“By shifting electricity use in time, consumers can both reduce CO2 emissions and with the right incentives, reduce household bills.”
This month, following our 2020 editorial line about climate challenges, we deal with a social challenge: how to involve consumers in reducing their energy demand. We have interviewed Timothy Goodson, analyst at the International Energy Agency.
Sometimes we, consumers, do not realize the carbon footprint of our electrical consumption or the opportunities to reduce this carbon footprint. Are renewables sufficient or is consumer action needed?
While electricity is clean at the point of use, electricity generation is responsible for almost 40% of global energy related CO2 emissions. Achieving decarbonisation objectives in line with the Paris Agreement requires a rapid reduction in emissions from electricity generation, at the same time as our dependency on electricity is increasing. Renewables are central to reducing emissions from electricity generation, yet often overlooked is the critical role that consumers can play. The first lever for consumers is to switch to more efficient appliances and equipment, reducing their total electricity demand, and directly reducing electricity bills. Beyond efficiency, households and businesses can also shift their electricity demand to hours of the day when emissions from electricity supply are lowest, reducing the emissions footprint of their electricity use, and facilitating the integration of higher shares of renewables. With no significant infrastructure or economic barriers preventing immediate implementation, such action is particularly valuable for achieving rapid emissions reductions, and is the focus of this post.
Consumers have not always had the possibility to reduce emissions by shifting electricity use in time. For many decades the carbon footprint of electricity consumption was relatively constant across the year and during different hours of the day. Today, the increasing share of generation from variable renewables such as solar PV and wind is upending this paradigm, increasing the variability of hourly CO2 emissions intensity of electricity and providing consumers with ever greater opportunities to reduce the carbon footprint of their electricity use.
Globally renewables are expected to account for almost 30% of electricity generation in 2020, with 9% coming from wind and solar PV. Shares are higher in the European Union, with 17% of generation expected to come from solar PV and wind in 2020. IEA analysis has shown that the increase in variable renewables over recent years now results in the carbon intensity of electricity generation varying by a factor of 1.4 across an average day in the European Union, meaning 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. The variation in emissions intensity depends on weather conditions (wind and sun availability) and can be much higher on individual days, or in countries with higher levels of renewables penetration.
Looking forward, the average daily variation of hourly CO2 intensity is set to increase rapidly as uptake of renewables accelerates. This is 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.
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 our Sustainable Development Scenario solar PV and wind are projected to meet well over 50% of electricity demand in the European Union by 2040, driving an increase in the average daily variability of hourly CO2 intensity to a factor of 3. This would mean that programming your washing machine to run during the day rather than during the evening peak could reduce its emissions by two-thirds. The variability is even greater in India, where solar PV is set to play a major role in meeting electricity demand. Shifting electricity demand to better match the availability of renewables can also reduce curtailment and negative price events, encouraging further increases in generation from renewables.
What social instruments could be used to increase the society’s awareness and involve consumers in the reduction of emissions linked to their electricity consumption?
While the potential for consumer led emissions reductions is present and growing, better access to information and incentives are needed to encourage consumers to take action.
An increasing number of resources are available to inform consumers of the real time CO2 emissions intensity of their electricity use and even provide forecasts of CO2 emissions intensity over the coming days. Wider awareness of such information and tools that translate this information into simple messages would help consumers understand what time of the day is generally best to programme their washing machine, water heater, EV charging, or other electricity uses, to minimise emissions. Including such information in popular media platforms or in customer bills, for example, could further increase society’s awareness of the opportunities for consumers to reduce emissions.
Nonetheless, the quantity of information and the variability of hourly CO2 emissions intensity can make manually shifting demand to reduce emissions a daunting task for many. The digitalisation of electricity use can remove the burden for consumers by automatically shifting the many flexible uses of electricity in households and businesses without impacting daily lives. For example, charging an electric vehicle when the carbon footprint of electricity is lowest, or pre-cooling a house while solar PV is still generating can be automated without any adverse impact on the consumer. The potential for digitalisation to leverage emissions reductions highlights the importance of equipping appliances and equipment with smart control capabilities that allow consumers to set and forget. The European Union’s Smart Readiness Index for buildings encourages progress in this domain.
What role can governments and the media play to raise public consciousness?
A desire to reduce CO2 emissions may be sufficient to motivate certain consumers to act, but financial incentives that reward consumers for their efforts will significantly increase uptake. Wholesale electricity prices are generally lower when the share of renewables is greatest, and can even be negative if there is a surplus of generation from solar PV or wind. Governments have a key role to play in establishing markets and regulations that allow customers to see the economic benefits of shifting demand to hours with lower electricity CO2 intensity and lower wholesale prices. One option is to provide consumers access to time of use (TOU) electricity tariffs that broadly reflect trends in wholesale prices, this can incentivise consumers to shift their consumption to benefit from lower price periods. Traditionally TOU tariffs were lowest at night, but tariff structures can be changed to encourage electricity use when there is an abundance of supply from solar PV in the middle of the day. Dynamic tariffs go further, directly reflecting the trends of wholesale prices. In some countries, such as Spain, dynamic tariffs are the default offer for new customers; this is one way that governments can ensure widespread uptake. Uptake is also high in certain Scandinavian markets, while dynamic pricing offers are increasing across many major European markets. Changes to tariffs should be accompanied by consumer education to reduce the risk of bill shock and help consumers reap the full benefits of such tariffs. Media platforms can assist in increasing societal awareness.
Beyond tariffs, policy makers also have an important role to play in establishing and opening markets for demand-side response, opening the door to consumers receiving direct payments for shifting their electricity demand in response to requests from electricity system operators.
Could emissions saving be considered a cultural transition and not just an individual one?
Achieving emissions reduction goals of the Paris Agreement and increasingly widespread net-zero emissions by 2050 targets requires more than just technological changes in the energy sector, and more than isolated individual actions.
Recent IEA analysis published in the World Energy Outlook 2020 underlines the essential role for behaviour changes in helping to achieve climate goals. Widespread shifting of flexible uses of electricity to times of low CO2 intensity of supply, and related demand-side response, provides an important source of flexibility to power systems and facilitates the integration of renewables. Achieving further emissions reductions in line with net-zero by 2050 ambitions would require citizens to make lifestyle choices which either reduce their demand for energy services (e.g. flying less often), or change the way in which these demands are met (e.g. taking the train not the plane). The IEA’s Net-Zero Emissions by 2050 (NZE) Case describes 11 additional behaviour changes that could reduce global CO2 emissions by a further 2 Gt by 2030.
Achieving this level of savings will require such behaviour changes to become the social norm over the next 10 years. For example, the NZE Case assume that the vast majority of households reduce the average temperature of their heating by 3°C, or that the average temperature of washing machine cycles is reduced by 10°C. The right combination of awareness raising and government action has the potential to demonstrate that such changes are not necessarily a sacrifice, but can instead be beneficial to consumers and wider society.
The Covid-19 crisis has shown that changes in societal behaviour are possible, that individuals and governments can go ‘all-in’, acting together to change behaviour and create cultural change. While recognising that behaviour changes won’t be possible for all people in all circumstances, IEA analysis underlines that such a level of citizen engagement and action is needed to avoid the worst effects of climate change. Consumer action can not only reduce CO2 emissions, but also reduce household energy bills, air pollution and the wider costs of energy transitions.
- [Article International Energy Association 2020] – Empowering electricity consumers to lower their carbon footprint.
- [Report International Energy Association 2020] – World Energy Outlook-2020.
- [Report International Energy Association 2019] World Energy Outlook 2019.