Heating is one of the biggest expenses in private households - and the trend shows that things are not getting any better. Since 2020, the cost of almost all heating energy sources has risen massively, with particularly drastic developments for fossil fuels.

The reality: heating costs at record levels

• Gas: +52 % since 2020
• Heating oil: +79 %
• Wood pellets: +71 %
• Electricity (heat pump tariff): +32 %

These figures from the Federal Statistical Office relate to the period from January 2020 to April 2025. While the inflation rate in the same period was around 20 %, fossil fuel heating systems are significantly higher - and therefore represent a risk for households, tenants and owners alike.

Causes: Global crises, carbon pricing and structural deficits

The explosion in energy prices is no coincidence:

• Geopolitical risks (e.g. war in Ukraine, escalation in the Middle East) are driving up commodity prices.
• CO₂ pricing as part of European and German climate policy is making fossil fuels more expensive.
• Structural supply risks, such as the dismantling of gas grids and the reduction of conventional power plant capacities, are exacerbating the market situation.

Pellets in particular, which were often marketed as a sustainable alternative, were subject to massive price fluctuations - in the meantime, prices were three and a half times higher than in 2020. Anyone hoping for security of supply was disappointed.

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The way out: electricity-based heat from renewable sources

Despite rising electricity prices, heat pumps offer stable and calculable operating costs in comparison. This is due to three factors:

• Electricity prices tied to grid fees and EEG levy (no speculative fluctuations as with oil or gas)
• Increasing share of renewable energies in the electricity mix (in 2024, the share was > 60%)
• Electricity market regulation by the EU, which also makes charging processes and grid usage more transparent through the AFIR regulation, for example - and will have an impact on heat pump tariffs in the future

In the long term, electricity-based systems are therefore ahead - especially if the energy comes from their own photovoltaics and can be stored or shared locally.

The social lever: tenants pay the second rent

In the real estate industry, it has long been clear that operating costs are becoming the second rent.

Owners who do not invest in the decarbonization of their portfolio are transferring the price risk directly to their tenants - with massive social and political consequences:

• Higher ancillary costs reduce the willingness and ability to pay.
• Rent control does not apply to operating costs - protests loom.
• Municipalities are increasingly demanding proof of affordable heat supply as part of municipal heat planning.

What's more, energy costs have long been an investment risk. Properties that remain on fossil fuel heating systems lose their ESG conformity and become “stranded assets” - no longer saleable, no longer financeable, no longer sustainable.

Let's talk about PAUL Net Zero – get in touch now.

Regulation leaves no more time

The Building Energy Act (GEG), the EU taxonomy and the climate targets for 2045 mean that the direction of travel is clear:

• Gas grids will be dismantled in many places by 2035 at the latest.
• CO₂ levies are rising continuously - to over €65/t CO₂ by 2030.
• Financing requirements based on ESG criteria are increasingly ruling out fossil fuels.

This means that those who do not act now will be forced to renovate later at a higher cost. The “costs of inaction” far exceed today's investments in modern systems.

The solution: CO₂-free heat in existing buildings – without full renovation

Modern heat pump systems such as PAUL Net Zero already enable a CO₂-neutral heat supply, even in older existing buildings – without additional insulation measures and without investment costs for owners.

• Thanks to smart sensor technology, AI-supported control and prefabricated modules, heat pumps can be operated efficiently even in apartment buildings with poor energy classes.
• This lowers energy costs by up to 30%, significantly reduces CO₂ emissions and improves the energy efficiency class by up to 5 classes - with a direct effect on the rating and ESG rating.

Act now – for economic efficiency, climate protection and social fairness

Fossil heating systems are not only harmful to the climate - they are economically and socially unacceptable. The data is clear: anyone who continues to rely on gas, oil or pellets is taking a double risk - for tenants and for the portfolio.

The future lies in renewable, decentralized, smart heating solutions that are affordable, scalable and ESG-compliant. PAUL Net Zero offers a solution that meets precisely these requirements - and thus provides the real estate industry with the decisive lever for successful decarbonization.

Let's talk about PAUL Net Zero – get in touch now.