Variable taxes promoting district heating heat pump flexibility

Heat pumps are foreseen to play a pivotal role in future renewable energy-based heating systems. In addition to supplying heat, they can assist the sector integration that facilitates the integration of fluctuating renewable energy-based electricity production. However, while heat pumps have this potential, they are also associated with high investment costs and modest operation costs. Thus, heat pumps give incentives for near-continuous operation and not the flexible operation required for renewable energy integration. This article investigates heat pumps from two perspectives: The impact of electricity taxes on a) the incentive to increase heat pump and thermal energy storage capacities to give the basis for flexible operation and b) the alignment of heat pump operation with the dynamic electricity system needs. Results show that a tax equal to the hourly spot market electricity price will provide the same fiscal income for the state as in the current system with a fixed tax and will provide incentives for tentatively 20% more thermal storage. However, the tax will not provide incentives for more heat pump capacity, but for a somewhat more flexible operation causing the heat pump/thermal energy storage combination to operate more according to electricity prices and less according to heat demands.