SMART METERING The Impact of Prosumers in a Smart Grid based Energy Market By Bernt A. Bremdal, NCE Smart Energy Markets and Narvik University College Briefly put: Prosumers have the ability to change the face of the energy market, impacting price stability and potentially challenging the economic basis for fossil fuel generation. But – consumers need carefully thought out business and regulatory strategies to make the transition from consumer to prosumer. can be found within this territory. But the overall picture, including the relationships between the individual prosumer, new business roles such as the VPP (Virtual Power Plants) and the energy market have not been well defined or explored. The basic aim of IMPROSUME was to define and study the role of prosumers in the future power market. Energy prosumers are not only consumers that also produce energy, but also sellers of energy and therefore active participants in the market. If a producer merely consumed what he produced he would only influence the demand side of the market. Obviously whenever surplus energy is fed into the grid the supply side is also influenced. Consequently prosumerism is much more than homesteading. In fact it also extends beyond the act of selling the surplus energy that is not consumed. The prosumer might in fact wish to sell what he has for a given price and then buy what he needs from someone else, thus benefiting from the arbitrage. Enjoying the double role as producer and consumer and having access to the energy market is going to provide the prosumer with a tactical choice. How he capitalizes on this depends on his flexibility. Shifting demand or supply along a time line will empower the prosumer and enable him to maximize benefits in terms of his own needs, but also in accordance with the state of the grid and the market price. Investigations undertaken in the project were supported by surveys and interviews of house owners in the three participating countries. An investigation of comparable businesses was also conducted. Theoretical models were used to explain the results. Based on market intelligence gathered, models of the energy market in northern Europe in 10-15 years from now were created to support simulations based on basic findings. A good deal of empirical work directed towards individual households in Denmark was carried out too. However, this had little effect on the final market study. The ERA-Net project , IMPROSUME, set forth to investigate the role of prosumers in the future energy market. Spearheaded by NCE SMART in Norway, University of Aarhus in Denmark and St. Gallen University in Switzerland, the project partners specified four fundamental issues that required more insight. 1. Would energy consumers adopt a prosumer role dependent on smart grid technologies? 2. What role could fit these and what kind of business model and context could be suitable to support and organize groups of prosumers? 3. To what degree would a group of well-organized prosumers be able to influence the future energy market? 68 4. And what type of energy market would that be? The potential market contribution in a future smart-grid dominated energy market has been heralded as promising, but not well defined. Viable business models that can leverage the contribution of prosumers in a smart grid oriented market are still only vaguely defined. Naturally the whole concept also hinges on what incentives and stimuli are likely to drive future prosumers in the future. Also, what are the possible constraints? All of this comes down to what business strategies and regulations are required to ensure sound participation and sustainable growth. To what degree would a group of well-organized prosumers be able to influence the future energy market? The project soon discovered that it had entered virgin territory. Truly, islands of knowledge related to technology, user engagement and smart grid in general The University of Aarhus addressed the psychological factors that influence consumers’ intention to adopt Smart Grid technologies. Here a theoretical framework combining two psychological theories, i.e., the Technology Acceptance Model (TAM) and the Values-Beliefs-Norm (VBN) model were applied. According to the TAM, individuals’ acceptance of a new technology is primarily determined by rational choice, implying that people focus on ease of use and their own benefits. Although it is highly likely that this influences the adoption of Smart Grid technologies, it is not likely that people actually expect large private benefits from Smart Grid technologies, at METERING INTERNATIONAL ISSUE - 2 | 2014