The Impact of System Integration on System Costs of a Neighborhood Energy and Water System

The fossil-based energy system is transitioning towards a renewable energy system. One important aspect is the spatial and temporal mismatch between intermitted supply and continuous demand. To ensure a reliable and affordable energy system, we propose an integrated system approach that integrates electricity production, mobility, heating of buildings and water management with a major role for storage and conversion. The minimization of energy transport in such an integrated system indicates the need for local optimization. This study focuses on a comparison between different novel system designs for neighborhood energy and water systems with varying modes of system integration, including all-electric, power-to-heat and power-to-hydrogen. A simulation model is developed to determine the energy and water balance and carry out economic analysis to calculate the system costs of various scenarios. We show that system costs are the lowest in a scenario that combines a hydrogen boiler and heat pumps for household heating; or a power-to-X system that combines power-to-heat, seasonal heat storage, and power-to-hydrogen (2070 €/household/year). Scenarios with electricity as the main energy carrier have higher retrofitting costs for buildings (insulation + heat pump), which leads to higher system costs (2320–2370 €/household/year) than more integrated systems. We conclude that diversification in energy carriers can contribute to a smooth transition of existing residential areas.