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A heated debate – The future cost-efficiency of climate-neutral heating options under consideration of heterogeneity and uncertainty (Update)

Author

Listed:
  • Moritz, Michael

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Czock, Berit Hanna

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Ruhnau, Oliver

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

Abstract
To tackle climate change, residential heating must become climate-neutral. Which technology cost-efficiently achieves this goal is a complex question, given the heterogeneity of buildings and existing infrastructure, as well as the uncertainty regarding future energy prices and grid fees. This article aims to disentangle this complexity by comparing the future costs of various decentralized and centralized climate-neutral heating options. Using Germany as a case study, we calculate the future levelized cost of eleven heating technologies for different building and settlement types and a wide range of assumptions for uncertain parameters, such as energy prices and infrastructure costs. We find that electric heat pumps are most often the economical choice within the modeled range of inputs when they are deployed either decentrally, in rural areas, or centrally, with heating grids in more urban areas. Hydrogen boilers can also be cost-efficient, mainly in rural areas and in scenarios with low hydrogen prices and grid fees or high electricity grid fees. By contrast, heating with synthetic natural gas seems unlikely to be economical across our broad range of plausible input assumptions.

Suggested Citation

  • Moritz, Michael & Czock, Berit Hanna & Ruhnau, Oliver, 2024. "A heated debate – The future cost-efficiency of climate-neutral heating options under consideration of heterogeneity and uncertainty (Update)," EWI Working Papers 2024-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    • Handle: RePEc:ris:ewikln:2024_005
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    More about this item

    Keywords

    Infrastructure costs; Energy prices; Heat pumps; Hydrogen; Decarbonization; Technoeconomic analysis; Levelized costs of heating; Residential heating; Building energy;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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