Insights 13.05.2025
Price cap for district heating: necessary for the social and ecological heating transition
Marc Pion
Alongside decentralized systems such as heat pumps, district heating is considered a key technology for a climate-friendly heat supply. However, recent analyses by the Federation of German Consumer Organizations (vzbv) show considerable price differences between different district heating networks. While the median price is 17 cents per kilowatt hour, consumers pay 20 cents or more in over 27% of networks, and even 25 cents or more per kilowatt hour in almost 9%.
District heating: Significant price differences and monopoly-like structure
These price differences lead to considerable additional costs for households. At a consumption of 20 cents per kilowatt hour, annual additional costs of around 290 euros are incurred compared to the median value; at 25 cents, the additional costs amount to around 770 euros per year.
A central problem is the monopoly-like structure of many district heating networks. Consumers generally have no opportunity to switch providers, which leads to limited price transparency and control.
At the end of 2023, the German Federal Cartel Office initiated an investigation into suspected illegal price increases by district heating providers. According to the investigation, unlawful price adjustment clauses were used to the detriment of customers in four out of nine district heating networks investigated. The authority is investigating seven municipal utilities and district heating suppliers in four federal states.
www.bundeskartellamt.de
vzbv: Demand for a price cap
In view of these challenges, the vzbv is calling for the introduction of a price cap for district heating. This should be based on the operating costs of heat pumps in order to enable a fair comparison between the two key technologies of the heating transition.
It also calls for equal public funding for district heating networks and heat pumps in order to avoid distortions of competition. An independent price regulator should monitor compliance with the price cap and ensure greater transparency.
Recommendation to introduce a price cap
A price cap for district heating is a necessary step to promote social justice and acceptance of the heating transition. By introducing a price cap based on the costs of heat pumps, consumers can be protected from excessive prices and the competitiveness of different heating technologies can be ensured. Independent price supervision and transparent pricing are essential here.
We are one of the first major cities ever to have a municipal heating plan, which is complete. Of course, we work with district heating for 70% of households, but 30% rely on heat pumps, for example. And of course this technology, which PAUL has developed, is really crucial here. It is a very important building block in achieving our climate policy goals in Mannheim, especially in cooperation with our housing associations.
Christian Specht, Lord Mayor of the City of Mannheim
District heating and heat pumps essential for the heating transition
With a pipeline network of over 30,000 kilometers, district heating plays a central role in municipal heating planning and in the German energy system. Many cities are currently converting their district heating systems to renewable energy sources - a necessary but cost-intensive process that cannot be implemented everywhere in the short term and is itself still facing structural challenges. Further conversion and expansion of the infrastructure would be particularly expensive: according to a Prognos report from 2024, this would require investments of around 43.5 billion euros by 2030.
The use of decentralized technologies such as heat pumps is much more economical. These enable greater energy efficiency, lower operating costs and independence from the district heating network. In cities where district heating has already been or is being converted to renewable energies, it can still be a sensible solution - provided the energy mix is climate-neutral.
Overall, however, it is clear that the expansion of district heating is expensive, technically challenging and cannot be implemented across the board.