Is Real-Time Pricing Green? The Environmental Impacts of Electricity Demand Variance

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Stephen P. Holland, Associate Professor (Creator)
Institution
The University of North Carolina at Greensboro (UNCG )
Web Site: http://library.uncg.edu/

Abstract: Real-time pricing (RTP) of electricity would improve allocative efficiency and limit wholesalers’ market power. Conventional wisdom claims that RTP provides additional environmental benefits. This paper argues that RTP will reduce the variance, both within- and across-days, in the quantity of electricity demanded. We estimate the short-run impacts of this reduction on SO2, NOx, and CO2 emissions. Reducing variance decreases emissions in regions where peak demand is met more by oil-fired capacity than by hydropower, such as the Mid-Atlantic. However, reducing variance increases emissions in more U.S. regions, namely those with more hydropower like the West. The effects are relatively small.

Additional Information

Publication
Review of Economics and Statistics (2008) 90(3): 550-561.
Language: English
Date: 2008
Keywords
Real time pricing, Electricity, Economic impact, Environmental impact