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The Rise of the Energy Prosumer

Posted by on in Heat 2014
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Energy, and in particular electrical power, is closely linked in all countries to political power and the history of the UK energy industry, especially the electricity industry, is closely tied with social and political history.  Mass deployment of electricity in the UK – which took what had been a luxury for a few and turned it into an every day necessity for all – took from the 1920s to the 1960s.  In that period the dominant models were centralization and large-scale generation which fitted the economics of electricity as well as the over-riding social model and politics of the time – characterized by: “big is best”, “government knows best” and “take what you are given”.  Since the 1970s, and accelerating in the last few decades, we have been living through simultaneous social and technological revolutions that are fundamentally changing the foundations on which the energy industry was built.  In 1980 the futurist Alvin Toffler coined the phrase “prosumers” and although it is now sometimes used in different ways the original meaning was “people who blurred the line between consuming and producing by actively collaborating to improve or design the goods and services of the marketplace, transforming it and their roles as consumers”.  Given this phrase was coined well before the internet it was prescient, on-line developments such as Wikipedia are examples of prosuming and with technologies such as 3D printing we are now seeing examples of prosuming in physical products emerge.

Many of the perceived problems of the energy system in the UK actually result from separation of producer and consumer – the “big 6” suppliers, the National Grid, the DNOs – are all remote (even if your pension fund owns shares in some of them).  Energy generation and use are remote – you just flick a switch and expect something to happen – you get a bill – you deal with a call centre that nowadays may be in another continent.  The whole system is remote. 

It wasn’t always that way.  Prior to the nationalized British Electricity Authority being established in 1948 there were over 600 electricity companies, most of them owned by local councils.  With the growing interest in community energy and municipally owned energy companies, as well as innovations in technology around small scale distributed generation, interconnection through the internet and innovations in finance like crowd funding, the question is are we likely to revert back towards local energy companies and rebuilding the connections between production and consumption?

Back in 2013 the BBC reported on a community project to install high-speed fibre optic broadband into a rural village in Lancashire, a project crowd funded by the community.  Telecommunications, like energy, is a highly technical and regulated industry so this is an interesting model of what is possible. On a recent visit to Bavaria I saw a 6km gas pipe from a farmer’s Anaerobic Digestion plant to the local village.  The project was planned and actually constructed by the farmer and then tested by the appropriate authorities.  The Danish examples of community owned wind farms and district heating are well known.  The last few years has seen a growing interest (and actual investment) in community energy schemes in the UK, although most of these are dependent on subsidies through Feed-in Tariffs for renewables.  We should not expect continuation of subsidies for any form of energy – it is not sustainable – but we should expect and demand more community engagement and ownership of the energy system.  Many local authorities are evaluating the possibility of municipally owned energy companies and the leading authorities are now implementing their plans. 

A lot of people talk about disrupting the energy industry but then go on to talk about models that sound strangely similar to the existing system.  Real disruption would involve creating new mechanisms to facilitate individuals and communities to be able to design their own energy services system – based on sound technical and economic analysis rather than reliance on subsidies and technology fantasies.  Such a system would be far more diversified and de-centralized than our current energy system.  We should always remember that no-one actually wants to buy energy – they want to have the benefits of energy services - comfort, light, sound, mobility.  A shift towards prosuming energy would almost certainly encourage true services models that provide a combination of efficiency, demand response, storage and energy supply – a combination that probably changes in real-time to match the current conditions.

It is finally being recognized that improving energy efficiency brings many co-benefits such as improved productivity, better health and economic development and work soon to be published by the International Energy Agency demonstrates these co-benefits in many areas.  Community involvement, the rise of “prosuming”, in the energy system, would provide many co-benefits other than just energy savings or reductions in emissions, not the least of which would be improved individual and social engagement, a greater sense of ownership and control.  That could be considered priceless.

Producer and consumer, divorced by the industrial revolution, are reunited in the cycle of wealth creation, with the customer contributing not just the money but market and design information vital for the production process. Buyer and supplier share data, information, and knowledge. Someday, customers may also push buttons that activate remote production processes. Consumer and producer fuse into a "prosumer." (Alvin Toffler, Powershift, 1990: 239)

Dr. Steven Fawkes


 

Steven Fawkes has over 30 years experience in energy efficiency and is actively involved in energy efficiency financing programmes in Europe and North America.  He is the author of “Energy Efficiency”, published by Gower and the blog: www.onlyelevenpercent.com

 

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