Business case for electric heat pumps under different day-ahead price scenarios

This paper aims to present a probabilistic assessment, via a two-stage stochastic optimization, of the potential benefits from cost optimizing the interaction of thermal and electrical systems of an aggregation of buildings, through the use of domestic electric heat pumps. As more and more intermittent generation is integrated into the grid, while capacity margins are shrinking, not only might prices drop on average but they could also become much more volatile than at present. Potential future day-ahead price scenarios are therefore analyzed in this paper, by using specific price evolution stochastic models developed to take into account different levels of average prices and volatility. Results suggest that lower average values of day-ahead prices combined with very high volatility can lead to noticeable economic benefits from managing EHP aggregation to exploit potential arbitrage opportunities.