Heat pumps will play a major role in an energy system characterized by low-energy buildings on the demand side and large share of renewables on the production side. HP flexibility for load shifting or peak shaving can be harnessed through demand response (DR) programs on different levels, at different time-scales and for multiple purposes, such as minimizing imbalance costs or cost of ancillary services, avoiding power curtailment, maximizing auto-consumption, minimizing procurement cost of electricity,…
Harnessing flexibility of domestic HP on the Belgian electricity market: Who wins, who loses ?
As a partner of the Flexipac project, financed by the Walloon Region, 3E studied different ways to optimize the value of the flexibility of domestic heat pumps on the day-ahead electricity market in Belgium (Belpex), from an energy supplier and end user perspective.
Our team specifically assessed the opportunity to reduce the procurement cost of the heat pump electricity loads by shifting heat pump operation from peak price hours towards off-peak periods. They also investigated how such reduction in procurement cost could be shared between the energy supplier and the end user.
The results showed it is hard to find a win-win solution given the current electricity price structure. Optimizing heat pump operation with a flat tariff results in the lowest electricity consumption and the lowest electricity cost for the end user. Optimizing heat pump operation with a Belpex-based dynamic price yields the lowest procurement cost for the electricity supplier. The latter scenario however entails higher costs for the end user, which cannot be compensated for by the energy supplier. The flexibility of shifting heat pump operation towards periods of low Belpex-price comes at the cost of higher electricity consumption. Because of the high fraction of fixed costs in the current electricity price structure, the reduction in procurement cost is offset (among other factors) by the increase in fixed costs entailed by the overconsumption.
The study concluded that an active participation of grid operators is necessary to create economic incentive for domestic heat pump users to participate in DR programs which focus on load shifting. The study also tends to show that, within the current Belgian power mix, the capacity of such DR programs to reduce CO2-emissions might be very limited or even negative. Although specific CO2-emissions per unit electricity are (on average) slightly lower during off-peak periods, this is offset by higher volumes of electricity consumed by heat pumps operating at higher load factors.