Coalition agreement 2025: Intended changes to district heating

The coalition agreement is only a few days old and has yet to be accepted by the party committees of the CDU/CSU and the Social Democrats. However, it already gives a first impression of where the new government’s energy policy priorities will lie.

In the district heating sector in particular, the process of amending the AVBFernwärmeV, the core of which has not undergone any significant reforms since the 1980s, has stalled since the end of the coalition between the SPD, Greens and FDP. Since the hearing of experts and associations in the fall of 2024, the draft bill of the AVBFernwärmeV has not been further developed by the German Federal Ministry for Economic Affairs and Energy (“BMWE”). 

A look at the coalition agreement: These are the plans for the AVBFernwärmeV

In just eight lines, the new coalition agreement now provides the first indications of what the future of district heating could look like.
Firstly, it emphasizes the importance of district heating as part of the heating transition. Therefore, the construction of local and district heating networks is to be further supported in future through an expansion of federal funding for efficient heating networks (“BEW”).

Focus on transparency and consumer protection

As part of the amendment to the AVBFernwärmeV, the coalition agreement emphasizes the issues of transparency and consumer protection.

Both topics are reflected in the current draft bill – for example, in the reduction of initial contract terms in district heating from ten to five years. There are also adapted options for reducing the supply at the customer's request as well as increased publication and transparency obligations, which should enable end customers to digitally compare different district heating suppliers.

However, it remains to be seen what effects this shortening of contract terms will have on the planning security of suppliers, particularly in the area of local heating contracting, which is particularly affected by the shortened contract terms.

More on the coalition agreement

This is to change in labor and social law.  This is to change in tax law.

Secure investment conditions for suppliers

On the other hand, the coalition agreement also takes the interests of suppliers into account and intends to reconcile increased transparency and flexibility for consumers with the need for secure investment conditions.

In the previous draft bill, this was achieved in particular by implementing the previous case law of the Federal Court of Justice (BGH) on price adjustment clauses. In addition, specifications were made as to how the market and cost elements should be weighted.

In addition, the creation of a model price adjustment clause is intended to provide for further legal certainty in the use of price adjustment clauses. When using such model clause, the draft provides for an assumed correctness in favor of the supplier. Finally, the right to adjust price adjustment clauses in current contracts on the basis of BGH case law is also to be better codified.

Strengthening price supervision in district heating

Furthermore, price developments in district heating are to be subject to stricter price supervision in future. It can therefore be assumed that in future suppliers will not only have to justify the price adjustment clauses used in their district and local heating contracts more frequently in the context of audit procedures, but also towards audit authorities such as the Federal Network Agency or the Federal Cartel Office, and check the plausibility of the calculations on which they are based.

This creates increased requirements for suppliers to keep their procurement and cost structure up to date and monitor it continuously. These increased requirements apply all the more as the establishment of an unbureaucratic arbitration board planned by the new government not only offers additional consumer protection, but also entails increased verification requirements for suppliers.

Conclusion: Suppliers should prepare for shorter contract terms and transparency requirements

As a result, the statements in the coalition agreement indicate that the changes and trends known from the previous draft bill will be continued, so that suppliers will be confronted with shorter contract terms, increased consumer protection and increased transparency requirements in the foreseeable future.

Public utilities in particular should therefore already identify the foreseeable tasks that consumer protection and transparency pose for existing business models and contract terms and prepare for the imminent amendment of the AVBFernwärmeV. Particular attention should be paid to the contractual design of price adjustment clauses and the underlying cost structure, also due to the increased price supervision in this sector.

We will be happy to provide you with legal and business advice in this respect.