Assessing the impact of a demand-resource bidding market on an electricity generation portfolio and the environment

Abstract

Although numerous studies have examined the economic benefits of demand response programs, the environmental impacts of such programs have been relatively underexplored. This study assesses the impact of demand resource bidding on the wholesale energy market and the environment, based on three years of high temporal-resolution data from Korea. In this demand resource bidding program, successful bidders were paid the system marginal price for reducing their electrical load at a given hour, which in turn reduced the generation of power from various technologies. This investigation of how carbon dioxide and particulate matter emissions from existing power systems changed with the introduction of the demand bidding program finds that the program altered the system operator's electricity generation portfolio and marginally abated carbon dioxide and particulate matter emissions from the power sector. It also shows that the environmental impact of the program varied over the course of the day and the year. The modest but statistically significant environmental impact of the demand resource bidding program points to the importance of including electricity demand resources in the discussion and development of energy and environmental policies for the power sector.