Energy Markets in Crisis Mode: What Happened
The geopolitical landscape shifted dramatically in February 2026. The armed conflict between the United States, Israel, and Iran has triggered one of the most severe energy price crises since Russia's invasion of Ukraine. For property owners, landlords, and HOA managers in the Rhine-Main region, the consequences are immediate and far-reaching – from surging heating costs and the need to adjust advance payments to a significantly heavier CO2 cost burden.
As a professional property management firm in the Rhine-Main region, we monitor energy markets continuously and advise our clients proactively on the financial implications. In this practical guide, we explain what happened, what it means for property owners and landlords, and what steps you should take now.
The Strait of Hormuz: The World's Energy Bottleneck
The Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula, is the single most important chokepoint for global oil transportation. Under normal conditions, approximately 20 million barrels of crude oil per day – roughly 20% of global production – pass through this strait, which measures just 34 kilometres at its narrowest point. Since the military escalation in the Persian Gulf began in February 2026, shipping traffic through the Strait of Hormuz has dropped by an estimated 70%. Iranian naval blockades, minefields, and the threat of anti-ship missiles have brought international tanker traffic to a near standstill.
The result: a massive supply shock on global oil markets that rippled through every energy commodity within weeks. Brent crude reached a peak of $126 per barrel in early March 2026 before stabilizing at the current level of around $104 per barrel. Even this stabilized price remains far above pre-crisis levels, and the knock-on effects for European heating fuels have been substantial.
Energy Prices at a Glance: Before and After the Crisis
The following table illustrates how key energy prices have moved since the onset of the crisis:
| Energy Source | Pre-Crisis (Feb 2026) | Current (Mar 2026) | Change |
|---|---|---|---|
| Brent Crude Oil ($/barrel) | $72 | $104 | +44% |
| Heating Oil (€/100 litres) | ~€95 | ~€124 | +31% |
| Natural Gas (€/MWh, THE) | ~€46 | ~€74 | +61% |
| Electricity (€/MWh, Day-Ahead) | ~€100 | ~€149 | +49% |
The numbers speak for themselves: all relevant energy prices are 25 to 61% above pre-crisis levels. The gas price increase is particularly alarming because natural gas is by far Germany's most important heating fuel – approximately 49% of all residential units in the country are heated with gas.
> Important note: Prices remain highly volatile. Depending on how the conflict evolves, further increases or a partial easing are both possible. All figures in this article reflect prices as of late March 2026.
What This Means for Landlords and Utility Billing
The energy price explosion hits landlords on multiple fronts simultaneously. Running heating costs are climbing, tenants' advance payments are no longer sufficient to cover actual expenses, and the next annual utility statement threatens to deliver massive back-payment demands. On top of all this, the rising CO2 cost burden under Germany's cost-sharing legislation adds further financial pressure. Landlords who fail to act now risk cash-flow problems and conflicts with their tenants.
Adjusting Heating Cost Advance Payments
The single most important step landlords should take right now is to adjust heating cost advance payments. The legal basis is found in Section 560(4) of the German Civil Code (BGB): after issuing a utility cost statement, either party to the lease may adjust advance payments in text form (letter, email, or fax) to an appropriate level. The adjustment must be transparently justified and reflect the costs that can reasonably be expected going forward.
Requirements for adjusting advance payments:
For more detail on utility statement deadlines and obligations, see our guide on utility cost statement deadlines and landlord obligations.
Worked Example: 80 m² Apartment with Gas Heating
To illustrate the practical impact, consider a typical apartment in the Rhine-Main region:
| Item | Previous Calculation | Updated Calculation |
|---|---|---|
| Living area | 80 m² | 80 m² |
| Annual consumption | 12,000 kWh | 12,000 kWh |
| Gas price (net) | ~8.5 ct/kWh | ~13.5 ct/kWh |
| Annual heating costs | ~€1,020 | ~€1,620 |
| Hot water share (~18%) | ~€184 | ~€292 |
| Total annual cost | ~€1,204 | ~€1,912 |
| Monthly advance payment | ~€120 | ~€190 (recommended) |
In this example, the recommended monthly advance payment rises by roughly €70 per month – a significant additional burden for the tenant, but one that prevents an even larger back-payment shock when the annual statement arrives.
Avoiding Back-Payment Shock: Communicate Proactively
The experience from the 2022/2023 energy crisis provides a clear lesson: tenants who receive a large, unexpected back-payment demand often react with frustration, delayed payments, or even formal objections to the utility statement. Landlords should therefore reach out to their tenants proactively and explain the situation transparently:
> Practical tip: Prepare a standardised information letter for your tenants that transparently presents the price developments and simultaneously offers a voluntary increase in advance payments. This reduces administrative effort and builds trust.
CO2 Cost-Sharing Model + Energy Price Shock = Double Burden for Landlords
Since 1 January 2023, the CO2 Cost Allocation Act (Kohlendioxidkostenaufteilungsgesetz, CO2KostAufG) has governed how the CO2 costs arising from burning fossil fuels are split between landlords and tenants. The legislation is designed to incentivise landlords to invest in energy-efficient renovation: the worse a building's energy performance, the higher the share of CO2 costs the landlord must bear.
How the 10-Step Model Works
The allocation of CO2 costs depends on the specific CO2 emissions of the building, measured in kilograms per square metre per year (kg CO2/m²/a). This figure is calculated based on actual energy consumption and the type of fuel used:
| CO2 Emissions (kg/m²/a) | Tenant Share | Landlord Share |
|---|---|---|
| < 12 | 100% | 0% |
| 12–17 | 90% | 10% |
| 17–22 | 80% | 20% |
| 22–27 | 70% | 30% |
| 27–32 | 60% | 40% |
| 32–37 | 50% | 50% |
| 37–42 | 40% | 60% |
| 42–47 | 30% | 70% |
| 47–52 | 20% | 80% |
| > 52 | 5% | 95% |
The logic is straightforward: for energy-efficient buildings with low CO2 emissions, the tenant bears the majority of CO2 costs, since the landlord has already invested in the building envelope and heating systems. For unrenovated buildings with high energy consumption, the landlord pays up to 95% – a powerful financial incentive to renovate.
CO2 Price in 2026: EUR 55–65 per Tonne
Germany's national CO2 price in 2026 sits within a price corridor of EUR 55–65 per tonne of CO2. This corridor was established under the Fuel Emissions Trading Act (Brennstoffemissionshandelsgesetz, BEHG). Starting in July 2026, emission certificates will be auctioned on the EEX energy exchange in Leipzig, meaning the actual price within the corridor will be determined by market forces.
Given the current energy crisis and increased demand for fossil fuels, the CO2 price is likely to settle near the top of the corridor – around EUR 65 per tonne. From 2027 onwards, the price corridor will be removed entirely, and the CO2 price will be set exclusively by the market.
Worked Example: Unrenovated Multi-Family Building with Gas Heating
For a typical unrenovated multi-family building in the Rhine-Main region, the numbers look like this:
| Item | Value |
|---|---|
| Building area | 600 m² |
| Specific CO2 emissions | 40 kg CO2/m²/a |
| Step in the CO2 model | 37–42 kg → Landlord 60% |
| Total CO2 emissions | 24,000 kg = 24 tonnes CO2/year |
| CO2 price (assumed) | EUR 65/tonne |
| Total CO2 costs | EUR 1,560/year |
| Landlord’s share (60%) | EUR 936/year |
| Tenant’s share (40%) | EUR 624/year |
When energy prices rise, the total cost of energy in euros increases – and with it, the CO2 costs. In this example, the landlord bears EUR 936 per year in CO2 costs that cannot be passed on to tenants. For owners with multiple unrenovated properties, this burden adds up quickly. Combined with the already elevated energy prices, this creates a double financial burden that makes the case for energy-efficient renovation more compelling than ever.
HOAs (WEG) and Service Charges: What Managers Need to Check
For homeowners' associations (Wohnungseigentümergemeinschaften, or WEG), the energy price explosion presents a distinct challenge. Unlike rental management, where the landlord can adjust advance payments unilaterally, any change to HOA service charges (Hausgeld) requires a resolution by the owners' assembly.
The Financial Plan and Energy Cost Projections
The financial plan (Wirtschaftsplan) is the central budget document of a WEG for the current calendar year. It includes, among other items, the projected costs for heating and hot water. If the current financial plan was prepared before the Iran crisis escalated – that is, before February 2026 – the energy cost projections it contains are almost certainly significantly understated.
The consequence: the owners' ongoing service charge payments no longer cover actual energy costs, creating a funding shortfall. This shortfall must be settled at the latest when the next annual accounts are approved – which means owners will face substantial back-payments.
For a comprehensive explanation of how service charges work, see our guide on service charges for condominiums.
Special Levy or Service Charge Adjustment?
HOA managers have several options for responding to the increased energy costs:
1. Updated financial plan (recommended):
The manager can prepare an updated financial plan reflecting the new energy price assumptions and present it to the owners' assembly for approval. This is the cleanest and most transparent approach.
2. Special levy (Sonderumlage):
Alternatively, a special levy can be approved to cover the expected additional costs. This is particularly advisable when the cost increases are so substantial that a regular service charge adjustment would not be sufficient.
3. Advance on the expected back-payment:
In some cases, an informal advance payment towards the anticipated shortfall can be arranged to spread the financial burden over time.
Decision-Making at the Owners' Assembly
Any amendment to the financial plan or approval of a special levy requires a majority vote at the owners' assembly. The property manager should therefore:
> Practical tip for HOA managers: Prepare a side-by-side comparison of the original financial plan versus the updated plan and share it with owners before the vote. Transparency and verifiable numbers make it considerably easier to secure approval.
Which Heating Systems Are Affected?
The impact of the energy price crisis varies significantly across different heating technologies. A differentiated view is essential for determining the right course of action.
Oil-fired heating: Most immediately and severely affected. Heating oil prices have risen by approximately 31%. Owners who have not yet purchased their annual supply will pay considerably more. Those who bought at lower prices in autumn 2025 benefit for the current heating season, but the next refill will be significantly more expensive.
Gas-fired heating: With a price increase of around 61%, gas-heated properties face the steepest percentage rise. Since gas is the most common heating fuel in Germany, this affects the majority of residential buildings. Existing supply contracts with fixed pricing offer some protection, but new contracts and variable-rate tariffs reflect the full impact of higher wholesale prices.
District heating: District heating prices react with a time lag, as suppliers typically operate under long-term contracts with price formulas linked to indices that are updated periodically. However, noticeable price increases should be expected over the course of 2026. In Frankfurt, Mainova AG supplies numerous residential buildings through a 310 km district heating network.
Heat pumps: Heat pumps are largely unaffected by the oil price surge directly, as they run on electricity. That said, electricity prices have also risen by approximately 49%, which increases operating costs. Nonetheless, the cost advantage over fossil-fuel heating systems persists and has actually widened in the current environment.
Pellet boilers: Wood pellets are not directly tied to oil prices. Pellet prices have remained stable so far, though they could edge higher if demand increases as owners consider switching fuels. Overall, pellet heating remains a cost-effective alternative.
> Practical tip: Review which type of heating system each of your properties uses and assess the specific level of exposure. Gas-heated properties require the most urgent action on advance payments. For oil-heated properties, the timing of fuel purchases should be planned strategically.
Short-Term Measures to Reduce Costs
Regardless of the geopolitical situation, there is a range of measures that owners and managers can implement quickly and at manageable cost to bring heating expenses down. These measures are no substitute for a comprehensive energy-efficient renovation, but they can reduce consumption – and therefore costs – by 10–20%.
1. Hydraulic Balancing
Hydraulic balancing ensures that all radiators in a building receive an even supply of hot water. Without balancing, radiators close to the boiler often receive too much heat while those further away receive too little. The result: the flow temperature is set unnecessarily high to compensate, wasting significant amounts of energy. Hydraulic balancing has been mandatory since October 2022 for gas-heated buildings with more than six residential units (under the Energy Saving Measures Ordinance, EnSimaV), but compliance in practice remains patchy.
Savings potential: 5–15% of heating energy.
2. Optimise the Heating Curve
The heating curve governs the relationship between outdoor temperature and the flow temperature of the heating system. Many systems are configured at installation with excessively high flow temperatures. Reducing the heating curve by 2–3°C can deliver substantial savings without any noticeable loss of comfort.
Savings potential: 3–8% of heating energy.
3. Replace Thermostatic Radiator Valves
Old, imprecise thermostatic valves lead to rooms being over- or under-heated. Programmable thermostatic radiator valves enable time-controlled, room-by-room temperature regulation and prevent unnecessary heating when rooms are unoccupied.
Savings potential: 5–10% of heating energy.
4. Check and Optimise Night-Time Setback
Many heating systems include a night-time setback function that reduces the flow temperature between 10:00 pm and 6:00 am. Verify that this function is correctly configured and active, and adjust the timing to reflect actual usage patterns.
Savings potential: 2–5% of heating energy.
5. Inform and Involve Tenants
Tenant behaviour has a significant impact on overall heating costs. Keep your tenants informed about:
For further information on long-term optimisation strategies, see our article on energy-efficient renovation in existing HOA buildings.
Long-Term Strategy: Energy-Efficient Renovation as Protection
The current energy price crisis underscores a truth that has become impossible to ignore: energy-efficient renovation is not a luxury – it is an economic necessity. Buildings with proper insulation, efficient heating technology, and low energy consumption are significantly less vulnerable to price swings on global energy markets. Investing in a building's energy performance is the most effective long-term protection against energy price crises – regardless of whether those crises are triggered by geopolitical conflicts, carbon pricing, or shifts in supply and demand.
BEG Federal Subsidies Available Until 2029
The Federal Funding for Efficient Buildings programme (Bundesförderung für effiziente Gebäude, BEG) provides substantial subsidies for energy-efficient renovation measures through 2029. Depending on the specific measure and building type, grants or low-interest loans are available:
The Building Modernisation Act (GMG) Brings Greater Flexibility
The Building Modernisation Act (Gebäudemodernisierungsgesetz, GMG), which came into force in January 2026 as the successor to the much-debated "Heating Law" (GEG), introduces greater flexibility in heating system choices and strengthens the role of municipal heat planning. Owners who invest in renovation now benefit from expanded subsidy options and a more technology-neutral regulatory framework. For a detailed analysis of the GMG, see our article on the Building Modernisation Act and how it replaces the Heating Law.
For an overview of how to finance energy-efficient renovation within an HOA structure – from special levies and maintenance reserves to HOA-level loans – see our guide on financing energy-efficient renovation in HOAs.
Renovation Economics in the New Price Environment
Higher energy prices dramatically improve the financial case for energy-efficient renovation. A façade insulation project that would have taken 18 years to pay for itself at a gas price of 8 ct/kWh reaches breakeven in just 11–12 years at 13.5 ct/kWh. At the same time, the property gains in market value and the landlord's CO2 cost burden decreases. In the current market environment, energy-efficient renovation is not just an environmental imperative – it is first and foremost a sound financial decision.
The Rhine-Main Region: A Special Case
The Rhine-Main region has several distinctive characteristics that are worth considering when assessing the impact of the energy price crisis.
Frankfurt and the Mainova District Heating Network
Mainova AG operates a district heating network in Frankfurt with a pipeline length exceeding 310 kilometres, and the network is being continuously expanded. District heating customers are not directly exposed to the oil price surge, but should expect delayed price increases over the course of 2026. The planned expansion of the district heating network – particularly the connection of new neighbourhoods and the integration of renewable heat sources – could lead to a more stable and independent heat supply over the long term.
Municipal Heat Planning: Deadline June 2026
Hessian municipalities are required to submit their municipal heat plans by June 2026 at the latest. These plans set out which areas will be served by district heating, local heating networks, or individual heating solutions in the future. For property owners, the municipal heat plan is an important point of reference when deciding on heating investments:
Information on your municipality's heat plan is typically available on the local government's website or through the regional energy agency. Our team is happy to advise you on the implications for your specific properties.
The Property Market: Renovated vs. Unrenovated
The energy price crisis is amplifying a trend that has been building for several years: the value gap between energy-efficient and unrenovated properties is widening further. Buildings rated A+ to C on the energy performance scale are in strong demand from both tenants and buyers because they offer lower running costs and are future-proof. Unrenovated buildings rated F to H are losing attractiveness on both the rental and the sales market.
For owners in the Rhine-Main region – a market characterised by traditionally high property prices and robust demand – the message is clear: investing in energy efficiency now protects the long-term value of your asset. Those who wait risk a gradual erosion of value and ever-increasing running costs.
Conclusion: Act Now, Don't Wait
The heating cost surge triggered by the Iran crisis is hitting property owners and landlords in the Rhine-Main region with full force. Price increases of 25–61% across all major energy sources translate into substantial additional costs – and the full impact will only become apparent in upcoming utility statements.
In the short term, you should:
In the medium term, you should:
In the long term, energy-efficient renovation remains the most effective shield against energy price crises – and the surest way to preserve the value of your property.
As an experienced rental management and HOA management firm in the Rhine-Main region, we support you across every aspect of energy cost optimisation – from adjusting advance payments and preparing HOA resolutions to planning and overseeing energy-efficient renovation projects. We also offer specialised unit management services for individual apartment owners. Get in touch for a personalised consultation.
*As of March 2026. Energy prices are subject to daily fluctuations. This article is for general information purposes and does not constitute individual legal or tax advice.*
