Uncertain costs for customers: Almost one in five municipal utilities plans to phase out gas

More and more municipal utilities are opting for district heating and heat pumps instead of gas. To avoid high costs for consumers, the Association of Municipal Utilities is holding the federal government accountable.

According to the German Association of Public Utilities (VKU), gas customers must not be overburdened by the decommissioning of networks. "The closer we get to 2045, the end of natural gas supplies, the greater the risk of a patchwork of supplies and considerable uncertainty among consumers," said VKU General Manager Ingbert Liebing. "The federal government can prevent this by establishing clear rules for an orderly phase-out of natural gas." Specifically, the VKU is calling for a "conversion bonus."

This would provide support to homeowners or the homeowners' association of an apartment building when the building is disconnected from the gas grid. The Association of Municipal Utilities further proposes that the state should offset part of the costs incurred by shutdowns and shortened depreciation periods, which would therefore have to be passed on to customers via grid fees, through a "compensation account." Gas customers should be spared the very high costs of dismantling the system.

Change in networks

According to a VKU survey, almost one in five municipal utilities in Germany currently plans to shut down their gas network. Instead, these utilities intend to rely on district heating and heat pumps. For 46 percent of municipal utilities and municipal energy suppliers, it is not yet clear what will happen to their gas network. 23 percent plan a combination of shutdown and conversion to green gases such as hydrogen or biomethane – although this is more likely for medium-sized companies. However, hydrogen is currently still very expensive and insufficiently available.

The announcement to shut down the gas grid, for example, caused a stir in Mannheim. The energy supplier MVV announced in November that it intends to shut down its gas network by 2035. A citizens' initiative is fighting back, arguing that not all households have the option of switching to district heating. Instead, they would have to install an expensive heat pump.

The goal is more climate protection

Germany aims to become climate-neutral by 2045 and heat with district heating, heat pumps, or green gases instead of oil and natural gas. According to the VKU (Association of German Industrial and Commercial Companies), municipal utilities and energy suppliers must now review which sections of their gas grid they will convert to green gases and which they will shut down. However, the VKU notes that clear legal regulations regarding decommissioning and dismantling are currently lacking. The majority of municipal utilities, along with many citizens and mostly medium-sized industrial and commercial customers, are currently in limbo.

Municipal heat planning also plays an important role. Homeowners should then be able to decide what to do—whether to connect to a district heating network, for example, or install a heat pump or other more climate-friendly heating system if a new heating system is needed. Municipal heat planning is to be available in municipalities with over 100,000 inhabitants from mid-2026, and for the remaining municipalities from mid-2028.