Quantifying demand shifting potential of domestic hot water storage under dynamic electricity pricing

Domestic hot water (DHW) preparation represents a growing share of residential energy demand and offers substantial demand-shifting potential, as peak loads align with high electricity price periods. This study quantifies the technical requirements for DHW thermal energy storage (TES) systems to meaningfully exploit dynamic electricity pricing, focusing on storage capacity, charging rate, and discharge rate as system-level flexibility constraints. A technology-agnostic linear optimization framework was applied across three European electricity markets (Germany, France and Spain) over 2021–2025, evaluating 243 unique TES configurations using normalized performance metrics to ensure generalisability across system sizes and technologies. Results demonstrate that the economic value of flexible DHW storage is increasing across all markets due to rising intraday price volatility, such that technically constrained systems in 2025 consistently deliver higher relative cost savings than unconstrained systems in 2021. Additionally, cost-based demand shifting consistently delivers greenhouse gas emission reductions alongside cost savings. Storage capacity is the primary flexibility-enabling parameter, with diminishing returns beyond 70% of daily DHW demand. Reducing charging time below four hours provides negligible cost savings at current intraday price dynamics. Discharge power emerges as the dominant flexibility bottleneck for large-capacity systems due to DHW's characteristically high-power peaks. Findings are synthesised into performance heat maps and four distinct flexibility regimes providing a transferable framework for TES design evaluation.