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China’s energy system is based mainly on coal power plants, which held a share of 69% in 2017. Large numbers of coal power plants lead to air pollution and high CO2 emissions. China has high potentials for renewable energies, which could bring about the transformation of the energy system in the future. The transition of the energy system from coal-based to renewables-based is a huge challenge. A carbon–neutral energy system is based mainly on fluctuating renewable energies like wind and solar power. In order to meet the hourly demand, flexibility options are needed to balance volatile energy production. In this paper, we construct two scenarios to analyse a carbon–neutral Chinese energy system in 2060. The first scenario focusses on electricity in order to decarbonise the energy system. The second scenario uses hydrogen for the decarbonisation. We found that storage possibilities like batteries and hydrogen play a major role in both scenarios. However, the number of installed batteries was lower in the hydrogen scenario although the installed capacity of renewable energies is higher. This is due to the increased hydrogen production in this scenario, which flattens the high solar photovoltaic (PV) peak at noon. Our results highlight the importance of flexibility options in a decarbonised energy system with a high share of renewables.

Decarbonizing the energy supply by substituting fossil fuels with renewable energy sources (RES) is a key task for the coming decades in order to achieve the EU's ambitious climate protection targets. Information about the possible development and marketability of RES in the electricity sector is essential for assessing future funding needs. However, rising shares of fluctuating RES generation in the energy system reduce the average market prices and increase price volatility. Balancing price variations requires a considerable degree of flexibility. Additional flexibility in the electricity market through closer interconnection between the electricity sector and other demand sectors makes it possible to keep the market values of RES closer to the general market price level, irrespective of their shares. Such sector coupling can thus contribute to a cost-efficient transition to a low-carbon energy system. This paper examines the impact of efficient sector coupling on the market values of RES in a European energy system with ambitious decarbonization. We analyze different scenarios by applying the Enertile model, which uses an integrated cost optimization approach with flexibility options due to sector coupling and provides a detailed future development of RES. In our analysis, we examine three flexibility options: smart charging of electric vehicles, decentralized heat pumps in buildings, and multivalent district heating grids. We show that the flexible use of electricity in district heating has a significant impact on market values, while the impact of both flexible electric vehicle charging and flexible heating with heat pumps is rather small. Short-term flexibility due to load shifting of the charging or heating process shows only a limited effect on market values. Fuel switching in district heating, however, offers the possibility to change the absolute demand for electricity in direct response to RES feed-in and drastically reduces the curtailment of RES.