Opinion of the European Economic and Social Committee on ‘Prosumer Energy and Prosumer Power Cooperatives: opportunities and challenges in the EU countries’ (own-initiative opinion)
Date: 2016-10-19
Institutions: European Economic and Social Committee
Subjects: consumer, cooperative, digital technology, energy consumption, energy production, environmental protection, renewable energy, renewable resources, self-sufficiency in energy








C_2017034EN.01004401.xml










2.2.2017   


EN


Official Journal of the European Union


C 34/44





Opinion of the European Economic and Social Committee on ‘Prosumer Energy and Prosumer Power Cooperatives: opportunities and challenges in the EU countries’
(own-initiative opinion)
(2017/C 034/07)






Rapporteur:



Janusz PIETKIEWICZ











Plenary Assembly decision


21/01/2016




Legal basis


Rule 29(2) of the Rules of Procedure




 


Own-initiative opinion




 


 




Section responsible


Section for Transport, Energy, Infrastructure and Information Society




Adopted in section


06/10/2016




Adopted at plenary


19/10/2016




Plenary session No


520




Outcome of vote
(for/against/abstentions)


225/4/3




1.   Conclusion and Recommendations









1.1.


The EESC takes the view that the general development of distributed prosumer energy should form an important and sustainable part of the European Union’s energy policy. Such an approach would be beneficial and might even be necessary from the point of view of energy security and in light of environmental and social concerns.












1.2.


The extent to which prosumer energy contributes to overall energy generation should be tailored to the specific circumstances of each Member State. The EESC therefore proposes that the European Commission develop a framework for prosumer energy, while the detailed regulation in this field should remain a matter for the individual Member States.












1.3.


A wide range of renewable energy sources can be used to generate prosumer energy, which is suitable for any area regardless of climatic conditions.












1.4.


The wide-scale arrival of prosumers on the energy market has been made possible thanks to new technologies, the digital revolution and the expectations of consumers that they should be able to participate directly in economic processes.












1.5.


To ensure that the concept of the prosumer is better understood in the Member States, it is suggested that the Commission draw up a framework definition of the prosumer covering essential common elements, such as: size of the installation, individual and collective power generation, ownership of the installation and the issue of power generation surpluses.












1.6.


Anyone can become a prosumer regardless of whether they own property, installations or facilities used to generate prosumer energy. For example, both the owner of a family house and the tenant of an apartment in an apartment block can become a prosumer.












1.7.


The economic advantages of prosumer energy, which are mainly associated with lower energy transmission costs, better use of local energy sources and the economic activation of local communities, should in the not too distant future enable this kind of energy to be generated without the need for additional support mechanisms.












1.8.


The savings and social benefits of a more informed and active consumption, the decentralised use of renewable energy sources, the reduction of network losses and efficiencies resulting from cooperation can rapidly result in a positive return on the investment in prosumer energy generating facilities, the development of transmission, distribution and local networks and their management system, as well as the development of energy storage.












1.9.


On no account should the systems used to support prosumers distort competition on the energy market or eliminate other operators. They must also take into account that there are energy consumers in this market who cannot or do not wish to become prosumers.












1.10.


Financial solutions which are likely to have an impact on prosumers, such as taxes, tariffs and other charges, should be favourable to them. Under no circumstances should they discriminate against prosumers on the energy market.












1.11.


The dynamic growth of prosumer energy depends on the creation of good partnerships between prosumers, other energy producers and companies working in the field of energy transmission and distribution. Conditions need to be put in place that enable all energy market stakeholders to reap the benefits of the growth of prosumerism. The EESC suggests that the Commission carry out tests to find solutions in this area.












1.12.


Solutions are required to protect prosumers from the monopolistic practices of energy transmission and distribution companies, and of large energy producers.












1.13.


In general, prosumers generate energy for their own needs (individual and those of groups of individuals, private households, farms and small businesses). A perfect match between the capacity of energy installations and own energy needs is not achievable. It is therefore crucial to find a solution to the problem of surplus energy. The issue is all the more important if we wish to encourage prosumers to lower their energy consumption — something we should do as a matter of routine.












1.14.


Smart living systems should be used to support optimal energy consumption by prosumers. The EESC calls for this to be included in the system solutions currently being drawn up by the European Commission.












1.15.


Given the small scale of the power generated by individual prosumers, prosumers should not be restricted in their access to the network.












1.16.


Distribution and transmission networks, and the way in which they operate, must be adapted to take account of the growth in prosumer energy. Prosumers should contribute to the costs arising in this connection, but transparent rules should be drawn up for contributing to these costs.












1.17.


If the necessary development of prosumer energy is to be achieved, smart local networks also need to be developed. The EESC sees the roll-out of smart meters as part of the network infrastructure, and the related financing costs should not therefore be directly borne by consumers. The EESC draws attention to the need to ensure the protection of any data that is collected.












1.18.


The benefits of prosumer energy will increase sharply as a result of the development of small-scale energy storage facilities. The Committee suggests that scientific research should continue to focus on improving existing energy storage technologies and looking for new ones.












1.19.


One way of stepping up development of prosumer energy is to create power cooperatives or other forms of prosumer groups. Groups of prosumers are more effective. Among other things, they benefit from lower energy generation costs, have a stronger position in the energy market and assume a direct role in improving local energy security.












1.20.


Groups of prosumers are better able to balance the energy they generate with their own energy needs. This in turn further reduces the transmission of energy, meaning lower energy costs for members of the group. As a result of smaller fluctuations in supply and demand, prosumer groups are more effective at influencing the distribution and transmission network than individual prosumers.












1.21.


The EESC suggests that the Commission attach the utmost importance to the development of prosumer energy in activities relating to the construction of nearly zero energy buildings.












1.22.


The Committee proposes that the Commission take account of prosumer energy issues in the current Electricity Market Design and Renewables Package review initiatives.












1.23.


The EESC believes that the benefits of prosumer energy should be applied in an active policy of reducing energy poverty and protecting particularly socially vulnerable groups, as well in addressing issues connected with the silver economy and the ageing society. The involvement of civil society organisations will be key in this respect.












1.24.


The widespread development of prosumerism is also an opportunity to activate local businesses, thereby creating new jobs linked to the establishment of key facilities and services.












1.25.


The involvement of local and regional authorities will have a huge impact on the further development of prosumer energy. The EESC recommends that the Commission take account of this issue in its Covenant of Mayors activities.












1.26.


Given that prosumer energy is at a different stage of development in the Member States, it would be a good idea to organise various exchanges of experience. The EESC suggests that the Commission monitor the development of prosumerism in the Member States as part of the annual Energy Union reporting. The data collected will be extremely helpful for the activities carried out by the Member States.












1.27.


The widespread introduction of prosumerism is a complex, multi-faceted and lengthy process. It is therefore important that solutions to encourage development of prosumer energy are sustainable over the long term.




2.   Context









2.1.


Access to energy sources, security of supply and pricing policies that take into account the interests of vulnerable social groups and consumers in difficult situations are a major challenge for societies, all political administrations and individual consumers.












2.2.


Until recently, we were unable to effectively obtain energy in any other way than through combustion, with the possible exception of hydroelectric power. Technological developments have made it possible for energy to be widely produced without having to burn anything. We have learned to produce energy in its cleanest form from sunlight, without polluting the environment. Furthermore, this energy source is both free and inexhaustible and the only costs incurred are those of the installations.












2.3.


It is equally effective to generate electricity from wind power, i.e. from the same source, the sun, which, in the process of warming the Earth, causes movements of air masses. This also includes biomass, as photosynthesis is the principal reason for its renewal.












2.4.


The development of renewable energy is inevitable in the face of the reduced availability of fossil fuels arising from the fact that they are being progressively exhausted, the dependence of many countries on imports and global warming and air pollution. These problems have meant that Europe, and with it the majority of the largest economies, have begun to invest in RES.












2.5.


At the 1992 Earth Summit in Rio de Janeiro, fundamental socioeconomic principles were adopted requiring environmental protection, such as the United Nations Framework Convention on Climate Change.












2.6.


In September 2015, the UN General Assembly adopted the Sustainable Development Goals (SDGs). One of them (SDG 7) is to ensure access to sustainable energy for all. Today, 1,2 billion people in the world have no access to electricity.












2.7.


More than 120 million EU citizens are at risk of poverty or social exclusion. 10 % of Europeans live in households where no-one has a job; the number of homeless is rising. These figures also mean energy poverty.












2.8.


Civil societies are showing overwhelming support for RES. This was confirmed in 2015 by Pope Francis’ Environmental Encyclical and declarations on climate change by Muslim, Hindu and Buddhist religious leaders. They called on faith communities to commit to a zero- or low-carbon future.












2.9.


The need to move away from fossil fuels was reinforced at the 2015 COP21 conference in Paris in which 200 countries took part. This was, above all, about ‘holding the increase in the global average temperature to well below 2 oC above pre-industrial levels and pursuing efforts to limit the temperature increase to 1,5 oC’.




3.   The digital revolution. Impetus for the development of prosumerism









3.1.


Over the last half century the Earth’s population has tripled. The fragility of the global financial system has posed the threat of long-term stagnation in the world economy. The high level of unemployment and rising energy costs have caused instability in many countries: the costs of doing business and the burden on consumers have risen.












3.2.


The world has been faced with the need for an economic paradigm shift and transformation of business models, also in the social sphere. Instruments for the new system have emerged as a result of the digital revolution and the internet of Things.












3.3.


By 2020 there will be more than 50 billion devices connected to the network on the market, i.e. seven times more than there are people in the world. A smartphone, rather than a PC, has already become the most important window for communication with the world. In 2020, there will be around 6,1 billion of them on the market.












3.4.


The internet of Things has made it possible for millions of people to participate in social networks. The sharing economy model has emerged, which is better adapted to an organisation of society focused on social cohesion. The economy is beginning to move from centralised institutions managed in a top-down way to the idea of sharing, and many excluded social groups are being given the chance to participate actively in economic life.












3.5.


Online platforms can make consumers into producers, creating and disseminating information and products made using 3D printers. Platforms make it possible to share cars, homes, clothes and other items. The consumer/producer can undertake training on the internet, obtain medical advice or find a craftsman for home renovation. Social entrepreneurs, avoiding the banking establishment and using crowd-funding, can fund their economic activities in the young sharing economy.












3.6.


In a world of digital opportunities social capital becomes just as important as financial capital, access becomes more important than ownership, and ‘exchange value’ on capitalist markets is increasingly replaced by ‘sharing value’ in the cooperative community.












3.7.


The development of digital technology and new business models in the energy sector, including the distributed energy model, make it possible to regard rural areas, suburbs of conurbations, residential areas consisting of single-family houses, single-building communities and housing associations as large power plants with enormous potential. The same applies to the cloud of distributed sources which give rise to the new doctrine of energy security, built from the bottom-up — from households, farms, small businesses and micro-cooperatives.












3.8.


In the energy sector, the internet has made it possible — in the framework of the sharing economy — for millions of people to participate in social networks, producing electricity in their homes, office buildings, on the roofs of warehouses, and then sharing it by means of the internet of Energy, just as today we create and exchange information on the network. Elements of that system which still need to be significantly developed include energy storage, the ‘internetisation’ of energy networks and electric cars.




4.   Towards Renewable and Distributed Energy Sources









4.1.


Producing clean energy to supplement the market and replacing fossil fuels have made it necessary to transform energy systems and introduce rules on the participation of new players in the market.












4.2.


In accordance with the Article 2(3) of the Lisbon Treaty, sustainable development in Europe takes place in a social market economy. The civil society partners play an important role in this and public acceptance of the transformation of our energy systems, especially at the local level, is crucial.












4.3.


The European Union has drawn up targets on the Energy Union and transforming the EU into an energy-efficient, low-carbon economy by 2030. Two of the main targets are to reduce greenhouse gas emissions by 40 % and increase the share of renewable energy sources to 27 % without setting country-specific indicators. A low-energy economy will ensure energy security and economic growth with low levels of CO2 emissions and, in the longer term, an increase in the production and consumption of locally produced energy. According to the most recent available data, in 2014 RES made it possible to reduce global CO2 emissions by 380 Mt.












4.4.


One of the individual 2030 targets outlined by the EU is to cut spending on energy by private consumers and businesses. They will be able to actively enter the energy market as a result of the possibilities created by new technologies.












4.5.


The EU energy balance is dependent on trade. More than half the EU’s internal annual gross domestic energy consumption, amounting to EUR 400 billion, comes from imports. Some studies show that by 2030 the EU’s dependency on external energy supplies may reach 70 %. It has been estimated that RES made it possible to reduce global fossil fuel use by 114 Mtoe in 2014.












4.6.


It is key for the EU to improve its energy balance. One solution is for energy to be produced from many local sources directly by individual consumers. Without broad grassroots support for renewable energy production to satisfy local needs, many countries may have difficulties in ensuring that their systems are secure.












4.7.


Technological developments in energy production in home installations, increasingly efficient energy storage solutions, transmission of energy over smart grids, use of smart meters and local demand management mean that consumer installations can have a significant effect on the energy basket of each country.












4.8.


The renewable energy sector is a strong factor in technological innovation. It is essential to the fundamental transformation of Europe’s energy system in the framework of the Digital Single Market strategy.












4.9.


The transformation of passive consumers into active ‘prosumers’ in various sectors and the possibility of integrating micro-entrepreneurs and the single market strategy into the digital era of the internet of Things are described in the European Commission’s May 2016 Digital Single Market Strategy (COM(2015) 192 final), which is built on three pillars: 1) better access to online goods and services, 2) the right conditions for digital networks and services to flourish, and 3) the growth potential of the European Digital Economy. This could bring the EU economy EUR 415 billion per year and create hundreds of thousands of new jobs, including in the renewable energy sector.












4.10.


The market, which is dominated by major energy producers and distributors, must be opened up to individual players and become more distributed. Electricity will no longer flow ‘top-down’ in a centrally regulated way from large power plants to consumers. It will be produced from many decentralised renewable energy sources.












4.11.


The degree of distribution of electricity generation needs to be adapted to the specificities of energy consumers. Differences in this area may be associated above all with the operation of energy-intensive industries in a given country.












4.12.


Currently energy security increasingly depends on the resilience of the energy system to terrorist attacks. By developing distributed generation we also increase energy security, as decentralised generation is less vulnerable to terrorist threats.












4.13.


Distributed energy sources make it possible to look at the problem of continuity of energy supply to operators whose activities are highly dependent on electrical current (e.g. poultry-breeding farms, processing plants, cold stores). There are EU countries where power cuts average no more than twenty minutes per year, but there are others where cuts in supply vary from 450 to 500 minutes. Prosumer micro-installations ensure business continuity for producers of this kind.












4.14.


The opportunities created by the general development of distributed prosumer energy can be exploited in the socially important areas of the EU identified in the Europe 2020 strategy in connection with the solution of the demographic problems associated with an ageing society and combating poverty and social exclusion.












4.14.1.


One of the objectives of the strategy is to reduce by at least 20 million the enormous number of 122 million people at risk of poverty and social exclusion. Support will be provided by operational support programmes, active labour market instruments and targeted funds, including at least 20 % of the European Social Fund budget. Logistical and financial support for these people to set up energy micro-cooperatives and/or to join existing local internet of Things businesses could facilitate their occupational and social integration and help them to escape from the risk of poverty.












4.14.2.


Similar challenges exist in relation to the silver economy. The EU faces a historic challenge of a kind which no society has ever before faced, namely sharply rising longevity and the simultaneous general digitalisation of life, which call for the introduction of unconventional economic solutions as well as new social strategies.












4.14.3.


In 2060 there will be two senior citizens for every young person (1). The elderly population and older workers should be viewed not as a threat and a burden on society but as an opportunity in the age of the digital revolution for the creation of a job-rich economy, building on the extensive experience and leisure time of senior citizens and their financial capital — even if modest — for investing safely in digital-age enterprises. One possibility would be the involvement of older people as e-seniors in energy generation activities, for example through cooperative power plants located in housing estates or blocks of flats.




5.   Prosumer energy









5.1.


The distinguishing feature of modern capitalism was a definition of the concept of consumption in relation to production and marketing processes, consumption no longer being the privilege of a wealthy elite but rather a mass phenomenon.












5.2.


The term ‘prosumer’ was first introduced in 1980 by the writer and futurist, Alvin Toffler. In ‘The Third Wave’, he defined prosumption as the blurring of the distinction between production and consumption in the market. The third wave was a process involving the participation of individuals or organised groups of prosumers in the production of products intended for personal use, which, in turn, shifted the boundaries between producers and consumers.












5.3.


The concept of a market in which consumers, including households, were perceived exclusively as passive market participants was not in line with the challenges brought about by technological developments. As early as 1972, Marshall McLuhan and Barrington Nevitt predicted that, as electrical technology developed, the consumer would be able to become the producer.












5.4.


The backbone of a modern economy is the secure and affordable supply of energy to consumers, taking into account the need to protect vulnerable social groups as part of the fight against energy poverty.












5.5.


Prosumers are individuals, groups of individuals, households or farms able to operate in an organised way, e.g. through associations, foundations or cooperatives, that are both producers and consumers of energy produced in small installations located in back yards or on residential or commercial buildings (e.g. mini wind turbines, photovoltaic panels, solar collectors and heat pumps). Prosumers can also be small businesses, including social enterprises and local authorities.












5.6.


The concept of prosumerism includes, in addition to electricity generation, heating and cooling.












5.7.


In principle, prosumers produce energy for their own private use. They become the co-producer of the goods consumed. Individuals who produce an amount of energy similar to what they consume are also considered prosumers, even if the two processes are not simultaneous. For instance, this is the case when they produce energy mainly during the day, but consume relatively little for their own needs, selling off any surplus to other consumers and consuming most of their energy at times when they themselves are producing much less of it.












5.8.


Individual prosumption requires life to be organised differently. It can, to a large extent, be linked to a dissatisfaction with mass, standardised production. Modern consumers in the digital age want to be treated as individuals and see an opportunity to meet their individual needs and aspirations. They are consciously getting involved in projects related to environmental protection and combatting greenhouse gas emissions.












5.9.


Prosumers associate the transition to a modern energy system with development, the need for creativity and independence. The most active group of prosumers on this market is the net generation. This generation is distinctive in that it does not see the world from the perspective of consumption but through production. It aspires to meet needs related to freedom, credibility in society, a fast-paced life and innovativeness.












5.10.


The first prosumer processes originated in simple self-service operations and e-commerce and in the process of making consumption less market-orientated. Other causes of prosumption are changes in the job market, computerisation of everyday activities, the possibility of working from home (teleworking), more free time and the need to make use of it in the best way possible.












5.11.


The market-based reason for the rise of prosumption, not only in the energy sector, is the fall in household incomes during the crisis, rising prices of goods and services, the need to save on an everyday basis and the production of goods and services by individuals for personal use for economic reasons.












5.12.


Many countries see benefits from the simultaneous development of distributed energy sources, including micro-installations. The upper limit on their power is usually 50-100 kW. This applies to prosumer installations, in particular.












5.13.


Prosumer energy can be regarded as an essential element of the transition to distributed generation, i.e. a solution that is generally desirable from the point of view of energy security, and bearing in mind environmental and social considerations.












5.14.


The broad implementation of prosumerism should significantly facilitate the accomplishment of the tasks arising from COP 21 in Paris.












5.15.


The EU has put consumers at the heart of its energy policy, making it possible for them to make active use of new technologies. In recent years new RES technologies have emerged, for both large-scale industrial installations and smaller-scale projects, with significant reductions in the cost of underlying investments. For example, the cost of solar PV modules fell by 80 % between 2008 and 2012. As a result, businesses and households have been able to start producing and consuming their own electricity profitably.












5.16.


Bearing in mind the advantages of the development of prosumer energy, it makes sense to encourage potential prosumers to become active in this field. This support could include the removal of barriers and the simplification of administrative procedures, easier network connections and favourable conditions for the sale of surplus electricity.




6.   Energy Cooperatives for Prosumers









6.1.


An energy cooperative is a voluntary association with an unlimited number of members and legal personality. The objective of an energy cooperative is to meet the energy needs of its members.












6.2.


A prosumer can act individually or together with neighbours in an apartment block housing several families. We speak of a cooperative when several people invest in the installations. They may consist of entire groups of residents on a particular site. The idea is to produce electricity or heat using renewable energy sources to meet personal needs and possibly to sell any surplus to the grid. Three natural persons are required for this in Germany, in Poland ten natural persons or three legal persons.












6.3.


The German experience of recent years shows that the aim of cooperatives is not to maximise profits but, above all, to provide economic assistance and support to their members. Every fourth cooperative out of nearly a thousand was financed solely from members’ contributions. In the case of the remaining cooperatives, two thirds of the funding was obtained from cooperative banks. Every member has one vote, regardless of the amount of his/her financial contribution. Generally, this is not a large amount, and it is laid down in the cooperative’s statutes. If a cooperative makes losses, members’ liability is limited to the amount of their investment.












6.3.1.


Cooperatives have to function effectively in economic terms, like any business. The advantage of cooperatives was the negligible proportion of bankruptcies in this sector (about 0,1 % of all bankruptcies in Germany). Initially dividends averaging 5-6 % were paid; currently they average 2-3 %.












6.3.2.


Municipalities in Germany are very important partners for energy cooperatives, and not just by making roofs and municipal buildings available for investment. Often mayors have taken the initiative for the formation of energy cooperatives and have tried to win over local people to this idea.












6.4.


One notable effect of the formation of energy cooperatives is the opportunity of obtaining energy at a lower cost than would otherwise be possible for individuals.












6.5.


Energy cooperatives very significantly strengthen the position of prosumers compared to large players in the energy market.












6.6.


Energy cooperatives also directly involve local people in the process of increasing energy security in their area. This is essential for optimising solutions tailored to the needs and conditions of local communities.












6.7.


The cooperative movement, particularly in the old EU countries, played a significant role in driving growth and boosting economic competitiveness, as well as fostering European values such as solidarity, autonomy and democracy. The economic potential of cooperatives in the old EU countries is still huge. For the central and eastern European countries from the former socialist bloc, the socialist origins of the cooperative movement as well as the policy of that time of bringing cooperatives under the control of central and regional authorities are today acting as a hindrance to prosumer cooperatives and having a negative effect on attitudes towards them.












6.8.


The self-consumption model has opened up the possibility of reducing energy costs, especially for SMEs, for which high electricity prices constituted a serious burden. Among residential consumers new models have emerged, ranging from PV panels on roofs, owned either by the household or third parties, to projects implemented by civic renewable energy cooperatives.





Brussels, 19 October 2016.


The President of the European Economic and Social Committee

Georges DASSIS




(1)  OJ C 389, 21.10.2016, p. 28.