Economic analysis of using excess renewable electricity to displace heating fuels

Recent work has shown that for high-penetration renewable electricity systems, it is less expensive to install higher capacity of renewables and to allow generation to exceed load during some hours, rather than to build so much storage that all electricity can be used to meet electrical load. Because excess electricity appears to be cost-optimum, this raises the question as to whether the excess electricity, which in the case of wind power is predominately produced in colder weather, might displace other fuels for purposes such as heat.

This study models using excess electricity for heating, based on an analysis of electricity and heat use in a TSO in the North-Eastern part of the United States (PJM Interconnection). The heating system was modeled as heat pump based district heating (HPDH) with thermal energy storage (TES). Thus, excess electricity is transformed into heat, which is easy and cheap to store near the point of use.

As an alternative to HPDH, the use of distributed electrical resistive heating coupled with high temperature thermal storage (HTS) was also assessed. In both cases, a natural gas fired boiler (NGB) was modeled to be installed in the building for back-up heat. An algorithm that calculates the total cost of a unit of heat was used to determine the economically optimal size of the system’s main components and the influence that natural gas (NG) and electricity prices have on this optimum.

It was found that a system based on heat pumps (HP) and centralized thermal storage supplies building heat at a lower or similar cost than conventional systems. In most cases electric resistive heating with HTS was found to be less cost-effective than HPDH. The consumption of natural gas can be reduced to as little as 3% of that used by an entirely NG-based heater.

Also, thermal energy storage was found to be crucial when it comes to reducing the need for fossil fuels for heating (in this model, as backup heat).