Electricity market modeling considering a high penetration of flexible heating systems and electric vehicles

The electrification of the heating and transportation sectors is a major building block in Germany’s effort to reduce carbon dioxide emissions. The additional loads and flexibilities resulting from the anticipated large-scale integration of the heating and transportation sectors necessitate an adequate representation in electricity market modeling. First, the paper presents a comprehensive modeling approach of the heating sector in a pan-European electricity market simulation considering both small-scale building heat pumps and large-scale conversion units with thermal energy storages in district heating networks. The operation of small-scale building heat pumps is emulated using an electro-thermal 1R1C building model integrated into the economic dispatch formulation while the operation of units in district heating networks is restricted by additional constraints resulting from the combined heat and power output, local heat load coverage and possible heat power transfer between heating networks. The transportation sector is mapped using previously published models by the authors including both controlled and fast charging processes. Subsequently, the load shift potentials resulting from the market-integration of the heating and transportation sectors and their impact on the pan-European electricity market with focus on Germany based on the three target years 2030, 2040 and 2045 are examined. Furthermore, by applying a Monte Carlo simulation to map possible future primary energy source prices a major uncertainty dimension is addressed. Considering the current German electricity market design, the integration of the two sectors lead to a moderate increase in future annual electricity demands and a substantial increase in market-based peak load. The resulting annual peak load from power-to-heat devices account to 22 GW (2030), 53 GW (2040) and 102 GW (2045) and from electric vehicles to 12 GW (2030), 36 GW (2040) and 96 GW (2045) for the target years. Further results demonstrate the larger load-shift potentials of electric vehicles compared to building heat pumps by comparing the weighted annual average market price of the flexible loads. The primary fuel price uncertainty is examined based on the 0.25, 0.50 and 0.75 quantiles for the target years which result in annual average electricity market price spreads of over 2.16 (2030), 2.97 (2040) and 3.44 (2045) between the 0.25 and 0.75 quantile scenarios.