Energy Prosumers and Infrastructure Regulation: Some Initial Observations from Australia

Abstract

This paper will present some initial reflections about the rise of ‘energy prosumers’ and the implications for the regulation of energy infrastructure. With the decentralized micro-production of energy becoming increasingly available through the declining price of photovoltaic technology (solar panels) and, to a lesser extent, wind turbines, the idea of the ‘prosumer’ - developed in relation to ‘disruptive’ media and communications technologies, free software and 3D printing - has also become relevant to energy, since individuals now have the ability and means to produce energy as well as consume it. Individuals or community groups can sell excess energy that they have generated back to the grid or opt to go ‘off-grid’ entirely. In addition, going off-grid or being part of a small-scale energy network may have further benefits in terms of promoting energy localisation, resilience and sustainability, which may be of particular appeal to communities or individuals in remote areas living far from large population centres. Since these small-scale energy generation technologies usually involve the generation of renewable energy there are additional social benefits to this energy production in terms of contributing towards the reduction of carbon emissions and the promotion of clean and sustainable energy. The digitization of energy grids and smart meters, and the development of household battery storage cross-fertilise this decentralized micro-production of energy and enhance the ‘prosumer’ experience.However, the emergence of energy prosumers stands in stark contrast to the centralized model of energy production in developed economies, which forms the paradigm on which existing energy regulation is built. Yet prosumers in other areas of production, such as the Internet and 3D printing contexts, have also proved ‘disruptive’ to existing laws. Prosumers in the guise of ‘user’ are recognised to some extent by copyright law but other areas such as competition law have been less willing to acknowledge productive individuals. While the forthcoming net neutrality regulation might go some way to acknowledging and integrating prosumers into EU telecoms regulation the concept would still seem to be disruptive for other areas of existing utilities regulation. Energy would appear to be among these, experiencing only recently issues of decentralization which have characterized and transformed communications since the advent of digitization and the Internet’s widespread take-up. This paper will critically examine the development of energy prosumers and provide some initial reflections on their trajectory within current infrastructure regulation, and what might need to be changed to better accommodate them, particularly in the Australian context. The issue of renewable energy has become highly politicized in Australia, despite the country having some of the best natural resources for this kind of production. Yet Australia’s ‘tyranny of distance’ characterising many remote communities makes small-scale renewable energy production an even more resilient and attractive option for individuals and small communities. The paper will then identify some developing flashpoints for energy prosumers around issues such as: • consumer network charges; • disadvantageous energy pricing – both for household-produced electricity being sold to the grid and centrally produced electricity being bought from the grid by household producers;• attempts to stop household producers selling electricity back to the grid.In light of these flashpoints, some observations will be offered on energy prosumers’ trajectory under existing Australian regulation, and what insights this may offer to regulators in other jurisdictions, especially the EU, where similar ‘disruptive’ trends can be observed. Examples from other areas of infrastructure regulation, especially telecommunications where digital-led disruption has created prosumers, will also inform these observations.