Unlocking thermal flexibility for the electricity system by combining heat pumps and thermal storage

The expansion of heat pumps drives the electrification of the heating sector which is important to achieve Germany's ambitious climate targets. This paper examines the impact of heat pumps in combination with thermal storage on the flexibility of the German electricity system in 2030, focusing on its market and grid impacts. A timely and spatially detailed electricity market and transmission grid model evaluates the impact of thermal storage. The results show that, overall, unlocking the flexibility of thermal storage consistently reduces total supply costs. However, while the flexibility provided by thermal storage supports the integration of RES and reduces supply costs in the dispatch, the use of flexibility increases grid violations and hence, redispatch measures. By further studying a model setup with locational marginal prices (LMPs), the analysis highlights regional differences in the value of flexibility, which is particularly high in northern Germany, where proximity to wind generation enhances the benefits of thermal storage.