Elsevier

Energy Policy

Volume 114, March 2018, Pages 540-548
Energy Policy

The flexible prosumer: Measuring the willingness to co-create distributed flexibility

https://doi.org/10.1016/j.enpol.2017.12.044Get rights and content

Highlights

  • Novel measure of prosumers’ willingness to provide flexibility.

  • Series of 3 choice experiments with 902 actual and potential flexible prosumers.

  • PV plus storage and electric vehicles promising sources of distributed flexibility.

  • Business model design needs to account for discomfort costs of prosumers.

  • Flexible prosumers can be compensated through cheaper or greener electricity.

Abstract

Rising shares of fluctuating renewables increase the need for flexibility in the power market. At the same time, the emergence of the prosumer has created new opportunities for co-creation of distributed flexibility. As of yet, there is surprisingly little empirical analysis in terms of whether individuals are actually ready to co-create flexibility, and if so, under which conditions these resources can be mobilized by grid operators or electricity supply companies. We address this gap in the energy economics literature with three studies analyzing in total 7′216 individual decisions in a series of choice experiments with 902 study participants in three main domains of residential energy prosumption: (1) solar PV plus storage, (2) electric mobility, (3) heat pumps. We develop a novel measure of the prosumers’ willingness to co-create flexibility, and solicit their preferences for power supply contracts with varying levels of flexibility to derive implied discomfort costs. Our results indicate that current and potential electric car and solar PV users exhibit a higher willingness to co-create flexibility than heat pump users. Reaping the potential in those two domains requires taking the prosumer perspective into account when designing policy instruments and creating adequate business models.

Introduction

Matching supply and demand over time is a key challenge in power markets. In traditional electricity markets, demand has largely been taken for granted, while the necessary flexibility has been built into the supply side through peak power plants and centralized storage. Increasing shares of fluctuating renewable energies have enhanced the need for flexibility to avoid imbalances in the power system. Established and new companies develop novel business models to provide flexibility (Helms et al., 2016). Decentralization trends in the energy market offer new opportunities for matching supply and demand in a distributed manner. Distributed flexibility provision can take different forms: Shifting demand and supply over time and/or building up local storage capacity. Successfully mobilizing flexibility in distribution grids can help to delay or avoid investments in extending centralized grid infrastructure (Gordijn and Akkermans, 2007, Veldman et al., 2013), resulting in cost efficient energy systems and allowing smooth integration of renewables (Denholm and Hand, 2011). While centralized sources of flexibility (e.g. gas-fired power plants or hydropower reservoirs) are well understood, the tendency of decentralized electricity consumers becoming prosumers (producers and consumers at the same time, cf. (Bergman and Eyre, 2011, Kotler, 1986, Toffler, 1980)) provides a potentially valuable source of – so far underutilized – flexibility (Gordijn and Akkermans, 2007, Kubli, 2018, Veldman et al., 2013). Decentral prosumers can provide flexibility by optimizing the timing of their electricity production and consumption, and by making decentralized storage available (e.g. through investing in batteries or providing heat reserves through a more flexible heating behavior). A better understanding of whether and under which conditions prosumers are actually ready to contribute to flexibility provision is important if these resources are to be mobilized.

This paper empirically investigates prosumers’ willingness to co-create flexibility with a series of studies across three main domains of energy use: (a) solar PV plus storage, (b) electric vehicles, (c) heat pumps. By conducting three choice experiments with a unique sample of actual and potential flexible prosumers in Switzerland (N = 902), we aim to answer the following two research questions:

  • 1.

    To what extent are prosumers willing to co-create flexibility?

  • 2.

    Are there differences between the three technology domains?

Our paper makes three main contributions to the extant literature on smart grids and flexibility in the power market. First, we answer the call for “putting people in the loop” (e.g. Sowe et al., 2016) and for revealing determinants of social acceptance of smart grids (Wolsink, 2012), by investigating the preferences of end users as important agents in the diffusion of distributed flexibility. Second, we develop an innovative way of operationalizing and measuring the willingness to co-create flexibility. Third, we provide a pilot application of this measurement instrument that can serve as a role model for policymakers and energy companies who seek to effectively engage prosumers.

This paper is structured as follows. In the second section, we discuss existing literature on distributed generation, energy consumer preferences, and the role of prosumers in co-creating flexibility. In the third section, we introduce our methodological approach. Section 4 presents the results of the three studies and a discussion, while Section 5 concludes the paper with implications for energy policy and flexibility business model design, as well as a section on limitations and further research.

Section snippets

Energy system flexibility and smart grids

As Lund et al. (2015) point out, energy system flexibility is “definitely a ‘hot topic’”. Their review of close to 400 academic publications presents a comprehensive overview of all the available options to integrate increasing shares of renewables in the grid, from large-scale centralized to small-scale decentralized, from supply-side to demand-side, and across a range of different time horizons. As another indication of the “hot” nature of this topic, the European Commission under its Horizon

Methodology and data

Borrowing from previous studies investigating preferences related to consumers’ electricity choice, demand response and becoming a prosumer, we investigate prosumers's willingness to co-create flexibility with choice experiments. Choice experiments have been widely applied in energy economics and related fields (Aravena et al., 2016, Chau et al., 2010, Heinzle and Wüstenhagen, 2012, Kaenzig et al., 2013, Lüdeke-Freund and Loock, 2011, Lüthi and Wüstenhagen, 2012, Park et al., 2013, Salm, 2017,

Results and discussion

In the following, we report the results of the three studies along two main factors: the relative importances of the attributes and the part-worth utilities for attribute levels. Subsequently, we conduct a qualitative comparison of the three studies based on the willingness to co-create flexibility.

Conclusion and implications for energy policy

Increasing shares of renewable energies create new challenges for balancing supply and demand, but in combination with the rise of the prosumer, they also offer opportunities for providing distributed flexibility. In this paper, we have emphasized the important role of the prosumer in co-creating flexibility. By conducting a series of choice experiments with 902 actual and potential flexible prosumers across three domains of energy use, we confirm that there is actually a positive willingness

Acknowledgements

The authors gratefully acknowledge funding from the nano-tera project HeatReserves, the European Union's Horizon 2020 Research and Innovation programme under Grant Agreement No 646476 (EMPOWER) and from SCCER CREST and SCCER Mobility, which are financially supported by the Swiss Commission for Technology and Innovation (CTI). We thank Gianni Operto and Thomas Kubli for their expert advice on the technical assessment of flexibility options included in the choice experiments, as well as Stefanie

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