Building Energy Act (Gebäudeenergiegesetz, GEG): what will the next amendment involve?

The Building Energy Act (GEG) came into force in 2020, harmonising the regulations governing energy saving law for buildings.

After six years of discussion and several postponements, the GEG was finally adopted at the end of 2020, before being revised for the first time in 2022. Further GEG amendments and revisions have been announced and are already under discussion. A principle aim of the GEG was to merge three older pieces of legislation, namely the Energy Saving Ordinance (Energieeinsparverordnung, EnEV), the Energy Saving Act (Energieeinsparungsgesetz, EnEG) and the Renewable Energy Heat Act (Erneuerbare-Energien-Wärmegesetz, EEWärmeG), into a harmonised and simplified set of rules. A secondary aim of the legislation was to keep the primary energy demand of buildings as low as possible. The GEG lays down requirements for buildings’ energy efficiency, drawing up and using energy performance certificates, and the use of renewable energy in buildings. It is an important step along the road to the Federal Government’s goal of climate-neutral building stock by 2045.

The GEG also provides the formal legislative foundations for the Heating Costs Ordinance (Heizkostenverordnung, HKVO) (article 6 paragraph 1 GEG). Soon after it was passed, an amendment to the HKVO was implemented whereby the EU Energy Efficiency Directive (EED), which was also amended in December 2018, was transposed into German federal law. Under EU rules this should have been done by 25 October 2020, but in fact the revised HKVO entered into force on 1 December 2021. An amendment to the GEG, possibly coming into force by mid-2023, is already under discussion.

GEG and data security

The GEG also sets high standards for the built-in technology (article 6 paragraph 1 no. 4 and paragraph 5 GEG). Any such technology must comply with the guidelines laid down by the Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik, BSI) for data protection, data security and interoperability. If a smart meter gateway has been installed in the property in the course of the smart meter rollout, the gateway’s BSI certification guarantees that these requirements have already been met. The smart meter gateway is much more than just a piece of digital metering infrastructure. It is also a key element in satisfying the need to combine climate protection with affordable housing, and therefore fundamental for meeting future lifestyle requirements. For example, the smart meter gateway facilitates applications that use machine-to-machine communication to boost energy efficiency and cut operating costs. Moreover, a smart meter gateway can be used to effectively link the fields of smart metering and submetering, so that duplicate structures and costs are avoided.

GEG: greater flexibility and efficiency

The GEG also lays down uniform energy-related requirements for the systems technology and structural thermal insulation used in new and existing buildings. The GEG specifies which energy sources may be used to meet the remaining energy demand for heating and cooling. The GEG 2020 did not set out higher energy requirements for existing and new buildings, but more stringent future restrictions were announced at the time. Then in 2022 primary energy requirements for new build were tightened to the EH 55 level with effect from 01 January 2023, for both residential and non-residential buildings.

At the instigation of the housing industry, in 2020 an “innovation clause” was incorporated into the Act. The real estate associations GdW and ZIA took a positive view of the clause. It means, for example, that it is not necessary for every single building in a residential district to meet the energy requirements. Rather, the area as a whole must do so. This enables the highly energy-efficient buildings to compensate for the less efficient ones, which gives housing companies greater flexibility.

GEG amendment: prospective changes

The Federal Government and further expert bodies are currently discussing a major amendment of the GEG, something already announced for 2023 within the scope of the 2022 amendment. In early March 2023, an unofficial draft bill drawn up by the ministries involved, namely the Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Federal Ministry for Housing, Urban Development and Building (BMWSB) was leaked. It proposes various innovations that are the subject of heated debate. The ministries’ current timetable envisages the changes to the GEG coming into force very quickly, by mid-2023 at the latest.

One of the most hotly debated proposed changes in the amended version of the GEG amendment is the plan for every heating system that needs replacing or is installed in a new building to run on 65 per cent renewable energy as early as 1 January 2024. This was originally planned for 2025, but the project has been brought forward due to the war in Ukraine. The current picture is very different, with gas heating systems to the fore, accounting for about 70 per cent of all newly installed heating systems, and indeed nearly half of all German households are gas heated. If the climate policy goal of greenhouse gas neutrality by 2045 is to be achieved something will have to change here. In the memorandum to the bill, the Federal Government’s notes that accelerating the energy transition is called for not only for reasons of climate policy but also, given the current crisis, for geopolitical and economic reasons.

Another provision proposed in GEG amendment bill is for fossil fuel-operated boilers to be completely prohibited from 2045 onwards. If the appropriate conditions are met, the aim is to allow gas or oil boilers installed before 1996 to operate until 2026 at the latest. An operating ban for owner-occupiers of detached and semi-detached houses will not come in until 2030, even for low-temperature and condensing boilers. In the case of heating systems installed between 1996 and 2024, the permissible operating life is to be reduced each year, at regular four-monthly intervals, from 30 to 20 years. If the existing heating systems in the current building stock break down, the bill proposes a transitional period of just three years before the applicable requirements have to be met.

As alternatives, the federal government has proposed expanding district heating networks and using heat pumps, supplemented by geothermal systems and solar thermal energy. There should also be various other options for implementing the 65 per cent renewable energy obligation. It appears highly probable that it will be impossible to implement these proposals without major financial support. It is also already clear that such wide-ranging changes to the GEG will require further redrafting and revision of content in order to come up with solutions that stand a realistic chance of being implemented.

The prospective amendment to the GEG also addresses single-floor heating systems, but with their own transitional periods proposed by the bill. There are also clearly formulated proposals for how to deal with single-floor heating systems in the case of condominium owners’ associations, setting out the duties and responsibilities of property managers in these cases. For example, the Federal Government’s draft text proposes that property managers should, by 31 March 2024, gather detailed data from apartment owners concerning their single-floor heating systems. The additional costs thus incurred by property managers will also give rise to a further entitlement to fair remuneration unless they are already required to do this under existing management contract provisions.

The content eventually incorporated into the GEG and the changes introduced will remain the subject of wide-ranging debate, both at government level and with representatives of all stakeholders concerned. It should also be remembered that, at the end of the day, the German Parliament will have to debate and pass judgement on the GEG amendment. It remains unclear whether the GEG’s system of requirements will also be revised, and whether additional details will be facilitated, or indeed made mandatory. The BMWK has commissioned expert proposals, which include converting the environmental requirement from primary energy demand (Qp) to greenhouse gas emissions (GHG) during the operation of the building, as this is much more compatible with the goal of achieving climate-neutral buildings.