Going From Passive to Active as an Energy Consumer - Q&A with Gianluca Rimini

• What and who are active consumers?
• Why this new status occurred
• Benefits and downsides of being an active consumer
• Traditional energy markets and the rise of active consumers

First of all, what and who are active consumers? 

Active consumers are disrupting the traditional unilateral relationship between consumers and energy providers. Unlike traditional, “passive” consumers, they take an active role in the energy industry by making available their energy-intensive assets to balance the grid and getting remunerated for doing so. 

In recent years, we’ve heard a lot about prosumers. The core difference between active consumers and prosumers is that active consumers don’t have energy-producing assets, like solar panels, that give back electricity to the network. They also tend to be commercial and industrial businesses that don’t necessarily plan on investing in energy-producing assets. 

Virtually all commercial and industrial businesses can become active consumers, especially as all industries are electrifying. For example, a company owning an electrical boiler or a grinding mill powered by electricity can become an active consumer and be remunerated for helping to balance the grid.

Why did this new status happen? What was the need?

The energy transition, combined with the increase in electrification, has been the driving force. We’re in a situation where electricity demand is drastically increasing, mainly driven by the electrification of transportation, while we’re integrating more intermittent renewable energy sources in the energy mix. So what happens is that we simultaneously need more electricity while not being able to rely on energy production like we used to - the classic “what do we do when the sun doesn’t shine and the wind doesn’t blow”. 

Of course, we don't want to go back to the old ways of producing electricity with fossil fuels, and we need to accelerate the electrification and decarbonisation of industries if we're going to solve the climate crisis.

While active consumers are not a new thing, as industries have been reinjecting energy back into the system for a while, their wide-scale deployment of it and the involvement of individuals is relatively recent. As we’re moving towards a fully renewable energy system, commercial and industrial companies who choose to become active consumers can help cope with intermittent and unpredictable generation by moving their consumption and making their flexibility available.  

It really came from a systemic need, which is not going anywhere. If anything, we will only see more active consumers participating in flexibility services and demand response across countries. The amount of flexibility needed to strengthen the grid, accommodate the increase in electrification and act as a safety net for renewables is enormous, so everyone will get a share of the cake. 

What are the benefits and possible downsides of becoming an active consumer?

The main advantage is the enormous economic opportunity this represents. Think about it: we're completely reframing how the economics of energy works. As a consumer, the best a commercial or industrial entity could hope for would be catching the lowest hourly electricity price. By becoming an active consumer, they can earn revenues for providing a service to the energy system. 

But obviously, it's so much more than just a monetary transaction. Helping to strengthen the grid might not sound like the most glamorous benefit, but we all benefit from a stable grid, and businesses are no exception. And, of course, we must remember that by participating in flexibility services, commercial and industrial businesses are playing a part in making the energy transition a reality. 

Regarding the downsides, businesses can be deterred from participating in distributed flexibility if the upfront investment is too high. The ideal set-up is to have an energy manager, the proper organisational infrastructure for load management, and to invest in flexible assets if they don't already have them. But it's a worthy investment with a reasonably quick return on investment, since participating in distributed flexibility, or demand-side response, does not cost anything once they have the proper set-up. Businesses can also turn to flexibility service providers like us to guide them when building this setup and reconsidering their energy strategy. 

Can traditional energy markets and the current grid cope with the rise of active consumers?

Active consumers present a challenge to energy markets by making it harder to forecast consumption for a specific hour. However, this is benign compared to the issue posed by distributed production, which is intermittent, difficult to forecast, and opens new bidirectional electricity flows.  

However, as electrification and flexible consumption become more common and as we develop automated systems that can lower prices, we'll be able to switch production on or off in one second. Ultimately, we're tapping into a new energy pool requiring the grid to manage volatile electricity flows. 

We need the TSO and DSO to invest in the correct infrastructure to measure how much electricity is produced and consumed at any given time and support bidirectional electricity flows. We're moving away from the traditional setting where electricity would go from high to low voltage, with industries connected to the transmission network and receiving electricity from large power plants. Instead, with the increase in distributed resources, we now see more and more often electricity flows going from low to high voltage. Therefore, the low-voltage infrastructure must be robust enough to manage the flow inversion hourly. 

And because we're working towards a fully renewable energy system, we also see energy production sites that are not necessarily connected to consumption hubs. For example, in Italy, most renewable energy is produced in the South, but most energy consumption comes from the North. 

These grid challenges represent a strong opportunity for active consumers, who play a central role in strengthening the grid. The need for distributed flexibility will increase alongside electricity demand and intermittent renewable energy production, simultaneously offering new revenue opportunities for active consumers.