Demand‑Driven Decarbonization: Impact of Voluntary 24/7 Low-Carbon Power Procurement

Abstract

This thesis examines the impact of voluntary 24/7 (hourly) low-carbon power procurement on grid-wide emissions and investment strategies in generation technologies. Recognizing the growing number of businesses and government agencies making voluntary commitments to reduce greenhouse gas emissions (GHGs) through increased procurement of low-carbon power, this study investigates the effectiveness of these commitments, particularly those aiming for hourly matching of low-carbon energy with consumption.

This study employs GenX, an open-source capacity expansion model, to simulate an electricity market with two classes of buyers. Buyers in one class commit to reduce the carbon intensity of their electricity procurement by some amount, while buyers in the other class procure electricity at minimum cost without any regard to carbon emissions. This setup allows for a detailed examination of how different levels of ambition in voluntary hourly low-carbon commitments influence the electricity system and investment strategies. The study tests both a simpler model without storage and demand-response capabilities and a more complex model that incorporates these elements to assess their impact on meeting hourly clean energy targets.

Our findings suggest that at low to moderate ambition levels of hourly low-carbon electricity procurement, the buyers with voluntary commitments can primarily "reshuffle" built low-carbon generation without incentivizing new clean capacity additions or achieving measurable reductions in system-wide emissions. Significant shifts in generation investments and decreases in total carbon emissions are observed only when commitments exceed a critical threshold, ranging from approximately 70% to 96%, depending on the facts of the system, which happen to be reflected in different model set-ups. Even then, cost-minimizing behavior in voluntary procurement can distort investment, spurring excessive wind and solar builds that exceed what a least‑cost, socially-optimal zero‑carbon portfolio would require.

In conclusion, for voluntary 24/7 procurement to cut emissions materially—and avoid misallocating capital—either ambition must be extremely high or participation must broaden enough to share costs and benefits. Otherwise, committed buyers bear steep costs, non‑participants enjoy spill‑over gains, and the system drifts toward a sub‑optimal technology mix.