Assessment of Flexibility Requirements and Policy Interventions for a Cost-Optimal Energy Transition in Germany

Germany aims to achieve climate neutrality by 2045, with an interim target of a 65% reduction in greenhouse gas emissions by 2030 (relative to 1990). This transformation relies on expanding renewable energy and electrifying multiple sectors such as transport and heating. The resulting variability in supply and demand increases the importance of system flexibility. This thesis investigates how different flexibility options can contribute to a cost-effective decarbonization of Germany’s electricity sector. Using a fundamental capacity expansion model, this research evaluates optimal pathways for achieving net-zero emissions under technical and social constraints, considering demand growth, technology costs, carbon budget, fuel prices, and policy frameworks. Moreover, this research assesses the readiness of electricity markets to support this transition by exploring different policy measures to realize the transition. The thesis consists of four interconnected chapters: • Chapter 1 analyses demand-side flexibility from small and medium-sized enterprises (SMEs) and storage flexibility from batteries and hydrogen fuel cells, exploring cost impacts and trade-offs. • Chapter 2 studies hydrogen-ready gas turbines as a source of flexibility under varying policies. • Chapter 3 assesses low-carbon fuel blends in gas-fired plants in Germany and the UK, evaluating costs and operational implications. • Chapter 4 investigates how electricity market price signals influence investment incentives identifying necessary policy interventions. By combining technical modelling with economic analysis, the research delivers evidence-based recommendations for policies and technologies that can enable an economically viable transition to a net-zero electricity system in Germany