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Glossary · Energy industry & energy transition

GEG, Buildings Energy Act (since 29 July 2026: Buildings Modernisation Act, GModG)

GEG Building Energy Act heat transition building Heating Energy Efficiency regulation

GEG stands for Gebäudeenergiegesetz (Buildings Energy Act). It is the central German federal law on the energy requirements for buildings. It regulates how new and existing buildings must be designed in energy terms, which obligations apply to the installation and operation of heating and air-conditioning systems, and how the energy quality of a building is demonstrated, for example in the energy performance certificate. The GEG has been in force since November 2020. It merged the Energy Saving Ordinance (Energieeinsparverordnung), the Energy Saving Act (Energieeinsparungsgesetz) and the Renewable Energies Heat Act (Erneuerbare-Energien-Wärmegesetz). In doing so, it combines requirements for structural efficiency with rules on heat supply.

Important note on the current status: On 10 July 2026, the Bundestag and Bundesrat fundamentally amended the law. The amendment was promulgated in the Federal Law Gazette on 28 July 2026 (BGBl. 2026 I No. 226). Since 29 July 2026, the law has officially been titled the Act on Saving Energy and on the Modernisation of Heat Supply in Buildings, or Buildings Modernisation Act (Gebäudemodernisierungsgesetz, GModG) for short. Formally, it is the same law in amended form and not an entirely new set of rules. The abbreviation GEG continues to be used in practice, above all for the legal position up to 28 July 2026.

Which variables the law uses

The law works with energy performance indicators. The most important are the annual primary energy demand, the final energy demand, the transmission heat loss through the building envelope, and indicators for individual building components such as the U-value. The U-value indicates, in watts per square metre and kelvin, how much heat is lost through a component such as a wall, roof or window when there is a temperature difference between inside and outside. The lower the value, the better the component insulates.

The demand for final energy is the amount of energy needed at the building, after conversion, for heating, hot water, ventilation or cooling. It is closer to the energy bill than primary energy demand. However, it remains a calculated value based on standardised assumptions and is not a measured consumption. In the case of primary energy, the upstream effort is added, for example for the extraction, conversion and transport of an energy source. For this reason, the same amount of heat is assessed differently depending on the energy source. With the reform, the primary energy factors are consolidated in a new Annex 4 and determined using a changed method. Total primary energy will in future be reported including the share of renewable energy. The calculation method is being switched to DIN/TS 18599:2025-10, and the former reference building method is being replaced. According to the source material reviewed, these rules apply from 1 January 2027.

These distinctions are not mere calculation subtleties. They help determine which standards are deemed to be met. A building can have low heat losses and still have an unfavourable primary energy value if it is heated predominantly with fossil fuels. Conversely, a building with renewable heat can perform well on paper even though its envelope is only moderately insulated. For a meaningful assessment, the envelope, the energy source and the building services must therefore be considered together.

What changed in 2026

The 2023 version, usually called the Heating Act (Heizungsgesetz) in public debate, stipulated as a basic principle that newly installed heating systems must supply at least 65 percent of their heat from renewable energy or unavoidable waste heat. When this obligation applied to existing buildings depended on the deadlines of municipal heat planning. Since 29 July 2026, this requirement no longer applies. The previous Sections 71, 71b to 71p and 72 were repealed. When replacing a heating system, owners can once again choose among many technologies. These include gas, oil and liquefied petroleum gas heating systems, heat pumps, solar thermal systems, biomass, hybrid heating systems, direct electric heating, district heating and highly efficient CHP plants.

Section 72 has also been dropped. As a result, there is neither the ban on operating certain constant-temperature boilers that are more than 30 years old, nor the statutory end of fossil-fuel boilers in 2045. The mandatory consultation before installing fossil-fuel heating systems also ceases to apply. The goal of climate neutrality by 2045 under the Federal Climate Protection Act remains in place. The Federal Government states that heating fuels must be fully climate-neutral from 2045.

Two instruments in particular replace the 65 percent rule:

  • Bio ladder (Biotreppe): Anyone who, after the reform, installs a new gas, oil or liquefied petroleum gas heating system in an existing building must operate it with a rising share of climate-neutral fuels. The share is 10 percent from 2029, 15 percent from 2030, 30 percent from 2035 and 60 percent from 2040. Recognised fuels include biomethane, bio-oil, biopropane and various types of hydrogen. Under certain conditions, the obligation can also be met with hybrid solutions. Until 2035, solar thermal systems or ventilation systems with heat recovery can also replace the bio ladder.

  • Green gas and green heating oil quota: This quota is aimed at suppliers of gas, heating oil and liquefied petroleum gas and therefore also affects all existing heating systems. Under Section 42a, the Federal Government must present a separate law on it by 1 December 2026. The quota is to apply from 2028. Its level, the fuels covered and the proof requirements have not yet been determined.

The same reform transposes the EU Energy Performance of Buildings Directive 2024/1275. New non-residential buildings of the public sector must meet the zero-emission building standard from 2028, and all other new buildings from 2030. For existing non-residential buildings, minimum standards apply based on the principle of renovating the worst-performing first: the worst 16 percent by 2030, the worst 26 percent by 2033. Exceptions apply where renovation is technically impossible or economically unreasonable. Energy performance certificates become digital and machine-readable. Non-residential buildings receive their own efficiency classes from A to G. From 2027, a solar obligation will be phased in for certain new buildings and larger buildings, and from 2030, new residential buildings are generally to be equipped with photovoltaics or solar thermal systems. Non-residential buildings with a heating or cooling capacity above 70 kW need building automation by the end of 2029. Previously this threshold was 290 kW.

Distinction from funding and heat planning

The law is not a funding law. Grants and loans are provided through the Federal Funding for Efficient Buildings (Bundesförderung für effiziente Gebäude, BEG), awarded by KfW and BAFA. The law sets obligations and minimum standards, while funding is intended to make investment easier. Amended funding conditions have applied since 21 July 2026. The income bonus is now tiered, eligible costs are capped at 28,000 euros, and this cap falls further every half year. Anyone who equates obligation and funding is mistaken: an obligation is not automatically funded, and funding does not replace a statutory requirement.

Municipal heat planning must be distinguished from this. It clarifies which areas are likely to be supplied via heating networks, decentralised heat pumps, a hydrogen network or other solutions. In the 2023 version, heat planning helped determine from when the 65 percent rule applied to existing buildings. This direct link has fallen away with the repeal of Section 71. Heat planning nevertheless remains important for investment. The Heat Planning Act (Wärmeplanungsgesetz) is also to be amended.

Why the law matters for the electricity system

The more buildings are heated with heat pumps, the more electricity consumption in the building sector rises. At the same time, the consumption of natural gas and heating oil falls. More electricity therefore does not automatically mean more energy consumption overall. Heat pumps use ambient heat from air, ground or water and need electricity mainly for the compressor. Depending on temperature, building condition and system design, one kilowatt-hour of electricity yields several kilowatt-hours of heat. The reform no longer commits to a particular technology. How quickly the electrification of heat progresses therefore depends more on prices, funding and heat planning than on an installation obligation.

For the grid, it is not only the annual amount of electricity that counts, but also the timing and the capacity. On cold days, many heat pumps run at the same time while photovoltaic systems generate little. This can put a strain on the distribution grids and increase the residual load. Buildings can store heat. The operation of a heat pump can therefore be shifted for a limited time, which creates flexibility. This leeway is limited, however. A poorly insulated house cools down faster, needs a higher flow temperature and offers fewer possibilities for load shifting. Renovation and grid-supportive operation therefore belong together.

Typical misunderstandings

First: The law was never an immediate obligation to replace all heating systems, and since July 2026 this is even more clearly the case. Existing heating systems may continue to be operated and repaired, and the 30-year replacement obligation for constant-temperature boilers has been deleted. However, anyone who installs a new gas or oil boiler today takes on future obligations through the bio ladder and indirectly the costs of the supplier quota. How available and how expensive biomethane, bio-oil or hydrogen will be in future is an open question. Even the explanatory memorandum to the law acknowledges this.

Second: Technology-neutral does not mean that there are no rules. Requirements for new buildings, for building components in renovations, for energy performance certificates and for direct electric heating remain in place. For example, direct electric heating in new buildings is only permitted if the building undercuts the thermal insulation requirements by at least 45 percent. Under Section 9, the federal states may also retain more far-reaching requirements. The legal position can therefore differ from region to region.

Third: Calculated demand is not the same as measured consumption. Demand-based certificates rely on standardised assumptions. User behaviour, room temperature, vacancy, weather, maintenance and controls can greatly change actual consumption. Residential buildings can continue to have either a consumption-based or a demand-based certificate. For non-residential buildings, a demand-based certificate will be mandatory in future.

Institutional and economic context

The Federation sets the framework, while the federal states and authorities monitor enforcement. Energy consultants, planners, tradespeople, chimney sweeps and building owners take on different tasks in documentation, execution and inspection. Buildings, heating systems and connections to heating networks are used for decades and lock in costs and emissions for a long time. In rental housing, landlords invest while tenants bear the running costs. The reform changes the cost allocation here: if a new heating system is installed under the rules of the bio ladder, landlords and tenants each bear half of the gas network charges and CO2 costs from 2028. From 2029, the additional costs of the bio ladder are also shared, up to a cap. A hardship rule exists for landlords.

For the heat transition, the law remains an instrument with limited reach. Since 2026, it focuses less on heating technology and more on fuels. It does not replace grid planning, a sufficient number of specialist firms, reliable funding or municipal decisions on heating network areas. The law is to be evaluated in 2030. Until then, the situation remains in flux: the quota law is still pending, and constitutional complaints have been announced.

Sources

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Edited by eCMS on 12.11.2026 05:05

© 2026 Erik Schmidt. All rights reserved. Quotations with a link to the source are welcome.