Energy Efficiency in Industry

To meet its decarbonization and energy reduction targets, Germany needs to massively invest in energy efficient technologies and services. 
 

The German industry is energy intensive and the largest industry in Europe with final energy consumption amounting to 667 TWh in 2022. Almost 70% of this energy is used for process heating and is still mainly based on fossil fuels. Profitable energy efficiency measures could reduce the final energy consumption by 33%, potentially saving €21 billion yearly in the field of process heat production. Heat recovery, electrification and waste heat use show the highest saving potential and thus the most promising market development. Additionally, increased legal requirements in terms of energy and environmental management systems drive the demand for energy monitoring and control solutions.     

To achieve climate neutrality in the building sector, the number of buildings connected to district heating networks will need to triple by 2045 compared to 2023. It means that in the mid-term, 100,000 buildings per year should be connected to district heating. By 2030, at least 30% of the heat in district heating networks must come from renewable or waste heat sources. Achieving this will require significant investments in large-scale heat pumps, geothermal energy, solar thermal solutions, waste heat recovery, and heat storage technologies. According to the think tank Agora Energiewende, investments up to €24 billion will be necessary by 2030 and further €83 billion from 2030-2045 to extend and decarbonize German district heating networks. This presents a major opportunity for suppliers of green heat production and storage technologies as well as manufacturers of insulated pipes.  

Germany has committed to energy efficiency, with both energy consumption reduction and the decarbonization of the heat sector enshrined in law and supported by attractive incentive programs. 

The Energy Efficiency Act, in effect since January 2024 aims to reduce energy consumption by at least 26.5% between 2008 and 2030, increasing demand for energy efficiency solutions. The public sector is set to become a role model with annual energy savings targets of 45 TWh for the Federal Government and 3 TWh for the Federal States. Companies consuming over 7.5 GWh of energy annually are required to implement energy or environmental management systems. Energy efficiency standards also apply to datacentres: as of July 2026, datacentres will be obliged to use waste heat and comply with energy efficiency standards.¹  

Several Federal Government incentive programs support energy efficiency. The “Energy and Resource Efficiency in Industry” program provides funding of up to €20 million for a wide range of technologies, including highly efficient cross-sectional technologies, renewable process heat, energy management software, and system optimization. 

The Act on Heat Planning and the Decarbonisation of the Heating Networks is driving the transformation of district heating systems. Since January 2024, municipalities must develop heat plans as instruments to better coordinate the development of energy infrastructure. The act also sets renewable and waste heat targets for heat networks—30% by 2030 and 80% by 2040. The Federal Government’s BEW program (Federal funding for efficient heat networks) supports the decarbonization of heat networks.