The German federal government is planning a one-off heating subsidy to help low-income families with rapidly-rising energy costs. Here’s what you need to know about the subsidy, including an overview of who’s eligible for it and when it is likely to be paid. 

Financial aid to help low-income households with heating bills

Plenty of households in Germany are in for a shock this summer: when the annual summary of their 2021 utility bills arrives from their landlord, many will face hefty back payments, after prices for heating oil, electricity and gas exploded towards the end of the year. 

According to the price comparison portal Verivox, households in Germany have never had to pay so much for heating, electricity and fuel as they do now, with the cost of energy rising by 35 percent within a year. This disproportionately affects low-income households in comparison to those on average or high salaries, since it eats up a greater proportion of their income. 

In order to cushion the financial burden for those most in need, the federal government is offering a one-time subsidy to help with heating costs. 

Who is eligible for the heating subsidy?

The primary group set to benefit from the heating subsidy is recipients of housing benefit - households on low incomes that need assistance with paying their rent and regular utility bills. The requirement for housing benefit recipients is that they received the social security benefit for at least one month between October 2021 and March 2022. 

The federal government also wants to support people studying in Germany who are in receipt of student loans, and trainees who receive vocational training grants. 

According to a draft document put together by the Ministry of Building, around 710.000 households eligible for housing benefits stand to receive the grant; a further 500.000 students and trainees should later be eligible. The estimated total cost to the state is around 130 million euros. 

How much will the subsidy be?

The final amount of the subsidy depends on how many people are in your household - according to the logic that a single-person household most likely has lower heating bills than a bigger family. 

Anyone who lives alone should receive a one-off payment of 135 euros, while a two-person household is set to receive 175 euros. For each additional person in the household, 35 euros will be added. A flat rate of 115 euros per person will be paid out to students and trainees. 

The money is due to be paid out in the summer, with the law expected to come into effect on June 1. Most households will receive their subsidy automatically with their housing benefit or vocational training aid. The subsidy is not offset against other benefits. 

Consumer advocates criticise subsidy as insufficient

Compared with rapidly-rising energy prices, consumer advocates in Germany have insisted that the sums laid out by the government are far too low. According to the Federal Association of Consumers, the money will not be enough to compensate for rising utility bills for many households. The association has called for a subsidy of at least 500 euros per household. 

However, the government has said that the subsidy was calculated in cooperation with the Cologne Institute of Economic Research, using the heating costs claimed by housing benefit recipients in 2020, and extrapolating them for expected price increases in 2021. 

The government has further pointed out that slashing the EEU surcharge this year, before scrapping it entirely by January 2023, will further relieve households in Germany, including families, pensioners, students, and medium-sized businesses, to the tune of billions of euros.