Optimizing residential PV-driven heat pumps with lithium-ion batteries reduces LCOE by 7%

Scientists in Spain have simulated the combination of power-to-heat-to-power storage systems with lithium-ion batteries to supply energy needs and heat pump production of an electrified dwelling. PV self-consumption was found to increase by up to 20% and levelized cost of energy decrease by 7%.

April 14, 2025 Lior Kahana

A roof in Madrid

mage: Diario de Madrid, Wikimedia Commons, CC BY 4.0

Researchers from Spain’s Technical University of Madrid (UPM) have conducted a techno-economic analysis of the integration of power-to-heat-to-power storage (PHPS) systems with lithium-ion (Li-ion) batteries and heat pumps (HPs). The study focuses on a fully electrified dwelling in Madrid, simulating the performances via PVSyst and EnergyPlus.

“Hybridizing Li-ion batteries with PHPS could capitalize on their complementarity characteristics, enabling them to meet both peak and base load demand, while utilizing the waste heat generated by PHPS as a valuable by-product,” the group stated. “Such a hybrid system could significantly enhance PV self-consumption, thereby reducing reliance on grid electricity”

The academics simulated two systems in the research. One was for control, using only a Li-ion battery (L system), and the other used both Li-ion and PHPS in a hybrid form (LP system). In both of them, the surplus of PV generation is stored either in the batteries or in the low-temperature thermal energy storage (LTES) system. The LTES system is comprised of a power-to-heat (P2H) converter and a hot water storage (HWS) tank.

The PHPS system includes both P2H and H2P converters, as well as a high-temperature energy storage unit (HTES). A resistive heater is considered for the P2H converter, with the H2P conversion being accomplished using a heat engine with a certain discharge efficiency at the operating temperature of the PHPS.

Each case was tested with either an electrical heater, where the coefficient of performance (COP) is 1, or with a heat pump, with a COP of 2.7. The yearly demand for the dwelling was assumed to be 20 MWh, 16 MWh of which was for heating demand and 4 MWh for electricity demand. The Nelder-Mead simplex algorithm was used to optimize the system based on the levelized cost of energy (LCOE).

The simulations showed that, if the building uses a heat pump with a hybrid Li-ion PHPS storage, its minimum LCOE would be €76 ($86.5)/ MWh, its PV self-consumption will reach 68.3% and its round trip efficiency (RTE) will be 96.9%.

If only Li-ion is used with the heat pump, measurements will be €77/ MWh, 68.3%, and 96.9%, respectively.

In the case where electric heating is used, and not a heat pump, the hybrid Li-ion PHPS will result in a minimum LCOE of €147/ MWh, a PV self-consumption rate of 79.5%, and an RTE of 91.7%.

If only Li-ion is used with the electric heater, measurements will be €149/ MWh, 68.6% and 97.1%, respectively.

“Under the assumptions of this study, the hybrid solution reduces the levelized cost of consumed energy by 7% compared to a system relying solely on Li-ion batteries, while simultaneously increasing PV self-consumption by up to 20%,” the academics concluded. “Furthermore, the inclusion of a heat pump enhances the system’s efficiency, enabling not only a reduction in electricity demand, but also the downsizing of key system components. Remarkably, the addition of a heat pump does not replace PHPS in favor of Li-ion batteries but instead encourages the hybridization of PHPS and Li-ion batteries, underscoring the complementary roles of these technologies.”

The results were presented in “Integrating lithium-ion and thermal batteries with heat pumps for enhanced photovoltaic self-consumption,” published in Applied Energy.

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