Discussion of “Is Realtime Pricing Green?”

1. Discussion of“Is Realtime Pricing Green?” Benjamin F. Hobbs Yihsu Chen Dept. Geography & Environmental Engineering Whiting School of Engineering The Johns Hopkins University POWER Conference, 14 March 2003

2. Cap & Trade Regulation of Pollution Implies … • Local regulations do not change emissions & may worsen impacts

3. Cap & Trade Regulation of Pollution Implies … • Local regulations do not change emissions & may worsen impacts • “New Source Review” increases cost with no environmental benefit

4. Cap & Trade Regulation of Pollution Implies … • Local regulations do not change emissions & may worsen impacts • “New Source Review” increases cost with no environmental benefit • Net emissions impact of load changes = 0

5. PJM Simulation: Summer 2000 MW 8760 hr 8760 hr 8760 hr

6. PJM Simulation: Summer 2000 } MW Peak (Gas, Oil) } Cycling (Coal) } Base (Coal) } } Base (Nucl) 8760 hr 8760 hr 8760 hr

7. PJM Simulation: Summer 2000 } MW • 5% peak reduction/ 1.7% shift in energy Peak (Gas, Oil) } Cycling (Coal) } Base (Coal) } } Base (Nucl) 8760 hr 8760 hr 8760 hr

8. PJM Simulation: Summer 2000 } MW • 5% peak reduction/ 1.7% shift in energy • No NOx cap: • $33.9/MWh saved • +0.57% CO2 • +0.61% NOx Peak (Gas, Oil) } Cycling (Coal) } Base (Coal) } } Base (Nucl) 8760 hr 8760 hr 8760 hr

9. PJM Simulation: Summer 2000 } MW • 5% peak reduction/ 1.7% shift in energy • No NOx cap: • $33.9/MWh saved • +0.57% CO2 • +0.61% NOx • (Partial) NOx cap: • $27.6/MWh saved • -0.26% CO2 • -0.77% NOx Peak (Gas, Oil) } Cycling (Coal) } Base (Coal) } } Base (Nucl) 8760 hr 8760 hr 8760 hr

10. PJM Simulation: Summer 2000 } MW • 5% peak reduction/ 1.7% shift in energy • No NOx cap: • $33.9/MWh saved • +0.57% CO2 • +0.61% NOx • (Partial) NOx cap: • $27.6/MWh saved • -0.26% CO2 • -0.77% NOx • Emission reductions worth ~10% of $ savings Peak (Gas, Oil) } Cycling (Coal) } Base (Coal) } } Base (Nucl) 8760 hr 8760 hr 8760 hr

11. Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better • General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs)

12. Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better • General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs) • Renewable portfolio standards are inefficient (if emissions is only goal)

13. Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better • General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs) • Renewable portfolio standards are inefficient (if emissions is only goal) • So too is demand-side management—unless retail market is broken

14. Real-Time Pricing May be Green… But Performance-Based Environmental Regulation is Better • General principle: If environmental quality is goal, more efficient to directly limit emissions (output) than to try to influence choices of technology, fuel, … (inputs) • Renewable portfolio standards are inefficient (if emissions is only goal) • So too is demand-side management—unless retail market is broken • Real-time pricing principle should be applied as well to emissions (NOx in SF Bay region: C. Marnay, LBL)