District heating contract: how do I get out of the term and the price-escalation clause?

The short answer

Under § 32 AVBFernwärmeV, district heating contracts run for up to ten years, renew automatically by up to five more years at a time, and can ordinarily be cancelled only with nine months' notice at the end of the term – an early exit is otherwise possible only through a few narrowly defined statutory routes. You do not negotiate the price itself; it follows from the price-escalation clause, and whether that clause is valid decides every future increase.

What makes a price increase legally contestable is set out in the guide to the ECJ ruling on district heating; what a kilowatt-hour costs compared with gas, oil and a heat pump is in the heating-cost guide. This article is about the term, the termination and the clause itself.

How long does a district heating contract tie me in?

The key figure is in § 32 (1) AVBFernwärmeV: the term of a supply contract is at most ten years. That sounds like a ceiling to protect the customer – in practice it is the standard term suppliers build their contracts on, because their network investments are designed to last for decades.

The real trap is the renewal. If the contract is not cancelled in time, it renews automatically by up to five years at a time. Termination must be in writing (§ 32 (6)) and reach the supplier no later than nine months before the current term ends. Anyone who misses this nine-month window is locked in for another five years. So the critical date is not the end of the contract, but the day nine months before it.

How do I get out of the contract early?

Before the regular end of the term, the AVBFernwärmeV allows only a few, clearly defined exits.

Route	Legal basis	Notice and condition
Ordinary termination at the end of the term	§ 32 (1)	nine months before expiry, in writing
Switch to renewable energy	§ 3 (2)	two months, proof of use; also if load is cut by more than 50 %
Termination for good cause / change of supplier	§ 32 (3) and (5)	two weeks
After a gas price rise or a Federal Network Agency determination	§ 24 (5) to (7)	extraordinary, time-limited

The most important route in practice is § 3 (2): anyone who wants to replace the district heating with renewable energy – for example with a heat pump – can cancel at two months' notice and must demonstrate the intended use. For most private owners this is the only realistic early exit.

What matters is what does not exist: a general special termination right for an ordinary price increase, as you know it from electricity and gas contracts. If the district heating price rises, you stay in the contract. The only lever is then to examine the price-escalation clause.

What is in the price-escalation clause?

Because the price is not renegotiated for years, the price-escalation clause is the real core of the contract. § 24 (4) AVBFernwärmeV sets it tight limits: it may be drafted only so that it appropriately reflects both the cost trend in generating and supplying the district heating and the conditions on the heat market – a pure cost element with no market reference is not permitted. The relevant calculation factors must be disclosed fully and in generally understandable form, and the percentage share of fuel costs in a price change must be stated separately. A change to the clause may not be made unilaterally by public announcement.

It is precisely these requirements that many clauses fail to meet. The Federation of German Consumer Organisations (vzbv) is currently running several model declaratory actions against large suppliers, and the ECJ ruling of September 2026 made it easier to reclaim payments where a clause is invalid. So anyone who receives an increase should first hold the clause against § 24 (4) before paying.

Worked example: a block of flats with 12 units

Assumptions: a block of flats draws 120,000 kilowatt-hours of district heating a year. As the price I use the weighted blended price for the standardised block-of-flats case of 15.6 cents per kilowatt-hour including tax – the reference-date figure from the AGFW/VKU price transparency platform as at 1 April 2026.

Calculation	Value
Annual cost (120,000 kWh × 15.6 ct)	€18,720
Over a full ten-year term	around €187,000
A price jump of 2 ct/kWh (assumption)	+€2,400/year
that jump over the remaining term	several tens of thousands of euros

The calculation shows two things. First: over a ten-year term this is not a minor cost line but a six-figure sum governed by a single clause. Second: the transparency platform reports a range of 12.5 to 17.5 cents per kilowatt-hour for almost the entire volume it covers. You cannot choose which value applies to your own network – there is exactly one supplier per location. That makes the question all the more weighty whether the clause limits future increases in a comprehensible way.

Can the municipality force me to use district heating?

A connection and use obligation is possible, but it is not in federal law. The power follows from the states' local-government law and is implemented through a by-law of the respective municipality. There is no nationwide obligation. Important for the current debate: designating a heat network area as part of municipal heat planning creates no obligation in itself. § 27 (1) WPG makes it expressly clear that the designation brings about “no obligation to actually use a particular type of heat supply”.

For the individual case this means: anyone considering an exit under § 3 (2) should first check whether a municipal by-law with a connection and use obligation applies to their property, because that can restrict the switch.

What changes with the heat network package?

On 26 August 2026 the Federal Cabinet adopted key points for a heat network package. Planned are subsequent price oversight, the mandatory disclosure of prices and cost components via a transparency platform, and an arbitration body. One point is especially relevant for contractual commitment: suppliers are to be allowed in future to pass on investments in decarbonisation and network expansion unilaterally through the price – but effective only once the new plant is commissioned – and customers are in return to receive a new special termination right. Where a customer terminates within the first ten years, the supplier is to be able to demand a compensation payment under certain conditions.

As things stand today, all of this is a key-points decision, not a bill with a timetable. For existing contracts, the AVBFernwärmeV alone continues to apply.

What owners and tenants should do now

1. Establish the contract start and the end of the term and put the date nine months before expiry in the calendar – it is the only window for ordinary termination.
2. Check the price-escalation clause against § 24 (4): does it contain a cost element and a market element, are the calculation factors disclosed understandably, is the fuel share stated separately?
3. Work out your own blended price per kilowatt-hour and hold it against the transparency platform's range of 12.5 to 17.5 cents.
4. Examine the exit under § 3 (2) if a switch to renewable heat is due – two months' notice, proof of use.
5. Check the local by-law for whether a connection and use obligation applies before planning an alternative.
6. In the event of a price increase, object in writing, pay under reservation and have the clause examined, rather than accepting it prematurely.