Rise of the Prosumer

Rise of the Prosumer

One of the most prominent methods of carbon reduction is by increasing the amount of electricity produced by highly efficient distributed and renewable generation technologies. Incentives and legislation have encouraged energy consumers to shift from conventional power generation to renewable power generation. Energy users are no longer confined to consumption of energy, and are increasingly involved in contributing to the energy distributed across grids by participating in the generation of energy.

The intermittency and unpredictability of renewable technologies have led power suppliers to invest in smart grid solutions. Investments in smart grid infrastructure have encouraged active participation by power consumers. They have evolved from passive consumers to active producers, commonly termed as ‘prosumers’ in the energy market.

Political willingness and cost allocation initiatives to facilitate grid integration across various distributed generation technologies will be a key driver for the growth of prosumers. Investments in technological developments will also ensure efficient energy management by the prosumers.

Technology-led price decline of renewable energy installations has led to increased competitiveness for conventional energy sources. The levelised cost of electricity for renewable generation is attracting increased investments. Distributed energy production and decentralisation of power generation through rooftop solar panels and wind farms have also contributed to the rapid rise in the number of energy prosumers. Frost & Sullivan forecasts that the traditional energy system will gradually evolve into a prosumer-led utility model across both developed and emerging markets.

About this report

Prosumers (customers who both produce and consume energy) are on the rise globally, as investment in renewables and distributed generation technologies increase. Enabled by smart energy management solutions, smart grids, energy storage solutions, and supportive legislation, the next 5 years will see strong growth in related markets, as well as disruption to the traditional energy business models due to increased penetration of prosumers in the energy value chain. The study details the various drivers for the growth of prosumers along with their discussions. It also provides the three big predictions, entailing the trends witnessed in the market.

  • Executive Summary
    • Key Findings
    • Key CEO 360 Degree Perspectives
    • Three Big Predictions
    • Relevant Research
  • Overview of Prosumers
    • Utility Models have Gradually Evolved from a Centralised to a Decentralised Model, Encouraging End User Participation
    • The Amount of Energy Produced by a Prosumer is Driven by its Need for Self-sufficiency and its Ability of Grid Integration
    • Most of the Existing Prosumers Fall into the `Predominant Self-consumption' Phase of the Evolution Curve
    • Prosumers-Drivers and Restraints
    • Likeliest Scenario for Development of Prosumers See Technology and Regulation Playing Key Roles
    • The United States, Australia, Germany, and France Offer Attractive Opportunities for Driving the Growth of Prosumers
    • The European Countries Remain Committed to Energy Efficiency and Climate Change, Driving Growth
  • Key Enablers
    • Key Enablers Driving Growth of Prosumers
  • Growth in Decentralised Energy
    • Renewables, CHP, and Distributed Generation Technology have Largely Contributed to the Rise of Prosumers
    • Increased Solar Investment Drives Global Growth in Renewable and Decentralised Energy
    • Renewable Energy has Been a Key Driver for the Rise of Prosumers
    • With Increased Technological Efficiency, the Cost of Generating Solar Energy has Decreased Significantly
  • Levelised Cost of Electricity/Grid Parity
    • Decline in Renewable Costs Makes Prosumer Offering More Attractive
    • LCOE Should be Lower than or at Least Comparable to Conventional Energy to be Attractive for Prosumers
      • Table Rise of the Prosumer: Comparison of LCOE, Global, 2009 and 2014
    • Price Reduction of PV Modules and Net Metering Policies Adopted Globally are Likely to Reduce LCOE
    • Small Scale PV is Not Yet at Grid Parity but is Catching Up Quickly, Supported by Tax Credits and Incentives
  • Retail Electricity Price
    • Prosumers-Value Proposition
    • High Retail Electricity Price is Very Attractive for Prosumer Growth
  • Supportive Regulation/Legislation
    • Supportive Regulations and Policies are Key Enablers for Prosumer Growth Globally
    • Regulators in the US are Unlikely to Let Mass Access to the Grid Without Utility Compensation
  • Metering
    • Smart Meters are Crucial for Effective Integration of Renewable Electricity by the Prosumers
    • Accurately Tracking Production and Consumption is Key to the Growth of Prosumers
  • Energy Storage
    • Energy Storage Costs will be a Game Changer in this Developing Market
    • Distributed Energy Storage Such as Home Energy Storage and Electric Vehicles as Storage Unit will Drive Growth
    • Energy Storage is Predicted to Become an Increasingly Important Enabler for the Rise of Prosumers
    • US and North East Asia Lead Investments in Energy Storage, While China is a High Growth Market
  • Business Models and Case Studies
    • Hybrid Models are a Combination of Virtual Power Plants, Distribution System Operators, and Technology Retailers
    • Hybrid Prosumer Utility Models are Currently Thought to be the Best and Fastest at Achieving Commercialisation
    • Power Purchase Agreements (PPAs) are an Attractive Investment Model for Hybrid Prosumers
    • Leasing Rooftops will Enable Utilities to Participate in the Prosumer Utility Model
  • Conclusions
    • Regulatory Actions and Storage Solutions are Crucial Factors Driving Growth of Prosumers

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