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.
This is a preview of subscription content, access via your institution
Access options
Subscribe to this journal
Receive 12 digital issues and online access to articles
$119.00 per year
only $9.92 per issue
Buy this article
- Purchase on Springer Link
- Instant access to full article PDF
Prices may be subject to local taxes which are calculated during checkout
Similar content being viewed by others
References
Bazilian, M. et al.Re-considering the economics of photovoltaic power. Renew. Energy 53, 329–338 (2013).
Tran, M., Banister, D., Bishop, J. D. K. & McCulloch, M. D. Realizing the electric-vehicle revolution. Nature Clim. Change. 2, 328–333 (2012).
Chiang, Y.-M. Building a better battery. Science 330, 1485–1486 (2010).
Monthly Deployment of all Solar Photovoltaic Capacity in the United Kingdom (Department of Energy & Climate Change, accessed 28 January 2016); http://go.nature.com/8RYnfb
Nelson, J., Gambhir, A. & Ekins-Daukes, N. Solar Power for CO 2 Mitigation Briefing Paper No. 11 (Grantham Institute for Climate Change, 2014); http://go.nature.com/kBuoXm
Harvey, F. UK should have 10 million homes with solar panels by 2020, experts say. The Guardian (29 January 2014); http://go.nature.com/VcN53c
Agnew, S. & Dargusch, P. Effect of residential solar and storage on centralized electricity supply systems. Nature Clim. Change 5, 315–318 (2015).
Benchmarking Smart Metering Deployment in the EU-27 with a Focus on Electricity (European Commission, 2014); http://go.nature.com/m2aHYu
Barnard, M. Here's why Tesla's battery is a big deal. Forbes (14 May 2015); http://go.nature.com/54oiqt
Sandalow, D. B. (ed.) Plug-in Electric Vehicles: What Role for Washington? 1st edn (The Brookings Institution, 2009).
Global EV Outlook 2015 (International Energy Agency, 2015); http://go.nature.com/2HxBgb
LaMarche, J., Cheney, K., Christian, S. & Roth, K. Home Energy Management Products & Trends (Fraunhofer CSE, 2011); http://go.nature.com/hefzlY
Saad al-sumaiti, A., Ahmed, M. H. & Salama, M. M. A. Smart home activities: a literature review. Electr. Pow. Compo. Sys. 42, 294–305 (2014).
Zipperer, A. et al. Electric energy management in the smart home: perspectives on enabling technologies and consumer behavior. Proc. IEEE 101, 2397–2408 (2013).
Home Automation (Luxury, Mainstream, DIY (Do It Yourself) and Managed) Market by Networking Technology (Wired, Power-line, Computing Network and Wireless) for Lighting, Safety and Security, HVAC, Entertainment and Other (Robotics and Heath Care) Applications - Global Industry Perspective, Comprehensive Analysis, and Forecast, 2014–2020 (Zion Research, 2015).
Reforming the Energy Vision (New York Department of Public Service, 2015); http://go.nature.com/nrsw3p
Trabish, H. K. How California plans to integrate distributed resources into its ISO market. Utility Dive (24 June 2015); http://go.nature.com/KGA9Rf
Skjølsvold, T. M., Ryghaug, M. & Berker, T. A traveler's guide to smart grids and the social sciences. Energy Res. Soc. Sci. 9, 1–8 (2015).
Balta-Ozkan, N., Boteler, B. & Amerighi, O. European smart home market development: public views on technical and economic aspects across the United Kingdom, Germany and Italy. Energy Res. Soc. Sci. 3, 65–77 (2014).
Goulden, M., Bedwell, B., Rennick-Egglestone, S., Rodden, T. & Spence, A. Smart grids, smart users? The role of the user in demand side management. Energy Res. Soc. Sci. 2, 21–29 (2014).
Jones, K., Zoppo, D. & Smarter, A. Greener Grid: Forging Environmental Progress through Smart Energy Policies and Technologies (Praegar, 2014).
Fox-Penner, P. S. Smart power: Climate Change, the Smart Grid, and the Future of Electric Utilities (Island, 2010).
Sioshansi, F. P. Distributed Generation and its Implications for the Utility Industry (Academic Press, 2014).
Sioshansi, F. P. Evolution of Global Electricity Markets: New Paradigms, New Challenges, New Approaches (Academic Press, 2014).
Elliott, N., Molina, M. & Trombley, D. A Defining Framework for Intelligent Efficiency Research Report E125 (American Council for an Energy Efficient Economy, 2012).
Marnay, C. & Lai, J. Serving electricity and heat requirements efficiently and with appropriate energy quality via microgrids. Electric. J. 25, 7–15 (2012).
Rodríguez-Molina, J., Martínez-Núñez, M., Martínez, J.-F. & Pérez-Aguiar, W. Business models in the smart grid: challenges, opportunities and proposals for prosumer profitability. Energies 7, 6142–6171 (2014).
Hvelplund, F. Renewable energy and the need for local energy markets. Energy 31, 2293–2302 (2006).
Rosen, C. & Madlener, R. Regulatory Options for Local Reserve Energy Markets: Implications for Prosumers, Utilities, and other Stakeholders FCN Working Paper No. 12/2014 (Institute for Future Energy Consumer Needs and Behavior, 2014).
Linnenberg, T., Wior, I., Schreiber, S. & Fay, A. A market-based multi-agent-system for decentralized power and grid control. In IEEE 16th Conference on Emerging Technologies & Factory Automation 1–8 (IEEE, 2011).
Crosby, M. An Airbnb or Uber for the electricity grid? RMI Outlet (2 September 2014); http://go.nature.com/iDCkUa
Marqués, A. et al. NOBEL — a neighborhood oriented brokerage electricity and monitoring system. In 1st International ICST Conference on E-Energy (eds Hatziargyriou, N. et al.) 187–196 (Springer, 2010).
Karnouskos, S., Serrano, M., Marques, A. & Marron, P. J. Prosumer interactions for efficient energy management in smartgrid neighborhood. In 2nd Workshop on eeBuildings Data Models, CIB Conference W078-W012 243–250 (European Commission, 2011).
Parag, P. Beyond energy efficiency: a ‘prosumer market’ as an integrated platform for consumer engagement with the energy system. In ECEEE 2015 Summer Study on Energy Efficiency 15–23 (ECEEE, 2015).
Corn, M., Cerne, G., Papic, I. & Atanasijevic-Kunc, M. Improved integration of renewable energy sources with the participation of active customers. Stroj. Vestn.-J. Mech. E. 60, 274–282 (2014).
Karnouskos, S. Demand side management via prosumer interactions in a smart city energy marketplace. In Innovative Smart Grid Technologies (ISGT Europe), 2011 2nd IEEE PES International Conference and Exhibition 1–7 (IEEE, 2011).
Geelen, D., Reinders, A. & Keyson, D. Empowering the end-user in smart grids: recommendations for the design of products and services. Energy Policy 61, 151–161 (2013).
Pentland, W. AutoGrid Systems strikes deal with Dutch energy provider for software-defined power plant. Forbes (13 November 2015); http://go.nature.com/ikfjRo
Rathnayaka, A. D., Potdar, V. M., Dillon, T. S., Hussain, O. K. & Chang, E. A methodology to find influential prosumers in prosumer community groups. IEEE T. Ind. Inform. 10, 706–713 (2014).
Rathnayaka, A. J. D., Potdar, V. M., Dillon, T., Hussain, O. & Kuruppu, S. Goal-oriented prosumer community groups for the smart grid. IEEE Technol. Soc. Mag. 33, 41–48 (2014).
Rathnayaka, A. J. D., Potdar, V. M., Dillon, T. S. & Kuruppu, S. Formation of virtual community groups to manage prosumers in smart grids. Int. J. Grid Util. Comput. 6, 47–56 (2015).
Rathnayaka, A. J. D., Vidyasagar, M., Potdar, S. & Kuruppu, J. Design of smart grid prosumer communities via online social networking communities. Int. J. Infonom. 5, 544–556 (2012).
Jian, L., Zhu, X., Shao, Z., Niu, S. & Chan, C. C. A scenario of vehicle-to-grid implementation and its double-layer optimal charging strategy for minimizing load variance within regional smart grids. Energy Convers. Manage. 78, 508–517 (2014).
Mwasilu, F., Justo, J. J., Kim, E.-K., Do, T. D. & Jung, J.-W. Electric vehicles and smart grid interaction: a review on vehicle to grid and renewable energy sources integration. Renew. Sust. Energy Rev. 34, 501–516 (2014).
Haddadian, G., Khalili, N., Khodayar, M. & Shahidehpour, M. Optimal scheduling of distributed battery storage for enhancing the security and the economics of electric power systems with emission constraints. Electr. Pow. Syst. Res. 124, 152–159 (2015).
Fanone, E., Gamba, A. & Prokopczuk, M. The case of negative day-ahead electricity prices. Energy Econ. 35, 22–34 (2013).
Sioshansi, P. New headache: over-generation — Perry Sioshansi's letter from America. Energy Spectrum 18–19 (23 February 2015); http://go.nature.com/rPYk16
Mulder, F. M. Implications of diurnal and seasonal variations in renewable energy generation for large scale energy storage. J. Renew. Sustain. Energy 6, 033105 (2014).
Bronski, P. et al. The Economics of Load Defection (Rocky Mountain Institute, 2015); http://go.nature.com/ZwDWur
Bronski, P. et al. The Economics of Grid Defection (Rocky Mountain Institute, 2014); http://go.nature.com/ZXC65t
Simshauser, P. & Nelson, T. The Energy Market Death Spiral - Rethinking Customer Hardship Working Paper No. 31 (AGL Applied Economic and Policy Research, 2012); http://go.nature.com/buJyel
Simshauser, P. Demand Tariffs: Resolving Rate Instability and Hidden Subsidies Working Paper No. 45 (AGL Applied Economic and Policy Research, 2014).
Kempton, W., Marra, F., Andersen, P. B. & Garcia-Valle, R. in Electric Vehicle Integration into Modern Power Networks (eds Garcia-Valle, R. & Peças Lopes, J. A. ) 87–105 (Springer, 2013).
Sovacool, B. K. Rejecting renewables: the socio-technical impediments to renewable electricity in the United States. Energy Policy 37, 4500–4513 (2009).
Sovacool, B. K. & Blyth, P. L. Energy and environmental attitudes in the green state of Denmark: implications for energy democracy, low carbon transitions, and energy literacy. Environ. Sci. Policy 54, 304–15 (2015).
Döbelt, S., Jung, M., Busch, M. & Tscheligi, M. Consumers' privacy concerns and implications for a privacy preserving smart grid architecture—results of an Austrian study. Energy Res. Soc. Sci. 9, 137–145 (2015).
Sovacool, B. K. How long will it take? Conceptualizing the temporal dynamics of energy transitions. Energy Res. Soc. Sci. 13, 202–215 (2016).
Edgerton, D. The Shock of the Old: Technology and Global History Since 1900 (Oxford Univ. Press, 2007).
Melosi, M. in The Energy Reader (ed. Nader, L. ) 45–60 (Wiley Blackwell, 2010).
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.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Competing interests
The authors declare no competing financial interests.
Rights and permissions
About this article
Cite this article
Parag, Y., Sovacool, B. Electricity market design for the prosumer era. Nat Energy 1, 16032 (2016). https://doi.org/10.1038/nenergy.2016.32
Published:
DOI: https://doi.org/10.1038/nenergy.2016.32
This article is cited by
-
Policy prescriptions to address energy and transport poverty in the United Kingdom
Nature Energy (2023)
-
Demcrp-et: decentralized multi-criteria ranked prosumers energy trading using distributed ledger technology
Peer-to-Peer Networking and Applications (2023)