The energy transition is the transformation of the energy system and the main energy resources from fossil-based to zero-carbon resources. Decarbonization of the end-use sectors and the integration of the variable renewable energy (VRE) sources are the main challenges of the transition. In the Netherlands, the heat sector depends on natural gas and much more effort is needed for reducing CO2 emissions. This research proposal presents "sector coupling" of power and heat markets in the Netherlands as a promising solution to the above-mentioned challenges. The addressed research question is: “What are the flexibility implications of the increasing sector coupling between heat and power?”. A flexible heat demand and hybrid technologies for heating will have a significant grid and market implications. In addition, to unlock this potential, incentives and amendments on regulations are necessary. A model-based study by using the power systems model COMPETES reveals the flexibility potential, power sector implications and the effects on end-users: households and industry. Effects of natural gas and electricity price structures are also investigated as one of the important barriers against power-to-heat technologies. Results reveal that flexibility of the heat demand provides a more cost-efficient coupling. The policy instruments such as a tax shift from electricity to natural gas have the potential to make power-to-heat technologies more attractive.