Complementarities of Supply and Demand Sides in Integrated Energy Systems

New small-scale demand-side technologies, such as micro combined heat and power technologies ( {\mu } CHPs) and heat pumps, offer opportunities to increase system-wide efficiency. Furthermore, the technical and economic characteristics of demand-side technologies could also complement the supply side by providing system services, such as adequacy and flexibility, which are increasingly required due to high variable renewable energy penetration. A capacity expansion methodology that captures the interactions between the supply and demand sides is developed to find cost-optimal and adequate investment portfolios. For the case study presented, the integrated energy system leverages the technical and economic complementarities of different supply and demand-side technologies. As a result, system integration using demand-side technologies improves the value proposition for decentralization given that the technologies can provide heat demand, while also meeting electricity demand and providing adequacy and flexibility.