Increased KfW Funding to Support Green Heating Initiatives

The KfW development bank has reported a significant uptick in funding for both businesses and individuals in 2024, attributed in part to the introduction of legislation promoting climate-friendly heating systems. As of the end of December 2024, the bank had approved subsidies for approximately 227,000 applications, primarily for heat pumps, amounting to about 3.3 billion euros.

In the early months of 2025, demand for heating subsidies remains strong. KfW's CEO, Stefan Wintels, noted that by January 31, 2025, the number of subsidy requests had risen to around 248,000, with the total funding volume increasing to approximately 3.6 billion euros. Wintels emphasized the positive reception of the heating law, officially known as the Building Energy Act.

The German government aims to incentivize the installation of eco-friendly heating systems while facilitating the replacement of outdated gas and oil heating systems through this legislation, which is retroactive to January 1, 2024. However, opposition parties have expressed intentions to abolish the revised heating law, sparking ongoing debates.

The surge in heating-related funding during the last quarter of 2024 contributed to the overall increase in KfW's funding disbursement, which ultimately exceeded the previous year's total. In 2024, the KfW Bank Group issued fresh funding of 112.8 billion euros, slightly surpassing the 111.3 billion euros allocated in 2023. Earlier in the year, funding levels had been significantly lower than the previous year's figures.

Looking ahead, KfW plans to allocate at least 500 million euros from its own resources in 2025 to enhance the terms of its funding products. This marks the highest investment in over a decade.

In its traditional funding operations, KfW provides low-interest loans to small and medium-sized enterprises, home builders, and students, alongside financing for exports, project funding, and investments in emerging markets through its subsidiary, KfW Capital.

Wintels stated that KfW will increasingly evaluate its activities to ensure they boost Germany's competitiveness. He highlighted the necessity for an investment push in infrastructure and education, as well as the need to reduce bureaucracy and improve regulatory and tax conditions.

While the exact directives from a potential new government remain uncertain, Wintels assured that those with accepted funding applications for new heating systems need not worry about the availability of funds, regardless of the political decisions regarding the heating law.