Heating optimisation grant in Germany 2026 (BAFA)
If you improve or rework your existing heating instead of replacing it, BAFA pays a small grant. Who qualifies, what it brings and when the income tax credit is the better choice.
Worked through by Radif Partners · Editorial policy · How we calculate
Grant for optimising
Grant
€270
| Rate | 15 % |
| Eligible cap | €30,000 |
| Minimum spend | €300 |
Fossil boilers at most 20 years old; buildings with up to five homes.
Germany’s Federal Office for Economic Affairs and Export Control (BAFA) funds the optimisation of an existing heating system at 15 % of eligible costs. That covers hydraulic balancing with the heating curve set, new circulation pumps, lower flow temperatures, pipe insulation, low-temperature radiators, underfloor heating, heat storage and controls. It applies to residential buildings with at most 5 homes whose heat generator is more than 2 years old; an oil or gas boiler may not be older than 20 years. Eligible costs are capped at €30,000 a year for the first home, or €60,000 with an individual renovation roadmap (iSFP). Hydraulic balancing with a new pump for €2,400 brings a €360 grant. For the same work the section 35c income tax credit would give €480 over three years, if you live in the house and it is more than 10 years old. You cannot have both. If you replace the heating entirely, you apply to KfW instead, where balancing is mandatory and funded.
What counts as heating optimisation
The federal guideline for single measures separates replacing a heating system from improving it (guideline no. 5.4). KfW funds replacement, BAFA funds optimisation (BAFA). Optimisation means any work on an existing system that makes it use less energy for the same warmth.
| Measure | Purpose | Funded |
|---|---|---|
| Hydraulic balancing with heating curve | each radiator gets the right water flow | 15 % |
| New circulation pump | less electricity, adjustable output | 15 % |
| Adjusting flow temperature and pump output | lower temperatures, fewer losses | 15 % |
| Insulating pipes | less heat lost in the basement | 15 % |
| Low-temperature radiators, underfloor heating | preparing for a heat pump | 15 % |
| Heat storage, metering and controls | better control | 15 % |
| Optimising a heat pump | higher seasonal performance | 15 % |
| Dust reduction on biomass boilers | less fine dust | 50 % |
Hydraulic balancing (hydraulischer Abgleich) is the core. Without it, radiators near the pump get too much hot water and distant ones too little, so the system runs hotter than it needs to. That matters for a future heat pump, because the lower the flow temperature, the less electricity it uses.
Who qualifies and who does not
The grant applies to existing buildings with no more than 5 homes. The heat generator must be over 2 years old. If it is an oil or gas boiler, it may not be older than 20 years, so a gas boiler from 2004 is out. For that boiler, replacement is the route, and balancing is part of the funded work: KfW requires the whole distribution system to be optimised whenever a new system goes in, with no separate BAFA application (KfW 458). The same costs can only ever be claimed once, either from KfW or from BAFA.
Owners can apply, and so can owners’ associations and other investors. Unlike KfW there are no bonuses for income or for the old system: the rate is the same for everyone. A landlord gets the same 15 % as an owner-occupier.
Caps and the renovation roadmap bonus
Eligible costs are capped at €30,000 for the first home and €15,000 for each of the second to sixth, per building and calendar year. With an individual renovation roadmap (individueller Sanierungsfahrplan, iSFP) drawn up by an energy efficiency expert, the caps double. Unlike KfW’s, they do not fall every six months (ministry, KfW and BAFA FAQ).
The 5 % iSFP bonus has been narrower since 21 July 2026. It applies only to the part of the cost above the cap without a roadmap, so above €30,000 in a single-family house. For small jobs it brings nothing.
| Project | Cost | BAFA grant | Tax credit s. 35c |
|---|---|---|---|
| Balancing and new pump, single-family house | €2,400 | €360 | €480 |
| Low-temperature radiators, three homes | €14,000 | €2,100 | own home only |
| Underfloor heating, house, no iSFP | €38,000 | €4,500 | €7,600 |
| Underfloor heating, house, with iSFP | €38,000 | €6,100 | €7,600 |
BAFA also funds specialist planning and site supervision by an energy efficiency expert at 50 % of the cost. For balancing in a house that is rarely needed; for a switch to underfloor heating it can be worth it.
Grant or tax credit
For optimisation the tax credit is often the better deal. Section 35c of the Income Tax Act cuts income tax by 20 % of the cost, spread over the year the work is finished and the two following years (section 35c EStG). Optimising an existing heating system is named explicitly in the list of eligible work. The conditions: you live in the home, it is more than 10 years old, a registered firm does and certifies the work, you pay by bank transfer, and the work is finished before 1 January 2030.
In the €2,400 example, €360 of grant stands against €480 of tax relief. The grant comes straight away, the tax relief only with your assessments and only if you pay enough German income tax. For a flat you let, only the grant is available. The guideline rules out both for the same work, but different measures on the same house can use different routes, for example a grant for new heating and the tax credit for insulation (heating tax credit).
Your replacement after the grant
You pay
€18,320
| Grant | €15,680 |
| Eligible | €28,000 |
Application and order of steps
BAFA applies the same rule as KfW: before applying, no unconditional order may be signed and no work started. A contract that only takes effect on grant approval is allowed. You apply through BAFA’s online portal (BAFA overview), and the documents are in German. Ask the installer to document the balancing, with the water flow for each radiator; when a funded new system is installed, the guideline requires the confirmation form of the VdZ industry association for this.
For a pellet or wood chip boiler there is a second option: dust reduction measures at 50 % (pellet boiler grant). What an optimised system costs to run each year is shown by the heating cost calculator. If optimising is no longer enough, the route to a new system is under how to apply.