As the world seeks to move towards electrification and renewable energy, a transformation of the energy market as we know it is on the way. To break our dependence on fossil fuels and meet the growing need for clean, affordable energy, we must move away from a centralised system where big power companies produce and distribute energy from their large powerplants. Instead, energy should be produced more locally – in cities, by its very consumers.
Geographically distributed energy production with renewable energy sources
Smart new technologies such as energy meters and electric vehicle batteries have given us more independence and control over the energy we consume. Thanks to these technologies becoming more accessible and affordable, even individual households can now install a solar panel on their roof or purchase a small wind turbine. This has paved the way for a more decentralised and distributed energy production model that puts consumers in the driver’s seat.
Prosumers, energy communities and value-sharing
Having increased agency over energy production and consumption turns consumers into prosumers. Prosumers are consumers that not only consume, but also produce energy. In the future, millions of us will become small-scale energy producers.
When prosumers join forces, they form an energy community. An energy community can be, for example, an apartment building or a housing company where transferring energy among neighbours is easy. Within the community, members can sell and buy energy from each other. Alternatively, they can sell their surplus energy to electricity retailers and turn a profit.
It’s up to each energy community to adopt a value sharing mechanism that is fair, stable, easy to understand, and incentivises members to act in a way that benefits the community as a whole. In successful energy communities, a value sharing mechanism that meets all these requirements ensures that members will want to continue being part of their energy community.
Monetary incentives for prosumers, flexibility for electricity system operators
Moving away from a centralised energy system towards a more geographically distributed, prosumer-centric model benefits all parties.
Prosumers can expect to see a noticeable drop in their energy bill as buying energy from one’s energy community is cheaper than buying from electricity retailers. What is more, prosumers can reap economic benefits by selling their surplus energy within their energy community. Currently, Finnish prosumers who sell electricity to members of the same energy community do not need to pay electricity taxes nor network tariffs.
For electricity system operators, the new energy system offers flexibility. In fact, energy communities and prosumers can sell flexibility services to electricity system operators. At times when demand for electricity is high, they can use their energy storage to ease congested lines, thus guaranteeing uninterrupted power supply to consumers. This flexibility reduces the need for electricity system operators to invest in strengthening their infrastructure.
ProCemPlus – Prosumer Centric Energy Communities
Business Finland’s co-innovation project ProCemPlus puts prosumers and energy communities at the centre of the focus. VTT is an active participant in the project that aims to achieve a holistic view of energy communities, to tackle technical issues associated with these communities, and to develop value-sharing methodologies within energy communities. The project also looks at legislative changes needed to accelerate the introduction of these emerging technologies and a prosumer-centric energy system. We believe that incentivising self-generating energy providers will result in tangible benefits for the end-users, local communities, electricity system operators as well as the environment.
Want to be part of the change? VTT has in-depth knowledge of the energy sector as well as a fully functioning simulation platform up and running. We’d be happy to collaborate and share our know-how! Get in touch.
Want to learn more? Check out these useful articles:
https://ieeexplore.ieee.org/abstract/document/9435374
https://www.vttresearch.com/en/ourservices/smart-grids-and-energy-systems
