Comparison of load shifting incentives for low-energy buildings with heat pumps to attain grid flexibility benefits

This paper aims at assessing the value of load shifting and demand side flexibility for improving electric grid system operations. In particular, this study investigates to what extent residential heat pumps participating in load shifting can contribute to reducing operational costs and CO2 emissions associated with electric power generation and how home owners with heat pump systems can be best motivated to achieve these flexibility benefits. Residential heat pumps, when intelligently orchestrated in their operation, can lower operational costs and CO2 emissions by performing load shifting in order to reduce curtailment of electricity from renewable energy sources and improve the efficiency of dispatchable power plants. In order to study the interaction, both the electricity generation system and residences with heat pumps are modeled. In a first step, an integrated modeling approach is presented which represents the idealized case where the electrical grid operation in terms of unit commitment and dispatch is concurrently optimized with that of a large number of residential heat pumps located in homes designed to low-energy design standards. While this joint optimization approach does not lend itself for real-time implementation, it serves as an upper bound for the achievable operational cost savings. The main focus of this paper is to assess to what extent load shifting incentives are able to achieve the aforementioned savings potential. Two types of incentives are studied: direct load control and dynamic time-of-use pricing. Since both the electricity generation supply system and the residential building stock with heat pumps had been modeled for the joint optimization, the performance of both load shifting incentives can be compared by separately assessing the supply and demand side. Superior performance is noted for the direct-load control scenario, achieving 60–90% of the cost savings attained in the jointly optimized best-case scenario. In dynamic time-of-use pricing, poor performance in terms of reduced cost and emissions is noted when the heat pumps response is not taken into account. When the heat pumps response is taken into account, dynamic time-of-use pricing performs better. However, both dynamic time-of-use pricing schemes show inferior performance at high levels of residential heat pump penetration.