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The potential of decentralized power-to-heat as a flexibility option for the german electricity system: A microeconomic perspective

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  • Ehrlich, Lars G.
  • Klamka, Jonas
  • Wolf, André

Abstract

One fundamental challenge of the German energy transition for the electricity market is the growing imbalance between inflexible generation and generally inelastic load. Against this background, we investigate the future potential of decentralized Power-to-Heat (P2H) as an additional demand-side flexibility option for the German electricity system. Precisely, we analyze the case of hybrid systems, where conventional gas and oil condensing boiler systems are equipped with an electric heating rod. In contrast to previous approaches, we set our focus on the economic incentives at household level: only if the switch to a P2H-hybrid system can reduce individual heating expenses significantly, a considerable number of these systems will be installed. For this purpose, we implemented an integrated approach combining three distinct simulation modules. First, a stochastic simulation of the electricity spot market prices in 2020 was conducted. Second, average heat load profiles were generated based on a standard bottom-up analysis. Both results were then fed into an optimization model calculating the cost-minimizing paths of heat generation at household level during the year 2020. The simulated annual savings prove modest as long as household electricity prices are not heavily reduced through political influence.

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  • Ehrlich, Lars G. & Klamka, Jonas & Wolf, André, 2015. "The potential of decentralized power-to-heat as a flexibility option for the german electricity system: A microeconomic perspective," Energy Policy, Elsevier, vol. 87(C), pages 417-428.
    • Handle: RePEc:eee:enepol:v:87:y:2015:i:c:p:417-428
    DOI: 10.1016/j.enpol.2015.09.032
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    14. Bloess, Andreas & Schill, Wolf-Peter & Zerrahn, Alexander, 2018. "Power-to-heat for renewable energy integration: A review of technologies, modeling approaches, and flexibility potentials," Applied Energy, Elsevier, vol. 212(C), pages 1611-1626.
    15. Møller Sneum, Daniel, 2021. "Barriers to flexibility in the district energy-electricity system interface – A taxonomy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
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    18. Meha, Drilon & Pfeifer, Antun & Duić, Neven & Lund, Henrik, 2020. "Increasing the integration of variable renewable energy in coal-based energy system using power to heat technologies: The case of Kosovo," Energy, Elsevier, vol. 212(C).
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