Heating Costs Ordinance 2021

Taking great strides towards the digitalisation of the housing industry

Since 2016, utility companies in Germany have been obliged to digitalise their metering operations by the German Metering Point Operation Act (Messstellenbetriebsgesetz). Up to now, this has primarily focused on the electricity sector, but that is about to change with the draft bill for the Regulation on the Amendment of the German Heating Costs Ordinance (Verordnung über die Änderung der Heizkostenverordnung), which will also focus on submetering.

The draft bill implements the requirements of the EU Energy Efficiency Directive 2012/27/EU amended in 2018, as well as recommendations set out in the Sector Inquiry into Submetering of Heating and Water Costs that the German Federal Cartel Office published in 2017. The main component of the bill is the obligation to make it possible to read metering devices remotely.

In the future, utility companies will be able to read metering devices remotely

As soon as the new German Heating Costs Ordinance comes into force, all newly installed metering devices used to record heat and hot water consumption will have to be capable of remote readout. A metering device is considered to be remotely readable if it can be read without needing physical access to individual units. In addition, these metering devices must ensure they can connect to a smart meter gateway (SMGW).

SMGW connection makes it easier to comply with data protection and data security requirements

Remotely readable metering devices must meet the state of the art to ensure the security of data when it is transferred. In concrete terms, this means that they must adhere to the relevant protection profiles and technical guidelines set out by the German Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik, BSI). Alternatively, it will assume that the measuring device meets the state of the art under the provisions of the legislation if it is connected to an SMGW.

Strengthening competition through interoperability

In its Sector Inquiry into Submetering of Heating and Water Costs, the German Federal Cartel Office criticised the lack of competition and recommended that metering devices become more interoperable, among other things. Now that this recommendation has been taken into account in the amendment to the Building Energy Act (Section 6(1) Number 4 Energiegebäudegesetz, GEG) of last year, it is mandatory for the submetering sector in the draft bill for the German Heating Costs Ordinance. Accordingly, a metering device is deemed to be interoperable if, in the event that another person takes over the reading, that person can read the metering device themselves remotely. This will make it easier to switch metering point operator for submetering in the future.

Obligation to inform tenants each month increases transparency

Building owners are obliged to inform tenants about their consumption as soon as the metering devices can be read remotely. They must provide them with the following information at least twice a year:

• Information about the fuel mix.
• An explanation of the taxes and duties levied.
• A comparison of the current energy consumption with the consumption of the same period of the previous year.

From 1 January 2022, this information shall be communicated monthly during the heating season.

Existing metering devices are exempt until 2026

The amended German Heating Costs Ordinance coming into force will not only bring in the obligation to make it possible to read new metering devices remotely, but the metering devices that have already been installed in existing buildings will also have to be remotely readable by 31 December 2026 at the latest. The devices can either be retrofitted or replaced. The obligation to inform tenants about their consumption then also applies to these devices.

Draft bill identifies digitalising processes as a major compliance cost

Building owners, metering point operators and the submetering service providers are directly affected by the draft bill. They are responsible for implementation, which means they must ensure compliance and thus bear the corresponding compliance costs. Policymakers have analysed these and refer to the high compliance costs involved in introducing or adapting digital processes in particular. Since the costs of converting the existing devices to remote-readable ones will not be passed on to the consumer, the new obligations will likely only prove economically feasible for the parties affected if they automate as much as possible.

A gradual path to a digitalised housing industry

Policymakers are taking a further step towards the digitalisation of the housing industry with the draft bill for the German Heating Costs Ordinance. It will be exciting to see how the parties affected position and strategically align themselves. In addition to the pure implementation obligation, fully automated and digitalised data reading systems will open up a number of new solutions in the future, ranging from simplified assembly planning and leakage warnings to new data-based services and business models. Furthermore, the digitalisation of the heating and hot water sectors has the potential to strongly stimulate competition in metering point operation, also with regard to possible bundled offers (Section 6 German Metering Point Operation Act).

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