Flexibility is the key to decarbonizing heat supply: A case study based on the German energy system

Decarbonizing the heating sector is a key challenge in Europe and Germany and lags significantly behind the electricity sector regarding the share of renewable energies. This is also due to municipal heating planning being still in progress in many places, and decision-makers being uncertain about efficient technologies. We apply an advanced energy system model with linear optimization to the German energy system with special consideration of district heating. Our goal is to determine the near-optimal solution space in the heating sector, which we define as solutions within a 1% increase in optimal system cost. We show that the optimal share of district heating on the German heat demand is only 8.3%, but 27.2% of the demand can be supplied in the near-optimal solution. Larger shares are inefficient due to higher investments caused by lower heat density in sparsely populated regions. The wide range of solutions at comparable costs must encourage urban authorities to implement and communicate consistent heat planning regardless of the choice between centralized and decentralized heat supply. Direct electrification dominates both centralized and decentralized heat generation in all scenarios. Combined heat and power (CHP) plants are part of the optimal solution, but their heat production is limited by high fuel cost. It is therefore risky to plan with high shares (>20%) of CHP in heating networks. Alternative flexibility options such as water-based seasonal heat storage and the use of excess heat from power-to-x plants show promising results. They increase the district heating share in the near-optimal solution to 42.2%, but are limited by the amount of land required and the monetary value of the excess heat, respectively.