Energy Consumers become Prosumers

How far we have reached?

Traditionally, from the inception of commercially availed electricity, we have been utilizing electricity form the grid. The electricity has always flowed one way to our doorstep from some remotely situated gigantic power station. But from the past decade and a half, the business model of the whole energy industry is being redefined with the rise of decentralized renewable energy sources as it gives the consumer the freedom to generate their own electricity and sell the excess electricity – resulting into bi-directional flow of electricity in the grid.In Indian context, this shift has been initiated with the enactment of the Electricity Act 2003 and being pushed hardly with the policies related to captive generation and target of achieving 40 GW of rooftop solar till 2022. In addition to the legal and policy framework, the market forces are also contributing in this shift e.g. the continuously increasing power tariffs by DISCOMs.

As it is clear that the rise of the prosumer era has inverted the utilities model as we know it, the questions arise what opportunities exist for customers and utilities in this new era of two-way energy management? What are the challenges? And who will be the real winners?

I personally believe that this is going to benefit the customers as they are getting clean electricity at much cheaper cost than that of the conventional power form DISCOMs. Also the customers are now learning to understand the utility bills and how to control it by means of energy efficiency measures due to its monetary linkages in terms of incentives, savings and pay back.

For the utilities, this shift is going to be very tough phase in a short run. The loss of revenues due to loss in industrial and commercial customer base and subsidized rate of power for agricultural consumers collectively create financial strain on DISCOMs – making them unable to even recoup the power purchase cost. Also, the electric grids tend to be under stress due to intermittent nature of renewable energy sources and it can become a challenge for the existing grid infrastructure in long run.

Though the utilities appear to be at risk due to the new model of "prosumers" now, I believe they are also going to be benefited in future by implementing real-time demand management, smart grid and smart metering technology. For example, based on real-time data from the DISCOM, the consumer at some flat could remotely configure a load of laundry to run during off-peak hours. In another example, the prosumer could intimate the utility on real-time basis to supply electricity for a few hours if the stored solar power is running out.

While both DISCOMs and prosumers will be benefited from this new arrangements, the journey is not so swift ahead. However it is enabling a green, locally controlled, reliable energy supply along with maximizing the financial benefits of participating in the Smart Grid. The emergence of prosumer era will surely change how energy will be generated, distributed, and consumed in the future.

Pathik Kapadia

MBA - Energy and Environment,

Symbiosis Institute of International Business

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