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Rise of the prosumer to have a transformative impact on the energy market

Energy consumption is no longer a one-way street as householders look to capitalise by availing of new technology

People are putting solar panels on their roofs and producing energy that way coupling it with a battery in terms of optimising it, while farms or larger businesses may have their own wind turbines

People are putting solar panels on their roofs and producing energy that way coupling it with a battery in terms of optimising it, while farms or larger businesses may have their own wind turbines

 

Ever heard of a prosumer? It might sound like just another buzzword but as the way we produce and use energy fundamentally changes, you too could become a prosumer – a hybrid of producer and consumer – in the not-too-distant future.

And as the number of prosumers grows, the associated benefits are myriad, for the community, the economy, and the environment.

Prosumers may operate as individual households or as local co-operatives, and are both producers and consumers of energy generated by mini-wind turbines, photovoltaic panels, solar collectors and heat pumps for instance. Not only will they be able to use this energy to power their own homes, but soon they will be able to sell the surplus to others.

Gary Ryan, managing director at Energia Customer Solutions, explains that the “pro” in prosumer is two-fold; it can mean becoming a producer of energy having invested in renewable home energy generation technology or simply someone who is a proactive participant in the energy market.

Recent years have seen a surge of homeowners anxious to capitalise on natural energy sources, meaning energy consumption is no longer a one-way street. This could have a transformative effect on the energy market, he says.

“We are used to having big power plants that produce energy and feed it down to people but now people can produce their own energy – for example people putting solar panels on their roofs and producing energy that way coupling it with a battery in terms of optimising it, while farms or larger businesses may have their own wind turbines,” Ryan explains.

Other types of prosumers are actively participating in the energy market by reducing their demand, increasing their demand or changing their behaviours based on instructions that come from the energy markets. This is emblematic of a wider move away from being a merely passive consumer.

“Supply and demand pertaining to energy markets means that every half hour there’s a different price for energy in the marketplace,” says Ryan.

“Those half hour signals can send messages in terms of what people should do. If there’s a lot of wind in the marketplace and there’s no demand therefore the price goes right down – people can then react to this by placing demand on the system and therefore being more efficient.”

For years, a significant financial investment was required to install the necessary technology, meaning many would-be prosumers simply could not afford to go green. However, the rise of the prosumer has occurred in parallel with a fall in the costs associated with renewable energy technologies. Ryan also says a protracted time to return on investment is no longer a deterrent in the way it once was.

Smart meter

“The payback that people have been experiencing in the past has taken longer than people would have liked,” he notes. “These technologies have been improving rapidly and economies of scale see the price continuing to fall.”

These technologies in combination with other connected devices have the opportunity to revolutionise homes in a “simple but impactful” manner, adds Ryan. Many households already have this type of tech; “smart” thermostats allow you to control your home heating system with your smartphone, while smart fridges can tell you if its door has been left open.

And even if renewables aren’t on your agenda, the ongoing rollout of smart meters will see Irish homeowners gain unprecedented insight into their energy usage, a move that will not only benefit the environment but should see lower energy bills. Not only will automatically estimated bills be a thing of the past, but those lucky enough to have a smart meter will have access to more information allowing them to manage their electricity usage and make more informed choices.

Some 250,000 homes across the country will have a smart meter installed by December of this year, Ryan explains.

“This will allow owners to see the consumption that they have on a half hourly basis in their home and will also allow for the export of energy back onto the grid. It will be an enabler in terms of participation in the marketplace,” he says.

There are also broader community benefits from homeowners becoming prosumers. A growth in renewable technologies and prosumers will reduce the overall carbon footprint of a locality, improve air quality, encourage self-sufficiency and will help to foster a greater sense of co-operation. There is also a great opportunity for local energy co-operatives.

Ultimately, as the number of prosumers grows, they will become key market players so consideration around integration in the current market and their place in the future will be important, Ryan says.

“From a market perspective, the increasing number of prosumers will add increased capacity to the grid and draw them closer to existing providers. It will also encourage existing providers to continue to innovate and offer new products and services.”

The recently launched Programme for Government boasts a commitment to 70 per cent renewable energy in Ireland by 2030. By its very nature, however, renewable energy is intermittent, meaning demand does not always equal supply. Prudent demand management must therefore happen in tandem with a wider shift to renewable energy sources, and the rise of the prosumer will be a key factor in its success, Ryan says.

“When the wind is blowing in the west of Ireland but there isn’t the demand for it, then how do we make the best out of that renewable resource? We need to be able to control demand a lot more flexibly in the future.”

Prosumer – what is it?

· A prosumer is both a producer and consumer of energy. More and more people are beginning to generate their own energy for heat and electricity. In the future, people will be able to sell any excess electricity they have back to the grid. At the moment people cannot be paid for the excess electricity they generate; however, the climate action plan has signalled intent to introduce such payments in the next couple of years.

For example, a household may have solar panels that supply a portion of their electricity that they mainly use themselves. On very sunny days, they may have extra electricity they can sell back to the grid. They may also buy electricity at night to power their electric car, taking advantage of cheap rates due to lots of wind energy.