Gas? Electricity? District heating? How to heat your home most cost-effectively this winter

Heating is back in full swing in Germany. From October to March, households in this country consume around 80 percent of all heating energy for the entire year. Accordingly, 80 percent of heating costs are also incurred during these months.

How high these costs are depends on many factors. More living space with more rooms naturally requires more heat, especially if the household is made up of a family of four rather than a single person. The insulation of the house also plays a role. The less heat that can escape through walls, ceilings, windows, and doors, the less heating is required.

Another decisive factor is the type of heating system and thus the choice of heating medium. While the market is still dominated by natural gas, which is the preferred heating medium in around 48 percent of all households, other heating sources are catching up.

District heating increased its share from 13.9 to 15.2 percent between 2019 and 2023, while heat pumps now account for 5.7 percent of the market—more than double the share from four years earlier. Oil heating systems, on the other hand, are on the decline and will need to be gradually expanded. However, they still account for 23.4 percent. Night storage heaters play only a minor role at 1.8 percent, and the category of other heating systems has also fallen from 7.5 to 5.6 percent. These include fireplace stoves, pellet heaters, coal-fired stoves, and liquid gas heaters.

The figures come from an evaluation by the German Association of the Energy and Water Industries (BDEW) and were only published in the spring.

This is how expensive your heating will be in the winter, depending on your heat source.

Natural gas consumption in winter depends on household size. Annual consumption is generally estimated at 6,000 kilowatt hours for single people, approximately 10,000 kilowatt hours for couples, and approximately 20,000 kilowatt hours for families of four. Assuming that 80 percent of this consumption begins in the winter months, consumption in the three groups is 4,800, 8,000, and 16,000 kilowatt hours, respectively.

The BDEW currently reports the average gas price for households at 12.07 cents per kilowatt hour. This applies to existing customers; new customers can expect a discount of a few cents. This is slightly higher than last year, when it was 11.22 cents at the same time. However, gas customers will pay significantly less than in the winters of 2023/24 and 2022/23. However, prices below seven cents per kilowatt hour, as was common before the start of the war in Ukraine, are unlikely to be reached forever.

The pure procurement costs for natural gas are currently at their lowest level in four years. They account for only about half of the gas price. However, the costs for network charges, which reached a new record high of 2.33 cents per kWh, as well as the share of taxes, duties, and surcharges in the gas price, have increased. The increased CO2 price is the main factor here. At 3.77 cents per kWh, this item alone has increased by 20 percent compared to the previous year.

This results in the following costs for households heating with natural gas in the winter months until the end of March:

• Single people (4800 kWh winter consumption) pay 579 euros
• Couples (8000 kWh winter consumption) pay 966 euros
• Families (16,000 kWh winter consumption) pay 1,931 euros

Around a quarter of Germans still heat with oil, mostly in older households. While natural gas customers receive their fuel directly from the supplier via pipelines, oil customers have to fill their basement tanks themselves in time for winter. A single person should expect to consume around 600 liters per year, couples 1,000 liters, and families 2,000 liters. In older buildings, this consumption increases by around a third, while in well-insulated new buildings it decreases by the same amount. This results in winter consumption of around 480 liters for single people, 800 liters for couples, and 1,600 liters for families.

Since the outbreak of the war in Ukraine, heating oil, like natural gas, has become significantly more expensive. While prices previously fluctuated between 50 and 80 cents per liter, they rose to as much as €1.60 in 2022. Although the curve has recovered from that, it hasn't gone down much. This year, the average heating oil price is around €95. That's slightly lower than last year. However, the ever-increasing CO2 prices are also having an impact over time.

Timing is therefore also important when buying heating oil. During the summer months, prices were sometimes as low as €89 per liter. So, anyone who filled up their tank in May, for example, saved around €6 per liter. But even those who bought at the average annual price can still get a better deal than gas customers during the heating season. The following costs apply:

• Single people (480 liters winter consumption) pay 456 euros
• Couples (800 liters winter consumption) pay 760 euros
• Families (1600 liters winter consumption) pay 1520 euros

District heating uses waste heat from industrial plants to heat water and then distributes it through pipes throughout the neighborhood, where it can be used as a heating medium. This isn't possible everywhere, so you'll need to be lucky enough to have your home connected to a district heating network.

Consumption in kilowatt-hours is roughly the same as natural gas. Single people can therefore expect to use 6,000 kilowatt-hours per year, or 4,800 kWh in the winter months, couples 10,000 or 8,000 kWh, respectively, and families 20,000 or 16,000 kWh, respectively.

Unlike oil and natural gas, district heating prices in Germany fluctuate more. This is because each municipal district heating network is different in size and composition and is fed from different sources, which can be more or less expensive. For example, the Federal Association of Consumer Organizations (BfV) reported in May that prices ranged between 8 and 33 cents per kilowatt hour depending on the location. The median was 17 cents. This, in turn, has been fairly stable over the past 18 months, which is why we are assuming this here.

Accordingly, the following average costs arise for district heating customers:

• Single people (4800 kWh winter consumption) pay 816 euros
• Couples (8000 kWh winter consumption) pay 1360 euros
• Families (16,000 kWh winter consumption) pay 2,720 euros

Heat pumps are the fastest-growing heating option, also because they are heavily promoted by the Building Energy Act passed by the traffic light coalition.

While this applies to all heating systems that use renewable energy, the heat pump has clearly prevailed among them. It extracts energy from the environment—either the air, the ground, or water—and converts it into heat energy for heating with the help of electricity. Heat pumps are extremely effective at this . While a gas heater can use almost one kilowatt-hour of heating energy from one kilowatt-hour of natural gas, one kilowatt-hour of electricity used in a heat pump produces between three and five kilowatt-hours of heating energy.

This makes heat pumps very efficient in operation. In addition, they are usually installed in new buildings, which are therefore better insulated than older houses. However, electricity consumption varies greatly depending on the type of heat pump you install. A water-source heat pump that draws energy from groundwater can supply a small apartment with as little as 2,000 kilowatt-hours per year, while a less efficient air-source heat pump needs 3,500 kilowatt-hours. Geothermal heat pumps fall somewhere in between. More powerful heat pumps of all types also consume correspondingly more electricity.

For this reason, we're calculating the costs for three different types of heat pumps here. We'll start with air-source heat pumps. They have an average annual performance factor of 3, meaning they convert one kilowatt-hour of electricity into three kilowatt-hours of heating energy. Therefore, to cover the winter demand of 4,800 to 16,000 kilowatt-hours, between 1,600 and 6,700 kilowatt-hours of electricity are required.

Most electricity providers offer special tariffs for heat pumps, although these require the installation of a separate electricity meter. However, the costs are lower. Heat pump electricity currently averages 27.5 cents per kilowatt hour, according to the comparison portal Verivox. This results in the following costs for owners of air-source heat pumps:

• Single people (1600 kWh winter consumption) pay 440 euros
• Couples (2700 kWh winter consumption) pay 733 euros
• Families (6700 kWh winter consumption) pay 1467 euros

With a geothermal heat pump, whose annual performance factor averages four, the costs are reduced to the following values:

• Single people (1200 kWh winter consumption) pay 330 euros
• Couples (2000 kWh winter consumption) pay 550 euros
• Families (4000 kWh winter consumption) pay 1100 euros

With a water heat pump that achieves an annual performance factor of five, you only pay:

• Single people (960 kWh winter consumption) pay 264 euros
• Couples (1600 kWh winter consumption) pay 440 euros
• Families (3200 kWh winter consumption) pay 880 euros