Economic benefits of residential heating and cooling flexibility: consumer and system perspective

Price-based residential demand response (DR) schemes should be planned to enable win-win situations where both the flexible buildings and energy system enjoy economic benefits. Our study modelled the electrically heated Finnish residential building stock, assuming flexible space heating and cooling as well as water heating. We integrated different penetrations of such buildings to a North European energy system model. Two DR schemes were considered: a grid-interactive scheme, in which flexible buildings participated in the minimization of total system costs, and a self-optimizing scheme in which the buildings minimized their own heating/cooling costs based on pre-determined and fixed electricity prices. Annual operational costs of the combined systems were solved as linear optimization problems to assess the cost savings potential from DR.

The results suggest that while flexible consumers often benefited directly from timing their consumption on more inexpensive hours, wide-scale DR penetration can also impact non-flexible consumers by influencing electricity spot prices. In addition, basing wide-spread DR on pre-determined and fixed pricing, such as day-ahead spot prices, may carry risks for the energy system and electricity market if many buildings shift their demand synchronously, causing new demand peaks.

H2020 TradeRES (grant agreement no. 864276)