The Producers/Consumer off-grid has arrived, there is a lack of regulation. Utility Business should change. What if some Utilities in Western Europe, Japan, Australia and USA by 2020 lose about 50% of their demands; and obviously the revenues associated with those operations? All because the Prosumers...

1. The Rise of the Prosumers
Technical Innovation & Regulatory Gap
in the Global Power Sector
Alejandro S. CORE
saenzcore@gmail.com
Washington, DC; July 1st 2015
1

2. Table of Content
• Who are the Prosumers
• Technical Innovation and Regulatory Gap
• Why this Happens - The disruption
• The Potential Solution
• Opportunity for further research
• What Next
• References
2

3. Who are the Prosumers (1)
• Producer and consumer: Marshall McLuhan and Barrington Nevitt
suggested in their 1972 book Take Today, (p. 4) that with electric
technology, the consumer would become a producer.
• In the 1980 book, The Third Wave, futurologist Alvin Toffler coined
the term "prosumer" when he predicted that the role of producers
and consumers would begin to blur and merge (even though he
described it in his book Future Shock from 1970).
• In the 1982 book, The Energiewende “The Energy Transition”, the
German Institute of Applied Ecology described the problems that the
energy transition faces in Germany and it proposed some solutions
such as “One power plant per company/consumer” using Solar,
Wind and Biogas energy.
• !n 2013, the Australian CSIRO (Commonwealth Scientific and
Industrial Research Organisation) introduced the Rise of the
Prosumers as one of their energy future scenarios for 2050, where
consumers actively design or customise solutions.
3Here some examples from USA and Germany…

4. Who are the Prosumers (2)
• Typical US Prosumer
4

5. Who are the Prosumers (3)
• Typical German Prosumer, farmer with PV solar,
wind farms and BioGas production.
5
Courtesy: RWE – SmartCountry Project

6. Technical Innovation and Regulatory Gap (1)
• Utility Business model has over 100 yrs Old…
• 1980/Present - Attempts to reform utility
market
• Recent technological advances, DERs (e.g. PV),
batteries and micro-grids – new business
models
• …Players providing consumers off-grid
solutions
• Fast growing of DERs Scheme worldwide
6DERs: Distributed Energy Resources

7. Technical Innovation and Regulatory Gap (2)
Utility model since 1888
to Present…
Passive Demand…
7
Disruption of existing model
Intelligent Demand (DER or on/off-grid)
Residential, Commercial, Military,
Hospitals, Schools, some Industries….
Consumer
R/Evolution
30 GW of Renewable Energy could
be online by 2020 in the U.S.

8. …
8
Technical Innovation and Regulatory Gap (3)

9. Why this Happens. The disruption (1)
9
Lower cost of
Renewables (DERs)
Demand
Response
Financial
Incentives
Smart Energy
Mngmnt Services
Time of Use
(TOU)
IT - Energy
Management
IT - Smart
Technologies
Lower Cost
Energy Storage
Affordable Electric
Vehicles
Sustainable
Culture - Resilient
EE - Efficient
Appliance/Building
ON/Off-Grid
Mini-Grid
DER Systems

10. Why this Happens. The disruption (2)
10
Utilities
• Aged Infrastructure
• Heavy Investments
• Higher losses
• Expansion Issues (Land…)
• Vulnerability (Cyber…)
• Lesser Reliability &
Resilience (to severe
weather)
Mini-Grids, IT-EM & DER
• New Business Model
• Light Investment
• Up to 100% RE
• Lesser Losses (+EE)
• Cost-saving/Grid parity
• Potential Relocation
• Higher Resilience
• Public Acceptance
• Energy Access
Catalyzers - Transactive Energy, Resilience, and Distributed Energy Resources
Vs.

11. Why this Happens. The disruption (3)
1st Catalyzer – Transactive Energy 11
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Charging:
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Discharging:
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e.g. Virtual Power Plants…

12. Why this Happens. The disruption (4)
122nd Catalyzer – Resilience
In the case of United States, severe weather, number one cause of power outages…
E.g. 2005 - Hurricane Katrina; 2008 -Hurricane Ike; and 2012 Super-Storm Sandy
Number of outages caused by severe weather is expected to rise…
Then Resilience and Reliability are required

13. Why this Happens. The disruption (5)
Intelligent Demand is growing fast…(PV/DER)
• China -> 110 GW by 2020 (IEA)
• USA ~ Germany -> 50 GW/each by 2020 (IEA)
• India ~ Italy -> 25 GW/each by 2020 (IEA)
• …
• SE4ALL Programme - Achieving 40% of universal
electrification by 2030…DERs…
• OPEC Fund for International Development (OFID)
recent commitment, including DERs…
133rd Catalyzer – Distributed Energy Resources

14. The Potential Solutions (1)
• “EPRI (2014): The Integrated Grid” – Significant power system
evolution, driven by technological and economic changes, and
the need for new regulatory models.
• “NYDPS (2014): Reforming the Energy Vision” - Transformation
of NY electric sector. Establishing retail power markets, and DERs
integration through intelligent grid systems & evolutionary
shifts in regulation.
• “CSIRO (2013): Rise of the Prosumer” - Australian power system
in 2050. DERs supplies 50% consumption. Main drivers of power
system investment shift to DERs, and implementation support
frameworks.
• IFC (2012): Fragmented Services - Especially in areas with
limited energy access, the ‘fragmented services’ model of
evolution aims to accelerate energy supply through reliance on
small-scale energy providers, with robust business models &
cost-effective technology.
14

15. The Potential Solutions (2)
Any Solution should address
• Inadequate regulation, policy gaps or uncertainty
(early stage market fragmentation)
• Lack of technical definitions, standards, control and
operational requirements (Capacity Issues…)
• Consideration of various pricing mechanisms
• Models/analytical tools to support transactions
(multi-dimensional, multi-scale power flow/market)
• New commercial business models
• Access to affordable longer term finance
15

16. Opportunity for further Research
To provide answers to this challenge:
The global power industry is in the middle of an
unprecedented transformation driven by
growing penetration of renewable energy and
storage, availability of massive information, new
energy management technologies, and
consumer expectations in the search for a smart
electric grid that can support a highly efficient,
secure, resilient and sustainable society.
16
The Prosumer is here and it needs answers and
regulatory solutions

17. Next Steps
• As a practitioner, I would like to be:
– part of the solution
– part of a team with intellectual horsepower,
enthusiasm and initiative
– either an advisor, a team member or a mentor
The challenge is enormous, and the success will
be just archived by a multi-disciplinary team
17

18. Thank you
References (1)
• Is Rooftop Solar Finally Good Enough to Disrupt the Grid? – HBR, May 2015
• The future of solar energy – MIT, May 2015
• Power Systems of the Future – NREL, February 2015
• Sources of energy by households - Australia Bureau of Statistics, December 2014
• Top 9 Things You Didn't Know About America's Power Grid – US DOE, November 2014
• NIST’s Smart Grid Advisory Committee Report – US National Institute of Standards and
Technology (NIST), June 2014
• From the Bottom Up, How Small Power Producers and Mini-Grids Can Deliver
Electrification and Renewable Energy in Africa – World Bank, 2014
• Engineering IT-Enabled Sustainable Electricity Services, The Tale of Two Low-Cost Green
Azores Islands - Ilic, Marija et Al, Springer, 2013
• Making Competition Work in Electricity – Hunt, Wiley, 2002
• International Comparisons of Electricity Regulation – Cambridge University Press, 1996
18

19. References (2)
• Wikipedia – accessed on Saturday June 27 2015 -
https://en.wikipedia.org/wiki/Prosumer
• Craig Morris, and Martin Pehnt. “Energy Transition - The German Energiewende”. The
Heinrich Böll Foundation. Nov 2012 http://energytransition.de/wp-
content/themes/boell/pdf/en/German-Energy-Transition_en.pdf
• CSIRO. “Change and choice - The Future Grid Forum’s analysis of Australia’s potential
electricity pathways to 2050”. Dec 2013.
https://publications.csiro.au/rpr/download?pid=csiro:EP1312486&dsid=DS13
• NYSPSC. “Reforming the Energy Vision”. Jun 2015.
http://www3.dps.ny.gov/W/PSCWeb.nsf/All/26BE8A93967E604785257CC40066B91A?
OpenDocument
• GTM Research. “Is the Power Secttor Ready for a New Phase of Complementary
Disruption? - according to Steve McBee…”. June 2015.
http://www.greentechmedia.com/articles/read/is-the-power-sector-ready-for-a-new-
phase-of-complimentary-disruption
• GTM Research. “First Solar CEO: ‘By 2017, We’ll Be Under $1.00 per Watt Fully
Installed’”. June 2015. http://www.greentechmedia.com/articles/read/First-Solar-CEO-
By-2017-Well-be-Under-1.00-Per-Watt-Fully-Installed
• Navigant Research. “Capacity of Distributed Generation is Expected to Double by 2023”.
Dec 2014. http://www.navigantresearch.com/newsroom/the-annual-installed-capacity-
of-distributed-generation-is-expected-to-double-by-2023
• Santiago Grijalva. “Research Needs in Multi-Dimensional, Multi-Scale Modeling and
Algorithms for Next Generation Electricity Grids”. Georgia Institute of Technology. Feb
2011.
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20. Current Utility Model
20
Financial Incentives

21. The disruption trends
Current 10 Trends
• Renewable Energy Cost Reductions
• Innovations in Data, Intelligence, and System Optimization
• Energy Security, Reliability, and Resilience Goals
• Evolving Customer Engagement
• A Tale of Two Electricity Demand Forecasts
• Increased Interactions with Other Sectors
• Local and Global Environmental Concerns over Air Emissions
• Energy Access Imperatives
• Increasingly Diverse Participation in Power Markets
• Revenue and Investment Challenges
21

22. Dynamic Mini-Grid
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With capability of isolated operation, self-restoration, integrated control of industrial loads,
and self-reconnection. Using Advanced Distribution Management Systems, ADMS

23. Distributed Energy Resources (DER)
• Solar photovoltaic (PV)
• Landfill gas
• Waste-to-energy (or biomass)
• Wind turbine
• Small hydroelectric
• Fuel cell
• Combustion turbine and microturbine
• Reciprocating engine
• Combined heat and power (CHP/Cogeneration)
• Other non-generation technologies, demand response,
energy storage or battery storage
• Vehicle-to-grid (reverse power flow from electric
vehicles)
23

24. Electricity uses by household
• Flat Screen TV ~ 0.1 kWh /hr.
• Lights Per Room ~ 0.1 kWh /hr.
• Laptop ~ 0.05 kWh /hr.
• Refrigerator ~ 4.8 kWh /day
• Reverse Air Conditioning System ~ 4.0 kWh/day
• Clothes Washer ~ 2.3 kWh each use
• Clothes Dryer ~ 3.3 kWh each use 24
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ElectricityConsumption(kWh)
Baseline Load Net Consumption With Solar

25. How Residential Energy Storage Works
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ElectricityConsumption(kWh)
Baseline Load Net Consumption With Solar
Charging:
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Discharging:
4 PM-8 PM

26. Multi-dimensional & Multi-scale
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Spatial Dimension/Temporal Dimension/Scenario Dimension