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This paper analyses optimal electricity investments (PV and battery storage) to decarbonise heat supply in residential buildings under different heat pump and energy retrofitting scenarios in a detailed representation of the Swiss power and heating system. The sensitivity of PV and storage deployment, including lithium-ion (LiB) and vanadium redox flow batteries (VRFB), with respect to distribution network capacity is also investigated. We propose an open-source dispatch sector coupling model (GRIMSEL-AH) to minimise energy system costs (social planner perspective) for heating and electricity supply in Switzerland with hourly and daily time resolution for electricity and heating respectively. Moreover, our representation of the Swiss energy system includes various types of consumers and urban settings which are represented with monitored electricity demand data for each sector and simulated heat demand data at the building level for the residential sector. We find that under a "business as usual" heat pump deployment and retrofitting rate, the optimal electricity investments correspond to 27.8 GW p of PV combined with 16.9 GW (33.8 GWh) for LiB and 1.9 GW (7.6 GWh) for VRFB. For this case, 57% (13.3 TW th /year) of the residential heat demand is covered by heat pumps with a total installed capacity of 19.7 GW th by 2050 (capacity exogenously set with its operation optimised). With increasing heat pump deployment, retrofitting rates are found to have a large impact on the investment in storage and a 100% heat pump scenario for the residential sector appears to be feasible. Our results show that heat pumps do not only decarbonise heat but also provide extra flexibility to the power system, since they increase local PV self-consumption, resulting in higher PV deployment. The model and the methodology presented in this study can be applied to other countries. • Open-source sector coupling modelling framework with flexible heat pump operation. • Impact of heat pump and energy retrofitting scenarios on electricity investments. • Retrofitting rates have a significant impact on the storage investment. • Heat pumps provide extra flexibility by increasing local PV self-consumption. • Trade-offs between storage and distribution grid upgrade are discussed. [ABSTRACT FROM AUTHOR]

This paper discusses the optimal configuration of PV and electricity storage in a detailed representation of the Swiss power system. The sensitivity of storage deployment with respect to distribution network capacity is also investigated. We propose an open-source dispatch model to optimise the electricity supply of Switzerland and its four neighbouring countries with hourly time resolution. Moreover, our representation of the Swiss power system includes various types of consumers, namely, the residential (single-family house and multi-family house), service and industrial sectors, with a differentiation by rural, suburban and urban settings, resulting in 12 sub-national nodes. We then use monitored electricity demand load data for each sector. We find that the achievement of the Swiss federal target of 13.8 GW p PV capacity by 2050, which corresponds to 30% of the annual production, requires an additional storage capacity of 11 GWh (corresponding to 1.6 h of average consumption) in order to minimise total costs. However, when letting the optimisation model choose both the PV capacity and the size of energy storage, then minimal costs are achieved by a system with 24.6 GW p of PV (corresponding to 53% of the annual production) combined with 29.2 GWh (4.1 h of average consumption) of storage capacity. Our results show that storage plays an important role in minimising the total cost for energy systems with large PV capacity as well as satisfying the distribution capacity constraints. The detailed results and mechanisms at the level of sub-national nodes are discussed. The model and the methodology presented in this study with a focus the Swiss case can be applied to any country/region. • We present a dispatch model with sub-national nodes combining consumer types and urban settings. • We discuss the trade-offs between storage deployment and distribution capacity upgrade. • 24.6 GWp of PV combined with 14.6 GW (29.2 GWh) of storage is the cost optimal solution for Switzerland by 2050. • Storage plays an important role in minimising the total cost and in satisfying the distribution capacity constraints. [ABSTRACT FROM AUTHOR]