As we move into 2024 the energy transition is taking shape, and further moving away from traditional large centralized power plants to a more decentralized, bidirectional system of renewables, energy storage, EVs and other advancements including IoTs and VPPs.
This development has major implications for the energy market, utilities and for prosumers themselves. There are many reasons home energy users are increasingly turning to renewable energy and energy storage systems. Rising prices are the primary driver, with 64% of surveyed solar customers citing cost savings as a reason to invest in photovoltaic panels.
But prosumers are also motivated by energy security concerns, noting increasing political and economic tensions and related disruptions to international energy supply. As blackouts, power disruptions and sanctions grow more frequent, having the ability to produce the energy that keeps the systems on is a big plus factor for many people.
Prosumers also have a part to play in reducing climate emissions. Households already contribute 24% of global greenhouse gas emissions — a figure many experts believe may rise — so it is essential societies reduce the domestic consumption of fossil fuels as fast as possible yet in an intelligent manner that does not disrupt the grid or expose critical infrastructure to cybersecurity threats.
Besides hardware, to properly integrated prosumers into the increasingly-complex power distribution system we need software and communication solutions, deployed by both the user and the utility to maximize energy management efficiency. For example, shifting energy loads during peak usage periods, stabilizing the grid and reducing strain on the energy network. Advanced pricing marketplaces and possibly use of blockchain-type mechanisms would facilitate this.
Modern buildings now often incorporate prosumer energy systems into their structure from the design stage, which could be solar panels, energy storage, voltage optimization, heat pumps, user-responsive lighting and of course passive heating and cooling measures.
Integrating new energy units into the grid is not simple: there are a vast number of different incompatible and legacy systems to consider. To accelerate the development of microgrids, companies can consider joint ventures to offer Energy-as-a-Service. EaaS enables organizations to capture the benefits of microgrid ownership without the cost and risk of capital investment. These structures enable organizations to build, own, and operate a microgrid for a long-term price per kWh.
Bloomberg NEF projects 167 million homes and 23 million businesses to be solar users by 2050. This will affect utilities' business models. How can they maintain profitability and relevance, as well as contributing to greater sustainability? They will need to adapt. This shift will require increased grid optimization, greater flexibility, and dramatically enhanced engagement with prosumers. Those utilities that move quickest to implement these changes will improve their viability in a changed marketplace.
The growth of distributed energy generation and storage technologies requires a more flexible, intelligent grid infrastructure capable of managing bidirectional power flows. Utilities will have to adopt a new approach to managing the grid, for example, deploying virtual power plants that aggregate and optimize DER output, so they can maintain their role as essential players in the energy sector.
Along with the new systems of management, utilities will need to develop and offer services that help prosumers manage their energy. That means creating energy management services, demand response programs, and integrating DERs and other new technologies, to keep the grid stable and dependable. By welcoming the prosumer development, utilities can empower their customers to become active participants in energy markets. Good incentives from utilities, and of course local and national governments, as well as regulator policies, will ensure that the energy transition proceeds with the minimum amount of disruption.