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Let energy consumers take full control

The Clean Energy Package of the European Commission is all about ‘consumer empowerment’. In all member states, the final energy customer is prompted to generate, store, consume and sell self-generated electricity. “Today, it’s within everyone’s reach to be a fully active player in the energy transition,” says Lode Vervloesem, principal consultant at Trilations. “The setup for peer-to-peer energy trading is available.”

“In the traditional energy system, consumers were passive players. They used electricity, paid their bills and that was that. There was no direct interaction with the market,” Lode Vervloesem starts off. “Today, the situation is different. Many households and companies have invested in distributed energy resources such as solar panels, electric cars or even wind parks. These distributed energy resources  combined with smart grids – which allow bi-directional flow of both energy and data – has paved the way for new players in the field.”

However, Vervloesem emphasises, the change is not as radical as we often assume: “Even so-called ‘prosumers’ – energy consumers who also generate electricity through solar panels, for example – remain rather passive. When their production exceeds their consumption, they are unable to monetise the surplus. At present, only large companies actively participate in the energy market through demand response, with offtake and injection contracts based on market spot prices or on market forward prices with customer click options.”

 

The clean energy for all Europeans Package aims to empower all European consumers, even the residential ones, to become fully active players in the energy transition

 

The European Commission wants to speed up the process. Its Clean Energy for all Europeans Package[1] aims to empower all European consumers, even the residential ones, to become fully active players in the energy transition. Article 15 of the EC’s Electricity Directive Proposal[2] stipulates that member states must ensure that final customers are entitled to generate, store, consume and sell self-generated electricity in all organised markets either individually or through aggregators without being subject to disproportionately burdensome procedures and charges that are not cost reflective. “Consumer empowerment is the current buzz word,” summarises Vervloesem.

A SHIFT THAT BENEFITS ALL

Why is that so? Well, in order to function properly, the new energy system needs fully active consumers. The rise in renewable generation has heavily impacted the supply chain. On sunny or windy days, grid balance is under pressure with a high risk of congestion and loop flows.[3]  Lode Vervloesem: “A possible solution would be a shift from ‘generation-follows-consumption’ to ‘demand-follows-generation’[4]. Unfortunately, residential or small industrial consumers today have little to no financial incentives to respond to the balancing needs of the system. This has to change – consumers should be actively prompted to use energy when it’s available. Only by empowering the consumer, we’ll be able to engage new sources of flexibility.”

 

Empowered consumers will be able to optimise their energy bill by responding to price signals on the market

 

Empowering consumers will mean a win-win situation for consumers, commercial parties and grid operators. “Consumers want clean, affordable and reliable electricity,” says Vervloesem. “Empowered consumers will be able to optimise their energy bill by responding to price signals on the market. This way, they’ll finally be able to fully benefit from the technological investments they’ve made. Commercial parties will offer new products and services enabling prosumers to connect to and participate in the real time energy market system.”

NECESSARY STEPS

Over the past decade, large industrial prosumers have assumed an active role in the energy system. Now is the time to empower residential prosumers, and small commercial or industrial consumers – like SME’s. Lode Vervloesem sums up the steps that are currently being taken to that end: “The EU Clean Energy Act will drive the necessary adaptation of the market design. The roll out of digital meters has started in Brussels and is about to start in Flanders. And in February 2019, Elia and the Belgian DGO’s kicked-off[5] the ‘IO.E Ecosystem, supported by the IO.E Platform’, an open and secured real-time communication platform on which all market parties can exchange data. A large group of companies clearly feels the time has come to bring consumer empowerment to the next level as they’ve started co-creating new energy services in the IO.Energy Ecosystem.

 

Just like any other sector, the energy sector benefits from existing digital technologies

 

“Just like any other sector, the energy sector benefits from existing digital technologies, Vervloesem continues, “such as Blockchain, Artificial Intelligence, Cloud Computing and Big Data. These technologies help create new tools for e.g. analyzing, measuring and controlling the grid, or for forecasting and balancing.”[6]

USE CASE: VERV

Vervloesem goes on to discuss one of the most advanced consumer empowerment setups: peer-to-peer (P2P) energy trading platforms which enable consumers to trade their energy among each “A nice example is the P2P energy trading platform Verv[7], a home energy assistant that unlocks unique energy insights with artificial intelligence. This intelligent IoT hub incorporates blockchain technology and is installed in connection to the electricity meter. It collects and analyses electricity and appliance usage data and provides a platform on which energy consumers can generate, store and sell their own energy.” Verv is a tool of empowerment with which consumers can safely and securely monetise their household energy data and cut down electricity costs. “In practice,” Vervloesem clarifies, “Verv allows people with renewable energy sources to sell their surplus power directly to their neighbours at a favourable rate. This way, Verv promotes the uptake of renewables, while providing at the same time cheaper energy costs for those without solar panels and a return on investment for those who did install them.”

Peer-to-peer platforms in other sectors – like AirBnB in accommodation or Über in passenger transportation – have proven to be quite disruptive. “The time is now to bring consumer empowerment to the next level so we as Belgian companies can play a role in the disruption of the energy sector,” says Vervloesem. “Exciting times are ahead.”

[1] https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/clean-energy-all-europeans

[2] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52016PC0864R(01)

[3] More on loop flows in the article by Ruby Russell on Clean Energy Wire

[4] Elia Vision Paper 2018, Towards a consumer-centric system, p. 4-5

[5] https://ecosystem.ioenergy.eu/

[6] Blockchain technology in the energy sector, article by Merlinda Andoni et.al. in Renewable and Sustainable Energy Reviews 100 (2019), p.143-174

[7] https://verv.energy/

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