Renewables, all about prosumers: the energy players of the future

In recent months, many people will have become aware of terms such as energy communities (CERs), prosumers and consumers. These concepts all tie in to the topic of innovative models of energy management. Let us go into the details of these definitions by exploring the scenario in which they live and interact with each other.

_{^{June 12th 2023}}

In Europe, the concept of energy communities can be traced back to exactly fifty years ago, when in Denmark, the Danish people formed cooperatives and installed wind farms to self-generate renewable electricity. The idea was then imitated in the following decades by other community groups in Germany and Belgium. Technological innovation and liberalization of the energy market has then recently given impetus to renewable energy communities (CERs). What are they? It is an association of local people, local government and small/medium enterprises who decide to join forces with the aim of producing, sharing, and consuming energy from renewable sources on a local scale. In Italy, they were introduced with the conversion into law of Article 42 bis of the Milleproroghe Decree 162/2019, which transposes the points of the European Renewable Energy Directive II (2018/2001/EU).

Renewable energy communities are thus a new type of association created to achieve environmental, social and economic benefits: reduced CO₂ emissions, strengthened local community, stimulation of a culture of sustainability and generation of renewable energy within the community, which also reduces energy bills. 

Community groups, joint owners of residential buildings, small and medium-sized enterprises, local governments, cooperatives, associations and religious bodies can all form CERs.  

As a general rule, anyone who wants to establish a renewable energy community needs to identify the suitable areas for PV installations and the consumers who will share the energy: everyone has to be served by a single primary substation

Thus, the energy community is a virtual network of multiple producers and consumers, which must be conceived and designed to harmonize consumption with electricity generation from renewable sources.  

Owners of consumption units are referred to as consumers, i.e., end customers who do not have PV installations—private homes, businesses, public buildings, etc.—who participate in the community only as consumers that share the energy produced and fed into the grid by prosumers, who instead participate in the CER as final customers who, in addition to consuming electricity, own a renewable power generation facility.

The term “energy sharing” refers to the simultaneous feed-in of energy produced by CER prosumers and consumption of this energy by CER consumers, on an hourly basis, which serves to determine the financial “premium” called the “feed-in tariff” and a partial reduction in grid charges.

Simply put, a prosumer is “someone who both produces and consumes energy (producer + consumer).” The term was first proposed by US sociologist Alvin Toffler in his 1980 essay The Third Wave (Sperling & Kupfer). Actually, this term had already been considered in the previous decade, when the author was already talking about a possible fusion of the roles of producer and consumer. Let's go back to electricity prosumers: they produce it from a renewable source, consume it, and feed the surplus into the grid, benefiting from the sale. In the case of CERs, in addition to obtaining the sale value, this energy is shared with the community, with the rewards already indicated.  

What are the benefits of being a prosumer by participating in a CER? We have already mentioned that a prosumer is both a producer and a consumer, and this combination is the start of a virtuous circle: it accelerates the transition to renewable sources, reduces CO₂ emissions into the atmosphere, makes you less conditioned by fluctuations in energy prices, reduces energy expenditure and helps fuel national energy independence. 

One particular case is joint-owners of apartment buildings, which have their own particular type of energy community, called an AUC (group of self-consumers acting collectively). 

The apartment building owners incorporated in AUC install a photovoltaic system, use the energy produced to cover the electricity requirements of the building, and sell the unused energy. Individual apartment owners, while continuing to pay separate bills, benefit from a feed-in tariff and reduced grid charges if they consume electricity when the system feeds energy into the grid (sharing). The rules are in fact the same as for CERs but with the advantage that the apartment owners are already naturally aggregated in the apartment building and the self-consumption benefits all participants, whereas in CERs it benefits only the prosumers.  

The European Environment Agency (EEA) defines the figure of prosumers, identifying them as important resources on both the path to decarbonization and the path to community energy independence. The EU's target year is 2050, by which EU policy hopes prosumers will be able to produce much of the energy required for residential purposes.