Consumers are driving the global energy transition together
Image credits: 123rf

How much more power could the consumer have? What would they do with that power? And what is their role in the global energy transition? Kelvin Ross asks players in the energy sector.

If there is one thing that we can all agree on, it’s that the consumer is now an integral part of the global energy transition.

Many are now proactive, engaged prosumers, choosing how their power is generated – and some generating it themselves.

Yet others remain passive acceptors of whatever is delivered to them at the end of the energy supply chain.

So how much power could the consumer have?

How much power should the consumer have?

What would they do with that power?

And what can the rest of the sector do to empower them?

This article was originally published in Smart Energy International Issue 4-2020.
Read the full digimag or subscribe to receive a print copy.

“If consumers drove the energy transition, our energy supply would be cheaper and cleaner at the same time,” asserts Frauke Thies, executive director of smartEn, a European business association for digital and decentralised energy solutions.

“As of today, consumers – or prosumers – are already driving investments in clean energy,” she says. “For companies, onsite renewables and green energy procurement have become important investment areas. Likewise, private citizens play an increasing role through investments on site or participation in community projects.”

She says that over the last five years, 8GW of new renewables have been contracted in Europe through corporate power purchase agreements and at least another 10GW have been installed on site.

She adds that it’s estimated that by 2030, “energy communities could own up to 20% of wind and solar capacity in Europe and by 2050, more than 185 million EU households could contribute to demand response, storage and renewable energy production.”

IF CONSUMERS DROVE THE ENERGY TRANSITION, OUR ENERGY SUPPLY WOULD BE CHEAPER AND CLEANER AT THE SAME TIME

FRAUKE THIES

“Crucially,” says Thies, “energy users can also provide flexibility, which is indispensable for a renewables-based system. Flexibility from demand response, the smart management of energy resources, and storage can complement the growing variability in energy supply.

“A very substantial number of industrial processes, commercial buildings, private homes and electric vehicles can be operated flexibly with only very limited investments.

“The European Commission has assessed the potential of flexibility from demand response alone to be 160GW by 2030 already. This will continue to grow as further sector integration unlocks flexibility potentials from electric vehicles, heating and cooling, and industry.”

Thies stresses that the involvement of businesses and citizens as active participants in the global energy transition “will boost societal support. If consumers are encouraged to contribute their resources and flexibility, they will not only show commitment and gain value through direct earnings or reduced energy bills, but they will also reduce costs for the system at large.

“A consumer-driven energy system thus benefits all users.”

Energy protagonists

Paolo Rocco Viscontini, president of Italian solar PV association Italia Solare, also believes that “consumers – as prosumers – are ready to be the basis of a new distributed, shared and renewable energy model.”

But he says that to enable this model, “it is a priority that governments understand that the real energy transition is urgent and possible and that consumers be free from the still excessive influence coming from large, often state-controlled companies that still base their revenues largely on centralised and fossil fuel generation.”

Viscontini argues that “we talk a lot about self-consumption and yet we approve a new structure for household bills that increases fixed charges and therefore makes self consumption less convenient. We talk about energy communities and yet we forget that today exchanging energy, even in the most logical and natural contexts such as condominiums, shopping centres or industrial districts, is restricted… although fortunately, we are moving in the right direction.”

He is confident that “citizens are now aware of the need to change the current energy model – the only obstacles that remain are bureaucracy and the powers of lobbies. But the process of transformation is now underway and cannot be stopped.”

And he stresses that “citizens will increasingly be the protagonists of the energy paradigm shift by producing and consuming energy in an increasingly conscious way.”

Noëlle Fischer, chief executive of metering solutions company Blicker, agrees that “building new business models around customer experience” is crucial.

She says that while there isn’t a one-sizefitsall model that meets the requirements of the future market, “by creating a stronger customer relationship, and by providing data to consumers about energy usage and management, consumers appreciate and value that data, are able to cut down on costs – and that results in a change of behaviour.”

Fischer adds that “as consumer’s values and preferences evolve, utility companies must take a proactive role in helping to shape the future of the industry. Creating a customer-centric organisation where the customer experience is the largest focus, companies become more adaptable to the changing needs and expectations of their consumers.”

Consumers driving the global energy transition
Image credits: 123rf

Remove barriers

Jayson Dong, policy officer at AVERE, the European Association for Electromobility, believes that “consumers must be at the core when developing energy and mobility systems of the future, as they are key to accelerating the clean energy and mobility transition.” “The energy system must do more to empower citizens and remove barriers preventing them from taking control of their energy consumption and management.”

Dong adds that in a consumer-driven world, “citizens would be more directly engaged in, and support, the advancement of clean technologies in both the energy and zero emission mobility sectors.”

“Sectoral integration would accelerate at a more effective rate and more people would be profiting – for instance, from sending energy back to the grid from their electric vehicle.” However, it is enabling this direct engagement that will be the biggest challenge, believes Jonathan Robinson, energy research director for power at consultancy Frost & Sullivan.

“Currently not enough consumers in fully liberalised markets exercise their ability to select either the lowest cost option or the greenest option.”

To overcome this, he says “we need a combination of regulatory-led initiatives, backed up by sound technology offerings, continued societal pressure, and an educational campaign on the benefits of the energy transition to consumers – how they can do good, but crucially, how they can gain.”

Trust is vital

Marine Cornelis, executive director of Next Energy Consumer, stresses that the most essential pillar on which to build customer engagement is trust. “They must trust the energy companies, the service providers, but also the policies and overall the economy.

“It is up to all the stakeholders to create a stable and motivating environment, allowing concrete empowerment.” She adds that this means “not only supporting a consumer’s journey but also giving them the tools and resources to take the driver’s seat.” “All kind of consumers should have a chance to get on-board; however, we must also respect their personal circumstances and motivations, and never penalise those who are unwilling or unable to participate.”

Venizelos Efthymiou, chairman of FOSS Research Centre for Sustainable Energy and member of the governing board of ETIP SNET (the European Technology & Innovation Platform for Smart Networks for Energy Transition), says that the power system has been on a path to “a more consumer-centric perspective” for the past two decades.

“The grid is more than ever turning into an active, digitalised, interconnected system with bi-directional flow of energy and data, facilitating the strong contribution of end users.”

He lists several sector developments that are “paving the way for a stronger presence of end-users in generating, managing and using their energy.” This includes solar PV, smart grid technologies, blockchain and peer to peer trading, plus electric mobility and its related technologies such as vehicle-to-grid and storage.

All of these, he says, are “sowing the seeds of this emerging world with consumers at the centre of the energy transition… and such seeds, once germinated, will play an important role in the transition. But they need the expert support of the grid operators, who can act as market facilitators for secure, resilient, and optimal use of all interconnected systems and sources.”

He says that “drawing the full picture requires a composite action, with well-developed and designed systems through the support of knowledge experts from the electricity industry as well as emerging actors like aggregators that will support the role of the active consumer.”

Behavioural changes

Benjamin Sovacool is professor of energy policy at the University of Sussex in the UK and professor of business and social sciences at Denmark’s Aarhus University.

He has been involved in research as part of the European HOPE project, which examined household preferences for reducing greenhouse gas emissions in four European cities in France, Germany, Norway and Sweden.

From this research, he says, he has acquired “a rich insight into how behavioural changes from consumers themselves – when they are empowered – can achieve substantial reductions of greenhouse gas emissions.” Sovacool says that “it is clear that car and plane mobility, meat and dairy consumption, and heating are the most dominant components of household footprints.”

However, most interestingly, household living situations such as demographics and size of the home, greatly influence household reduction potential, whereas country location didn’t make any difference. This implies the power of demographics trumps the power of space, place, or country.”

Moreover, he says household decisions “can be sequential, temporally dynamic and impacted by major life events such as falling ill, retiring, or having children. Short-term voluntary efforts will not be sufficient by themselves to achieve drastic reductions at the scale needed to achieve the 1.5°C goal.”

NOT ENOUGH CONSUMERS EXERCISE THEIR ABILITY TO SELECT EITHER THE LOWEST COST OR THE GREENEST OPTION

JONATHAN ROBINSON

Instead, he says households will “need regulatory frameworks supporting their behaviour changes, at least to get emission reductions beyond 50%. In other terms, households will use their power to voluntarily cut about half of their footprints – but they need inducement to go the rest of the way.”

Lopsided

Mark Howitt, chief technology officer and co-founding director of UK compressed air energy storage firm Storelectric, has a more cautious approach to engaging the consumer.

“If consumers drove the energy transition, then it would be lopsided, expensive and shortterm focused,” he states.

Lopsided, he says, because “a consumer-led approach would be led by those who can afford it and are most vocal and engaged; those who cannot afford it or are not engaged or vocal – maybe because they don’t have the time or resource – will not have their needs taken into account and would, therefore, be left behind and disadvantaged.”

He also believes that a consumer approach is short-termist: “Consumers focus on now and the next few years – grid assets take years or decades to build and more decades to amortise, so need a multi-decade focus and remuneration system.”

Edoardo Zanchini disagrees. As national vicepresident of Italian environmental organization Legambiente, he believes that “consumers are ready to lead the energy transition – all research and surveys confirm it.”

“They want to be able to choose energy produced from renewable sources and to accelerate their choices towards an increasingly distributed model.” Zanchini says that “renewables are changing the paradigm of the energy system… and in this perspective, new possibilities are opening up for consumers.”

Currently in Europe, he explains, “we look at information on the energy performance of buildings and on electricity and heating/ cooling bills separately. Yet we know little of the information that is in the meters outside the front door.”

“Tomorrow, those numbers will be invaluable to completely rethink the way we manage energy inside buildings because thanks to innovations we can go towards near zero-energy building houses and self-produce electricity for all consumption, detaching ourselves from the gas network and storing energy inside batteries or electric cars.”

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