Peak Demand Reduction vs. Emission Savings: When Does It Pay to Chase Emissions?

Jeff Erickson and Bryan Ward, PA Consulting Group
Jim Mapp, Wisconsin Department of Administration Division of Energy

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Abstract

Public benefit programs may have multiple objectives including saving energy, reducing peak demand, system reliability, and reducing emissions. Optimizing programs to address one objective implies less than optimal performance on other objectives. Thus policy makers and program designers must weigh the relative importance of competing objectives to design programs that do the best job possible of meeting all objectives. For Wisconsin public-benefit programs, the tradeoffs are particularly apparent for two objectives: reducing peak demand and reducing emissions. The statewide evaluation team created a model to calculate peak and offpeak, winter and summer emission factors for the power plants supplying Wisconsin’s electricity grid. The team also estimated season and peak energy savings by the statewide programs. Multiplying the savings by the emission factors produces estimates of the pounds of pollutants avoided by season and peak. The results indicate that energy savings in off-peak hours and particularly winter off-peak hours produce the highest emissions savings. This places the objectives of demand reduction and emission savings in direct opposition. This paper will present the results of the energy and emissions analysis in particular focusing on the dollar value of emissions avoided (assuming a system of tradable allowances for avoided emissions) compared to the dollar value of peak demand reduction.