The heating sector accounts for a major part of Germanys energy consumption and carbon emissions. Both, renewable energy and power-to-heat, could help decarbonizing it. To analyse the impacts of power-to-heat and heat storage on power system development, a dynamic long-term power sector investment and dispatch model for Europe is extended to also include German individual and district heating. Findings show that power-to-heat causes a substantial rise in electricity demand, even if heat energy demand decreases strongly. Power generation from wind and natural gas accordingly increase. Power-to-gas capacity increasingly substitutes battery storage. Combined heat and power does not play a role in future scenarios.