The energy industry is in the midst of a revolution!
We are moving away from the traditional, centralised fossil-fuel power stations towards a hyper-local green energy economy – where decentralised micro-generation turns buildings/houses into mini power plants and communities take control of their energy supply.
The widespread growth globally of micro-generation (particularly photovoltaic or PV) means that consumers are interacting with electricity systems in new ways, becoming ‘energy prosumers’ – both producing and consuming energy (refer Figure 1). We define an energy prosumer as “a consumer of energy who also produces energy to provide for their needs, and who in the instance of their production exceeding their requirements, will sell, store or trade the surplus energy”. Prosumerism is increasing rapidly at a global and local scale, as it becomes increasingly straightforward and cost-effective for households (or businesses) to be prosumers.
Growing prosumerism has the potential to create challenges for grid management, particularly if local generation becomes concentrated within a part of a lines network, which can particularly occur with the establishment of prosumer collectives. In considering how people become prosumers, we found it useful to differentiate between ‘active prosumers’ whose decision to adopt micro-generation is self-directed and purposeful, and ‘passive prosumers’ whose entry is the result of external influences or the by-product of other decisions. The shift to becoming a prosumer creates many opportunities for people to become more actively engaged with the role of energy in their lives, which opens the door for collective engagement.
Residents with photovoltaic panels have previously been able to sell excess energy to utility companies, but they could not profit from it. Instead, they had money deducted from their bills and remained subject to the utility company’s control. This meant that when there is a blackout in the area, despite the capability to create their own power, they would have their PVs switched off. With the microgrid there is no need for a utility company to act as an intermediary, leaving residents in control of their own power.
At a more fundamental level, prosumer collectives also challenge the structure of the electricity industry. One description of collective prosumerism was like Airbnb in relation to the hotel industry. It could also be seen as the Uber of the taxi industry. Collective prosumerism similarly appeals to people’s interest in personal engagement and personal control, and a similar willingness to trade the level of service for the less upfront cost. As with Airbnb and Uber, it is enabled through developments in ICT and data management, together with nimble new entrants thinking outside the square.
How widespread collective prosumerism will become depends on many factors, with the changing price of micro-generation being probably the most significant. Another factor is likely to be the new models of operation and business that emerge in coming years, and either fly or fail. Battery storage will be a game-changer if prices continue to drop significantly, as they give prosumers greater control, greater ability to optimise their energy exchanges with others, and the option to go completely off-grid should they choose. A further factor will be the response of the incumbent industry to this clear signal by consumers that they want something different. It is notable that the third- party developments are largely initiated by organisations that have not traditionally been part of the electricity industry. If the industry ignores or attempts to suppress this emerging interest by consumers in collective prosumerism, it may find itself becoming increasingly irrelevant in the lives of electricity users.
As we are aware that the transmission over long distances creates energy losses. The major part of the energy losses comes from Joule effect in transformers and power lines. The energy is lost as heat in the conductors. The overall losses between the power plant and consumers is then in the range between 8 and 15%. This clearly tells us that there are clear financial benefits when electricity is consumed near to where it is generated.
It is also evident, that by bringing together a diversity of people who care about their community’s energy future there is a great possibility of not just reducing the carbon footprint of the community but also of creating a stronger circular economy.
The Positive Energy Venture is the first step to realising those benefits.