Heat networks in 2026 and 2027: applying for KWKG approval and notifying a complex measure under Section 29 WPG

Three deadlines, two authorities

Two applications go to BAFA and one notification goes to the state authority, and at a municipal utility all three usually end up with the team that also closes the books for the heat business. Each deadline hangs on a different point in time: the CHP application on the start of continuous operation, networks and storage on commissioning, and the complex measure on a fixed calendar day that is the same for every network.

The order of the work differs from the order of the dates. The notification under Section 29 WPG is an investment decision, since whoever notifies has to start building a year later; the two KWKG applications are evidence work that depends on auditors and technical experts.

CHP plants in continuous operation since 2025: apply by 31 December 2026

Without BAFA approval there is no CHP surcharge and no bonus (Section 10(1) KWKG). When the application arrives decides from when the money flows. If it is in by 31 December of the year after continuous operation began, approval is granted with effect from that start. A plant that started in March 2025 therefore needs its application in by 31 December 2026, and the surcharge then runs from March 2025. If the application arrives in January 2027, approval only takes effect from 1 January 2027 (Section 11(3) sentence 2 KWKG), and the months before are lost for the surcharge. After modernisation or retrofitting, the same applies from the date continuous operation resumes.

Plants holding an award from the CHP tender, in the segment above 500 kilowatts up to 50 megawatts, follow a different rule. Their entire award lapses if the plant was not approved, or should have been approved, within twelve months of starting continuous operation (Section 18(2) KWKAusV), and BAFA says what counts is that the application arrives in time. For such a plant that started in February 2025, the deadline already expired in February 2026, so an operator with plants in both segments should split the list by segment before writing New Year's Eve into the calendar as a single date. How the tender for innovative CHP systems is currently running is covered in our piece on the innovative CHP tender gap.

Applications only go through BAFA's electronic DKWKG portal (ELAN-K2); scanned applications sent by e-mail are rejected. Among other things they need the plant's number in the Market Master Data Register and an expert report on the plant properties that matter for the surcharge (Section 10(2) nos. 1e and 4 KWKG), and that report is what takes time. BAFA charges a fee of 0.2 percent of the expected surcharge, at least EUR 150 and at most EUR 45,000. BAFA itself calls its figures for the 2025 cohort of "very limited significance", because applications outside the tender segment can still be filed until 31 December 2026. The gap between 1,162 and 1,815 approved plants is therefore no evidence of missing applications, but it does show that much of the 2025 cohort is still open, either in processing at BAFA or not yet applied for.

Heat networks and heat storage commissioned in 2026: apply by 1 July 2027

For networks and storage the deadline is shorter and anchored differently. Applications for approval are due by 1 July of the year after commissioning (Section 20(3) KWKG for networks, Section 24(4) for storage). A network counts as commissioned when it first supplies heat on a permanent basis; a storage tank, when it is first charged after the trial run. For a network section that starts supplying its first houses in November 2026, that leaves just under eight months, and they include the year-end close and the contractors' final invoices from which the cost statement is built.

Networks receive 40 percent of eligible investment costs, capped at EUR 50 million per project (Section 19(1) KWKG). Heat storage receives EUR 250 per cubic metre of water equivalent, for tanks above 50 cubic metres at most 30 percent of eligible costs, and no more than EUR 10 million per project (Section 23(1)). Internal planning costs, fees and financing costs do not count, and grants from the federal government, the states or municipalities are deducted unless they are expressly granted on top. Network operators pass the share of the surcharge attributable to house connections on to the customers (Section 19(3)).

What the application must contain is set out in Section 20(1) and Section 24(1) KWKG and in BAFA's guidance sheet: an audit report from a certified public accountant or sworn auditor (for storage only above 100 cubic metres), a project description, the list of eligible costs, and proof that the surcharge is needed for the project to pay off, following AGFW worksheet FW 704. Storage also needs a heat-loss calculation, and losses must stay below 15 watts per square metre of tank surface (Section 22(1) no. 3). A network's supply share, meaning the portion of CHP heat, renewable heat and waste heat, may first be stated as a forecast; measured values have to follow once 36 months have passed (Section 20(2)). BAFA advises commissioning the audit report early, since many applications arrive at once shortly before the deadline.

2026 is the last year in which commissioning alone is enough. Under current law and the approval conditions BAFA lists, networks and storage commissioned after 31 December 2026 only receive a surcharge if all permits required under state law were in place by 31 December 2026 or, where none are needed, the main construction work had been firmly contracted, and commissioning follows by the end of the fourth year after that (Section 18(1) no. 1, Section 22(1) no. 1 KWKG). For projects completing in 2027 or later, New Year's Eve 2026 is therefore a cut-off date as well, only one that sits in the operator's own procurement and permit files rather than at BAFA. For seasonal thermal storage with long permitting paths, this is the date that gets tight first.

Complex measure under Section 29(3) WPG: notify by 31 December 2026

From 1 January 2030, every heat network has to source at least 30 percent of its annual net heat generation from renewable energy, unavoidable waste heat or a combination of both, and 80 percent from 2040 (Section 29(1) WPG). Subsection 3 moves the first step to the end of 2034 if the operator carries out a complex measure needed for decarbonisation and shows that lengthy planning and permitting procedures prevent completion by 2030. The deferral depends on two dates: notification by 31 December 2026 and construction start by 31 December 2027.

Deep geothermal energy, which falls under mining law, is the main case for the first criterion. The second can apply to a river-water heat pump, whose abstraction and return flow need a water-law permit; on the wording, though, it only becomes complex if the procedure takes longer than two years, which for some applications will not be known by the end of 2026. More on these plants is in our piece on large heat pumps in district heating. The third criterion, EUR 150 million, is mostly reached by large networks rebuilding their generation in one go.

A notification is not an application. Unlike the extension under subsection 2, no decision is issued: there the authority extends the deadline on application for undue hardship, and one condition is a heat network expansion and decarbonisation roadmap under Section 32 WPG. Subsection 3 requires notification and an explanation, the authority may request documents, and under subsection 6 the operator confirms to the authority that the conditions are met. Our piece on the decarbonisation roadmap under Section 32 WPG covers that roadmap, due on the same day; a notification without a roadmap containing the same measure would be hard to explain.

Which authority is competent is a matter of state law; the WPG does not name it. In June 2026 the federal government introduced an amendment to the WPG (Bundestag printed paper 21/6587) that rewrites the exemption for industrial networks in subsection 4 of Section 29 and defines in subsection 6 who operates a heat network; subsection 3, with its 2026 and 2027 dates, is left untouched by the draft. The amendment in force since 29 July 2026 only touched subsection 8 of Section 29. Notifying commits the operator: for a geothermal well, starting construction by the end of 2027 means the drill site, contracts and financing have to be in place during 2027, and an operator who cannot manage that is back at the 30 percent obligation in 2030, with one year less to find a plan B.

What the law provides if a deadline is missed

For CHP plants the act sets the consequence itself: an application filed after 31 December 2026 leads to approval from 1 January of the filing year, and no surcharge is paid for the period between the start of continuous operation and that date (Section 11(3) sentence 2 KWKG). For plants with a tender award, the award lapses entirely once the twelve-month period has passed (Section 18(2) KWKAusV).

For networks and storage, Section 20(3) and Section 24(4) KWKG state no express consequence. BAFA's page on heating and cooling networks, however, says that applications not submitted on time are rejected, its guidance sheet says that without documents submitted on time approval "cannot be granted", and incomplete applications after the deadline are rejected as well. Whether a court would read the deadline as strictly is open; for planning purposes, the only reading that counts is that of the authority writing the decision.

For the complex measure, without timely notification and a construction start by the end of 2027 the 30 percent obligation applies from 1 January 2030 (Section 29(1) no. 1 WPG). There is no fine in the WPG. The consequence of a missed share follows from subsection 7: connected customers can ask for proof of compliance or of an exemption, and they have a right to disconnect if the network does not meet the requirements and the shortfall is not merely temporary; rules on compulsory connection and use remain unaffected. This is a general reading of the provisions, not an assessment of any individual network.

KWKG amendment: key points to 2035, no draft

On 21 September 2026 the Federal Ministry for Economic Affairs and Energy published key points for a KWKG amendment: an extension to 2035, a higher cap of EUR 100 million instead of EUR 50 million per heat network project, aligned with the federal funding for efficient heat networks (BEW), and an annual budget for networks and storage of EUR 400 million instead of EUR 150 million. According to Solarserver, the ministry is aiming for a cabinet decision "in autumn of this year" and entry into force "at the latest in the first quarter of 2027". The cabinet date registered for 14 October did not take place, ZfK reported, because no draft bill existed yet.

On the term, the German Association of Energy and Water Industries (BDEW) disagrees with the ministry. It considers the extension to 2035, tied to taking part in CHP tenders by the end of 2031, too short and wants 2038 with final tenders by the end of 2035, in line with the coal phase-out and the hydrogen ramp-up, and it calls the timetable ambitious. None of this changes the three deadlines discussed here: they concern plants, networks and storage that went into operation in 2025 and 2026, and they are in the act as it stands. Holding back an application in anticipation of the amendment puts the surcharge at risk, and the key points promise nothing in return.

What to do by New Year's Eve and by July 2027

Four steps across two deadlines

1. List the 2025 CHP cohort

   By mid-November, record every plant that started or resumed continuous operation in 2025, with the date, the segment (tender or not) and the state of the application. Check plants with a tender award against the twelve-month period, not against New Year's Eve. For all others, commission the expert report now if it is still missing, and get the application into the portal before the holidays.

2. Decide on a notification under Section 29(3) WPG

   Check large projects against the three criteria and get a decision from management. Notifying requires a credible plan for starting construction by 31 December 2027 and the same measure in the Section 32 roadmap.

3. Document 2026 commissioning dates

   For every network section and storage tank, record the date of first permanent heat supply or of the first charge after the trial run, while site management can still prove it.

4. Prepare the audit report and cost statement for 1 July 2027

   Engage the auditor in the first quarter of 2027, pull eligible costs from the final invoices, net off grants from BEW or state programmes and prepare the funding-gap evidence under FW 704. Projects that will only be completed in 2027 or later need the permit, or the firm contract for the main construction work, in the file by New Year's Eve 2026.

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