Assessing the effects of a demand-resource bidding market on generation systems and the environment

Abstract

Various demand response programs including dynamic pricing and demand bidding market have been introduced in pursuit of economic and reliable electricity market operation. This study assesses the demand-resource bidding program’s impact on generation portfolios and the environment while taking the economic dispatch behavior into consideration, based on high temporal-resolution three-year data on the bidding market in Korea. The author robustly finds that the program indeed altered electricity generation portfolio, marginally abating carbon dioxide ($CO_2$) and particulate matter (PM) emissions from the power sector. These results also demonstrate that the nature and extent of the environmental impact of the program are contingent on characteristics of technologies and bidding hours, thereby providing the implications of the demand bidding market for future researchers and energy policy makers.