Fostering Decentralized Multi-Energy Systems: Policy Strategies and Methods for Effective Sector Coupling

Abstract

The transition to decentralized sector-coupled energy systems, also known as multi-energy systems (MES), presents a promising pathway to cost-effective decarbonization. By integrating electricity with electrified energy services such as heating and mobility at the local level, MES can reduce emissions, lower costs, and increase energy independence. However, realizing these benefits requires addressing several challenges, from navigating trade-offs between cost, emissions, and energy independence in potential system designs to overcoming behavioral barriers. Policies can shape energy systems by fostering the adoption of technologies such as photovoltaic (PV) systems, heat pumps, and electric vehicles (EVs) through instruments such as feed-in tariffs and carbon taxes. Additionally, new policies may be required to mitigate emerging issues, such as grid congestion resulting from increased residential PV installations. Effective policy design requires an understanding of their impacts on household-level energy systems while considering factors such as public acceptance and cost distribution. Moreover, behavioral barriers, such as consumers’ reluctance to invest in energy-efficient technologies, must be better understood and included in our modeling to overcome real-world adoption challenges. This thesis aims to address four key challenges in the transition toward decentralized sectorcoupled energy systems, with a focus on identifying policy options to foster low-carbon and cost-efficient MES. To this end, four modeling approaches are developed and applied to specific case studies, addressing the following objectives: → Objective 1 Quantify benefits and identify trade-offs of EV charging strategies for municipal energy systems → Objective 2 Investigate the impact of different export limitation policies on trade-offs in the PV design for residential buildings → Objective 3 Quantify the impact of policies on consumers and prosumers → Objective 4 Assess policies to overcome investment barriers to residential heat pump adoption The increasing electrification of transportation is essential for decarbonization, yet it poses significant challenges for local energy systems due to rising electricity demand. Understanding how different EV charging strategies impact energy system design is crucial for ensuring cost-effective and reliable energy transitions. Chapter 2 investigates the role of passive charging, smart charging, and vehicle-to-grid (V2G) in shaping municipal energy systems across varying urbanization levels, thereby addressing Objective 1 of the thesis. The findings show that flexible EV charging reduces stationary storage needs and enhances self-sufficiency, particularly in solar-dominated urban areas, while wind dominated regions see an increase in self-consumption of locally produced electricity from wind. Additionally, the chapter concludes that oftentimes V2G does not offer significant benefits over smart charging, questioning whether pushing for bidirectional V2G charging is sensible in all cases. By providing a computationally efficient EV aggregation method, this chapter contributes to optimization methods for decentralized energy systems and informs policymakers on effective EV integration strategies. As residential PV adoption grows in Switzerland, policymakers and distribution system operators are considering export limitations on PV electricity fed into the grid. However, the implications of such policies on the cost- and emission-optimal design of PV systems remain unclear. Chapter 3 investigates how feed-in constraints influence optimal PV orientation, panel sizing, and battery storage decisions by employing an optimization framework, addressing Objective 2 of this thesis. The analysis incorporates dynamic grid emissions, temperature-dependent PV efficiency, and cost differences between rooftop and façade panels. Results show that strict export limitations reduce the economic and environmental benefits of excess PV generation, leading to smaller installations with steeper panel tilts that prioritize self-consumption over total production. More moderate export limitations, however, have little effect on the optimal system design. While cost-optimal designs favor larger systems without batteries, emission-optimal solutions integrate storage to enhance self-sufficiency. These findings provide critical insights for policymakers seeking to balance economic feasibility, grid stability, and decarbonization goals when assessing potential future policies. Effective policy design is essential for accelerating the adoption of low-carbon technologies such as PV systems, heat pumps, and electric vehicles. However, different policy mechanisms have trade-offs in terms of cost-effectiveness, emission reductions, and energy equity. Chapter 4 examines the impact of four policy instruments, namely feed-in tariffs, PV investment subsidies, carbon taxes, and emission limits, on building-level MES. Using an optimization framework, the analysis assesses economic, environmental, and social sustainability outcomes across different end-user groups, addressing Objective 3 of the thesis. Results indicate that while subsidies lower costs for prosumers, they increase costs for passive consumers, raising concerns about the cost distribution of policies. Carbon taxes and emission caps, in contrast, lead to more uniform cost distribution while effectively driving emissions reductions and supporting heating electrification. The findings highlight the importance of policy approaches that balance cost-effectiveness, decarbonization, and equitable cost distribution among end-users. Decarbonizing residential heating is critical to meeting climate targets, yet heat pump adoption in Switzerland remains insufficient. Chapter 5 uses an agent-based model (ABM) to assess the effectiveness of carbon taxes and investment subsidies in promoting heat pump adoption. The study thereby addresses Objective 4 of the thesis. The analysis simulates adoption rates for single- and multi-family houses, highlighting the significant role of upfront financial incentives. Without policy intervention, adoption is projected to reach only 40% by 2035, far below the national target of 55%. A carbon tax of 120 CHF/tCO2 or a 20% investment subsidy alone increases adoption to around 46-47%, but only a combined policy approach meets the target. By calibrating the model on historic adoption data, we estimate the mean implicit discount rate to be 50.3%, suggesting that individuals tend to underestimate long-term financial benefits and are reluctant to take upfront investments. As a result of the investment barrier, policies addressing upfront costs are more effective than those targeting operational savings. To overcome such behavioral investment barriers, the chapter proposes three strategies: low-interest loans, heating-as-a-service models, and information campaigns. These findings offer key insights for policymakers to design comprehensive policy mixes that accelerate heat pump adoption and support Switzerland’s decarbonization goals. To summarize, this thesis examines the role of policies in fostering technology adoption and shaping decentralized sector-coupled energy systems. The findings reveal trade-offs between different policy instruments in terms of their impact on costs, emissions, and energy independence. Financial incentives alone may not be sufficient since behavioral barriers, such as households’ reluctance to invest in capital-intensive technologies, must also be addressed. Strategies such as low-interest loans, heating-as-a-service models, and information campaigns can help overcome these challenges. We further conclude that encouraging time-shifted smart EV charging might be preferable over following a bidirectional V2G charging strategy, since the additional benefits of the latter are rather minor and there might be additional barriers in consumer acceptance to overcome. Moreover, our analysis suggests that moderate export limitations for residential PV systems might yield a good trade-off between managing local distribution grid constraints without disincentivizing investments in residential PV systems. Methodologically, the thesis underscores the importance of accurately representing key technologies to avoid overestimating their potential benefits. Moreover, we suggest that integrating concepts and findings from social sciences into energy system models allows for a better representation of human behavior and thus allows for a more accurate estimate of policy impacts.