- More transparency for district heating customers - what Habeck plans
District heating is set to play an increasingly important role in the heating transition, but consumer advocates have long called for the market to become more consumer-friendly. The Federal Ministry of Economics now wants to increase cost transparency. It also aims to strengthen consumer protection against high district heating prices, as the ministry announced. A change to the District Heating Ordinance is planned. This should achieve "significant competition- and customer-friendly improvements" for more transparency and flexibility in supply conditions.
What is planned
The publication obligations of district heating supply companies are to be expanded. In the future, a model invoice is to be published on the Internet, from which the application of any price adjustment clause can be understood, as the draft bill shows. Price components are also to be listed. In addition, "adjustment rights" of the customer regarding the contractually agreed heat output are to be regulated. The term of the supply contract for follow-up contracts is to be shortened, from 10 to 5 years.
From the point of view of consumer advocates, it is currently difficult for consumers to understand how district heating prices are formed. The prices for district heating in Germany differ significantly regionally.
How Germany heats
Around 70 percent of heaters in Germany are operated with gas or oil, as data from the Federal Association of Energy and Water Industry (BDEW) on the heating market 2023 shows. The share of district heating is around 15 percent of all apartments - with a rising trend.
District heating is heat that is not generated in the residential building, but comes from a power or heating plant in the vicinity. Usually, water is heated there, which is then piped into the houses through insulated pipes. In the long term, the heat networks are to be increasingly fed from renewable energies.
In the heating transition, the gradual replacement of fossil heaters, district heating is to be expanded - as part of the municipal heat planning. This is to be available in major cities by mid-2026 and for the rest of the municipalities by mid-2028. Homeowners will then have clarity about whether they will be connected to a district heating network, for example, or whether they should take care of their own decentralized solutions for a new heater - such as a heat pump.
What consumer advocates say
The ministry's draft contains some progress for private consumers, said Thomas Engelke, head of the Energy and Construction team at the Federal Association of Consumer Centres. He mentioned, for example, more transparency in the publication of information on the Internet and the specification of some provisions on price adjustment clauses.
However, a central point is missing, namely a nationwide price monitoring, so Engelke. The district heating market represents the strongest monopoly in the energy sector. "Nevertheless, there is no central price monitoring by a federal authority." Consumers must be effectively protected from "black sheep".
BDEW CEO Kerstin Andreae stated that the expansion and decarbonization of district heating plays a central role in the heat transition. Both investments in existing infrastructure and significant new investments are necessary. To achieve this, planning and investment security is required. Therefore, it is correct that the draft provides for a contract term of ten years for initial contracts. "It's good that the bill does not provide for a price cap. This would be a significant market intervention," Andreae added. A price cap (English) refers to the regulation of the maximum price.
The Monopolies Commission had warned about excessive prices in district heating due to the monopolistic positions of suppliers, which could erode public acceptance of the heat transition. The advisory body to the federal government proposed introducing a "market-based price cap." Last November, the Federal Cartel Office initiated proceedings against six district heating suppliers due to suspected excessive price increases.
Association against price supervision
Ingbert Liebing, CEO of the municipal utilities association VKU, rejected calls for price supervision. This would be "absolutely counterproductive" and a brake on district heating expansion. The pricing of district heating is already subject to clear legal rules and functioning control mechanisms, such as those of the cartel authorities. Liebing also referred to an energy association's district heating price transparency platform for more transparency.
District heating prices
A spokesperson for the Association of Municipal Enterprises (VKU) said that every heat network is different, as are local prices. For example, local energy sources and methods of heat generation vary. Wholesale gas prices have now stabilized after the sharp increases in 2022/23. In district heating, wholesale prices are passed on to customers with a delay, which helps to absorb and spread price peaks. With the price adjustments in January 2025, the "energy price crisis" in district heating is very likely to be fully overcome. Moreover, he said that a comparison between district heating and gas prices should be based on a "full cost comparison" that also takes into account the costs of a gas boiler and its installation.
The expansion of publication obligations for district heating supply companies includes the publication of a model invoice online, allowing consumers to understand price adjustment clauses more easily. According to consumer advocates, a nationwide price monitoring is crucial to effectively protect consumers from excessive district heating prices in Germany.
