German chancellor Olaf Scholz has been an advocate of the green transition and vowed to ‘invest heavily’ in the modernization of Germany's economy in order for it to stay competitive as a strong industrialized country.
Nevertheless, he does not intent achieving this goal through subsidizing consumer energy prices, a practice that is meant to stop by 2024. From next year in Germany there will be a notable increase in taxes on energy, increasing from 7% to 19% and additionally, grid fees are set to rise.
Nationwide funding initiative in Germany for energy efficiency (software and hardware) - The Energy and Resource Efficiency Program under the General Block Exemption Regulation (AGVO).
Germany has already established a program for Federal funding for energy and resource efficiency in the economy (EEW), amended it in 1st of July 2023 with updated changes in action as of November 1, 2023. The initiative is funded under the General Block Exemption Regulation (AGVO) which is the state aid basis for large parts of the “Federal funding for energy and resource efficiency in the economy (EEW)”. Under the Module 3: MSR, sensors and energy management software of the Energy and resource efficiency in the economy program there is funding provided for software and hardware related to the establishment or application of an energy or environmental management system. The maximum funding is 15 million euros per investment project with a funding rate of up to 50 percent of the eligible investment costs. The technical requirements for the program are the same as for applying for a low-interest loan with repayment subsidy from KfW (further information can be found at: Link )
IoT projects are now eligible for funding under Module 3: MSR, sensors and energy management software.
Subject of funding of the Module 3 of the Energy and resource efficiency program is the acquisition, installation and commissioning of software solutions to support an energy management system or environmental management systems (energy management software). Such a system could be any digital solution that controls, monitors and reports important sustainability metrics of the smart devices connected to it. A good example is the MClimate Enterprise - buildings management platform that gathers all MClimate smart devices in one place, facilitating the creation of buildings digital twins, enabling mapping, monitoring, and control. Through custom schedules, advanced analytics and reports the Enterprise manage multiple buildings and improves their energy efficiency.
Same is applicable for sensors and analog-digital converters for recording energy flows and other variables relevant to energy consumption for the purpose of integration into the energy or environmental management system. Funding is applicable also for control and regulation technology that influence systems and processes, provided that the primary purpose of their use is to reduce energy consumption. The Vicki LoRaWAN® Smart Radiator Thermostat for instance is designed with a specific focus on enhancing energy efficiency, realizing significant cost savings, and minimizing the CO2 footprint across various building types. This is achieved through its advanced features like remote temperature control and innovative data analytics.
The eligible investment costs include in particular:
- Acquisition of a license to use an energy management software or software solutions like the MClimate Enterprise and App
- Acquisition, installation and commissioning of various devices such as the MClimate Wireless Thermostat LoRaWAN®, MClimate CO2 Display LoRaWAN®, MClimate Fan Coil Thermostat LoRaWAN and other MClimate devices are falling under the category of:
- Sensors for integration into an energy or environmental management system or alternative system
- Analog-digital converters
- Actuators for efficient control/regulation of energy flows
- Logging data and gateways for transmitting sensor data to the software solution, the use of which should lead to a quantifiable reduction in energy consumption
- Instruction or training of staff by third parties in dealing with the funded software solution
- If the energy management software is a cloud service, the full external costs for use
Nationwide initiative for Tax reduction for energy measures in buildings used for residential purposes (Section 35c EStG)
Since January 1, 2020, the federal government has been funding energy-related renovation measures in owner-occupied residential buildings in accordance with Section (§) 35c EStG. Both labor and material costs are eligible. The prerequisite is that the object is older than ten years when the energy measure is carried out (start of production).
The owner must prove to the tax office that he meets all the requirements for the tax reduction by submitting a certificate from the specialist company (or an energy consultant) drawn up according to an officially prescribed template.
The funding conditions were adjusted in 2023. That is why the Federal Ministry of Finance (BMF) has published updated templates for certificates for both companies and for people with an authorization to issue them in accordance with Section 88 of the Building Energy Act.
The minimum requirements for the installation of digital systems for energy-related operational and consumption optimization are contained in Appendix 7 of the regulation for energy measures in buildings used for residential purposes in accordance with Section 35c EStG (Energy Renovation Measures Ordinance - ESanMV). The implementation of measures to optimize operations through electronically controlled systems is supported with the aim of improving the energy efficiency and network utility of the building's technical systems (e.g. heating, drinking water and hot water preparation, ventilation/air conditioning technology, lighting).
Eligible measures for the installation of digital systems for energy-related operational and consumption optimization include:
- Apartment display for displaying current data on heating and electrical energy, hot and cold water
- Smart meters, measurement, control and regulation technology for heating ventilation, lighting, ventilation and air conditioning technology as well as integration of weather data
- Systems for recording and evaluating energy flows, energy consumption, partial consumption of different sectors and energy costs
- Electronic systems for operational optimization, the provision of user information when system efficiency decreases and the display of necessary maintenance intervals. For example, heat generation, the hydraulic balancing of the heating system and emissions from heat generation
- Electronic systems to support the network utility of energy consumption (e.g. for heating, cooling, ventilation, hot water, lighting, charging infrastructure for electromobility, consumption and production of renewable energies, household appliances)
- Presence-dependent central switching of devices, sockets, etc. MClimate Wireless Thermostat LoRaWAN®
- Building-related operating and drive systems for doors, interior doors, blinds, roller shutters, windows, door communication, lighting, heating and air conditioning technology
- Integration of air quality sensors, window contacts, presence sensors, lighting actuators like MClimate CO2 Display LoRaWAN®, MClimate CO2 Sensor LoRaWAN®, MClimate open/close sensor LoRaWAN®
- Electronic radiator thermostats/room thermostats like MClimate Vicki LoRaWAN® Smart Radiator Thermostat
- Intelligent door systems with personalized access rights
- Energy management system including integration into residential software MClimate Enterprise and App
- System technology for data exchange internally/externally
- Electronic heat cost allocators, water and heat meters for visualization and analysis of heating consumption
- Energy management system including integration into residential software
- System technology for data exchange internally/externally
- Electronic heat cost allocators, water and heat meters for visualization and analysis of heating consumption
The tax reduction amounts to a total of 20 percent of the eligible expenses incurred (up to 40,000 euros).
The following are deductible:
- Seven percent of the expenses (up to 14,000 euros each) in the year in which the measure is completed and in the first following calendar year as well
- Six percent of expenses (maximum 12,000 euros) in the second following calendar year.
Funding initiative from the state of Bavaria
The free state of Bavaria also promotes the research, development and application of new energy and energy-saving technologies. The goal is to improve the economic efficiency and its sustainability by reducing the reliance on non-renewable energy sources such as oil, coal, natural gas and others. The initiative is also aiming to increase the security of energy supply and maintain jobs.
Companies with their registered office or branch in Bavaria can seek funding for projects that are intended to contribute in particular to achieving national and international goals for improving energy efficiency, saving energy, increasing the use of renewable energies and reducing energy-related CO2 emissions are funded.
Some of the Terms and Conditions
One of the conditions for the project to receive a funding is to be characterized by high degree of innovation namely to be implement technological advancements that are beyond the ordinary solutions with essential part of the project being situated in Bavaria.
The project must not be started already and at least one of the partners must have a specific research or development capabilities or technical experience at the time of the application
Funding will not be provided for projects that have already been started prior to receipt of a verifiable application by the responsible project management organization or that are being carried out on behalf of third parties not involved in the project.
The applicant is required to clearly demonstrate the use of an appropriate portion of its own or external funds, excluding any funds replaced or reduced in price by other public funding sources. Combining funds with those from the European Union or other state aid is allowed only under specific conditions. Companies facing financial difficulties are not eligible for funding, particularly those applicants whose assets are subject to insolvency proceedings or have had such proceedings initiated.
The funding is provided in the form of grants as part of project funding. All the application can be submitted through project management organizations electronically or in writing.
The grant amounts to
- up to 50% of the eligible expenditure for individual company projects in the field of industrial research,
- up to 35% of the eligible expenditure (for SMEs in accordance with Annex I of the AGVO) or up to 25% (for companies that are not SMEs in accordance with Annex I of the AGVO) for individual company projects in the field of experimental development,
- up to 40% of eligible expenditure (for SMEs in accordance with Annex I of the GBER) or up to 30% (for companies that are not SMEs in accordance with Annex I of the GBER) for technical feasibility studies in the run-up to industrial research or experimental development,
- up to 40% of the eligible expenses (for SMEs pursuant to Annex I of the GBER) or up to 30% (for companies that are not SMEs pursuant to Annex I of the GBER) for energy efficiency measures within the meaning of Art. 38 of the GBER for investments in energy measures, which serve the purpose of demonstration and introduction (demonstration projects),
- up to 50% of the eligible expenditure (for SMEs pursuant to Annex I of the GBER) or up to 40% (for companies that are not SMEs pursuant to Annex I of the GBER) for investments within the meaning of Art. 41 of the GBER for the promotion of renewable energies that serve the purpose of demonstration and introduction (demonstration projects), provided that funding is not excluded due to the EEG funding.
Europe's building industry urgently requires innovative solutions in its pursuit of climate neutrality. Germany, a pioneer in green technologies, is investing significant efforts to spearhead the transition toward sustainable buildings achieved through IoT solutions. The establishment of funding programs specifically targeting the implementation of smart software and hardware solutions for energy management systems is a key strategy to achieve climate neutrality.
References:
- Politico:https://www.politico.eu/article/germany-must-invest-heavily-green-transition-technology-despite-budget-crisis-chancellor-olaf-scholz/
- KfW – Bank aus Verantwortung https://www.kfw.de/inlandsfoerderung/Unternehmen/Energie-Umwelt/F%C3%B6rderprodukte/Energieeffizienz-und-Prozessw%C3%A4rme-aus-Erneuerbaren-Energien-(295)/?redirect=497472
- Federal Office for Economic Affairs and Export Control https://www.bafa.de/DE/Energie/Energieeffizienz/Energieeffizienz_und_Prozesswaerme/Modul3_Energiemanagementsysteme/modul3_energiemanagementsysteme_node.html
- Federal Ministry of Finance https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Steuerarten/Einkommensteuer/2023-01-26-steuerermaessigung-fuer-energetische-massnahmen-bei-zu-eigenen-wohnzwecken-genutzten-gebaeuden.html
- Verwaltung.bund.de https://verwaltung.bund.de/leistungsverzeichnis/EN/leistung/99400365017000/herausgeber/BY-40728/region/09
