumps offer a significant reduction in energy use. They effectively absorb thermal energy from the outdoors and transport it to interior spaces, lowering energy costs and reducing CO2 emissions.
  • Utilizing renewable energy sources like the ground, water, or air, heat pumps produce heat. This lessens reliance on fossil fuels and helps maintain a sustainable and environmentally friendly energy balance.
  • Due to their dual ability to heat and cool, heat pumps can be used in a range of seasons and regions. They offer year-round comfort and can be used for cooling during the hotter months as well as space and water heating.
  • Although heat pump installations may be more expensive up front than typical heating systems, they are ultimately less expensive due to operational savings over time and potential energy subsidies.


Current Status of replace gas heater with heat pump

  • Significant Growth: Heat pump installations in Germany have witnessed substantial growth in recent years. According to statistics, the number of heat pumps installed in residential and commercial buildings has been steadily increasing.
  • Market Share: Heat pumps currently represent a significant share of the heating market in Germany, with increasing acceptance among homeowners and businesses.
  • Regional Differences: The adoption of heat pumps varies across different regions in Germany. Some states, such as Bavaria and Baden-Württemberg, have higher penetration rates, while others are gradually catching up.


Is there a government subsidy for heat pumps in Germany?

Yes, heat pumps’ government subsidies in Germany include KfW heat pump subsidy, BAFA heat pump subsidy, state-sponsored heat pump subsidies, and private heat pump subsidies


heat pump installation


Germany Heat pump subsidy types:

  1. KfW heat pump funding: This subsidy regulation aims to facilitate renewable heat pump installation in Germany. It provides financial assistance as high as €5,000 for single-family homes and up to €10,000 for multi-family housing.
  2. BAFA Heat Pump Subsidy: This subsidy is granted by the Federal Economic and Export Administration (BAFA). It pays no more than 50% of the overall cost of installing a heat pump, up to €3,000 for single-family homes, and up to €6,000 for multi-family homes.
  3. State-Sponsored Heat Pump Subsidies: Some federal states offer additional subsidies for the installation of heat pumps. These subsidies vary by state and can represent up to 50% of the total installation cost.
  4. Private Heat Pump Subsidies: Many German energy companies are promoting the installation of heat pumps. These subsidies typically contain up to 50% of the total installation cost.
heat pump installation


KfW subsidies:


KfW has launched a new program to help install heat pumps in Germany. The Federal Government’s Energy Transition Initiative is to offer up to €20,000 to homeowners to install heat pumps. The subsidy covers up to 75% of installation costs and is available for households with an annual income of up to €60,000.


In addition, the program covers up to 25% of the cost of thermal storage heating systems such as solar thermal systems. The initiative is open to both homeowners and renters and is expected to run through 2031. KfW services are provided to homeowners and landlords who install heat pumps for heating and hot water as part of federal energy efficiency initiatives. The subsidy covers up to 30% of the cost of heat pumps and up to 50% of the cost of solar thermal systems.


The KfW benefits are offered to homeowners and landlords that install heat pumps for heat and hot water as part of the German government’s energy efficiency initiative. The subsidy pays for up to 30% of the cost of a heat pump and 50% of the cost of a solar-thermal system.


The subsidy, granted by the Kreditanstalt für Wiederaufbau (KfW), is for homeowners, landlords, and tenants to cover the cost of heating their homes. Heat pumps must meet certain energy efficiency standards such as an efficiency minimum of 2.5 and be installed on subsidized residential land.


The property must be located in Germany, and the heat pump should be adopted to heat the property and must be an air-water heat pump or a groundwater heat pump by KfW’s subsidy criteria for funding heat pumps in Germany. Applicants must also prove that steps have been taken to maximize the energy efficiency of the property and that the heat pump installation will provide long-term energy savings. Individuals and companies whose annual income is less than €50,000 are entitled to claim.


The applicant must also demonstrate that they have made steps to maximize the property’s energy efficiency and that installing the heat pump will result in long-term energy savings. Individuals and businesses with a yearly income of less than €50,000 are eligible for the subsidy.


Berlin’s Subsidy Plan

Although the plan has not been finalized, Berlin will establish new tariff subsidies for heat pumps and air conditioners. The goal is to cut that support by next year.


Customers with annual heating bills below 2,000 euros will be eligible for the assistance. The amount of the subsidy is determined by the age and performance of the heating system. A supplementary subsidy is also available for low-income households.


This policy encourages more people to utilize heat pumps rather than electric boilers or gas stoves. Germany relies heavily on gas furnaces, and using them alone in a warm room can be wasteful.


In addition, air conditioning is a major problem in Germany. Because of its central location, Berlin cannot take advantage of very favorable weather, so most homes must rely on air conditioners year-round.


This raises their price and encourages those who do not need much cooling equipment but can afford it to buy it anyway.


The German government’s strategy

The drop in heat pump costs (halved in just six years) has led to a corresponding drop in costs to increase market share. According to euractiv.de, current turnover is well below what is needed to reach this target.


The German government intends to implement a subsidy program that will provide €200 to €300 per kW of the rated capacity of installed heat pumps and air conditioners. This would inject an additional €200 million to €300 million into the market every year, contributing to an increase in the share of heat pumps and air conditioners.


It is unclear at this time whether the subsidy applies to all heat pumps or only air-source heat pumps. It is also unclear how long the subsidies will last and whether they will apply to all federal states or just some.


The German government has previously stated that they intend to gradually cut subsidies as the market matures and becomes more competitive to stimulate private investment. The subsidies are part of a bigger package of measures to reduce building and household energy consumption since the government has set itself the objective of reducing construction and household energy use in the future.


Around 50,000 heat pumps have been installed in 2019, with 40% being decentralized systems that utilize groundwater or geothermal energy, according to the German Heat Pump Association (BWP).


Decentralized heat pumps will cost €2,000 less to buy, and air conditioning systems will cost €1,000 less, according to government subsidy proposals. The government is also thinking about reducing the installation costs of decentralized heat pumps by €2,000 and air conditioning systems by €1,000.


The government’s strategy to increase the proportion of renewable energy in the nation’s overall energy mix includes subsidies. By 2030, the government wants to have renewable energy sources account for 60% of Germany’s whole energy consumption.


Germany will be greatly supported in achieving this goal by heat pumps.


Government-sponsored assistance

By 2030, Germany wants to install 600,000 heat pumps annually, but only if they can be done affordably. An ambitious goal is attainable due to several variables, including energy savings and solutions that can be used in the future to efficiently heat buildings and provide hot water. To help make heat pumps more accessible, the German government is providing a subsidy for their installation.


Up to €4,000 per unit, or up to 35% of the overall expenditures, are covered by the subsidy. Both homes and companies are eligible for the subsidy, which can be used for both new construction and renovations.


The German government is working to cut emissions and reach its goal of 45% lower emissions by 2030, and the subsidy is one aspect of that endeavor.


Since they are energy-efficient and can be utilized to lower energy usage and dependency on fossil fuels, heat pumps are a crucial component of this endeavor. The government also provides financial benefits to entice consumers to select heat pumps over other types of heating systems.


It is intended that the subsidies and incentives will make heat pumps more widely used and more reasonably priced in Germany, assisting the nation in achieving its emissions targets.


BAFA germany government heat pump subsidy

Germany Government Heat Pump Subsidies Policy From EHPA Organization

Replacement for Russian Gas in Germany

  • Diversifying Energy Sources: To reduce dependence on Russian gas imports, Germany is actively diversifying its energy sources. Renewable energy, including wind, solar, and geothermal, along with the use of heat pumps, is seen as a viable solution.
  • Energy Transition Plans: The German government has set clear targets to phase out fossil fuel-based heating systems and increase the share of renewable energy. Heat pumps play a crucial role in achieving these targets and reducing reliance on foreign energy sources.
  • Energy Security: By promoting the implementation of heat pumps, Germany aims to enhance its energy security by reducing vulnerabilities associated with geopolitical tensions and price fluctuations in the global energy market.


Future Outlook and Government Subsidies for Heat Pumps

Is there a government subsidy for heat pumps?

  • Available Subsidies: The German government provides various subsidies and financial incentives to support heat pump installations. These include direct investment grants, reduced interest loans, and tax benefits.
  • MAP Funding: The Market Incentive Program (MAP) provides financial support and subsidies for heat pump installations. The program covers both residential and commercial applications.
  • Jonathan Green 4 Step Rebate: This specific rebate program offers grants to homeowners for heat pump installations, providing a supportive financial framework.
  • Staying Updated: It is important to stay informed about the latest government schemes, subsidy programs, and eligibility criteria to maximize the financial assistance available for heat pump installations.


How much does it cost to install a heat pump?

This partly depends on the nature of your existing heating system and whether your building needs more renovations to cause the heat pump worthwhile. The average cost of heat pump installation could be:
Air source heat pump: €20,000
Ground source heat pump: €25,000
Water source heat pump: €30,000

People also can apply for heat pump government installation subsidies to cover the cost of buying air-source heat pumps.



Germany’s market incentive program for heat pumps demonstrates the country’s commitment to reducing its carbon footprint and promoting renewable energy. By encouraging the replacement of oil and gas heating systems with heat pumps, Germany aims to achieve greater energy efficiency, reduce emissions, and enhance its energy security. With government subsidies, heat pump grants, and financial incentives, homeowners have a compelling reason to consider heat pumps as a sustainable and cost-effective option for heating and cooling in their homes. You can contact Shenling to either purchase the latest heat pump for installing in Germany or get the latest news about Germany heat pumps.


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