Prosumers, solar power and a shift towards decentralisation

Steve Hodgson à‚  Steve Hodgson
Contributing Editor

I first came across the term ‘prosumer’ used as a description of a sophisticated camera: a model that falls between those commonly used by professional photographers and those bought by mere consumers. But the term is said to have been coined originally by futurologist Alvin Toffler in 1980 – a ‘proactive consumer’ aims to improve or design the goods and services of a marketplace, rather than merely to consume them.

Now, the trade association for Europe’s electricity industry, Eurelectric, has used the word to describe a customer who both buys electricity from a utility, and also produces a proportion of his power needs himself, on-site – typically the operator of a cogeneration or other on-site power system that also buys power from the grid, in other words. More importantly, Eurelectric sees prosumers as integral parts of the modern power market previously dominated by utilities, and is making suggestions as to how regulatory frameworks can successfully accommodate prosumers and their distributed generation plants.

And so it should. Europe has moved beyond the early deployment stage for distributed generation, says the association, and utilities are becoming increasingly service-oriented. Many already provide services ranging from installation and maintenance of on-site generation equipment to smart home applications and storage – and buying excess electricity.

Eurelectric argues that distributed generation will develop cost-effectively when the regulatory framework provides a level playing field between all generation technologies, storage and demand response. And, perhaps surprisingly, that regulatory frameworks should therefore be adapted to ensure cost-effective development of distributed generation, as well as a fair allocation of costs and benefits.

So, in Europe at least, recognition of the role for on-site generation – as well as for ancillary services such as electricity storage and trading systems – is at an advanced stage. Even utilities themselves, which for so long acted as a brake to the development of distributed generation, have seen the writing on the wall. Indeed, several utilities already participate by building and operating cogeneration plants for host companies.

Looking wider and longer-term, utilities and power systems are in more radical change still – with a boom in solar energy, consumers seizing control of their power and weak overall growth in electricity demand – according to Bloomberg New Energy Finance’s latest projections. BNEF foresees huge growth in solar power to 2040 – both utility-scale and smaller distributed systems – giving huge numbers of consumers and businesses the ability to generate their own electricity on the back of falling costs for solar technologies.

At the same time, the march of energy efficiency technologies will limit demand growth – in OECD countries power demand will be lower in 2040 than now, says BNEF.

But, for COSPP readers at least, perhaps the most striking conclusion from BNEF is that its analysis ‘opens up the prospect of a clear move from a utility-scale, centralised system to one that is increasingly distributed and focused on the consumer, with household and business decisions on solar PV and storage driving many of the changes in the power system’.

The major revolution in developed world power systems in recent years – the huge growth of renewable generation – will be followed, everyone seems to agree, by a move to decentralised power generation, with solar energy, on-site generation and prosumers at its heart.

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