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Rising Demand for Energy Refurbishments

Germany’ buildings sector plays a key role in the effort to achieve the country’s climate targets: It accounts for nearly 40 percent of the German energy consumption. The Federal Ministry of Economic Affairs just announced that the number of funding applications for the energy refurbishment of buildings began to soar last year. In fact, the sum total of applications filed nearly doubled year on year, climbing from 326,000 applications for funds from the ministry’s various building efficiency programs to around 600,000 by the end of 2020. Part of the background to this development is that the Federal Government has drastically increased the funding for energy-efficient building refurbishments.1

“Stocking up the funds for the building efficiency programs is good for the climate and good for the economy, especially in the times of COVID-19,” commented Peter Altmaier, Minister for Economic Affairs (Christian Democrats). “The move has achieved its purpose as it prompted a surge in investments in energy efficiency and the use of renewable energies on the heat energy market.” According to Altmaier, the funding-relating CO2 savings will double to 14 million tons by 2030 when compared to previous analyses – a significant contribution en route to achieving the climate targets.

Boiler Conversion Bonus Pays off

The surge in funding applications is to a large extent explained by the strong demand for subsidies toward the installation of heating systems based on renewable energies. The sum total of the applications toward this end multiplied from 76,000 in 2019 to more than 280,000 last year. Roughly two thirds thereof were filed in conjunction with a refurbishment. In many cases, applicants took advantage of the boiler conversion bonus introduced in January 2020, which rewards the changeover from oil-fired heating to a climate-friendly energy source with an extra conversion bonus. A total of 110,000 applications for this program were received. As far as subsidised heating technologies go, heat pumps proved most popular, with 144,000 applications filed, followed by biomass systems and solar thermal energy.

Carbon-Neutral by 2050

The federal government seeks to achieve carbon-neutrality for the German building stock by 2050. At this time, the target seems remote, because the refurbishment rate averages merely one percent annually. New-build units have to meet tighter sustainability requirements from the start, but barely make a difference compared to the total stock. This makes the energy refurbishment of standing buildings all the more important. The German Government therefore earmarked billions in funding for building refurbishments over the past years. It further topped up the budget in 2020. Instead of the 1.85 billion euros available in 2019 for funding energy-efficient building refurbishments, approximately 8.6 billion euros were set aside for the purpose in 2020. The budget breaks down into various funding programs, for instance the low-carbon building refurbishment program of the KfW development bank and the “Market Incentive Programme for the Use of Renewable Energies in the Heating Market” (MAP) of the Federal Office for Economics and Export Control (Bafa).

Funding for Efficient Buildings to Boost Refurbishment Drive

According to information provided by the Federal Ministry of Economic Affairs, 2020 saw the approvals of full refurbishments to meet the KfW efficiency house standard under the low-carbon building refurbishment program nearly double (from 11,000 in 2019 to 20,000). The number of the approved one-off measures climbed from 81,000 the previous year up to 105,000. Analogously, the number of new-build construction projects sponsored soared from 44,000 to 93,000.

In the year now under way, Bafa vests its hopes particularly in the “Federal Funding for Efficient Buildings” (BEG), a program that was launched early this year and that is intended to add fresh impetus to the refurbishment campaign. It bundles the Federal Government’s existing funding programs for energy efficiency and renewable energies in the buildings sector. The idea is to make the applications less complicated and the process implementation more efficient.