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Faculty of Economics

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Fajardy, M., Reiner, D M.

An overview of the electrification of residential and commercial heating and cooling and prospects for decarbonisation


Abstract: Heating and cooling are responsible for over 50% of the world’s final energy consumption, and over 40% of global CO2 emissions. With an increasingly decarbonised electricity grid, the electrification of heating offers one potential alternative to the incumbent, heavily fossil-fuel dominated heating system. However, the high penetration of renewables, the high seasonality and hourly variability of heat demand, and an increasing domestic demand for energy services, including cooling, pose significant balancing challenges for both hourly system operation and the long-term investment decision planning of electricity systems. The combination of both demand-response measures and the integration of flexible systems will be required to deliver low carbon heating and cooling, while integrating an increasing share of renewable electricity, and managing peak load. We provide a global overview of the technical, economic and policy challenges and opportunities to decarbonise heating demand through electrification, in the context of rising demand for cooling services.

Keywords: Heating, cooling, electrification, decarbonisation, peak load management, demand response

JEL Codes: L95 O13 Q41 Q42

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EPRG Paper Link: 2037

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