Heating transition: how municipal utilities can make optimal use of private capital

Germany’s Stadtwerke face a financing gap of up to €200 billion to deliver climate-neutral heating by 2045, with mid-sized utilities alone accounting for around €126 billion. This implies a sharp rise in annual investment, from just over €2 billion today to €5–6 billion. “State subsidy pots are often time-limited or underfunded, and therefore hardly suited to closing the structural financing gap,” notes Thomas Gummert. Private capital, by contrast, is available in abundance — yet utilities and investors still rarely find each other. 

Long-term investors such as life insurers, pension funds and occupational retirement schemes are showing record appetite for municipal infrastructure, further supported by a 2025 amendment to the German insurance supervision law easing infrastructure investment. “Most institutional investors are not looking for risky return adventures. What they want are assets that generate stable, predictable and, where possible, inflation-protected cash flows over 20 to 40 years,” explains Thomas Gummert — a profile that fits district heating networks and capital-intensive assets like large heat pumps and deep geothermal, which combine a quasi-monopolistic position with a green footprint.   

The main obstacle is the fear of losing control over public services, compounded by procurement rules, EU state-aid law and a mismatch between investors’ minimum ticket sizes (€100–250m) and individual project volumes (€20–50m). Gummert sets out four proven models — project-level joint ventures, asset carve-outs, lease-and-operate arrangements, and multi-utility platforms — that reconcile both sides.

“With the right contractual structuring, municipal utilities can tackle the heating transition with external financial strength — without losing municipal steering power. 

Read the full article by Thomas Gummert published in Der Neue Kämmerer on July 7, 2026.