Retail Electricity Costs and Emissions Incentives Are Misaligned for Commercial and Industrial Power Consumers

Abstract

Electrification is contributing to substantial growth in U.S. commercial and industrial loads, but the cost and Scope 2 carbon emission implications of this load growth are opaque for both power consumers and utilities. We present a comprehensive spatiotemporal data set of U.S. price-based demand response (i.e., tariff) for large commercial and industrial consumers and incentive-based demand response programs, enabling direct comparison to previously published marginal emission factors, average emission factors, and day-ahead market prices. We resolve the structural incompatibility and fragmentation of these data sets by developing time series approximations of discrete data and unifying geospatially heterogeneous data sets. Analysis of the reconciled data reveals significant spatial and temporal heterogeneity in cost and carbon emissions incentives for demand-side energy flexibility, underscoring the importance of site selection as a key factor influencing power costs and Scope 2 emissions. We also find broad misalignment of economic and emissions incentives under existing electricity tariff structures, meaning tariffs are incentivizing consumption of more carbon-intensive electricity, and highlighting potential barriers to electrification delivering carbon savings.