Power: The Rise of Resilient Energy Prosumers

By André-Philippe Hardy, Nelson Ng and Elvira Scotto
Published April 7, 2022 | 16 min listen

The Russia/Ukraine war has highlighted the world’s dependence on oil and gas, and how interconnected global energy markets are. This has amplified the focus of countries and companies on the energy transition, electrification, and setting net zero targets, and has increased the attention of consumers on energy security, reliability and independence, while at the same time endeavoring to reduce carbon footprints. Against this backdrop, the term “prosumer” is becoming more relevant and mainstream. A prosumer is a consumer of energy who is also a producer of energy, to self-supply power or to sell it into the grid. Large industrial companies (e.g., mining operations) often build their own power plants, producing and consuming power. With advances in technology and cost reductions in renewable energy, some power generation is now taking place at a much smaller scale, including by individuals (e.g., using rooftop solar), and we expect an acceleration in the rise of resilient energy prosumers over the years to come.

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Rooftop solar brings power generation to the masses

Prior to recent pandemic-related inflationary pressures, over the last decade, solar PV module prices and lithium ion battery costs declined by more than 80%, and overall solar system costs declined by ~50%. Cost reductions have been a key factor driving a 15% compound annual growth rate in US residential rooftop solar installations from 2010-2020. Despite this significant growth, residential rooftop solar penetration in the US is still under 5% of all households. While the potential for lower costs through rooftop solar versus utilities remains a critical driver of residential solar adoption, we see residential solar adoption and growth being increasingly driven by electricity reliability and resiliency factors. This includes adoption driven by frustration with local utility power outages. Notably, in the US weather related power outages have increased in frequency, and were up 77% over the past ten years compared to the previous decade.

 

EVs to grid and smart homes on the horizon

The cost of solar and wind have declined significantly over the past decade, making these power options more competitive than fossil fuels in many regions. However, renewable energy generation via solar or wind is usually intermittent and weather-dependent, so greater reliance on renewables generally requires more energy storage or additional on-demand power sources to supplement solar or wind generation.  On-demand power may eventually be provided by renewable natural gas or green hydrogen in a net zero world. Battery storage technology is also quickly evolving, and one interesting opportunity for the future is the potential to connect electric vehicles (essentially batteries on wheels) to the grid as EV adoption ramps up. Most cars are driven only up to a few hours a day, so idle EVs could be utilized to support the grid and generate income for the EV owners who supply power.

With continued advances in technology and cost reductions, the energy needs of “smart homes” could be supported by rooftop solar, batteries and EVs, and smart appliances. In theory, such households could completely move off the grid as resilient energy prosumers. Homeowners could also participate in power generation with a network of other households, acting as a virtual power plant. Given the transformational changes the future may bring, local utilities will likely need to adapt to the changing environment to stay relevant.



André-Philippe HardyEVEnergyIndustries in MotionProsumersSmart HomesSolar

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