Germany's Heat-Pump Autumn – Is Waiting the Wrong Strategy?

Summary

For the past few years, simply waiting before replacing your heating system was the right move. But the contested “Heizungsgesetz” (“heating law”) of the former “Ampel” (“traffic-light”) coalition has been changed. As a result, the simple comparison of X euros for a new heat pump against 0 euros for keeping the old gas heating no longer holds. The regained “freedom of choice in the boiler room” calls for a more precise calculation.

The Gebäudemodernisierungsgesetz (Building Modernization Act) passed by the black-red (CDU/CSU-SPD) federal government in the summer of 2026 (1) has decisively changed the previous Gebäudeenergiegesetz (Building Energy Act). This autumn it comes down to a calculation with several variables: compared with the earlier legal situation, the Gebäudemodernisierungsgesetz grants owners choices, ranging from a new heat pump to waiting to a new gas heating system. The subsidy framework has also been redesigned, and it appears to encourage swift action. Simply waiting until the gas heating gives out could therefore be the wrong strategy. But further factors, too, such as the purchase costs and effects of a heat pump and the development of the gas price, now have to be weighed more carefully.

A new heat pump can work in many existing buildings. Whether it is economical there depends on the heating load, insulation standard, radiators, flow temperature, electricity tariff and good system planning. There is adequate government funding for heat pumps. The current KfW subsidy ranges, depending on the requirements and social status, between 30 and 80 % of the eligible costs. However, it shrinks every six months, and the new Klimageschwindigkeitsbonus (climate-speed bonus), too, will be reduced every six months from February 2027 and will cease entirely for applications from August 2028. At the same time, fossil-fuel heating systems remain exposed to risks, through possible gas shortages owing to the unstable global situation and through changes in CO₂ costs, grid fees and biogenic fuel shares.

The heat-pump subsidy with the Klimageschwindigkeitsbonus therefore does suggest swift action, but waiting remains an option as well. Homeowners should therefore calculate the total costs of their heating over the next 10 to 15 years more precisely than before: besides the subsidy, the financing costs, the expected energy consumption, the maintenance costs, possible repairs and presumed price and levy changes have to be estimated. And even waiting should be well prepared: have the heating checked technically, determine the heat demand, review the funding conditions, compare offers and develop a plan for a possible breakdown.

A careful review now, in the autumn of 2026, is therefore more important than a decision for or against a new heat pump made purely on gut feeling.

What Has Changed Legally

The contested Gebäudeenergiegesetz (or “Heizungsgesetz”) of the “Ampel” government laid down, as a rule of thumb: from mid-2026 in cities with more than 100,000 inhabitants, and from mid-2028 in towns and municipalities with fewer inhabitants, every old gas heating that breaks down will foreseeably have to be replaced by a heat pump, at least where no local or district heating network is in sight (2). Whether such a network would come was to be stated reliably by the municipal heat plan (3). There were, admittedly, some transitional rules, for instance where a heat network was in sight, or where there was hope for hydrogen. But the rule of thumb was: wait and see how long the old heating lasts. And then switch to a subsidized heat pump. The Greens had thereby prevailed over the Liberals, who backed technology openness and thus hydrogen in heating systems. At the end of 2024 the coalition broke apart over this dispute.

During the election campaign in early 2025, the CDU/CSU had announced that it would abolish the “Heizungsgesetz” of the “Ampel” and restore freedom of choice in the boiler room (4). The Gebäudeenergiegesetz was therefore substantially altered by the Gebäudemodernisierungsgesetz; above all, those passages that mandated the compulsory switch to a heat pump were deleted. And, because the previous 65 % requirement for renewable energy was dropped, the act permits a new gas heating system to continue to be installed. That is the freedom of choice in the boiler room that homeowners had been promised.

With the entry into force of the Gebäudemodernisierungsgesetz, the subsidy for heat pumps was therefore changed as well (5). There is now a special speed bonus, while at the same time the maximum subsidy shrinks. Both are intended to create incentives to replace old heating systems quickly. The aim is for Germany to achieve greenhouse-gas neutrality by 2045.

How to Compare a Heat Pump, a Gas Boiler and Keeping the Old System

Until now the view was: the gas heating still works. The system is old, and perhaps no longer particularly efficient, and yes, gas prices are rising. But it works. A new heat pump means taking on debt, dealing with paperwork at the funding agency, finding a trustworthy provider and, above all, fighting against one's own “loss aversion”. Who, after all, guarantees us that the new heat pump will also work in the cold winter? The political dispute over the “Heizungsgesetz” reinforced this attitude. Millions of German homeowners with old but still functioning gas heating systems simply waited. The market for heat pumps collapsed by 46 % in 2024 (6).

Under the new legal situation, however, waiting now has to be compared with the costs of purchasing, financing, installing and operating a heat pump (or a new, more economical gas heating system) and with the changed funding conditions for heat pumps. The promised freedom of choice also means having to decide. And that has become complicated.

For it is not only the shrinking subsidy that stands out. The obvious message to homeowners, to think quickly now about a heat pump as a replacement for the old but still intact gas heating, is tempting, but it would be too simple. Above all, it does not hold that: “Buy a heat pump now, or you'll lose the subsidy!” For the Gebäudemodernisierungsgesetz even permits installing a new gas heating system. In terms of purchase price, this would still be considerably cheaper than a subsidized heat pump. The question now arises: how does the gas price actually develop if I keep waiting (and, if need be, repair the old gas heating) or if I buy a new gas heating system as a precaution? More precisely: how does the shrinking subsidy for a new heat pump relate to the possibly rising gas price?

Heat-Pump Subsidies: More Social for Lower Incomes, but Shrinking Bonuses

Overall, the new subsidy scheme of the black-red government is no longer quite so generous. Yet for households with low incomes and children it has become more social, and for everyone it is geared toward faster action. Both can now be decisive for many households with old heating systems. The basic subsidy for a new heat pump is 30 %. And in addition there are special rules that, in individual cases, allow a subsidy of up to 80 %, capped at 28,000 euros (7).

Then there is the subsidy for lower-income households: owner-occupiers are granted an income bonus, amounting to

• 40 %, based on the eligible total costs, provided their taxable annual household income is up to 30,000 euros,
• 30 %, based on the eligible total costs, provided their taxable annual household income is up to 40,000 euros, or
• 10 %, based on the eligible total costs, provided their taxable annual household income is up to 50,000 euros
• Family supplement: if at least one minor child lives in the household, the income threshold is notionally raised by 10,000 euros.

And on the other side there are the incentives to act quickly: the Klimageschwindigkeitsbonus amounts to 16 % of the eligible total costs. It falls for the first time in February 2027 and thereafter every six months by 4 %. For applications from August 2028, no Klimageschwindigkeitsbonus is granted any longer. The maximum funding amount for the first residential unit falls for the first time in February 2027 and thereafter every six months by 750 euros.

There is a further particularity to note. Part of the subsidy applies only if the heat pump was produced in Europe. From 2027, the basic subsidy for heat pumps of non-EU manufacture is to fall to 15 % (instead of 30 %).

All of this is rather complicated, but through the tiering on the one hand and the ceilings on the other it is meant to create the aforementioned climate-protection incentives for lower-income households too. And since funding conditions can change every year, it is important to familiarize yourself with the respective current funding conditions on the information page of the Kreditanstalt für Wiederaufbau before entering into the concrete financial planning of a new heating system. Finally: before the purchase contract for a heat pump is signed, the funding application should have been submitted and its receipt confirmed, otherwise the subsidy is forfeited (8).

The Overlooked Costs: But the Old Heating Still Works

With the old gas boiler in the basement, a homeowner now faces the following questions: how much longer will the old heating last? And what subsidy can I still expect then?

On top of this comes the question of whether and how strongly the gas price will rise in the coming years. Two very different scenarios are conceivable: slowly and calmly rising prices within the inflation rate, but equally sharply rising prices as a result of a shortage caused by the geopolitical situation, for example owing to ongoing or new armed conflicts. A middle scenario must at least take into account the steadily rising European CO₂ price (9), the probably rising fixed costs for the regional gas network (10) and the so-called “Bio-Treppe” (“bio-staircase”) that sets in from the year 2029. From 2029, biogenic fuel shares must increasingly be blended into fossil gas, beginning at 10 % (11). The black-red federal government built this staircase into the Gebäudemodernisierungsgesetz so as not to jeopardize Germany's climate targets despite the promised freedom of choice in the boiler room.

All these uncertainties therefore argue against the mere wait-and-see strategy without closer examination. A homeowner must analyze, calculate and then consciously decide whether to act now or rather wait until the gas heating no longer works at all.

Beyond that, there is also a psychological side to the calculation. It concerns the “loss aversion” inherent in all people. As long as the new option does not immediately convince us economically, we prefer to trust the tried and tested old one. Some homeowners simply compare the price of the heat pump with keeping the old gas heating. But doing nothing has a cost too: in winter, the old heating consumes a lot of gas in poorly insulated houses, it has to be serviced, and the repairs may turn out ever larger and more expensive. It gets really expensive when the system fails and the emergency arrives. All of this makes the calculation difficult. The simple equation of X euros for a heat pump against 0 euros for keeping the old gas heating no longer holds, in any case.

The right comparison looks different: what will heating this house cost me per year over the next 10 to 15 years, taking the various options into account? The co2online check (12) or an independent energy consultant can help here.

Heat-Pump Technology Has Advanced

Heat-pump technology has left the experimental phase behind. Technically, it is readily possible to transport heat from outside to inside. The heat pump is, admittedly, clearly more expensive than a new gas heating system, but it is subsidized. And the renewable electricity generated in Germany that is required is at least no longer more expensive than imported gas. And in the medium term it will in any case be cheaper.

The operating costs of a heat pump, however, depend not only on the electricity price but also on the condition of the building and the type of its installation. The assumption known from earlier, that a heat pump is not efficient in an old house with poor insulation and old radiators, no longer holds without qualification. The technology has advanced. Precisely for Germany, where millions of houses and their radiators were built long before the development of heat pumps, this observation is relevant. Heat pumps work, in normally insulated houses even in the cold winter (13). Whether they are also economical there depends on the heating load, insulation standard, radiators, flow temperature, electricity tariff and good system planning. With very old houses one will probably have to look more closely again and, in particular, take care of good subsequent insulation. But that would also apply to the continued operation of a gas heating system.

The New Heat-Pump Business Model

The heat-pump market has responded to homeowners' “loss aversion”. It has by now developed an integrated model for homeowners that goes far beyond the sale of individual components. The offer is: homeowners no longer have to search for an installer and discuss the technical system with them, they no longer have to comb through the funding system and talk to the bank about financing. The providers offer them an all-round carefree package around the new heat pump. This is the economy's answer to the complex German system. But homeowners should not rely solely on such seemingly time-saving offers: a low monthly installment does not always and automatically mean low total costs (14).

Thinking and checking for yourself what best suits your own house remains important in view of the fundamental decision about the heat supply.

What Homeowners Should Therefore Do Now

1. Check the potential efficiency of a heat pump for your house.

   Old building or new build? It is about determining the heating load and the heat demand. Which heat pump best suits the house? The size and the number of storeys of the house, its insulation and the installed radiators are to be considered on the one side. The performance and the costs of an air-to-water heat pump compared with a ground-source heat pump are the other factors.

2. Then calculate the life-cycle costs for the next 10 to 15 years

   It is not the purchase price for a new heat pump minus the subsidy, nor the price for a new gas heating system, that is decisive on its own. What is decisive is rather: how does the gas price develop compared with the price of electricity from renewable energy over the next 10 to 15 years?

3. Check the subsidy conditions carefully

   The funding conditions for heat pumps have been changed. The new subsidy is intended to create an incentive to switch swiftly from an old gas heating system to a new heat pump. The programs provide for subsidies between 30 and 80 %, depending on who the applicant is and what budget he or she has. But the subsidies shrink. In addition, there is a speed bonus for a short time.

4. Compare the offers for heat pumps

   Buying a heat pump is a long-term investment. The prices for heat pumps and for their installation differ considerably. In particular, the decision between an air-to-water heat pump and a ground-source heat pump is important. Lower purchase costs and higher operating costs (but also a certain noise burden) or higher purchase costs and lower operating costs (but also a greater space requirement) are to be compared. Very important is: before you conclude the purchase contract, you must have submitted the funding application for this heat pump!

5. Do not simply wait until the gas heating fails

   These numerous options alone, which have to be weighed against one another, make it clear that the new freedom of choice for or against a heat pump that has existed since the summer is not easy and should by no means be exercised under time pressure. Simply waiting until the gas heating fails and then having to decide within a few hours in a cold living room is no option, at least no efficient one.

Germany's Great Heating-Transition Experiment

The current autumn debate about heat pumps goes, however, considerably further than answering the question: which heating system shall I buy tomorrow?

With the Gebäudemodernisierungsgesetz and a subsidy scheme that relies on incentives, Germany is attempting to transform the heating of millions of individual buildings. Fossil energy consumption is to be reduced, energy and heat consumption redirected toward renewable energy, the European market supported in the process, and at the same time the population protected from excessively rising costs.

This is a great political experiment. The levers are the changed subsidy and the rising CO₂ price on the one hand and the regained freedom of choice in the boiler room on the other. Whether they work lies in the hands of homeowners. Does the willingness to engage with the new heat-pump technology prevail, or does “loss aversion” against giving up gas heating systems prevail? Whether Germany can achieve climate neutrality in reasonable and recognizable steps will depend precisely on that.

Decisive for homeowners, however, will be the coming years: “When is the right moment for the heating replacement?”

And for those who have so far made do with the formula “Maybe next year”, the following applies: waiting even remains an option. But it should be chosen consciously and not from the gut.

This article was written with the support of artificial intelligence. Please note: the funding conditions described here can change every year.

In forthcoming articles we will look more closely at the “Bio-Treppe” and the formation of the CO₂ price, as well as at what the “loss aversion” is actually all about.

Sources

1. Gesetz zur Änderung des Gebäudeenergiegesetzes (GEG), zur Änderung des Gebäude-Elektromobilitätsinfrastruktur-Gesetzes und zur Änderung weiterer Vorschriften im Wärmebereich (Gebäudemodernisierungsgesetz) vom 23. Juli 2026 (BGBl. I Nr. 226).
2. § 71 Abs. 8 GEG a.F.
3. Schlacke, S./Wagner, J., Handbuch Klimarecht, Beck 2026, Kapitel 6 Rn. 497.
4. CDU/CSU manifesto for the 2025 federal election (https://www.cdu.de/wahlprogramm-von-cdu-und-csu/): „Wir schaffen das Heizungsgesetz der Ampel ab.“
5. Bundesministerium für Wirtschaft und Energie, Förderrichtlinie für die Bundesförderung für effiziente Gebäude– Einzelmaßnahmen (BEG EM), Bundesanzeiger vom 17. August 2026.
6. Cf. Müller, A., article dated September 11, 2026 on the website of the Deutsche Wärmepumpen-Beratung (https://www.deutsche-waermepumpen-beratung.de/ratgeber/waermepumpen-markt-2024-einbruch): „Der Absatz folgte der Debatte, nicht der Wirtschaftlichkeit“.
7. For details cf. the homepage of the Kreditanstalt für Wiederaufbau (https://www.kfw.de/inlandsfoerderung/Privatpersonen/Bestehende-Immobilie/F%C3%B6rderprodukte/Heizungsf%C3%B6rderung-f%C3%BCr-Privatpersonen-Wohngeb%C3%A4ude-(458)/).
8. Cf. the note on the homepage of the Kreditanstalt für Wiederaufbau (https://www.kfw.de/inlandsfoerderung/Meine-KfW/Online-Antrag-Heizungsf%C3%B6rderung-f%C3%BCr-Privatpersonen-Wohngeb%C3%A4ude/).
9. The future CO₂ price will be steered by the EU ETS 2 (European Emissions Trading System for buildings, road transport and small industry) planned for 2028.
10. Cf. the explanation on the homepage of the Bundesnetzagentur (https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Netzentgelte/start.html): „Netzentgelte dienen der Finanzierung der Strom- und Gasnetze. Sie sind Teil des Strom- und Gaspreises und werden von den Verbraucherinnen und Verbrauchern gezahlt. Netzentgelte haben in ihrer Systematik und im Falle von Vergünstigungen auch eine Anreizfunktion. Die Ermittlung der Netzentgelte unterliegt der Kontrolle durch die Bundesnetzagentur.“
11. § 43 (1) Gebäudemodernisierungsgesetz reads: „Wird eine Heizungsanlage, die mit Gas, Heizöl oder Flüssiggas beschickt wird, nach dem 29. Juli 2026 in ein bestehendes Gebäude neu eingebaut, hat der Eigentümer des Gebäudes sicherzustellen, dass ab dem 1. Januar 2029 mindestens 10 Prozent, ab dem 1. Januar 2030 mindestens 15 Prozent, ab dem 1. Januar 2035 mindestens 30 Prozent und ab dem 1. Januar 2040 mindestens 60 Prozent der mit der Anlage bereitgestellten Wärme aus Biomethan, Bioöl, biogenem Flüssiggas, grünem, blauem, orangenem oder türkisem Wasserstoff einschließlich daraus hergestellter Derivate erzeugt wird.“
12. See the heat-pump check offered (https://www.co2online.de/service/energiesparchecks/waermepumpencheck/CO 2-Preis).
13. Cf. the Umweltbundesamt's guidance on heat pumps (https://www.umweltbundesamt.de/umwelttipps-fuer-den-alltag/heizen-bauen/waermepumpe#gewusst-wie): „Grundsätzlich sind sowohl Neu- als auch Altbauten für Wärmepumpen geeignet. Je niedriger der Wärmebedarf, desto effizienter arbeiten sie. Wärmepumpen eignen sich besonders gut in Häusern, in denen Niedertemperatur-Heizsysteme als Wärmeabnehmer zur Verfügung stehen. Der Anschluss an eine Flächenheizung (zum Beispiel Fußbodenheizungen) ist für Wärmepumpen günstig. Flächenheizungen kommen mit niedrigen Vorlauftemperaturen, 35 °C oder weniger, aus. Wärmepumpen können auch in vielen teilsanierten oder manchen unsanierten Häusern mit Heizkörpern hinreichend effizient betrieben werden. Die Heizkörper in Altbauten sind in der Regel zu groß und haben "Sicherheitsreserven", die man nutzen kann, um die Vorlauftemperatur zu senken. Einzelne, zu kleine Heizkörper können auch ausgetauscht werden. In Altbauten, die sich nicht alleine mit einer Wärmepumpe beheizen lassen, sind Hybridheizungen eine interessante Lösung: Eine Wärmepumpe übernimmt die Grundversorgung mit Wärme und ein Heizkessel unterstützt an kalten Tagen die Wärmepumpe.“
14. Cf. e.g. the note on the homepage of Wärmepumpen Beratung Deutschland dated August 26, 2026 (https://www.waermepumpen-beratung-deutschland.de/waermepumpen-fehler-1/?matchtype=b&gclid=CjwKCAjwrbfWBhAeEiwAc2e6PpIDznFAnhJLrOiZEqj4jUT540X2kBvM_D1oBz2QQ_6KYcBtz2yedhoCwjUQAvD_BwE&utm_source=GoogleAds&utm_campaign=22765163000&keyword=w%C3%A4rmepumpe&placement=&device=c&gad_source=1&gad_campaignid=22765163000&gbraid=0AAAABAIOd-EtT9Xs0RCpu4EAk5iaf1DrK): „Trotzdem machen viele Deutsche den gleichen kostspieligen Fehler: Sie verzichten auf einen Preisvergleich. Dabei variiert das Preisniveau am Wärmepumpen-Markt erheblich – auch, weil einige Anbieter die angespannte Lage am Energiemarkt nutzen, um hohe Preise durchzusetzen. So kommt es vor, dass Eigentümer mehrere Tausend Euro mehr bezahlen, obwohl ein kurzer Vergleich bares Geld sparen könnte.“