Prosumers are Key to a Sustainable Energy System

Prosumers are key to a successful energy transition and climate change mitigation by investing in renewable and more sustainable energies, by choosing greener or more sustainable products or by just changing their (consumption) behavior. They boost the diversification of generation capacities and the energy mix, replacing (partly) fossil fueled plants.

Prosumers are key players in the future energy system. Their generation, storage and consumption capabilities and flexibilities are essential distributed energy resources (DERs) to tackle the challenges of a future supply-driven energy system mainly based on fluctuating renewable energies – especially a (cost) efficient (smart) grid management.

The “Rise of Prosumers” disrupts market concentration and energy oligopolies. It drives economic development, job growth and innovation, e.g. by cutting costs in solar panels, battery storage and EVs. It spurs competition (“Fight for Prosumers”) speeded up even more by digitalization and “disruptive” technologies like blockchain and the “Internet of Things”.

Personal Benefits Ensure Acceptance and Support

Most prosumers are driven by the prospect of pecuniary benefits from monetizing their portfolio. A large number of prosumers is also driven by the need to contribute personally to the energy transition and the fight against climate change. More and more prosumers want to become autonomous or more independent from utilities. For the growing number of consumers threatened by “energy poverty”, becoming prosumer is simply of existential importance.

The pursue of wealth and independence through prosumer activities is a universal right. It does not diminish the social and economic benefits of the prosumers’ activities. On the contrary, it is not only fair that prosumers benefit directly from the advantages of the energy transition instead of only paying the bill for it, e.g. through the “socialization” of costs. Personal benefits are crucial for the consumers’ acceptance and their motivation to further support it.

Responsibility and Fairness Among Energy Users

The pursue of wealth and independence is not without limits. Prosumers must take the responsibility for their impacts on the technical and financial infrastructure. Firstly, distributed volatile generation is key to sustainable energy system but it also challenges grid operators. Consequently, the integration of generation, storage and consumption capacities into the (smart) grid is crucial as well as their grid-friendly operation. Secondly, fairness between energy users is at stake, especially by “behind the meter” generation, consumption and storage. The “Rise of Prosumers” requires a revision of the charging methodology that guarantees a fair allocation of costs, especially the grid recovery costs.

Prosumers Need (Regulatory) Support and Protection

The democratization of the energy system by the “Rise of Prosumers” is key to the existential challenges we are facing in the energy transition and climate change mitigation. But despite the potential of a prosumer-centered energy system, the “Rise of Prosumers” must not be taken for granted. Many governments and “old” players are still fighting against (small-scale) prosumers instead of fighting FOR them, even in countries with advanced energy transitions. Prosumers might also be crushed by new oligopolies that replace the old oligopolies, e.g. by think-big policies focusing only on large scale (offshore and onshore) wind and PV generation.

To fully unleash the potential of a prosumer-centered energy system, regulators must take innovative and courageous decisions, anticipating the future. The lobbying along the policy making process on the regulatory framework will become tougher and tougher. Private small-scale prosumers do not have a powerful lobby, neither on international nor on national level. This blog aims at bridging the gap. It will focus on prosumer-relevant law and policy making processes: monitoring, “translating” and assessing legal, economic and technical subjects.

Considering the diverse prosumer-portfolio, this blog will focus mainly on PV-generation, storage and EVs – and their flexibility potential. Amongst the major regulatory issues will be:

  • proportionate integration of prosumer capacities into the (smart) grid in an integrated energy system,
  • proportionate allocation of costs, especially grid recovery costs (network charges),
  • supportive framework for innovative prosumer business cases.

The “Rise of Prosumers” is a global phenomenon to tackle the global challenges of energy transition and climate change mitigation. Therefore, this blog aims at a global coverage of prosumer-relevant information, but it will (have to) focus on countries that are pioneering the energy transition and the “Rise of Prosumers”. It could then be a blueprint for other countries.

Holger Schneidewindt