Association for Public Policy Analysis & Management

The emission-reduction benefit of demand-side management (DSM) is constantly evaluated using the total energy saved and average emissions factors, which may leads to significant errors. To provide more accurate estimation, this study uses marginal emissions factors (MEFs) to analyze the benefits of emission reduction from energy efficiency versus demand response. We analyze the MEFs for CO₂, NO_x, and SO₂ in high temporal and spatial resolution: hourly and locational power generation in Midcontinent ISO (Independent System Operator) from 8/5/2015 to 4/30/2016. Given that the dispatch of generating capacity are determined by price, we use multivariate regressions to analyze how MEFs are affected by real time LMPs (Locational Marginal Prices) and day-ahead LMPs during summer peak time, non-summer peak hours, and off-peak hours. The result suggests that MEFs are lower in off-peak hours than in non-summer peak hours, while MEFs increase when real time LMPs are higher. In summer peak hours, on the other hand, MEFs decrease when real time LMPs go up. Using this result, we estimate the emission reduction from two DSM options that save the same amount of energy: energy-efficient lighting which typically runs during peak hours, and demand response that runs during summer peak hours. We find that the avoided emissions from demand response are lower than energy efficiency in some summer peak hours when real time LMPs are high. This result suggests that emission reduction benefits should be evaluated at higher temporal resolutions to inform decision-making.