Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany

This paper provides an approach to incorporate planned investments in power grid infrastructure Germany, which are expected offer the necessary flexibility integrate large shares of variable renewable energy sources into system, a dynamic stochastic equilibrium model. Since investments' economic impact remains unclear, our research sheds light on two questions: Do Germany have potential positively performance, particularly GDP and employment? Is investment efficient way provide electricity system? We find negative effects outcomes, can, however, be mitigated by adequate design its framework conditions.