Achieving a fully decarbonised power system is not just a question of building more renewables—it’s about ensuring reliable, cost-effective flexibility to cover long-duration gaps in supply. As fossil fuels are phased out, the challenge of replacing their dispatchable capacity becomes increasingly urgent. While a range of clean alternatives exist on paper, many still face significant barriers to scalability, affordability, and near-term deployment.
Against this backdrop, our recent study for WePlanet-DACH explores a technology pathway scenario, denoted “VRE100”, for the German power system which aligns well with the current energy policy. Employing a high CO2 price of 250 €/tCO2 as the sole driver of emission mitigation, the study shows an emission reduction of 91.6% compared to 1990s levels achieved for this scenario. Remaining direct emissions stem from open-cycle natural gas power plants which despite the high cost of emitting CO2 remain competitive against alternative technologies. Whilst these results highlight the magnitude of the challenge to fully decarbonise the German power system, it is relevant to further understand the additional costs and other consequences associated with a “VRE100” system that achieves deep decarbonisation, here defined at 97%.
By restricting natural gas use and direct emissions reduction to 97% of 1990s levels in a scenario denoted “VRE100 Clean”, the study finds several critical changes to the energy mix compared to the “VRE100” scenario as presented in the figure below.
The shift to the 'VRE100 Clean' scenario brings substantial changes to the energy mix, as seen in the following capacity adjustments. Open-cycle gas turbines (Gas OC) see a dramatic decrease of 75% (-38 GW), which reflects the constrained use of natural gas. The gap in dispatchable capacity is filled by hydrogen power plants (+108% or +30 GW) and a significantly increased offshore wind (+42% or +28 GW) and solar (+28% or +88 GW) generation capacity to produce the hydrogen with electrolysers to fuel the gas turbines. Onshore wind remains at its maximum expansion level while battery storage capacity sees a 10% (-5 GW) reduction.
The “VRE100 Clean” scenario achieves greater emissions reductions compared to the “VRE100” scenario but comes at the cost of significantly reduced system performance. The results show an increase of 18% system costs, 39% increase of transmission costs driven by offshore wind expansion, and 60% increase of import dependency. Although electricity prices and volatility were not explicitly simulated for the “VRE100 Clean” scenario, it is evident that the market would face additional pressures. Sustaining the profitability of a larger generation capacity, combined with increased weather dependency, would likely exacerbate market instability, posing significant risks to energy system investors, including both producers and consumers.
The heavy dependence on locally produced hydrogen for balancing power, coupled with increased offshore wind and transmission investments, adds layers of uncertainty to Germany’s decarbonisation strategy.
There is a risk that electrolyser cost reductions fail to materialize (notably we assume very optimistic costs), the feasibility of this pathway would be significantly compromised. The feasibility of hydrogen infrastructure development including pipelines and storage is also uncertain.
The German power system, dominated by wind, exhibits production variations on the order of weeks rather than daily fluctuations. As a result, it caters more to long-duration energy storage (LDES), such as hydrogen storage, which provides extended-duration solutions for grid flexibility and reliability. (A wider palette of LDES technologies is featured in our upcoming CATF report).
While deep decarbonisation scenarios often assume long-term projection with cost reductions, unlimited build rates, and no grid or operational constraints, the reality presents greater challenges. Today the transition is challenged by a complex mix of factors, with economic competitiveness being a key barrier, as industries must balance the need for decarbonisation with the pressures of maintaining competitiveness.
Our analysis shows that the current technology portfolio—shaped by Germany’s existing energy policy—is insufficient to deliver a deeply decarbonised power system in a cost-effective and reliable way. The role that fossil gas power plants—particularly highly flexible open-cycle gas turbines—are likely to play in the foreseeable future to balance variable renewable generation is further highlighted. While carbon capture and storage (CCS) is often discussed as a means to mitigate emissions, it is not well-suited for these peaking plants, which operate intermittently and cannot justify the high capital costs and baseload operation needed for CCS to be effective.
Instead, direct air capture combined with CO₂ storage stands out as a more feasible long-term option for addressing residual emissions from such flexible assets. In the near term, other low-carbon solutions face considerable barriers: nuclear will have limited impact, while biogas and hydrogen continue to struggle with scalability and cost competitiveness.
In the end, this reality reinforces the need to accelerate evaluation and development of technical alternatives that can replace the long-duration, dispatchable capacity currently provided by gas turbines.
