How much can CO2 emissions be reduced? Impact of flexible household demand control linked to hourly CO2 emission factors

• Demand shifting and grid operation were simulated in linkage with hourly CO 2 factors. • A bulk CO 2 penalty scenario was compared with a hourly CO 2 factor incentives one. • The latter scenario achieved demand shaving, CO 2 reductions on the demand side. • The latter scenario yields larger CO 2 reductions and greater generation cost savings. • Demand shifting with hourly CO2-based incentives is crucial for decarbonization. This study evaluates, for Japan’s Kyushu area in 2030, the system-wide impacts of optimal demand-side control coordinated with hourly CO2 emission factors, using an integrated supply–demand simulation across multiple scenarios and carbon price levels. Hourly CO2 emission factors reflect the hourly generation mix, which is determined by power‑system operations and varies with electricity demand; therefore, these emission factors are related to consumers’ electricity consumption. The analysis focuses on the value of time-varying CO2 intensity as a control signal: because the emission associated with electricity consumption changes by hour, aligning flexible loads with low-intensity periods can materially reduce total emissions. Modeling approach in this study couples a supply-side operations model with a residential operation model that internalizes hourly CO2 emission factors to electricity price. Flexible demand-side control linked to hourly CO2 emission factors shifts electric-vehicle charging and heat-pump water-heater operation to low-CO2 hours, suppresses peaks in both purchased electricity and sold electricity. Compared with demand-side-only measures and supply-side-only measures, combining such demand-side control with supply-side carbon pricing achieves the largest reductions in both net demand-side and supply-side CO2 emissions. Moreover, the control method helps to reduce generation cost increase due to the carbon pricing. These findings imply that complementing supply-side carbon pricing like carbon levy with demand-side incentives indexed to hourly CO2 emission factors can achieve reduction of both CO2 emissions and generation costs, thereby easing social cost burden.