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The role of prosumers in the new energy world

Frauke Thies, Executive Director of smartEn.

Frauke Thies: „Prosumers need to be able to actively participate in the energy system“.
Seven questions about the role of prosumers in the new energy world for Frauke Thies, Executive Director of smartEn.
 

Mrs. Thies, in tomorrows’ world of energy consumers won’t only be clients, they will partly produce their own energy. How will it be possible to bring together this diversity?

Thanks to decentralized and innovative solutions like renewables, storage and demand response, the opportunities, roles and responsibilities in the energy system are changing entirely. People can self-generate energy or contribute flexibility by activating an electric heat pump, investing in storage or smartly charging an electric car. The same is true for industrial and commercial consumers who can actively engage not only by generating on-site electricity, but also through the automation of energy-using processes to react to the needs of the energy system. In order to make this work, it is essential that consumers have the opportunity to interact with the system to contribute and valorise their energy and flexibility for their own benefit, and for the benefit of a sustainable energy system at large.

 

What are the challenges to integrate the manifold market participants?

To ensure that the new energy services and technologies can be used in the best way for the prosumer and the electricity system, prosumers need to be able to actively participate in the energy system. New service offers e.g. from aggregators or the digitally enabled reaction to direct price signals from the market can facilitate this without hampering consumer’s convenience and often allowing for an improved energy consumer experience. However, these solutions often struggle to enter today’s markets that were designed for unidirectional energy flows from large individual power stations to mostly passive consumers. The challenge is to open these markets for new business models and decentralized technologies and to ensure that effective price signals allow for their appropriate monetization.

 

How much digitalization do we need for that?

Digitalization is already a fact in the energy system and it will and should evolve further to support the efficient operation of the network and the market in a decentralizing energy world. At system level, digitalization helps identify and manage constraints and at market level it enables new types of trading platforms and provides the basis for effective price signals in real time. At the level of generation and demand units – even down to the level of individual appliances – digitalization unlocks fast reactions to these signals from the market, while allowing for the aggregation of resources in virtual power plants. The question is no longer if digitalization will play a role, but how the roles, responsibilities and actors will evolve in this area.

 

How can prosumers benefit from the energy sector in the future?

Prosumers can benefit both from choosing their own energy services and resources, and by playing an active role in the energy market themselves. For example, people have the opportunity to choose where their energy comes from, join a community, invest in their own renewable energy project or engage in demand response. In general, people may want to use their resources for local optimization, cooperate with an aggregator who can sell their energy and flexibility on their behalf or opt for dynamic price signals to minimize their energy bill.

 

What role will provider independent virtual trading platforms play?

With growing digitalization and decentralization, platforms have become a central aspect of the energy system, whether it is for local communities, virtual power plants, or for the provision of network services, e.g. for distribution system operation. Which types of platforms will prevail, how they are organized and which digital infrastructure they are based on, will largely depend on the regulatory conditions and competition in the market.

 

To balance the demand and the production of energy will become more and more important in the future. How much progress has Europe made in this respect?

Across Europe, it has become clear that the energy transition is not just about the uptake of new and clean generation technologies, but it equally depends on effective use of flexibility from intelligent network management, services from generating plants, demand response and storage. Important progress has been made on European Balancing Markets to enable new services and technology solutions in this area but more is needed still, as shown for example in the new smartEn Map report on the topic. But flexibility signals are needed at all levels, including locally as well as on wholesale markets. The European Clean Energy Package that has been concluded in December 2018 and should be adopted in early 2019, represents a big step forward in this direction. However, the consequent opening of markets will be successful only when price signals evolve to reflect the value of flexibility at any moment.

 

You are chair of the Smart Renewable Systems Conference 2018. What are the main topics?

The conference will focus on the new realities of an increasingly decentralized, digital and clean energy system. On Day 1, we will look at the opportunities and services for residential, commercial and industrial users. Which energy services will people benefit from and how can they make the best use of the energy resources they have? On Day 2, the focus is on the interaction of these resources with the wider system. How will markets evolve, which trading platforms are available and how can system operators gain value from procuring flexibility services? The conference will have a strong emphasis on case studies and examples on current trends and challenges, shedding a light on emerging business opportunities in the new energy world.