Prosumers will replace energy generators at the core of the industry

Paul Dight discusses the rise of the energy prosumer – who both consumes and generates renewable energy – and the challenges and opportunities this poses for the sector.

The UK’s energy sector has undergone significant changes over the past few decades, with the integration of clean energy generation precipitating investment of nearly £82 billion in renewable assets between 2013 and 2017.

Although renewable energy generation has been a key disruptor in the energy market, it is only the start of the story. We are now on the cusp of further disruption and innovation that will shape the industry’s future – and the rise of the prosumer in the energy market is an integral part of this.

Decentralised generation

The UK’s energy sector has undergone a radical transformation because of the increasing decentralisation of energy generation. Renewable energy generators were the early disruptors and the rapid adoption of this new but intermittent form of energy generation posed a challenge for our electricity grids.

These grids were originally designed around a centralised system fed by a small number of large generators, with power flowing one way through a network to the consumer. However, the growing trend towards a mix of energy generation, comprising a small number of decentralised generators operating with intermittent loads, has put an unpredictable, rising and falling pressure on our distribution network. For example, surges from intermittent generators, such as wind and solar farms, have meant that some parts of the grid have had to be reinforced to offer greater capacity.

These changes have posed challenges for the UK’s traditional top-down energy system – but have opened up opportunities for new challengers in the energy generation market. In turn, we are beginning to see the advent of the prosumer and a blurring of the lines between energy production and consumption.

Smart technology

Alongside the increasing presence of decentralised renewable energy generators, smart technology has acted as an important precursor to the advent of the prosumer.

Smart meters are empowering consumers and changing the way in which the energy system is used. Consumers are their understanding of energy use – in turn helping them to improve their energy efficiency.

The adoption of smart meters, and the ensuing rise in consumer control, is a development that also enjoys support from the UK government, that has committed itself to deploying smart meters across all homes and businesses by the end of 2020.

This has led to shifting patterns of energy demand – which pose both a challenge and a potential solution for the energy distribution network. In encouraging consumers to be more aware of their energy consumption habits, it has laid the foundation for the emergence of a growing group of prosumers.

Enter the prosumer

Prosumers are a group who both produce and consume renewable energy. Rather than simply being conscious of their energy consumption habits, they focus on its generation as well. They often achieve this using solar panels and remote energy storage systems independent of the grid.

This is a particularly interesting development because it offers a solution to the increasing pressure placed on the grid by the increasing demand for renewable energy.

For instance, the UK government is committed to developing one of the best electric vehicle infrastructure networks in the world in its Road to Zero Strategy. In the same document, it announced its ambition to end the sale of conventional petrol and diesel-fuelled cars and vans by 2040. To provide enough renewable energy to support such an ambition is a challenge – and one that an increase in remote energy creation and storage championed by prosumers can help address.

As the number of prosumers in the UK grows, the energy market must adapt. Investment in the remote battery storage demanded by prosumers is an area in which we are likely to see further disruption as challengers to the traditional energy system look to innovate to provide products that meet these demands. It is likely too that we will see the established energy generators moving into the market for remote energy storage to maintain their market share.

Three innovations together

This coming together of three major innovations – decentralised renewable energy generators, smart meters and remote energy storage – is set to reshape the energy sector. There is a growing need for regulatory change to help facilitate an environment in which further innovation can flourish – and an increasing number of challengers can enter the generation and storage market. This in turn will offer prosumers greater choice and flexibility.

Ultimately, these disruptive trends will drive significant change in the energy sector. Prosumers will replace energy generators at the core of the industry.