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Electricity market design for the prosumer era

Abstract

Prosumers are agents that both consume and produce energy. With the growth in small and medium-sized agents using solar photovoltaic panels, smart meters, vehicle-to-grid electric automobiles, home batteries and other ‘smart’ devices, prosuming offers the potential for consumers and vehicle owners to re-evaluate their energy practices. As the number of prosumers increases, the electric utility sector of today is likely to undergo significant changes over the coming decades, offering possibilities for greening of the system, but also bringing many unknowns and risks that need to be identified and managed. To develop strategies for the future, policymakers and planners need knowledge of how prosumers could be integrated effectively and efficiently into competitive electricity markets. Here we identify and discuss three promising potential prosumer markets related to prosumer grid integration, peer-to-peer models and prosumer community groups. We also caution against optimism by laying out a series of caveats and complexities.

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Figure 1: Structural attributes of three prosumer markets.

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Acknowledgements

The authors are appreciative for the grants that have supported elements of the work reported here: EU FP7 Marie Curie CIG grant no. 303443, STESS: Socio-technical approach to energy services security; the Research Councils United Kingdom (RCUK) Energy Program grant no. EP/K011790/1, Research Centre on Innovation and Energy Demand; and the Danish Council for Independent Research (DFF) Sapere Aude grant no. 4182-00033B, Societal Implications of a Vehicle-to-Grid Transition in Northern Europe.Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the European Union, the RCUK Energy Program or the DFF.

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Correspondence to Yael Parag.

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Parag, Y., Sovacool, B. Electricity market design for the prosumer era. Nat Energy 1, 16032 (2016). https://doi.org/10.1038/nenergy.2016.32

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