Geothermal energy update: draft acceleration law for heat transition presented to parliament

In recent months, the supply of heating has increasingly come into focus in the political debate on decarbonizing the economy. While the electricity sector has made significant strides due to a vigorously pursued energy transition, achieving climate neutrality in the heating sector remains a considerably more prolonged journey.

In addition to refurbishing private heating systems to operate largely with renewable energies in the future, as mandated by the much-discussed German Building Energy Act (Gebäudeenergiegesetz), geothermal systems are also intended to significantly contribute to the heating transition.

Recently, the German Federal Ministry for Economic Affairs and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz) presented a draft law aimed at accelerating approval procedures for geothermal systems, heat pumps and heat storage systems as well as other legal framework conditions. The bill is a typical acceleration law, which is expected to significantly shorten approval procedures related to geothermal systems. The main elements of the law and its expected effects are presented below.

I. German Act to Accelerate the Approval of Geothermal Systems, Heat Pumps and Heat Storage Facilities, the “Geothermal Heat Acceleration Act” (“Gesetz zur Beschleunigung der Genehmigung von Geothermie-Anlagen, Wärmepumpen sowie Wärmespeichern, GeoWG”)

The draft bill proposes a new law to collectively establish the legal framework for simpler and faster development and expansion of geothermal infrastructure, heat pumps and storage systems.

Unlike for example the subsidy rules in North Rhine-Westphalia the draft law distinguishes solely between shallow and deep geothermal energy. However, medium-deep geothermal energy is not excluded. Instead, systems for the extraction of near-surface geothermal energy are defined as those with boreholes up to 400 metres deep, while systems with deeper boreholes are generally classified as deep geothermal energy systems.

1. Overriding public interest

The bill provides that the construction and operation of geothermal systems, heat pumps and heat storage facilities, including the necessary drilling, will be of paramount public interest and serve public health and safety until net greenhouse gas neutrality is achieved in 2045. This approach mirrors the approach of the German Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG), which has recognised the overriding public interest in systems generating electricity from renewable energies since its last amendment in 2022. This recognition significantly impacts the balancing of conflicting interests during the approval procedure as it basically establishes a predetermined priority that can only be overridden in exceptional cases. Similar to the electricity sector, the clear prioritisation of systems for renewable heat generation is likely to expedite and clarify decision-making, as the effort required for weighing and justifying decisions will be reduced.

2. Early start of projects

Further acceleration is to be achieved by facilitating the early start of projects requiring approval under water law or mining law. Under both the German Water Resources Act (Wasserhaushaltsgesetz) and the German Federal Mining Act (Bundesberggesetz), the use of water bodies or the execution of a project can begin before approval is granted if there is, among other things, a public interest or a legitimate interest in the entrepreneur starting early. The Geothermal Heat Acceleration Act now mandates that a public interest is always presumed for systems generating renewable heat that require approval. This provision should significantly accelerate practical implementation by eliminating the need to prove and extensively examine the public interest at great expense. Instead, the focus will be on meeting other requirements, such as a positive decision prognosis and the improbability of irreparable impairments.

3. Changes in civil law

From the civil law perspective, the ability to take action against neighbouring geothermal projects due to their impact on one’s own property will be limited. According to the proposed Geothermal Heat Acceleration Act, an impairment will be considered insignificant and therefore must be tolerated under sentence 1 of section 906(1) of the German Civil Code (Bürgerliches Gesetzbuch, BGB) if the heat supplied or extracted does not change the underground temperature by more than six kelvin and does not render an existing or specifically planned use of the property impossible or significantly more difficult.

4. Reduction of legal protection

In the context of legal protection, the approval process will be accelerated by removing the suspensive effect of objections and annulment actions against approval decisions for geothermal projects, heat pumps, and heat storage facilities, including required boreholes, and against decisions on the early commencement of measures. Injunctive relief may only be applied for and justified within one month of notification of the approval decision. In addition, the appeal process will be shortened by assigning all disputes concerning geothermal systems and large heat pumps to the higher administrative courts.

The overall aim is to achieve acceleration by anticipating or largely determining certain points of review and considerations, thereby limiting the possibilities for legal protection.

II. Amendment of the German Federal Mining Act

The second major acceleration measure can be found in the amendment of the German Federal Mining Act. One key change is the restriction on the involvement of other authorities: if an authority does not provide a statement within one month, it is assumed that it has no comments to make. This measure is apparently intended to encourage authorities to process enquiries from other authorities more quickly.

In future, the competent authority may exempt low-risk mines from the existing operating plan requirements pursuant to sections 51 ff. of the German Federal Mining Act. Until now, exemptions have only been possible for mines that were not only of low risk but also of minor importance, which did not align with the desired scale of geothermal energy utilisation. Where main operating plans have to be drawn up, this will have to be done for a longer period instead of just two years as has been the case to date.

However, the key innovation lies in the amendment to section 57e of the German Federal Mining Act. Previously, this section provided that the approval procedure for operating plans for geothermal projects should be handled by a single body only upon application by the entrepreneur. In future, this standardised processing will become the norm and must be carried out exclusively in electronic form. The single body will be responsible for ensuring complete coordination of the approval procedures and independently obtaining opinions from other authorities involved. Processing times will be significantly shortened: within 30 days of receiving the application, the competent authority must confirm the completeness of the application documents or, if incomplete, immediately request additional information. In future, a decision on the approval of geothermal projects will generally have to be made within one year (so far the deadline for large projects has been two years). For projects involving the extraction of geothermal heat through heat pumps with a capacity of less than 50 megawatts, the deadline will even be shortened to three months. The options for extending the deadline will also be significantly restricted. In principle, extensions will only be possible once, for up to six months, and only in exceptional circumstances. For projects with an electricity generation capacity of less than 150 kilowatts and modernisation projects, however, only a one-time extension of up to three months will be permitted. Finally, the deadlines for examining a notified borehole up to a depth of 400 metres, i.e. one used in the context of a near-surface geothermal energy project, will also be significantly shortened.

III. Amendment of the German Water Resources Act

Simplifications will also be introduced in the German Water Resources Act. For instance, the approval requirement for large heat pumps will be waived if the competent authority does not object or request additional information within one month of receiving the notification.

In addition, the scope for using groundwater without a permit will be extended. In addition to the abstraction, extraction, pumping or discharge of groundwater for domestic use, the supply of heat by extracting heat from water will no longer require a permit or approval. This exemption will also apply to the injection of substances into groundwater for heat supply via near-surface geothermal energy, provided that no significant adverse effects on the water balance are expected.

IV. Summary and outlook

The planned acceleration law will eliminate numerous procedural obstacles. By combing prioritisation of certain projects, exemption from approval for certain projects, restrictions on the ability to use legal challenges to delay projects, shortened approval periods and the standardisation and digitalisation of approval procedures, the new law is expected to significantly accelerate procedures. For companies, this will make the planning and realisation of geothermal projects more predictable and, therefore, more attractive. Nevertheless, the utilisation of geothermal energy remains a complex undertaking that requires careful legal preparation.