A R T I C L E I N F O Keywords: Virtual power plant Thermal energy storage Power balancing Power to heat Variable renewable electricity Combined heat and power A B S T R A C T Power systems with large shares of variable renewable electricity generation, i.e., wind and solar power, require high flexibility in both power generation and demand. Heat pumps and combined heat and power units within district heating systems, and thermal storages have previously been studied for their potential to

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... ase the flexibility of the energy system. When using these technologies for power balancing, they must be operated in a non-standard way with switched merit-order. This study hypothesizes that a residential area could form a local operated entity, i.e., a virtual power plant, that provides power-balancing services to a national power system. The hypothesis is tested with a case-study in Sweden where a combined heat and power unit, heat pumps, a local heat distribution system, and a thermal storage constitute the local entity. A simulation of the energy balances in the system, with optimization of storage size, was performed. The results show that all power surpluses in the system are consumed by the heat pumps. 43% of the annual and 21% of the electricity peak load are covered by the combined heat and power unit. It is concluded that an inter-seasonal thermal storage is crucial for the system's flexibility. Also, large electricity surpluses, if converted to heat and stored, limit the ability of the virtual power plant to utilize the combined heat and power unit for power balancing at a later stage. Despite this, a local virtual power plant can provide increased flexibility by offering power-balancing services to the power system.