The transformation of integrated electricity and heat systems—Assessing mid-term policies using a model comparison approach

The development of European power markets is highly influenced by integrated electricity and heat systems. Therefore, decarbonization policies for the electricity and heat sectors, as well as numerical models that are used to guide such policies, should consider cross-sectoral interdependencies and need evaluation. Many model-based policy assessments evaluate potential benefits of combined heat and power. However, the extent of benefits, such as emissions reductions, found in existing studies is subject to considerable variations. While scenarios and model inputs may partly explain such variations, differences in results may also be related to the model formulation itself. Against this background, this study is the first to compare electricity market models in the context of potential benefits of integrated electricity and heat systems in decarbonization. Five large-scale market models covering electricity and heat supply were utilized to study the interactions between a rather simple coal replacement scenario and a more ambitious policy that supports decarbonization through power-to-heat. With a focus on flexibility provision, emissions reduction, and economic efficiency, although the models agree on the qualitative effects, there are considerable quantitative differences. For example, the estimated reductions in overall CO2 emissions range between 0.2 and 9.0 MtCO2/a for a coal replacement scenario and between 0.2 and 25.0 MtCO2/a for a power-to-heat scenario. Model differences can be attributed mainly to the level of detail of combined heat and power modeling and the endogeneity of generation investments. Based on a detailed comparison of the modeling results, implications for modeling choices and political decisions are discussed.