System Effects of Carbon-Free Electricity Procurement: Regional Technology and Emissions Impacts of Voluntary Markets

TL;DR

This study evaluates how different voluntary carbon-free electricity procurement strategies impact regional emissions, costs, and technology deployment in the U.S. power system, highlighting the importance of hourly matching and policy context.

Contribution

It provides a detailed analysis of system-wide effects of voluntary CFE procurement, considering various technologies, policies, and assumptions, which was previously lacking.

Findings

Hourly matching maximizes emissions reductions.

Cost premiums vary widely across regions and scenarios.

Expanding technology eligibility reduces costs and influences resource deployment.

Abstract

Voluntary carbon-free electricity (CFE) procurement has the potential to accelerate electric sector decarbonization, but procurement strategies vary widely, leading to uncertainty about emissions, investments, and costs. This study assesses the system-wide effects of voluntary CFE procurement on U.S. regional power systems using a detailed energy systems model across a range of program designs, eligible technologies, policy environments, and modeling assumptions. Results suggest that hourly matching, where clean electricity procurement aligns with hourly load, combined with new and local generation could maximize emissions reductions from CFE procurement, particularly under existing Inflation Reduction Act incentives and state policies. However, regional costs vary significantly, with a CFE cost premium ranging from \$11-63/MWh nationally across scenarios and \$1-130/MWh across regions, broader than previous estimates. Expanding the eligible technology portfolio to include renewables, nuclear, carbon capture, and energy storage reduces costs, particularly in regions with lower wind and solar resource quality, though variable renewables and battery storage remain the dominant resources in many scenarios. Additionally, we show that the future policy environment strongly influences the effectiveness of voluntary CFE programs, with more stringent emissions policies or subsidies potentially limiting the incremental benefits of procurement. The analysis also quantifies how features of the model framework can shape insights about CFE procurement strategies.