Potential and costs of decentralized heat pumps and thermal networks in Swiss residential areas

Globally, there has been an increasing trend toward electricity production from renewables, hence promoting the opportunity for the electrification of the residential heating sector as opposed to fossil fuels' combustion. Decentralized heat pumps and district heating networks could play a key role in the Swiss future approach to heating. This study provides a detailed enviro-economic assessment of the application of heat pumps and district heating systems based on renewable sources in different Swiss building archetypes on different scales. The results show that the levelized costs of heat from individual heat pumps and large-scale district heating networks (using industrial excess heat with a lower energy price than for the other energy carriers) are 7% to 20% and 65% to 75% higher than individual fossil fuel boilers for single-family houses, respectively. However, for multifamily houses, individual heat pumps, small thermal grids, and large-scale district heating networks are competitive. The district heating network coupled with a large centralized water source heat pump is found to be the most expensive solution (0.24-0.29 CHF/kWh) for residential heating today. The sensitivity analysis suggests the economic feasibility of different heating technologies significantly overlaps with each other depending on the boundary conditions, hence justifying not only the mixed opinions by experts in Switzerland but also the disagreements over costs of these technologies in international literature. It can be concluded that, based on the levelized cost of heat, there are sufficient economically viable options for decarbonization and electrification of the residential heating sector. While this is an important finding for policymakers, the barriers, for example, high upfront cost, need to be addressed. Low-carbon heating technologies are investigated for residential heating supply. Levelized costs of heat from heat pumps and district heating networks are computed. Levelized costs of the heating technologies significantly overlap with each other.