Empowering electricity consumers to lower their carbon footprint

A new and growing combination of digitalization and rising renewables will increasingly allow consumers to act on the carbon footprint of their electricity use.

As our lives become more digital and interconnected, our dependency on electricity is increasing. While electricity offers multiple advantages, and is clean at the point of use, consumers often do not realise what is the carbon footprint (or emissions footprint) of their electricity use.

Understanding the emissions implications of electricity use is going to become increasingly important as power systems undergo rapid transitions with a growing penetration of renewables based generation. Renewables now account for over 25% of electricity generation around the world. In a scenario compatible with meeting international climate targets and other national and sustainability goals, the Sustainable Development Scenario, renewables increase to over two-thirds of global generation by 2040, with solar PV and wind alone accounting for 40% of the total.

Today, the time of day when consumers use electricity has a limited effect on CO₂ emissions as the share of variable renewables (solar PV and wind) in the power mix remains relatively low in most regions. Even in the European Union, where wind and solar PV already contribute 16% of electricity generation, the hourly CO₂ intensity of electricity only varies by a factor of 1.4 across an average day. This means that using electricity at 8 pm emits 280 g CO₂ per kWh, while at 6 am the intensity averages only 200 g CO₂ per kWh.

This level varies everyday and every hour depending on weather conditions (wind and sun availability), electricity demand etc. In the European Union, high shares of wind as well as nuclear generation reduce the need for fossil fuel fired-generation late at night when demand is lowest, while CO₂ intensity is often at its highest during the evening peak.

The rate of growth of generation from solar PV and wind in many power systems mean that the variability of hourly CO₂ intensity of electricity is set to increase rapidly in the coming years. That’s because generation from solar PV is by nature concentrated in the middle of the day, while wind follows local patterns and may be strongest at night.

Reducing emissions from electricity supply is therefore much easier during hours of the day when solar PV and wind are usually generating electricity. Using simulation modelling of hourly electricity demand and supply through economic dispatch, the IEA models the impacts of increases in generation from solar PV and wind at an hourly level.

In India, for example, variable renewables today account for 6% of generation, the CO₂ intensity of electricity supply is relatively stable throughout the day, varying by a factor of 1.2 between midday and the evening peak. As solar PV is set to play a major role in future electricity supply, the average CO₂ emissions intensity of generation at hours of peak solar production will decline steeply: the CO₂ emissions intensity of electricity supply across an average day could vary by more than a factor of 7. 

With rapid decarbonisation of electricity supply during certain hours of the day, the time of day when electricity is used becomes increasingly important for CO₂ emissions. Electricity demand today is often concentrated at times of high CO₂ intensity of electricity supply, and may become increasingly so with strong future demand growth for home appliances, air-conditioning and electric vehicles.

Yet by changing the way they use electricity, consumers can reduce demand during more carbon intensive hours of the day and make it easier to decarbonise.

Using electricity during hours when carbon footprint of generation is lowest would increase emissions reductions – this is increasingly possible thanks to digitalization. Many uses of electricity are flexible, meaning that they can be moved in time without impacting daily lives. For example, a washing machine or water heater could be programmed to run when the carbon footprint (and electricity prices) are lowest. Using an air conditioner to pre-cool a house while solar PV is still generating could reduce demand during peak times.

Even the ubiquitous action of charging phones, tablets and laptop computers could be shifted in time to move demand into less CO₂ intensive hours of the day. Changes in consumer habits of this nature affect system planning in the longer term, facilitating greater deployment of renewables. Digital technologies and aggregators can enable this “smarter” way of using energy, setting preferences acceptable to customers, while decreasing electricity bills.

This principle can be applied to charging electric vehicles, a load that is set to become increasingly important as the EV market grows. An electric car consumes around a thousand times more electricity in a year than charging a smart phone; ensuring that the charging of electric vehicles aligns with periods of low average CO₂ intensity is therefore important.

We estimate that smart EV charging, for instance, could nearly halve related CO₂ emissions from EV’s, a finding consistent in all major markets. But to do so requires consumer awareness and better policy frameworks to enable these decisions.

Why aren’t consumers already starting to reduce electricity demand during CO₂ intensive hours? Many consumers today simply don’t know what hours of the day are the most CO2 intensive, and when are the best hours to use electricity. But thanks to digitalisation and the increased availability of data, new tools can help provide real-time information on the CO₂ intensity of electricity in many areas, and help interested consumers to make the best decisions to reduce emissions and energy bills.

Consumer actions to change when electricity is used are also influenced by electricity pricing and incentives. Due to their low marginal operating costs, times when variable renewables are generating the most often correspond with relatively low (and sometimes negative) prices in electricity wholesale markets. This means that shifting electricity demand to times of low CO₂ intensity can potentially save consumers money on their electricity bills. Yet today most consumers pay the same price for a kWh consumed at midnight, or a kWh consumed at midday, different tariff structures are needed to provide consumers a financial incentive to shift or reduce their electricity use.

By setting different prices for different times of the day, time of use (TOU) electricity tariffs can incentivise consumers to shift their consumption to benefit from lower prices. Traditionally TOU tariffs were lowest at night, but today certain jurisdictions are proposing changes to tariff structures to encourage electricity use when there is an abundance of supply from solar PV in the middle of the day. Other options for encouraging consumers to shift demand include dynamic tariffs, which expose customers to the variations in wholesale prices.

The rapid digitalisation of our homes and energy use more widely also provide an avenue to shift demand to less CO₂ intensive hours of the day, and reward customers for their flexibility. Connected appliances such as air conditioners, fridges or electric vehicles can be aggregated together and their electricity use controlled remotely to shift demand to times when prices are lower and variable renewables are generating.

Policymakers have an integral role to play in ensuring that markets are open to the participation of demand side resources, and that innovative business models and new tariff structures can encourage consumers to shift demand, without compromising affordability or security of supply.