The effect of price-based demand response on carbon emissions in European electricity markets: The importance of adequate carbon prices

Authors

Markus Fleschutz, Institute of Refrigeration, Air-Conditioning, and Environmental Engineering, Karlsruhe University of Applied Sciences, Karlsruhe, Germany; Department of Process, Energy and Transport Engineering, Munster Technological University, Cork, Ireland
Markus Bohlayer, Institute of Refrigeration, Air-Conditioning, and Environmental Engineering, Karlsruhe University of Applied Sciences, Karlsruhe, Germany; School of Business and Economics, Friedrich-Alexander-Universität Erlangen-Nürnberg, Nürnberg, Germany
Marco Braun, Institute of Refrigeration, Air-Conditioning, and Environmental Engineering, Karlsruhe University of Applied Sciences, Karlsruhe, Germany
Gregor Henze, Department of Civil, Environmental and Architectural Engineering, University of Colorado, CO, USA; National Renewable Energy Laboratory, CO, USA; Renewable and Sustainable Energy Institute, CO, USA
Michael D. Murphy, Department of Process, Energy & Transport Engineering, Munster Technological University, Cork, IrelandFollow

ORCID

https://orcid.org/0000-0002-4269-2581

Abstract

Price-based demand response (PBDR) has recently been attributed great economic but also environmental potential. However, the determination of its short-term effects on carbon emissions requires the knowledge of marginal emission factors (MEFs), which compared to grid mix emission factors (XEFs), are cumbersome to calculate due to the complex characteristics of national electricity markets. This study, therefore, proposes two merit order-based methods to approximate hourly MEFs and applies them to readily available datasets from 20 European countries for the years 2017–2019. Based on the calculated electricity prices, standardized daily load shifts were simulated which indicated that carbon emissions increased for 8 of the 20 countries and by 2.1% on average. Thus, under specific circumstances, PBDR leads to carbon emissions increases, mainly due to the economic advantage fuel sources such as lignite and coal have in the merit order. MEF-based load shifts reduced the mean resulting carbon emissions by 35%, albeit with 56% lower monetary cost savings compared to price-based load shifts. Finally, by repeating the load shift simulations for different carbon price levels, the impact of the carbon price on the resulting carbon emissions was analyzed. The Spearman correlation coefficient between carbon intensity and marginal cost along the German merit order substantially increased with increasing carbon price. The coefficients were -0.13 for the 2019 carbon price of 24.9 €/t, 0 for 42.6 €/t, and 0.4 for 100.0 €/t. Therefore, with adequate carbon prices, PBDR can be an effective tool for both economical and environmental improvement.

Disciplines

Automotive Engineering

DOI

10.1016/j.apenergy.2021.117040

Publication Details

Applied Energy

Publisher

Elsevier

License Condition

This work is licensed under a Creative Commons Attribution 4.0 International License.

Recommended Citation

Markus Fleschutz, Markus Bohlayer, Marco Braun, Gregor Henze, Michael D. Murphy, The effect of price-based demand response on carbon emissions in European electricity markets: The importance of adequate carbon prices, Applied Energy, Volume 295, 2021. https://doi.org/10.1016/j.apenergy.2021.117040