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Skip to 0 minutes and 12 secondsTraditionally, the energy chain has been organised top-down. This means that electricity and gas producers inject gas or electricity in a transmission grid and off-take takes place by end consumers connected to the distribution grid. This concept is gradually changing. The process of energy market liberalisation and energy transition have also led to a situation where consumers are starting to generate their own electricity and selling any surplus of electricity to their energy supplier. In other words, injections take place at the lower levels of the grid and thus organise the energy chain on the basis of a bottom-up approach. This process also has some legal implications. Is a current legal framework capable of incorporating such a bottom-up approach?

Skip to 1 minute and 4 secondsHousehold consumers, as well as small and large industrial consumers, are increasingly producing energy, for example, by installing solar panels on their roofs, establishing a wind turbine on their property, or producing biogas from waste. Are these consumers then to be considered as a producer from a legal perspective? Is a new category of market players emerging, called "prosumers”? As EU law and probably national laws do not use the word "prosumer," we need to look at the definitions of "producer" and "consumer," the former being a natural or legal person generating electricity and the latter a wholesale or final customer of electricity.

Skip to 1 minute and 50 secondsGiven these broad definitions, it seems that under EU law, a final customer, being a natural or legal person, could also generate electricity. Although national law may differ in this regard, EU law does not prohibit prosumerism. In practice, prosumers will usually produce for their own use. But if they have generated more electricity than needed, they will try to sell this surplus. The next question would then be, can a prosumer also be a supplier? Again, EU law gives little guidance. It merely states that supply means the sale, including resale, of electricity to customers. In this case, national law may be of special relevance, as some national laws require suppliers to hold a permit to supply all or only household consumers.

Skip to 2 minutes and 41 secondsSuch a requirement will limit the possibilities of a prosumer to act as a supplier. Some national laws include a special provision requiring supply companies to buy any surplus of self-generated electricity against a reasonable price. Without such a clause, prosumers will meet difficulties to sell electricity. A crucial element of the electricity grids is a need to keep the grid in balance. This means that each off-take of the grid needs to be compensated directly with a similar quantity of input to the grid and vice versa. If the volumes taken from the grid and fed into the grid do not match, there may be a voltage dip, causing a brownout or a blackout.

Skip to 3 minutes and 28 secondsAn increasing number of prosumers will make it more difficult to balance the grid, especially as grid balancing requires an active participation of the parties involved by providing them with balancing responsibilities. Usually, prosumers are excluded from such responsibilities by virtue of their legal position as a consumer. One of the solutions is the use of smart energy solutions, such as smart meters and smart appliances. These meters provide customers and/or suppliers and/or network operators with a continuous stream of information on the basis of which they can act. Smart appliances can be instructed to operate when there is an excess of supply. This helps to keep the grid balanced.

Skip to 4 minutes and 19 secondsOn the longer term, there will be smart grids which upgrade the current electricity grid with new IT and communication technologies and solutions in order to better plan and operate existing electricity grids, to intelligently control generation, and to enable new energy surfaces and energy efficiency improvements. From a legal perspective, this causes another challenge, as it requires an integration of energy and communication and IT law. Also from a data protection perspective, it poses new challenges, as the continuous stream of information will produce massive loads of data. This introduction to decentralised energy production, prosumerism, and smart grids concludes the series of lectures on the role of law in energy transition.

Skip to 5 minutes and 12 secondsIt has shown that there are many legal challenges applying and that energy transition thus requires the joint effort of lawyers and other scientists, including psychologists and economists.

The role of energy prosumers in the process of energy transition

This last video discusses how the increased use of renewable energy sources impacts the regulation of the electricity grid. You will learn how negative effects of decentralised energy production can be resolved via a ‘smart grid’.

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This video is from the free online course:

Solving the Energy Puzzle: A Multidisciplinary Approach to Energy Transition

University of Groningen