A heated debate—The future cost efficiency of climate-neutral heating options under consideration of heterogeneity and uncertainty

Michael Moritz, Berit Hanna Czock and Oliver Ruhnau

Energy Policy, 2025, vol. 206, issue C

Abstract: To tackle climate change, residential heating must become climate-neutral. Which technology cost-efficiently achieves this goal is a complex question, given the heterogeneity of buildings and existing infrastructure, as well as the uncertainty regarding future energy prices and infrastructure costs. The present article aims to disentangle this complexity by comparing the future costs of various decentralized and centralized climate-neutral heating options. Using Germany as a case study, we calculate the future levelized cost of ten heating technologies for different building and settlement types and a wide range of assumptions for uncertain parameters, including energy prices and grid fees. We find that electric heat pumps are most often the economical choice within the considered range of inputs. Decentralized heat pumps appear to be preferable in rural areas, while heating grids with central heat pumps seem equally attractive in more urban areas. Hydrogen boilers would be cost-efficient only in scenarios with low hydrogen prices and, even then, often limited to rural settlements. Heating with synthetic natural gas seems unlikely to be economical across a broad range of plausible assumptions. Our results allow us to draw conclusions for policymakers in the German context and offer insights for similar policy debates in other countries.

Keywords: Infrastructure costs; Energy prices; Heat pumps; Hydrogen; Decarbonization; Techno-economic analysis; Levelized costs of heating; Residential heating; Building energy (search for similar items in EconPapers)
JEL-codes: D61 E61 Q40 Q42 Q48 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421525002976
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:206:y:2025:i:c:s0301421525002976

DOI: 10.1016/j.enpol.2025.114790

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().