The Regulatory Consumer: Prosumer-Driven Local Energy Production Initiatives

Abstract

This paper analyzes the (pro)active role consumers could (and are encouraged by the respective policy to) assume in markets that emerged due to European market liberalization and technological changes. These changes expanded consumer markets and changed regulatory architectures accordingly. Consumers’ purchasing decisions became key to the well-functioning of markets: they are entrusted to regulate markets and contribute to the competitiveness and the legitimacy of market processes. In the EU, consumers are expected to contribute both to EU market integration and to European society. However, this new regulatory role of the consumer is not matched with a corresponding legal framework. The policy discourse on consumers’ active participation in markets and even their accountability for regulating markets is not matched with the necessary legal (consumer) provisions to do so. The mismatch between legal rules and consumers’ new role in market regulation may lead to regulatory ineffectiveness and legal uncertainty. Moreover, while technological developments make this active consumer role possible, there is in fact also a gap between law and technological development, which can lead to the problem of ‘regulatory disconnection.’ These problems are especially present in the EU energy sector, where technical developments such as smart meters, solar panels, decentralized energy storage, etc., enable a proactive role of energy consumers. Consumers are often prosumers of energy i.e. consumers who produce their own energy. This paper critically analyzes current EU law on the (energy) consumers’ new role in market regulation. It analyzes normative EU law concepts and definitions of the consumer and examines whether and how rules comply with the concept of the active regulatory consumer. The paper uses a case-study of the prosumer-driven local energy production initiatives and examines whether the energy consumers’ new role creates regulatory disconnection, especially if it is not matched by the progress in corresponding EU law provisions.