A Next Big Demand-Side Resource for Germany’s Energy Transition?
Demand-side flexibility (DSF) is a cornerstone of the energy transition, enabling grids to balance fluctuating renewable generation with dynamic consumption patterns. While electric vehicles (EVs) and battery systems have dominated DSF discussions, the heating, ventilation and air conditioning sector represents a further significant yet underutilised flexibility resource. Residential heat pumps (HPs), with over 2 million units installed in Germany by 2025 and an annual electricity demand of approximately 8 TWh, offer controllable loads and inherent thermal storage capacity, making them promising candidates for DSF integration.
This whitepaper explores how HPs can evolve from a perceived load challenge into a strategic flexibility asset. It introduces a two-layer modelling approach: a thermal Resistance-Capacitance-Model (RC-Model) to capture building dynamics, combined with a virtual battery (VB) abstraction to standardise HP flexibility for market participation. Using real-world building data and an individual optimisation algorithm, the analysis estimates that residential HPs can provide up to 26 GWh of electric energy flexibility capacity, thus exceeding stationary battery capacity and approaching EV flexibility levels. Economic potential modelling suggests a possible reduction of the electrical energy price of up to 13% (30.17 ct/kWh) compared to average newly concluded energy contracts for 2025 (34.76 ct/kWh) through time shifting. Scaled to the German HP fleet, this translates to a potential of over 360 million EUR annually.
However, unlocking this potential requires overcoming systemic challenges: regulatory gaps, technical interoperability issues, and consumer acceptance barriers. This whitepaper outlines a roadmap for implementation, emphasising standardised communication protocols, robust energy management systems and clear financial incentives. By reframing HPs as flexibility assets, German energy market stakeholders can accelerate decarbonization, enhance grid stability and deliver tangible benefits to consumers, positioning HPs alongside EVs and stationary batteries as an additional pillar of a resilient, renewable-integrating energy system.
Download the full whitepaper with all insights for free here:
