All new homes built in Germany from January 1st 2009 will be required to install renewable energy heating systems under a new law called the Renewable Energies Heating Law (Erneubare-Energien-Warmegesetz).

Homeowners will have to use renewable energy sources to meet 14% of a household's total energy consumption for heating and domestic hot water.

"The heating sector is the sleeping giant of renewable energy," Thomas Hagbeck of the German Federal Environmental Agency tells RenewableEnergyAccess.com.

"Using renewable energy for heating homes will not only significantly cut greenhouse emissions but also reduce heating bills as oil and gas prices surge," he says.

Heating buildings accounts for 40% of the total energy consumption in the country. Renewables currently account for about 6% of the energy sources used for heating buildings. The new government legislation targets an increase in the use of renewables for heating to 14% by 2020.

Existing houses will also have to be remodeled to incorporate renewable-energy-based heating systems from 2010 on. For old houses, 10% of the heating and domestic hot water energy needs will have to be provided by renewables.

"The Renewable Energy Law gave a big boost to the renewable energy sector when it came to generating electricity in Germany and this law will give the same big boost when it comes to heating," says Hagbeck.

The use of renewable energy sources for electricity increased 300% in the last ten years in Germany while the use of renewables for heating increased by only 40% over the same period.

It is estimated that updating energy performance in buildings could save 50 billion euros [US $73.9 billion] in heating costs in Germany up to 2020 alone.

According to a German government source, houses built in the 1960s use on average four times more energy for heating than updated, energy-efficient houses, which need 5 to 6 liters of heating oil for each square meter a year. Meanwhile, oil prices in Germany have tripled since 2001.

The government is allocating 350 million euros [US $517 million] each year in grants for homeowners to install renewable energy systems such as solar panels, wood pellet stoves and boilers and heat pumps.

Most homeowners are expected to choose solar panels. Under the new regulations, the size of the solar panel required will depend on the size of the house: solar panels will need to have an area equal to 4% of the total area of a house.

Fines of up to 500,000 euros [US $739,000] will face anyone who fails to switch their heating systems.

Also, the government is launching a program to improve insulation in the country's housing stock, and to cut back on energy waste.

The introduction of new energy ratings for all houses in 2008 will be further incentive to homeowners in Germany to invest in energy efficiency to protect the value of their houses, analysts say.

The state of Baden-Württemberg in southern Germany has already passed a law requiring all building plans for new houses submitted after April 1st 2008 to include renewable energy heating systems.

People building new homes there will have to install a renewable heating technology that can provide 20% of the household's heating and domestic hot water needs.

Energy used for heating homes in Baden-Württemberg accounts for 33% of the 72 million tons of carbon emitted by the state each year, officials say.

Many of the 2.2 million homes built in Baden-Württemberg before 1977 use 7 times more energy for heating than updated, energy-efficient homes, according to Claudia Rist of the Climate Protection and Energy Agency Baden-Württemberg (Klimaschutz-und Energieagentur Baden-Württemberg).

The German federal government's new renewable energy heating law, which is set to be passed by parliament next year, is part of a comprehensive package of measures that aims to reduce the country's carbon emissions by 40% by 2020 when compared to 1990.

It is estimated that the package will cost 31 billion euros [US $45.8 billion] a year to implement. But the costs will be offset by savings of 36 billion euros [US $53.2 billion] a year from lower bills for coal, oil and gas, experts say.

Jane Burgermeister is a freelance writer based in Vienna, Austria.