Heating Market

The heating market has a decisive role to play in achieving the climate targets. Hydrogen will play an important role in its decarbonization. This is not only shown by studies. Legislators have also introduced regulations that enable the use of hydrogen in the heating market.

Legal framework

Two groundbreaking laws come into force on 1.1.2024: Building Energy Act (BEA) and Heat Planning Act:

When the amendment to the Building Energy Act comes into force, the switch to renewable energies for heating will become mandatory. The aim is to gradually implement a climate-friendly heat supply. This is particularly important as a quarter of today’s CO2 emissions originate from the heating market. The reason for this is a considerable energy demand – the annual final energy consumption for heating and cooling is just under 1,155 TWh, compared to 585 TWh in the transport sector or 550 TWh in the electricity sector. In addition, the proportion of fossil fuels is very high at around 80 %. By 2045 at the latest, the use of fossil fuels in buildings will be phased out. All heating systems must then be powered entirely by renewable energies. This also includes the possibility of using hydrogen. Section 71k of the GEG therefore recognizes so-called “H2-ready” natural gas boilers as a compliance option, provided they are technically capable of processing hydrogen.

The Heat Planning and Decarbonization of Heating Networks Act lays the legal foundations for the mandatory introduction of nationwide heat planning. The main objective is to identify the best and most cost-efficient way to achieve a climate-friendly and progressive heat supply locally. By legally anchoring the openness of technology in heat planning, the legislator also enables the use of climate-neutral gases such as green hydrogen.

“The question is not whether, but how much hydrogen needs to be used in the heating market. If you want to meet the climate targets without jeopardizing a secure and affordable supply, you have to say yes to hydrogen not only for industry and transport, but also for the heating market.”
Dr. Thomas Gößmann, FNB Gas Chairman of the Board

Key study results

A technology-open approach is indispensable for the heat transition

The bottom-up study on decarbonization of the heating sector, published on November 28, 2022, conducted by the Fraunhofer Institute for Solar Energy Systems (ISE) and Fraunhofer Institute for Energy Economics and Energy System Technology (IEE) on behalf of the National Hydrogen Council, shows why a technology-open bottom-up approach is essential for the success of the heat transition. According to the study, a successful heat transition requires a bundle of technology options. The main solutions are heat pumps, heat networks, renewable heat and hydrogen. This requires the expansion of all climate-neutral energy sources.

The study found that a “one-size-fits-all” solution for the heating market does not exist. Rather, the initial situation on site determines the optimal, most efficient decarbonization path. In this context, municipal heat planning is a central instrument for addressing local conditions and thus relevant influencing factors. Electricity, gas and heating networks must be considered as a whole.

According to the study, hydrogen is an integral part of the heat transition. Flexible energy sources play a key role in achieving climate targets in the heating market. For the hydrogen ramp-up, there is an urgent need for an efficient infrastructure and investment security for all parties involved. In addition to the establishment of a supra-regional hydrogen transport network, the downstream hydrogen infrastructures for the relevant applications are also imperative.

With hydrogen, the heating transition can be achieved at lower overall costs and in a socially responsible manner

Hydrogen not only plays an important role in reducing CO2 emissions in industry, transportation and power plants. The conversion of pipeline infrastructure to hydrogen is also an important factor in mastering the enormous challenges of rapid decarbonization in the heating market.

The heating market currently accounts for the largest share of total final energy consumption and is still 80 percent supplied by fossil fuels. Gas alone accounts for the lion’s share, more than half, of the heat supply.

As the existing gas networks already reach half of all German households, the use of hydrogen in the heating market can make an important contribution to the rapid and socially acceptable decarbonization of the heating market.

The gas infrastructure enables a secure supply even at the lowest temperatures

An efficiency analysis carried out as part of the 2021 study “The value of hydrogen in the heating market” by Frontier Economics on behalf of FNB Gas shows that hydrogen is similarly suitable as other heating technologies, e.g. heat pumps, during the heating period, especially in unrenovated or partially renovated existing buildings.

The comparison of heating technologies must take into account that the demand for heat in Germany varies greatly depending on the season. The generation, storage and grid infrastructure This corresponds to a maximum load of 300 GW. Hydrogen can absorb peak heat loads that would massively challenge the power system if electrification were to be widespread.

The gas infrastructure has always been designed for such high fluctuations in demand. Even at minus 14 degrees Celsius, we still have to be able to keep our living rooms warm. This corresponds to a maximum load of 300 GW. By comparison, the historical peak electricity load is just under 80 GW.

Hydrogen grid reduces demands on the expansion of the electricity grid

The electricity transmission infrastructure is foreseeably not designed for the comprehensive electrification of all consumption sectors: If the heating market, for example, were to be fully electrified in 2045, the additional peak electricity load would be more than twice as high as today at 86 to 124 GW. The need to expand the electricity grid would be correspondingly high.

Decarbonizing industry with hydrogen would also massively increase electricity consumption if it had to be generated at the respective location. A supra-regional hydrogen network in conjunction with power-to-gas plants close to where the hydrogen is produced can significantly reduce the need for additional electricity grid expansion.

The use of hydrogen for the heating market is an important option for achieving climate protection targets.


Fraunhofer, Bottom-Up Study Heating Market, Executive Summary
PDF / 318 kB / EN
Frontier Economics, Wasserstoff im Wärmemarkt
PDF / 2 MB / DE
Frontier Economics, H2 in the Heat Market
PDF / 2 MB / EN
Impulspapier Wärmemarkt
PDF / 320 kB / DE
FNB Gas Opinion 65 % RE for new heating systems
PDF / 228 kB / EN