Heat exchanges: who can now expect how much money

The German government has introduced new rules for state subsidies aimed at replacing traditional heating systems with climate-friendly alternatives. The changes, effective since July 21, 2026, affect how much funding households can receive for installing heat pumps or other sustainable heating technologies. Under the revised Building Modernization Act, the state-owned KfW bank in Frankfurt will reduce financial support over time, starting from 2020, to ease pressure on public finances. Previously, homeowners who replaced their oil or gas boilers with eco-friendly systems could receive up to €21,000 in grants from KfW. Now, these amounts will gradually decrease, though not uniformly across all applicants. A key factor in determining eligibility is the household’s taxable income, adjusted for professional expenses and tax-free allowances. Lower-income families stand to benefit more under the new system, while higher earners see reduced support. Those earning below a certain threshold, currently set at €50,000 per year, will receive additional bonuses based on their income level. For example, a high-earning single person might only get around €12,900 in aid after the change, compared to previous levels. Conversely, low-income households, especially those with children, qualify for extra payments. Parents with young dependents can claim a one-time reduction of €10,000 from their taxable income, which increases their overall subsidy. In some cases, the new rules actually offer better support than before. Families with very low incomes, such as those earning just €30,000 annually, may receive up to €22,400 for installing a heat pump in their home. This reflects the policy shift toward prioritizing sustainability and affordability for lower-income groups. KfW continues to support a range of alternative heating solutions beyond heat pumps, including connections to district heating networks, pellet stoves, and heating systems using fuel cells or other innovative methods. However, conventional oil and gas boilers are no longer eligible for funding unless they operate with green hydrogen or other clean fuels. This marks a clear move away from fossil fuel-based heating systems. Applicants can still submit their funding requests online via the KfW website, “Meine KfW.” As before, they must first obtain a confirmation of eligibility from energy efficiency experts, which includes a unique 15-digit number required for the application process. They also need to sign a contract with a company for the heating system replacement, which becomes valid only upon approval. Additional documents, such as tax returns, may be needed to verify income levels. Once approved, the heating system must be installed within 36 months, followed by submission of all receipts and documentation to KfW. Only then does the grant money become available. The KfW website has been updated to reflect the new conditions, following a brief period during which many users attempted to secure the old rates. Those who received conditional offers can rely on them, as funds have been reserved accordingly. To apply under the old terms, applicants had to meet specific deadlines. The last opportunity to use the previous guidelines ended shortly before the new rules took effect. This created a rush among potential beneficiaries seeking to lock in the earlier, more generous support levels.