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This study assesses alternative energy technologies (i.e., PV and battery systems, electric heat pumps, hybrid gas heating with solar thermal energy) in terms of profitability and CO 2 emissions, for the case of two simulated typical households living in detached houses in Germany. Under the status-quo regulatory framework, the energy transition in the heating sector is fostered through grants for replacing old heating systems, whereas PV generation is fostered by feed-in tariffs and indirect subsidies for self-consumption. This study considers an alternative regulatory scenario with a more market-oriented approach, finding that a CO 2 -oriented reform of energy surcharges and taxes, as well as a reform of network charges, can support a more cost-efficient energy transition in the residential sector. The paper concludes with a discussion of the consistency, cost efficiency and effectiveness of past and current policies underpinning the energy transition in the residential sector. • Assessment of home energy systems across 2 households and 2 regulatory scenarios. • Consideration of PV, batteries, heat pumps and hybrid gas-solar heating systems. • Comparison of subsidies and flat energy tariffs vs. cost-reflective, dynamic tariffs. • Market-oriented approach incentivizes far more cost-efficient CO 2 emission reduction. • The German residential energy sector needs a consistent regulatory framework. [ABSTRACT FROM AUTHOR]

[Display omitted] • Simulation of residential building energy supply with heat pump or hydrogen systems. • 2050: Hydrogen economically-viable if H 2 -/Elec.-price is less than 34–61 % per kWh. • For conservative price predictions: Electric heat pumps are most economical solution. • Energy carrier switch for single-family houses: H 2 -/Elec.-price below 44 % per kWh. • Energy carrier switch for multi-family houses: H 2 -/Elec.-price below 58 % per kWh. • Fuel cells are emerging as an economically-viable option for multi-family houses. Fossil-fueled heating in the building sector is responsible for 16 % of Germany's total CO 2 emissions. Options for the climate-neutral heating of buildings include renewable electricity or renewable hydrogen. In this paper, we conduct a bottom-up study to investigate the role of hydrogen in the climate-neutral energy supply of ten selected residential buildings in comparison to electricity-based systems. Based on a demand simulation and linear optimization of the supply system, sensitivity analyses identify the threshold values of the hydrogen price for the use of hydrogen technologies (hydrogen boilers or fuel cells) in building energy systems and make the quantities of hydrogen consumed visible. The results specify the first installations of hydrogen-operated fuel cells in multi-family houses if the hydrogen price reaches 0.17 €/kWh H2 in 2050 at an electricity price of 0.31 €/kWh el. Generally, for different building types and electricity supply prices, it indicates that the use of hydrogen becomes economically-viable if the price of hydrogen supply is in the range of 34–61 % of the price of the electricity supply per kWh and below. For the case of green hydrogen obtained using renewable electricity, it is highly questionable whether hydrogen supply will be that much cheaper than direct electricity supply, making its economical use in buildings uncertain. [ABSTRACT FROM AUTHOR]