Is Real-Time Pricing Green? The Environmental Impacts of Electricity Demand Variance
47 Pages Posted: 16 Oct 2007 Last revised: 17 Apr 2014
Date Written: October 2007
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 US regions, namely those with more hydropower like the West. The effects are relatively small.
Suggested Citation: Suggested Citation
Register to save articles to
By Fan Zhang