Germany is walking back its subsidies for heat pumps, gradually reducing state support through to 2030, in line with a recent overhaul of the Federal Funding for Efficient Buildings (BEG) programme.
Previously, the government subsidised up to €30,000 of eligible costs for anyone replacing a conventional (fossil-fuel powered) heating system with an environmentally friendly alternative, with grants covering up to €21,000 of that, depending on which bonuses applicants qualified for.
Now, the maximum amount of eligible costs covered by the KfW, the state-owned bank based in Frankfurt, is falling slightly. But some applicants may actually qualify for more support, depending on their income.
Here's how you can apply for a subsidy yourself, as well as a look at what's changed and who qualifies for the biggest grants.
How to apply
While the amount you might receive has changed, how you submit an application hasn’t: homeowners (and housing associations and some landlords) can still apply online via the ‘Meine KfW’ website.
The first step here is to confirm that you’re actually eligible to receive funding. You do this via a ‘confirmation for application’ (Bestätigung zum Antrag or BzA) form that an authorised energy efficiency expert can prepare for you. You might also be able to get one from the specialist company installing the heating system.
They'll assess whether the planned installation meets the funding requirements before issuing a 15-digit reference number, which you'll need in order to submit your application.
You may also need other documents, such as tax assessments, to verify your annual income.
Before applying, you'll normally need to sign a contract with the installer of the heating system. This should include a clause making the installation conditional on funding approval, so the contract does not become valid until the funding is approved.
Once it’s been approved, the project must be completed within 36 months.
One thing to bear in mind is that the grant isn't paid upfront. Homeowners normally need to finance the installation first and then claim the subsidy from the KfW after the work has been completed and they’ve submitted all the invoices.
Help with financing the project
If you’re struggling with footing the bill, you can also apply for a supplementary low-interest loan (Ergänzungskredit) from other providers, such as your own bank. This is designed to help bridge the upfront cost. But you’re only eligible to apply for this once your grant application has been approved.
Once the project is finished, your installer or energy expert will give you a Bestätigung nach Durchführung (BnD) form, which confirms that the installation was carried out correctly.
You then need to submit this form and your invoices to the KfW. You’ve got six months from the date of the final invoice to upload these documents and request reimbursement.
Make sure you keep to the deadlines, though; if you don’t meet them, there’s a chance you might not get reimbursed unless the KfW grants you an extension. The KfW says it can only pay the grant if the project has been completed within the approval period and the payment request is submitted on time.
How the terms have changed
The top-line figures first: Whereas government support previously applied to up to €30,000 in installation costs, that total has now fallen to €28,000.
But the bigger change to the subsidies is in how applicants’ earnings are taken into account. The KfW now looks at applicants’ taxable household income to determine the level of support people are eligible for.
In short, the government has shifted the scheme away from universal subsidies towards means-tested support, with higher earners receiving significantly less help than before while many lower-income households will qualify for more.
So now, the lower your income, the higher the so-called income bonus the KfW gives you as part of the subsidy package.
Since July 21st, all new applications submitted through the KfW are processed under the revised funding rules.
How much money is available?
Anyone installing an eligible heating system can still receive a basic subsidy (Grundförderung) covering 30 percent of eligible costs.
Owner-occupiers may then qualify for additional bonuses depending on their income and how quickly they replace an older fossil-fuel system.
Owner-occupiers can receive an additional income bonus of 40 percent where household income is no more than €30,000, 30 percent for household incomes up to €40,000 and 10 percent for household incomes up to €50,000, according to the KfW.
Households with a taxable annual income above €50,000 won't qualify for an income bonus (Einkommensbonus), but they may still be eligible for the basic 30 percent subsidy and other bonuses that we'll go into below.
In practice a high-earning single person might receive around €12,900 in KfW subsidies towards replacing their heating system.
But low earners could do better than before the rule change. That's because some lower-income owner-occupiers can now qualify for subsidies covering up to 80 percent of eligible costs, even though the amount of eligible costs has been reduced (to €28,000 from €30,000).
For example, a family with one or more children and a taxable household income of €40,000 is likely to receive more help with installing a heat pump than previously.
In this case the family would be eligible for a one-off family allowance of €10,000 - available for households with children. So their household would be treated as having a taxable income of €30,000, and thus would qualify for the 40 percent income bonus.
So if that same family installed a €32,000 heat pump before February 1st, 2027, it could receive up to around €22,400 in funding from the KfW.
Some owner-occupiers may also qualify for the so-called climate speed bonus (Klimageschwindigkeitsbonus) of 16 percent. This encourages people to replace older fossil-fuel heating systems sooner rather than later. It will fall by four percentage points every six months from February 1st, 2027.
But it’s not just about heat pumps. The subsidy scheme also covers connections to heating networks (such as district heating), pellet heating systems and systems using fuel cells or other innovative technologies.
Conventional oil and gas heating systems are not eligible for support, but certain hybrid or hydrogen-ready systems may still qualify where they meet the programme's requirements.
Why act now?
If you’re thinking about making the switch, it may be worth getting the process underway now, especially if you’re buying a non-EU heat pump.
From February 1st, 2027, the maximum available funding starts falling by €750 every six months.
Separately, during the first quarter of 2027, changes to support for EU and non-EU heat pumps are due to come into effect.
The KfW uses slightly different terminology in different parts of its guidance, which can be confusing. Here's what it boils down to: From the first quarter of 2027, non-EU heat pumps will receive a lower basic subsidy (Grundförderung).
Eligible EU-manufactured heat pumps will instead qualify for a new value-added bonus (Wertschöpfungsbonus), meaning the overall level of basic support is expected to remain broadly unchanged for those systems.
So you might not see much difference in the amount of support you receive for these EU-made systems. But if you’re looking at buying a non-EU heat pump, waiting until next year might mean you get noticeably less support.
Even with lower subsidies, many commentators argue that homeowners with older gas or oil heating systems will still have a strong financial incentive to make the switch, simply because rising energy costs are expected to make older systems increasingly expensive to operate.
