Individual compression heat pumps constitute a potentially valuable resource in supporting wind power integration due to their economic competitiveness and possibilities for flexible operation. When analysing the system benefits of flexible heat pump operation, effects on investments should be taken into account. In this study, we present a model that facilitates analysing individual heat pumps and complementing heat storages in integration with the energy system, while optimising both investments and operation. The model incorporates thermal building dynamics and covers various heat storage options: passive heat storage in the building structure via radiator heating, active heat storage in concrete floors via floor heating, and use of thermal storage tanks for space heating and hot water. It is shown that the model is well qualified for analysing possibilities and system benefits of operating heat pumps flexibly. This includes prioritising heat pump operation for hours with low marginal electricity production costs, and peak load shaving resulting in a reduced need for peak and reserve capacity investments. (C) 2013 Elsevier Ltd. All rights reserved.