The Rise of Prosumers

They’re “mash-ups,” call ’em hybrids too: “Prosumers” both produce and consume electricity. They are a new breed wielding their influence in the electricity market. According to Frost & Sullivan, there will be 20 million American prosumer households by 2020. “These consumers seek to participate actively in the energy market. They’re wielding their growing ability to control or shift their usage, or to produce (and even sell) their own power, in order to save money and help the environment.”

According to Wikipedia, a prosumer is a person who consumes and produces media. The word is derived from “prosumption”, a dot-com era business term meaning “production by consumers”. These terms were reportedly coined by American futurist Alvin Toffler. (“Prosumer” also relates to a trade term for select high-end digital cameras, those of a price point between “professional” and “consumer” cameras.)

According to Amy Gahran of Energy Biz Insider, “energy prosumers are gaining control of what was once a rote utility expense.” They can now generate and even store their own power, playing arbitrage on utility rate structures. So how are prosumers affecting electric utilities?

First, prosumers are spending big on smart-home tech. Fast forward: When homes can operate self-sufficient energy systems, utilities will lose customers and revenues. Honda’s Smart Home U.S. program is about homes that produce enough solar energy to operate themselves and a Honda EV.

Prosumers want more distributed generation. For smart utilities, rather than viewing this trend as “disruptive,” this trend could signal a new revenue source. Arizona’s decision to allow utilities to directly lease customer rooftops for solar generation underscores the value that prosumers offer the utility business model. In real time, prosumers are forcing utilities to streamline their customer service.

Accenture research shows that prosumers often prefer getting distributed generation products and services from utilities, but other service providers are gaining ground fast in this market. And like it or not, prosumers are forcing utilities to get better acquainted with them, and they’re putting pressure on regulators “to get hip” to today’s electric power trends, changing policies to support the transition to localized generation.

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