Market view: The prosumer revolution
Energy providers have long viewed the rise of proactive, energy-conscious consumers as a challenge, but in reality they offer a Brave New World for utilities, says Matthieu Mounier.
For the best part of the twentieth century, utility companies believed that if they could match the power generated with the power demanded by industrialising populations, they could survive and thrive. However, in the past few decades priorities have shifted as our changing climate has brought energy efficiency to the forefront of the debate.
At every level of civic society, from consumers to national governments, there is a demand for cleaner, more plentiful and more efficient energy. Unlike their predecessors, utility companies of today are expected to meet demand without polluting the planet. This task is not without its challenges, but it also promises gains. In order to achieve this, those responsible for utilities must respond correctly and with the right policies and technologies.
The rise of the prosumer
Key to their success is the ever-growing “prosumer” movement. These modern energy consumers want the reliable availability of power and technologies that give them more control over their energy – how it is produced, how much they need and how much they use – with many producing their own and selling it back to the grid.
City districts, educational campuses, military bases, hospitals, commercial buildings, factories, and residential homes are becoming proactive energy consumers, or prosumers, enabled by new, widely available technologies. There are three million of these prosumers in Europe already, with room for many more.
While the demands of informed, proactive energy users may appear daunting at first, there are many opportunities for providers. Where once utility companies were forced to build increasingly expensive infrastructure and fire up more generators to keep pace with customer demand, prosumers are leading them down a less costly path, looking for new ways to save energy and use it more wisely.
Key to this is greater investment in demand management and energy efficiency. The willingness of prosumers to limit and alter their energy consumption for periods at a time allows utility companies greater flexibility for balancing their networks. Provided that energy providers understand how to cater to prosumers and keep them engaged, it is now easier for them to balance their grids, increase the reliability of power, improve customer retention and cut costs, crucial for both growing their business and satisfying their environmental obligations.
However, consumers must first be encouraged and empowered with the right information and tools, including the provision of advanced metering infrastructure, namely smart metering technology, and the implementation of automated demand response (DR) services. Smart meters serve as the point of engagement for consumers and the utility, providing them with more information on their energy consumption across various interconnected devices, and lets them participate in DR programmes. DR then occurs when a grid operator identifies a consumer who is using and large amount of energy and asks them to limit their consumption – often through an automated process and often in exchange for an incentive such as discounted prices.
Taken together, these tools and services allow utilities to help their customers identify and implement energy-efficient projects to reduce their energy consumption and bills. This can provide utilities with a competitive edge, increasing customer satisfaction, loyalty and retention, reducing delayed repayments and creating new markets for potential services.
Yet, they also enable providers to orchestrate and manage energy consumption, increasing or decreasing demand where needed through lower pricing structures and automated DR and shifting loads to mitigate peak power. Ultimately, they allow utilities to provide more reliable power where and when it is most needed, as well as make better use of their existing assets and add new low-cost systems to their portfolios as opposed to the expensive construction of new energy sources.
For prosumers, new, interconnected technologies satisfy the desire for greater control and turn them from passive into active participants embedded within the energy infrastructure. For utilities, the prosumer revolution represents an exciting opportunity to go behind the meter to offer new services, manage assets and bring another layer of stability to modern grid constraints. By having the ability to modify energy usage on the demand side through smarter technology and education, they can both accommodate and fuel the fire of the prosumer movement, as well as save money.
- Offshore wind hits cost target four years ahead of schedule A target to reduce the levelised cost of energy (LCOE) for offshore wind to £100/MWh has been met four years ahead of the...
- Water licence application process favours incumbents The water supply and sewerage licensing process was “made for incumbents” and could be discouraging new entrants from...
- Brexit could put Hinkley over budget and behind schedule Britain’s exit from the European Union could put Hinkley Point C over budget and behind schedule, EDF has hinted.