Decarbonizing the heating sector poses significant challenges in many countries. Heat pumps have emerged as a key technology, converting ambient energy in the air, water, or the ground with the help of renewable electricity into useful heating energy.  Germany, like many European countries, still relies heavily on fossil fuel-based heating systems. Heat pumps can replace traditional oil and gas boilers. To lower carbon emissions and reduce dependence on fossil fuel imports — an issue intensified by the Russian invasion of Ukraine — the German government has set a goal to have 6 million heat pumps installed by 2030. This is over three times the current number of approximately 1.9 million in 2024.

Flexibility in the power sector

The need for flexibility grows as the power sector increasingly transitions to renewable energy and integrates new consumers like electric vehicles, heat pumps, and industrial users. Flexibility options, such as energy storage and load shifting, can enable better alignment of supply and demand. Heat pumps play an important role in this context, as they increase overall electricity demand, which may pose additional challenges during periods of low renewable energy availability. But if heat pumps are operated flexibly, shifting electricity use away from peak heat demand hours, they can become an important solution for enhancing power system flexibility.

The impact of flexible heat pump operation

To explore this issue, we analyze the German power sector and its neighboring countries using an open-source power sector model for 2030. Across different scenarios with varying numbers of heat pumps in Germany, we assess the effects of flexible heat pump operation on the power system. Flexibility is modeled by equipping heat pumps with thermal buffer storage. This analysis reveals several key insights:

Heat storage and demand smoothing

Heat storage allows heat pumps to operate flexibly by drawing electricity during periods of abundant renewable energy (e.g., sunny afternoons) and storing it for later use. Even with a short-duration heat storage capacity of two hours, the need for additional gas-fired power plants and battery storage can be significantly reduced. However, longer-duration storage shows diminishing returns, making small, short-duration systems a cost-effective solution. Larger storage systems will likely be better suited for district heating grids.

The heat map below illustrates the electricity demand patterns of heat pumps for varying storage capacities. Without heat storage (left panel), demand is relatively constant for the entire day, following the heat demand. As storage capacity increases, demand shifts to midday, aligning with the availability of solar energy.

Solar power can provide additional green electricity

An expansion of heat pumps requires additional power plant capacities. In winter, the wind blows more frequently than the sun shines. Thus, wind energy aligns better with heat demand. However, if additional wind energy expansion is limited, for instance, due to political or other reasons, solar photovoltaics (PV) can also be used to complement an ambitious heat pump rollout.

Reductions in natural gas and emissions

An ambitious rollout of 10 million heat pumps by 2030 could cut Germany’s private and commercial natural gas demand for heating by more than half, saving up to 206 terawatt-hours annually. This would translate into a 50% reduction in household-related CO₂ emissions, equivalent to approximately 42 million tons of CO₂ per year. Even with lower deployment according to the German government’s goal of 6 million heat pumps by 2030, natural gas demand would still decline by 20%, with household CO₂ emissions falling by 18%.

Costs and economic benefits

Although heat pumps lead to additional costs for adding new power plants, these costs are offset by the savings from the reduced natural gas consumption and lower carbon emissions. Depending on the assumed number of heat pumps installed and gas prices, annual net savings could range from €2 billion to €27 billion per year.

Market price signals are important

Enabling the flexible operation of heat pumps requires households to adopt electricity tariffs with hourly wholesale prices. However, most German consumers currently pay fixed tariffs, which limits their ability to adjust consumption based on price signals. A technical prerequisite for flexible prices is the widespread deployment of ‘smart meters’ required for continuous consumption metering. With flexible prices, consumers would be incentivized to optimize their electricity demand, which would not only lower their private bills but also benefit the entire power system.

Summary

Replacing natural gas boilers with heat pumps offers significant carbon reductions and cost savings. The flexible operation of heat pumps, supported by short-duration heat storage, smooths the impact of heat pumps on power systems and reduces the reliance on costly backup power plants and electricity storage. This approach not only supports decarbonization goals but also enhances the resilience and efficiency of the energy system.

This blog post is based on findings from “Power sector benefits of flexible heat pumps in 2030 scenarios” by Roth et al., published in Communications Earth & Environment. Poster photo by Alex Perz on Unsplash.