It is actually not unusual for the Ministry of Finance (BMF) to identify additional needs for a funding program. Officials are not always able to accurately predict incoming applications for funding for heat pumps or for climate-friendly new construction in euros, which means that over-budget spending occasionally occurs. Last year, for example, 100 million euros more were needed for energy policy cooperation with Ukraine or 305 million euros for heating network funding.
But the need for unforeseen billions is rare in the energy sector. At most, in the case of building funding (BEG), it has sometimes happened that demand significantly exceeded supply. And that is the case this year too.
For the second time in just a few months, the BMF has informed the members of the Budget Committee that it wants to allocate additional funds for BEG funding for the years 2027 to 2029: at the end of August this involved an additional 1.47 billion euros in over-plan commitment appropriations, and last Friday another 1.1 billion euros. “Even at the time the first extra-scheduled commitment authorization was granted, an application volume of the current magnitude was not foreseeable,” is the reasoning behind it.
The commitment authorizations for BEG funding would only be sufficient until mid-November, after which there would be a threat of a funding stop without further financial commitments, the BMF continues in the paper dated November 6th, which is available to Tagesspiegel Background. If this money deposited through commitment appropriations for the conclusion of contracts has been used up, no new funding commitments can be made.
Overall, the additional 2.57 billion euros would increase the commitment appropriations by around 40 percent compared to the 2026 budget, with the majority of the additional requirement at one billion each being for the next two years. According to the current budget, around four billion euros in commitment appropriations are planned for the BEG for 2027, and 1.7 billion for the year after.
In view of the additional resources required, the Greens are calling for adequate funding. “Once again the government needs more money for the BEG,” said Katrin Uhlig, a member of the budget committee. The additional funds are right and would show that there is a demand for efficient buildings and climate protection. “Minister Reiche must finally plan reliably and provide adequate funding in the long term, instead of constantly adding additional funds at short notice.” She therefore calls for reliable and long-term funding.
The Federal Ministry for Economic Affairs and Energy (BMWE) cannot clearly state the reasons for the high demand. According to Alexander Renner, there are three possible reasons: “Either the funding is so adequate that the market functions well,” says the head of the energy department in the building sector at the BMWE. It may also be due to the high prices for fossil energy or the market's return to investment as a result of the Building Modernization Act (GModG). “I believe the truth will lie somewhere in between,” said Renner on Monday at the German Energy Agency (Dena) congress.
In fact, demand for heat pumps in the first half of 2026 was 40 percent higher than in the same period last year. Martin Sabel, managing director of the Federal Heat Pump Association (BWP), sees, in addition to the energy price crisis, the “smart” design of the funding as the reason for the high demand. The fact that it is declining in a degressive manner is encouraging a lot of investment, said Sabel on Monday.
But the joy about the good sales figures is clouded in the background by a new development surrounding the BEG. The BMWE published a new version of the “Information sheet on eligible costs”, which defines the technical details of the devices eligible for funding from the BEG. What is new is, among other things, the specific regulation for the “interoperable and digital interface”.
And this regulation is tough: The BMWE stipulates that from the middle of next year only heat pumps that meet a software requirement for the use of dynamic electricity tariffs in combination with an energy management system (“Incentive Table based Power Consumption Management”; ITPCM) will be eligible for funding. The problem: This use case is not established anywhere today.
The affected associations BWP, the Federal Industrial Association of Germany Building Services (BDH), the Association for an Open Communication Standard for Energy Devices (EEBUS) and the Building Climate Association (FGK) therefore asked the BMWE for more time at the end of last week in a confidential paper that Tagesspiegel Background has received. The introduction of the technology makes sense, but it will still take time until it is ready for the market.
The associations write that a date in summer 2029 is realistic. The BEG information sheet has been valid since November 1st. Without change, new heat pumps would potentially be excluded from funding from July 1, 2027 if they do not meet the requirement. This probably applies to most devices.
What happens next with the BEG will also be decided by the question of how those interested in funding react to the meltdown. The time has come on February 1, 2027. Then the climate speed bonus and maximum eligible costs per residential unit will decrease for the first time. In addition, a local value creation bonus should take effect, although, as reported, detailed questions are still unresolved.
In view of these uncertainties with regard to demand, financing and technical details of building funding, industry representatives repeatedly repeated the well-known demand at the Dena Congress: planning security is now the most important thing in order to continue to ensure the market ramp-up. The BMWE must now deliver this.
