Decarbonization Options Research Articles

The costs of CC(U)S adaptation: The case of Russian power industry

In the context of the Climate Agenda, CC(U)S technologies are promising decarbonization options, but they are not widespread. The costs of CC(U)S are still high, and economic assessment of such initiatives for different sites and regions are of particular interest. This paper is aim to analyze the main approaches to costing CC(U)S, as well as the economic assessment of the CO2 capture option implementation on coal-fired power plant in the Murmansk region (Russia). The paper presents a brief analysis of CC(U)S costing approaches and focuses on economic assessment of CO2 capture at Apatitskaya coal-fired power plant, determining such indicators as Levelized cost of electricity and Cost of CO2 captured. The calculations have shown that the cost of CO2 captured at power plant in the Murmansk region is relatively high (263 USD per tonne). The main reasons are high capital costs, lack of tax incentives and project support. Also, the reasons are lack of economies of scale and high energy penalty. Monetization of CO2, state support of CC(U)S, scaling technologies with accompanying cost reductions can be the basis for improving the economics of such projects.

Life-Cycle Assessment and Costing of Fuels and Propulsion Systems in Future Fossil-Free Shipping.

Future ships need to operate with low or possibly zero greenhouse gas (GHG) emissions while ensuring low influence on other environmental impacts and that the operation is economically feasible. This study conducts a life-cycle evaluation of potential decarbonization solutions involving selected energy carriers (electrolytic hydrogen, electro-ammonia, electro-methanol, and electricity) in different propulsion system setups (engines, fuel cells, and carbon capture technologies) in terms of environmental impact and costs. The results of the study show that the assessed decarbonization options are promising measures to reduce maritime GHG emissions with low-carbon-intensive electricity. The same order of GHG reduction is shown to be possible independent of the propulsion system and energy carrier used onboard. However, the carbon abatement cost ranges from 300 to 550 €/tCO2eq, and there is a trade-off with environmental impacts such as human toxicity (cancer and non-cancer effects) and freshwater ecotoxicity mainly linked with the wind infrastructure used for electricity production. Electro-ammonia in fuel cells is indicated to be effective in terms of the carbon abatement cost followed by the so-called HyMethShip concept. The higher abatement cost of all options compared to current options indicates that major incentives and policy measures are required to promote the introduction of alternative fuel and propulsion systems.

Decarbonization Options in the Russian Energy Sector: a Comparative Study on Their Economic Efficiency

The study is focused on the comparison of how costly different decarbonization options in Russia are, in terms of their total expenses per a unit of CO2 avoided. We have constructed two marginal abatement cost curves reflecting different decarbonization policies in the Russian energy sector – basic and intensive scenarios. Doing that, we tried to adequately represent economic, regulation and climatic features of Russia (for instance, relatively low capital cost for most of the technologies, typical wind and solar conditions, regulation policy on natural gas cost, etc.). We found that non-carbon transport and energy savings in the demand side seem to be the most affordable decarbonization options in our country while solar heat, nuclear cogeneration and hydrogen as a carrier are uncompetitive in both scenarios observed.

Economics of aviation fuel decarbonization: A preliminary assessment

Limiting global warming to 1.5 °C requires decarbonizing all sectors of the world economy by mid-century, only 30 years from now. For sectors such as aviation, decarbonization will be challenging: There are currently no working examples of long-distance, zero-carbon commercial aircraft. While aviation emissions comprise less than 3% of world greenhouse gas emissions, aviation emissions are rising quickly. Previous studies describe technical feasibility of decarbonization options; this study compares the economics of decarbonization paths to make a preliminary assessment of cost effectiveness. We present economic data on three potential aviation decarbonization paths: 1) continuing use of fossil kerosene with direct air capture and sequestration of carbon dioxide emissions elsewhere; 2) producing hydrogen fuel from renewable electricity to replace fossil kerosene; and 3) replacing fossil kerosene with synthetic renewable kerosene produced from renewable energy. We combine estimates from the literature and expert opinion to assess the likely costs of each potential decarbonization path. Fossil kerosene plus remote sequestration appears to have the lowest short-term private cost, but is not completely sustainable; renewable kerosene could be available soon but likely has the highest cost; and hydrogen may be the least expensive fuel, but requires development of hydrogen-powered aircraft and infrastructure. Air fare changes resulting from any of the three paths are likely within the range of those seen in the last few decades. This study demonstrates that aviation decarbonization is economically feasible, through at least three paths.

Traffic ahead: Navigating the road to carbon neutrality

The journey to carbon neutrality will require trillions of dollars of capital investment over many years. Analytical models based on foresight offer guidance, but an overreliance on them can lead to a myopic focus on a single pathway. Some argue that the solution is to develop higher-resolution models, fed with increasingly granular data. Here, we note that real-time feedback is an important and underappreciated complement to this approach.We discuss how nations and corporations are currently embarking on the energy transition with the equivalent of a high-level map. The ambition is clear, but there is a lack of confidence in the best route. Routing options and conditions are changing rapidly. We outline the features of a navigation app for the energy transition that offers real-time, actionable guidance for the energy transition would be hugely beneficial. The essential function of such an app would be to collect, secure, process, and present data in a way that can support decisions by relevant actors. Such a capability would require three essential elements: route topology awareness with high-resolution details of the benefits and costs of different decarbonization options; data platforms that provide insight into the real-time situation; and trade-off tools that readily convey accurate, up-to-date, and easily-interpretable estimates of switching costs. These elements exist at varying levels of maturity, and improvement and integration is needed to deliver the utility and convenience of a road travel app.This Perspective draws on our collective experience mapping paths to carbon neutrality for the Princeton Net-Zero America study and one of China's largest energy companies (China Energy) to develop the idea of navigation apps for the energy transition. Starting with a resolved accounting of CO2 emissions, we illustrate the importance of accounting for differing motivations and leverage among actors. We discuss the essential features of a navigation app and show how progress in these areas can help address bottlenecks in large-scale clean energy deployment. We conclude with a call for increased collaboration with tech companies to accelerate development of these capabilities.

Multi-model assessment of heat decarbonisation options in the UK using electricity and hydrogen

Delivering low-carbon heat will require the substitution of natural gas with low-carbon alternatives such as electricity and hydrogen. The objective of this paper is to develop a method to soft-link two advanced, investment-optimising energy system models, RTN (Resource-Technology Network) and WeSIM (Whole-electricity System Investment Model), in order to assess cost-efficient heat decarbonisation pathways for the UK while utilising the respective strengths of the two models. The linking procedure included passing on hourly electricity prices from WeSIM as input to RTN, and returning capacities and locations of hydrogen generation and shares of electricity and hydrogen in heat supply from RTN to WeSIM. The outputs demonstrate that soft-linking can improve the quality of the solution, while providing useful insights into the cost-efficient pathways for zero-carbon heating. Quantitative results point to the cost-effectiveness of using a mix of electricity and hydrogen technologies for delivering zero-carbon heat, also demonstrating a high level of interaction between electricity and hydrogen infrastructure in a zero-carbon system. Hydrogen from gas reforming with carbon capture and storage can play a significant role in the medium term, while remaining a cost-efficient option for supplying peak heat demand in the longer term, with the bulk of heat demand being supplied by electric heat pumps.

Decarbonization options for cement production process: A techno-economic and environmental evaluation

The long-term environmental targets require significant cuts of CO2 emissions in fossil fuel-intensive industrial processes. Currently, the cement production sector is responsible for approximate 8% of world anthropogenic CO2 emissions. The present paper assesses from the technical, environmental and economic point of view different decarbonization systems integrated into cement production plants. As CO2 capture technologies, the tail-end post-combustion capture using amine-based chemical scrubbing, membrane and calcium looping were assessed as well as the partial and total oxy-combustion options. The size of decarbonized cement concept has a capacity of 1 Mt/y with 90% CO2 capture rate. The overall techno-economic assessment was based on modelling and simulation to assess the key performance indexes. A non-decarbonized cement plant was also assessed for comparison to calculate the energy and economic penalties for decarbonization. The membrane and oxy-combustion concepts have the lowest cement production cost in comparison to the reactive absorption and adsorption concepts (112–119 vs. 125–145 €/t). The full oxy-combustion plant followed by the membrane concept exhibit the lowest CO2 avoided costs comparable with the current emission tax (60–70 vs. 60–80 €/t). The reactive gas–solid system (calcium looping) exhibits superior indicators than the chemical scrubbing system due to high temperature heat recovery.

Steelmaking Decarbonization Options with Current Technology

Steelmaking Decarbonization Options with Current Technology

Long-term energy efficiency and decarbonization trajectories for the Swiss pulp and paper industry

The contribution of the industrial sector is essential to realize long-term energy and climate policy goals. The present research paper explores trajectories improving energy efficiency and reaching net-zero emissions in the Swiss pulp and paper industry by 2050. A techno-economic bottom-up cost optimization model is developed based on the Swiss TIMES Energy system Model (STEM) and applied for a scenario analysis. Establishing an advanced modeling methodology including material and product flows in addition to energy flows, allowed us to assess explicit process improvements and the impact of specific innovative production technologies. Furthermore, this paper demonstrates the value of dividing industrial heat demand into different temperature levels which enables a detailed assessment of high-temperature heat pumps and waste heat recovery as important decarbonization options in industry. The results of the scenario analysis performed with this advanced model show that an energy reduction of 23% and a reduction in the annual CO2 emissions of 71% until 2050 would result from a cost-optimal technology deployment even without major policy intervention, given the assumptions made on technology progress and costs. These improvements are achieved by fuel switching, improvements in the production processes and deployment of efficient technologies, in particular high-temperature heat pumps and efficient motors. Achieving a net-zero goal in the pulp and paper industry by 2050 requires increased amounts of biomass in the short term and additionally high-temperature heat pumps up to 200 °C in the long-term in case of biomass scarcity. On the other hand, this leads to 49% higher energy related costs compared to the baseline development, if all other sectors decarbonize simultaneously to reach net-zero CO2 emissions in Switzerland.

Country-specific cost projections for renewable hydrogen production through off-grid electricity systems

Renewable hydrogen is increasingly recognized as one of the key decarbonisation options compatible with the EU's climate neutrality goal. We quantify possible cost reductions for renewable hydrogen production until 2050 through electrolysis with off-grid renewable electricity generation systems. We focus on the use of solar PV and on- and offshore wind energy in 30 European countries. We project that towards 2050 hydrogen production costs can fall below 2 €/kg in several countries in Europe. Hybrid configurations, consisting of both onshore wind and solar PV electricity generation, generally result in lower renewable hydrogen production costs. Systems with a relatively high level of full load hours benefit from a reduced share of investment costs for the electrolyser component. The levelized cost of hydrogen produced via solar PV systems can only compete with wind-based systems when significant electrolyser cost reductions are realized, despite the ultimately low expected levelized costs of solar PV-based electricity generation. The novelty of this analysis is that it proffers an overview of the dependencies of the costs of green hydrogen production, and how these costs could decrease over the forthcoming decades across a large set of European countries. Specifically, we show how the dynamics behind the projected renewable hydrogen production costs per country highlight the role that technological learning could have in identifying the most suitable locations for hydrogen production.

Energy-socio-economic-environmental modelling for the EU energy and post-COVID-19 transitions

Relevant energy questions have arisen because of the COVID-19 pandemic. The pandemic shock leads to emissions’ reductions consistent with the rates of decrease required to achieve the Paris Agreement goals. Those unforeseen drastic reductions in emissions are temporary as long as they do not involve structural changes. However, the COVID-19 consequences and the subsequent policy response will affect the economy for decades. Focusing on the EU, this discussion article argues how recovery plans are an opportunity to deepen the way towards a low-carbon economy, improving at the same time employment, health, and equity and the role of modelling tools. Long-term alignment with the low-carbon path and the development of a resilient transition towards renewable sources should guide instruments and policies, conditioning aid to energy-intensive sectors such as transport, tourism, and the automotive industry. However, the potential dangers of short-termism and carbon leakage persist. The current energy-socio-economic-environmental modelling tools are precious to widen the scope and deal with these complex problems. The scientific community has to assess disparate, non-equilibrium, and non-ordinary scenarios, such as sectors and countries lockdowns, drastic changes in consumption patterns, significant investments in renewable energies, and disruptive technologies and incorporate uncertainty analysis. All these instruments will evaluate the cost-effectiveness of decarbonization options and potential consequences on employment, income distribution, and vulnerability.

Industrial energy use and decarbonisation in the glass sector: A UK perspective

• Energy use and decarbonisation options for the UK Glass sector have been evaluated. • The glass sector was examined in its historical context and industrial structure. • Glass is largely recyclable, and can contribute to ‘circular economy’ aspirations. • The techno-economic improvement potential of glass-making processes was assessed. • ‘Technology roadmaps’ were developed for various alternative scenarios out to 2050. The potential for reducing industrial energy demand and greenhouse gas (GHG) emissions in the UK glass sector has been evaluated, although the lessons learned are applicable across much of the industrialised world. It encompasses a range of product outputs, including flat glass (for glazing in the construction and automotive industries), container glass (bottles and jars), domestic glassware, fibreglass, and scientific hollow glass. Glass processing is a moderately energy-intensive industrial sector, and its GHG emissions are relatively low (~3% of those emanating from UK industry as a whole). This technology assessment was conducted within the context of the historical development of the glass sector, as well as its contemporary industrial structure. Currently available technologies will lead to short-term energy and GHG emissions savings in the sector, but the prospects for the commercial exploitation of innovative technologies by mid-21 st century is speculative. Glass is potentially 100% recyclable, and could therefore contribute to UK ‘circular economy’ or resource efficiency aspirations. Finally, a set of low-carbon UK technology roadmaps for the glass sector out to 2050 has been developed and evaluated, based on various alternative scenarios and the techno-economic characterisation of improvement potentials. These roadmaps help identify the steps needed to be undertaken by industrialists, policy makers and other stakeholders in order to facilitate decarbonisation of the UK glass sector.

Zero-Emission Pathway for the Global Chemical and Petrochemical Sector

The chemical and petrochemical sector relies on fossil fuels and feedstocks, and is a major source of carbon dioxide (CO2) emissions. The techno-economic potential of 20 decarbonisation options is assessed. While previous analyses focus on the production processes, this analysis covers the full product life cycle CO2 emissions. The analysis elaborates the carbon accounting complexity that results from the non-energy use of fossil fuels, and highlights the importance of strategies that consider the carbon stored in synthetic organic products—an aspect that warrants more attention in long-term energy scenarios and strategies. Average mitigation costs in the sector would amount to 64 United States dollars (USD) per tonne of CO2 for full decarbonisation in 2050. The rapidly declining renewables cost is one main cause for this low-cost estimate. Renewable energy supply solutions, in combination with electrification, account for 40% of total emissions reductions. Annual biomass use grows to 1.3 gigatonnes; green hydrogen electrolyser capacity grows to 2435 gigawatts and recycling rates increase six-fold, while product demand is reduced by a third, compared to the reference case. CO2 capture, storage and use equals 30% of the total decarbonisation effort (1.49 gigatonnes per year), where about one-third of the captured CO2 is of biogenic origin. Circular economy concepts, including recycling, account for 16%, while energy efficiency accounts for 12% of the decarbonisation needed. Achieving full decarbonisation in this sector will increase energy and feedstock costs by more than 35%. The analysis shows the importance of renewables-based solutions, accounting for more than half of the total emissions reduction potential, which was higher than previous estimates.

A review of decarbonization options for the glass industry

The glass industry is part of the energy-intensive industry posing a major challenge to fulfill the CO2 reduction targets of the Paris Climate Agreement. The segments of the glass industry, e.g., container or flat glass, are quite diverse and attribute to different glass products with different requirements to product quality and various process options. To address the challenge of decarbonizing the glass industry, firstly, an inventory of current glass products, processes and applied technologies in terms of energy efficiency and CO2 emissions is conducted. Secondly, decarbonization options are identified and structured according to fuel substitution, waste heat recovery and process intensification. Due to the high share of energy-related CO2 emissions, electrical melting and hydrogen combustion, or a combination of both, are the most promising options to decarbonize the glass industry but further research, design adjustments and process improvements are necessary. Furthermore, electricity and hydrogen prices have to decrease or fossil fuels must become more expensive, to be cost-competitive relative to fossil fuels and respective infrastructures have to be constructed or adjusted. Various heat recovery options have great potential for CO2 savings but can be technically challenging or have not yet been considered for techno-economic reasons.

Decarbonizing cement production

Paul Fennell is a professor of clean energy at the Department of Chemical Engineering, Imperial College London. His work encompasses the decarbonization and re-thinking of industrial processes, including the production of iron and steel and cement manufacture. He also works in the broader field of industrial decarbonization, including synergies between industry and power generation. Steve Davis is a professor of Earth system science and civil and environmental engineering at the University of California, Irvine, where he researches trends and drivers of GHG emissions, net-zero emissions energy systems, and the environmental impacts of energy production, climate change, and international trade. Aseel Mohamed received an MSc in advanced chemical engineering from Imperial College London. Her research focused on investigating the various decarbonization technologies used to capture CO2 emissions in order to mitigate climate change effects.

Quantifying the comparative value of carbon abatement scenarios over different investment timing scenarios

The world economy must rapidly decarbonize to reduce the likelihood of catastrophic climate change. Multiple decarbonization options are available to policymakers today, comprising both mature technologies that are fully commercialized and immature technologies that are not yet fully commercialized but offer potentially higher annual greenhouse gas emission reductions. Using static carbon intensity values, this analysis quantifies the comparative impact that different investment timing scenarios have on the financial value of decarbonization scenarios for Class 8 heavy-duty trucks (HDTs). We model both weight-limited and volume-limited cargo transport scenarios for a mature biomass-based diesel scenario (BBD) and an immature battery-electric (BE) scenario. We calculate the 20-year net present value (NPV) in which the social cost of carbon (SCC) benefit of low-carbon fuels is internalized. Under the weight-limited scenario, the results of this analysis illustrate that immediate investment in a mature, currently-commercialized BBD scenario yields the highest NPV and accounts for the second-lowest total quantity of greenhouse gas (GHG) emissions among the four scenarios analyzed. Under the volume-limited scenario, the BBD-BE scenario yields the highest NPV and accounts for the lowest total GHG emissions. In addition to the standard petroleum diesel (PD) scenario which offers no SCC benefit, the PD to BE scenario incurs the lowest cumulative SCC benefits despite the high potential annual SCC benefit offered by the BE option, under both the weight-limited and volume-limited scenarios.

Cost-effectiveness of decarbonisation options for the vegetable-oil and -fat industry in the Netherlands

There is significant emission reduction potential in the Dutch vegetable oil and fat industry, which consists of seven companies each producing more than 10 kt CO2 per year, emitting a total of 0.36 Mt CO2 in 2018. Marginal Abatement Cost (MAC) curves are constructed to provide an overview of the most cost-effective decarbonisation options. Both energy efficiency technologies and alternative heating systems are combined in order to achieve technological configurations for full decarbonisation of this industry. Energy consumption for vegetable oil processing can be reduced by 44% for rapeseed oil, 45% soybean oil, and 57% for palm oil. Vertical Ice Condensing is the most cost-effective decarbonisation option, while biogas boilers are the most cost-effective alternative heating systems that can supply energy in all stages of production. However, the availability of processing residues limits the energy substitution possible with biogas boilers. Electric boilers are therefore required to deliver the residual energy necessary to realise zero carbon emissions. Together the cost-effective decarbonisation options can abate between 38% and 40% of the total CO2 emissions by 2020 and 2030 respectively.

Techno-economic and environmental implications of decarbonization process applied for Romanian fossil-based power generation sector

This study estimates the technical, economic and environmental impact of decarbonization strategy on Romanian fossil power generation sector. Two post-combustion decarbonization options are considered either for existing power plant retrofit or new investment based on current conventional designs: a technological and commercial mature chemical scrubbing process using methyl-diethanol-amine (MDEA) and one more innovative and energy-efficient gas-solid process using calcium looping (CaL). Considering the Romanian power generation sector conditions, natural gas, hard coal and lignite were assessed as fuels. The decarbonized designs have 1000 MW net electricity output to permit an easier scale-up calculation with 90% CO2 capture rate. The non-decarbonized designs are also assessed to quantify the decarbonization energy and economic costs. It was shown that the decarbonization of Romanian fossil-fired electricity plants has significant benefits in term of increasing overall energy efficiency (from current 30–33% for coal and lignite and 35–39% for natural gas to 32.5–36% and 48–52% respectively) as well as reducing the cost of electricity (from current 80–120 €/MWh to 55–85 €/MWh). The investment effort to replace all fossil fleet (both gas and coal) with new modern units is foreseen to be substantial (about 11.2–14.9 billion Euro). A detailed environmental analysis was provided to assess the overall impact of decarbonization.

Power-to-Gas, Hydrogen, and a Spotlight on New York's Emerging Climate and Energy Policy

This paper examines the role of law and regulation in advancing technology-based energy decarbonization options such as hydrogen compatible networks and power-to-gas (P2G) in the context of New York’s energy and climate change mitigation goals. By exemplifying the potential of P2G and hydrogen, it underscores the need for a more comprehensive legal and regulatory framework that (i) reflects the peculiarities of gas and electricity systems (on the one hand) and (ii) facilitates a more effective and integrated energy decarbonization pathway (on the other hand). Hydrogen is an energy carrier with a significant potential to deliver zero and low-carbon energy depending on how it is produced. Also, when combined with oxygen in a fuel cell, hydrogen produces heat and electricity with only water vapor as a by-product. It has been used for several years in bespoke applications in the aeronautics, industrial, and transportation sectors. About ten million metric tons of hydrogen is currently produced in the US every year, and ninety-five percent of which is via centralized reforming of natural gas (i.e. steam methane reformation (SMR) and known as “Blue Hydrogen”) used mostly in petroleum refining and ammonia industries. Other modes of utilization include fuel cell vehicles, metals refining, and synthetic natural gas production. Notably, the P2G process leads to the production of “green hydrogen” by using electricity that would otherwise be curtailed or lost, from variable renewable energy (VRE) sources such as solar and wind. Such VRE sourced energy can be used to split water into its hydrogen and oxygen components. The ‘green hydrogen’ process is becoming increasingly relevant to the issues of (i) decarbonization of gas and electricity networks; and (ii) solving the ‘curtailment’ ‘intermittency’ and ‘storage’ challenge in an energy system where renewables are gradually playing a larger role. It may also be key to facilitating the integration of a growing share of VREs in existing networks and in the same vein helping to avoid the ‘stranded assets’ dilemma faced by operators of natural gas pipeline and storage networks which can be compatible with hydrogen or synthetic methane produced as a result. Law and regulation provide a facilitative means through which relevant institutions and operators can work towards decarbonization and develop the requisite technology-based solutions while addressing the energy policy challenges created by the increasing role of VREs. Such considerations are even more relevant for a state such as New York. Even though the state’s Clean Energy Standard revised in 2019 requires 100% carbon-free electricity by 2040; in 2019, 29% of New York's in-state generation came from renewable sources. One-third of its utility-scale net generation came from in-state nuclear power plants that are scheduled to be decommissioned soon, while it was the sixth-largest natural gas consumer in the US, and three in five households used natural gas for home heating. The emerging energy decarbonization issues can be met if, among other things, law and regulation are viewed from a functional lens. In this regard, ‘regulation’ is considered as part of a legal framework that is instrumentalist in orientation with the aim of pursuing defined energy policy objectives which typically comprise of ensuring (i) secure and reliable supplies, (ii) sustainability while protecting the environment, and (iii) ensuring that costs and rates are just and reasonable both for the suppliers and consumers. The (ii) dimension is crucial in a carbon-constrained world. Thus, the paper will consider these highlighted issues and in Part II discuss the growth and challenges with VREs in the US energy mix and then highlight potential role(s) for hydrogen and P2G as an example of innovative technology-based decarbonization solution as well as a means of efficiently integrating growing VREs in electricity context with natural gas networks. Part III will examine the regulatory issues in the regulation of gas and electricity systems in a carbon-constrained world and the challenges and potential for decarbonization by deploying hydrogen and P2G. Part IV examines New York’s emerging climate and energy regulation framework and points out the possible issues with deploying P2G and hydrogen in the state. The paper concludes by highlighting that in the pathways to decarbonization the overarching objective in determining how and what to regulate should be ‘curbing greenhouse gas emissions’. It also underscores the need to develop an integrated policy and regulatory framework that can enhance the required technologies and energy systems in the path towards decarbonization.

Heating with wind: Economics of heat pumps and variable renewables

Abstract With the growth of wind and solar energy in electricity supply, the electrification of space and water heating is becoming a promising decarbonization option. In turn, such electrification may help the power system integration of variable renewables, for two reasons: thermal storage could provide low-cost flexibility, and heat demand is seasonally correlated with wind power. However, temporal fluctuations in heat demand may also imply new challenges for the power system. This study assesses the economic characteristics of electric heat pumps and wind energy and studies their interaction on wholesale electricity markets. Using a numerical electricity market model, we estimate the economic value of wind energy and the economic cost of powering heat pumps. We find that, just as expanding wind energy depresses its €/MWhel value, adopting heat pumps increases their €/MWhel cost. This rise can be mitigated by synergistic effects with wind power, “system-friendly” heat pump technology, and thermal storage. Furthermore, heat pumps raise the wind market value, but this effect vanishes if accounting for the additional wind energy needed to serve the heat pump load. Thermal storage facilitates the system integration of wind power but competes with other flexibility options. For an efficient adoption of heat pumps and thermal storage, we argue that retail tariffs for heat pump customers should reflect their underlying economic cost.