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The residential and commercial sector in MESSAGE distinguishes two demand categories, thermal and specific.Thermal demand, i.e. low temperature heat, can be supplied by a variety of different energy carriers while specific demand requires electricity (or a decentralized technology to convert other energy carriers to electricity).

This stylized residential and commercial thermal energy demand includes fuel switching as the main option, i.e. different final energy forms that provide energy for thermal energy can be chosen from. In addition to the alternative energy carriers that serve as input to these thermal energy supply options, their relative efficiencies also vary. For example, solid fuels such as coal have a lower conversion efficiency than natural gas, direct eletric heating or electric heat pumps. Additional demand reduction in to response to price increases in policy scenarios is included via the fuel switching option (due to the fuel-specific relative efficiencies) as well as via the linkage with the macro-economic model MACRO (see illustrative the figure in the transport section). The specific residential and commercial demand can be satisfied either by electricity from the grid or with decentralized electricity generation options (including CHP) such as fuel cells.

To reflect limitations of switching to alternative fuels, for example as a result of limited infrastructure availability (e.g., district heating network) or some energy carriers being unsuitable for certain applications, share constraints of energy carriers (e.g., electricity) and energy carrier groups (e.g., liquid fuels) are used in the residential and commercial sector. In addition, the diffusion of speed of alternative fuels is limited to mimic bottlenecks in the supply chains, not explicitly represented in MESSAGE (e.g., non-energy related infrastructure) (add link).

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