The subject of "municipal heat planning" is on the minds of many now, and we would also like to take up the topic in our current newsletter. To this end, we present what we consider to be the most important points of the draft "Gesetzes für die Wärmeplanung und zur Dekarbonisierung der Wärmenetze".

The heating sector is a crucial factor in the fight against climate change. In Germany, around 40 percent of energy consumption is used to heat buildings and processes in industry. Much of this heat energy is still generated from fossil fuels such as natural gas and oil, resulting in significant CO₂ emissions. The new law has the ambitious goal of breaking this trend and making the heat supply in Germany more sustainable and environmentally friendly.

In our newsletter, we refer to the cabinet version dated Aug. 16, 2023, and the law is scheduled to come into force in 2024, at the same time as the new "Gebäudeenergiegesetz" (Building Energy Act). Of course, we cannot summarize all facets of the law in our newsletter, but we hope that we can answer the most important questions.

Who Needs to Do Municipal Heat Planning?

The draft specifies that heat plans must be drawn up for municipalities in Germany. The respective federal states are responsible for implementing the heat plans and monitoring that they have been created properly. Heat plans for larger municipalities with more than 100,000 inhabitants must be prepared by June 30, 2026. Smaller municipalities under these limits have until June 30, 2028. The cutoff date for measuring municipality size is Jan. 1, 2024 (the effective date of the law). Special regulations apply to municipalities with less than 10,000 inhabitants, which can prepare a municipal heat plan in a simplified procedure (more on this later).

It is important to note that heat plans that have already been started and implemented retain their validity. This is particularly interesting for the federal states (e.g. Baden-Württemberg), which have already started to prepare municipal heat plans across the state.

How Does Municipal Heat Planning Work?

According to the law, municipal heat planning is divided into several steps.

1. As-is analysis: Here, the current heat demands (or ideally heat consumption) are surveyed as well as existing heat generation systems, their energy sources and the energy infrastructures relevant for heat supply (gas grids, heat grids, but also electricity grids are to be mentioned here). A suitability test should be carried out at the same time as, or even before, the as-is analysis. This identifies areas that are particularly suitable for supply with decentralized systems (e.g. heat pumps) due to the building structure or existing infrastructure.
2. Potential analysis: In the potential analysis, locally renewable energy is identified. These can be, for example, geothermal energy (at different depths), wastewater heat, industrial waste heat, etc. central storage of heat must also be considered in this step. The potential analysis is to determine the technical, economic and also approvable usable potential, so that deeper analyses will already be necessary here.
3. Target scenario: Target scenarios can be developed on the basis of the potential analysis and the determination of demand. This is the actual core of the municipal heat planning. The target scenario subdivides the investigated area and heat supply areas. The supply of the areas is to be planned as cost-efficiently as possible. The developments for the observation periods 2030, 2035 and 2040 are presented. For each time period, the suitability of the areas for the selected supply type is to be indicated. In addition to decentralized supply, the focus here is on the transformation of gas distribution networks and, in particular, the new construction and transformation of district heating networks. A final scenario is developed from the different scenarios, which is then updated in the heat plan.
4. Implementation strategy: A concrete implementation strategy must be developed for the target scenario so that the scenario can be fulfilled at the different points in time under consideration.

A simplified procedure applies to municipalities with fewer than 10,000 inhabitants. In particular, the number of participants can be reduced. Hydrogen networks can also be excluded in a simplified manner, like the suitability test for decentralized supply.

All heat plans must be summarized in detail in a report, decided by the responsible bodies and then published. There is an obligation to monitor the heat plan at least every 5 years, to evaluate the implementation measures and to compare them with the target scenario.

What Are the Implications of Municipal Heat Planning for New Construction or Transformation of District Heating Networks?

As described above, a central result of municipal heat planning is the designation of heat supply areas. In concrete terms, this means that certain areas within a municipality are defined as priority areas for district heating. This can involve both redensification and the construction of a new district heating network. For district heating networks, requirements are specified within the draft law for the district heating network operator. Here, too, a distinction is made between existing and new heating networks.

For existing district heating networks applies:

• By 2030, the network must be supplied with at least 30 % renewable energies and/or unavoidable waste heat.
• By 2040, the network must be supplied with at least 80% renewable energy and/or unavoidable waste heat.
• The first date can be postponed by up to 4 years if a particularly complex decarbonization measure is required (e.g. approval of the Federal Mining Act, Water Resources Act or high investments in the range of €150 million).
• KWK-G plants may continue to operate until December 31, 2034, if at least 70 % is fed by CHP. However, the remaining heat should be fed by renewable energies.

The following applies to new district heating networks:

• The share of renewable energy must be at least 65 % (BEW: 75 %).
• Biomass is limited to 35 % (20 - 50 km) or 25 % (> 50 km) depending on the network length.

For new and existing networks, a complete conversion to renewable energies and/or unavoidable waste heat shall have taken place by 2045. The share of biomass is to be reduced again (25% for 20 - 50 km and 15% for > 50 km). In addition, every district heating network operator is required to prepare a heating network expansion and decarbonization roadmap by the end of 2026. This obligation does not apply to heating networks that have applied for Module I or Module II under the BEW. Here, too, exceptions apply for particularly small networks (< 1 km) and networks < 10 km that already have a high share (over 65 %) of renewable energies.

Further information

The full text of the draft law can be found here. Many statements from associations and companies can also be viewed at the address.

The next issue of our newsletter will be published on October 4, 2023. Until then, feel free to follow us on LinkedIn where we share smaller use cases and information.