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The Role of Renewable Energy Prosumers in Implementing Energy Justice Theory

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In recent years, the use of photovoltaic-based distributed electricity generation has played a key role in achieving climate and energy policy goals. The energy market is changing rapidly from centralized generation towards unbundling generation, transmission, distribution, and supply activities. As energy consumers also become producers, a new energy market player—the prosumer—is emerging. The role of the prosumer as a market player can be analyzed in terms of implemented technological solutions, economic assessment, environmental impact, and legal regulation requirements. The aim of this article is to investigate the importance and compatibility of energy prosumers with energy justice theory in the context of European Union (EU) law. The authors concluded first that an energy prosumer will help to meet energy justice goals only if government ensures support for generation facilities for low-income consumers, as only then can intrageneration equity be achieved. Second, seeking to ensure equality among places with different energy sources, the government should promote the development of generation facilities using different renewable energy sources. Third, the short-term electricity market, which may allow energy prosumers to participate, should be developed.
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sustainability
Article
The Role of Renewable Energy Prosumers in
Implementing Energy Justice Theory
Saul˙
e Milˇciuvien˙
e1, Julija Kiršien˙
e1, Enrique Doheijo 2, Rolandas Urbonas 3and
Darius Milˇcius 3, *
1Law Faculty, Vytautas Magnus University, K. Donelaiˇcio st. 58, LT–44248 Kaunas, Lithuania;
saule.milciuviene@vdu.lt (S.M.); julija.kirsiene@vdu.lt (J.K.)
2Deloitte, Torre Picasso–Plaza Pablo Ruiz Picasso 1, 28020 Madrid, Spain; edoheijo@deloitte.es
3Lithuanian Energy Institute, Breslaujos st. 3, LT–44403 Kaunas, Lithuania; rolandas.urbonas@lei.lt
*Correspondence: darius.milcius@lei.lt; Tel.: +370-687-80491
Received: 13 August 2019; Accepted: 23 September 2019; Published: 25 September 2019

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Abstract:
In recent years, the use of photovoltaic-based distributed electricity generation has
played a key role in achieving climate and energy policy goals. The energy market is changing
rapidly from centralized generation towards unbundling generation, transmission, distribution,
and supply activities. As energy consumers also become producers, a new energy market player—the
prosumer—is emerging. The role of the prosumer as a market player can be analyzed in terms
of implemented technological solutions, economic assessment, environmental impact, and legal
regulation requirements. The aim of this article is to investigate the importance and compatibility of
energy prosumers with energy justice theory in the context of European Union (EU) law. The authors
concluded first that an energy prosumer will help to meet energy justice goals only if government
ensures support for generation facilities for low-income consumers, as only then can intrageneration
equity be achieved. Second, seeking to ensure equality among places with dierent energy sources,
the government should promote the development of generation facilities using dierent renewable
energy sources. Third, the short-term electricity market, which may allow energy prosumers to
participate, should be developed.
Keywords: energy justice; prosumer; renewable self-consumer
1. Introduction
The energy sector is changing very rapidly. Not only are the technologies, enterprises, and property
rights changing, but also fundamental changes are occurring in the paradigm of regulation of the energy
sector. Fifty years ago, holding monopoly rights in energy production, transportation, and supply,
state-owned energy companies were dominating. This structure of the energy sector was based on
the doctrine that only companies with monopoly rights can be ecient, and that state ownership is
the best possible way of governance of energy companies to avoid abuse of monopoly power and to
ensure the proper supply of public services.
However, it was later discovered that private actors and competition could ensure the most
ecient way to operate in the energy sector and the market. This paradigm shift was followed by
the privatization of energy companies and the unbundling of generation, transmission, distribution,
and supply activities.
Over the last decade, new theories of economic regulation have been developing. They include
energy justice, energy democracy, and the distributed economy. Distributed generation based on
self-consumption could also have a positive impact in reducing grid losses. Although the idea of
distributed generation is not new in the energy sector, only recently have new technologies (especially
Sustainability 2019,11, 5286; doi:10.3390/su11195286 www.mdpi.com/journal/sustainability
Sustainability 2019,11, 5286 2 of 16
solar photovoltaic and batteries) enabled the implementation of this idea in practice (Figure 1). The times
when huge, centralized generators produced most of the electricity are changing; now, more and
more electricity is produced from renewable energy sources, and new technologies are allowing for
consumers not only to consume, but also to supply their surplus electricity to the grid. As energy
consumers are also becoming producers, a new energy market player–the prosumer–is emerging.
Moreover, currently distributed generation based on renewables could guaranty a sustainable energy
supply, which is more eective in economic terms than the current centralized process using fossil
fuels. The adoption of these solutions can contribute to mitigating energy poverty.
Figure 1.
Evolution of electricity systems, with distributed generation based on solar photovoltaic power.
The implementation of the energy prosumer concept could lead to essential changes in the energy
market. The self-suciency of the energy prosumer will increase and in peak hours demand for energy
will decrease if onsite energy storage technologies (for example, batteries in case of solar photovoltaic
electricity generation) is used. Photovoltaic systems produce electricity mainly during the daytime.
In the case the energy prosumer has a variable electricity price, own consumption during the daytime
may have a positive eect on the cost of electricity for the energy prosumer and reduce exposure to
the volatility of electricity prices. The main benefit of the increasing number of energy prosumers,
which uses renewable technologies, is related to the reduction of carbon emission and positive impact
on the mitigation of climate changes. Despite all benefits, due to the need for stable energy supply
energy prosumers will remain connected to the national networks. As more and more customers will
fulfil theirs’s energy needs by onsite energy generation it could reduce the network usage and increase
the network usage price for the rest of customers. In case photovoltaic systems produce more electricity
than it is consumed, losses in the transmission and distribution system may be increased and the
fluctuation related to non-stable generation can negatively impact the voltage and frequency stability.
The increasing role of the energy prosumer is emphasized in the 2016 European Commission
legislative proposals on renewable energy and the internal electricity market. The European Parliament
and the Council adopted a new directive (European Union (EU)) 2018/2001 “On the promotion of
electricity from renewable energy sources” on December 11, 2018 [
1
], which was one of the of eight
legislative acts of the “Clean energy for all Europeans” package, published by the Directorate-General for
Energy (European Commission) in 2019 [
2
]. Recognizing that only the changing role of consumers can
meet the existing challenges in the energy sector, the European Commission put not energy companies,
but energy consumers at the center of the energy sector. The active customer, renewable self-consumer,
and energy prosumer are terms based on newly emerging paradigms of energy democracy, energy justice,
and the distributive economy [3].
Sustainability 2019,11, 5286 3 of 16
The prosumer as a market player can be analyzed in terms of technological solutions implemented,
economic assessment, environmental impact, and legal regulation requirements.
Herein, we try to answer the following question: do energy prosumers contribute to the
implementation of energy justice in Europe?
The main tasks of the article are (i) to reveal the main characteristics of energy justice theory in the
changing energy market, (ii) to examine the concept of prosumer, (iii) to discuss the role and function
of the energy prosumer in the electricity market in the EU, and (iv) to compare the impact of the energy
prosumer in the electricity sector with the basic ideas of energy justice theory.
This article has three main parts. In the first part, the essence of the theory of energy justice is
revealed. The second part analyzes the concept of the prosumer and his or her main activities in the
energy market. The third part examines the compatibility of the energy prosumer with energy justice
theory, assessing the influence of the prosumer on the availability and aordability of energy service,
intragenerational equity, intergeneration equity, and responsibility.
2. Methodology and Data
In this article, the analysis is based on doctrinal legal research [
4
]. It includes (i) an analysis
of EU legal acts, the drafts of EU legal acts, EU preparatory documentation, and EU strategies,
(ii) a review of the scientific literature, and (iii) case analysis. It employs descriptive, historical,
and comparative analysis.
2.1. Analysis of Energy Justice Theory
We analyzed and identified the main feature of the last stage of development of energy law–energy
justice. The main research methods were a literature review and analyses. The main sources are [
5
11
].
2.2. Analysis of the Concept of the Renewable Energy Prosumer
In this part, we first examined the definition of a prosumer, and we identified the indispensable
features of the prosumer. We employed literature review, analysis, and comparative methods. Second,
we identified the indispensable features of the renewable self-consumer, and we compared them
with the indispensable features of the prosumer to prove that the renewable self-consumer is also
a prosumer. We analyzed legal acts and preparatory documents, and we also used the method of
comparison. Third, we identified the role of the renewable self-consumer, mainly by analyzing the
legal acts and preparatory documents, and by employing a case analysis method. The main sources
are [1228] and various pieces of EU legislation.
2.3. The Renewable Self-Consumer and Energy Justice Theory
As in the first part, we identified the main aims of energy justice theory, and in the second part,
we identified the role of renewable self-consumer in the energy market; in this part, we developed the
discussion of whether the renewable self-consumer contributes to implementing energy justice theory.
3. Discussions and Results
3.1. Identification of the Main Goals of Energy Justice Theory in the Changing Energy Market
To reveal the compatibility of the prosumer concept with contemporary energy law, this section
presents a short overview of energy justice theory and identifies the main characteristics of energy
justice theory. According to these characteristics, the compatibility of the energy prosumer with energy
justice theory is analyzed in the following parts of the article.
Energy law lacked a coherent philosophical basis for many years [
5
]. The lack of a societal goal
led energy law to its current stage of evolution–energy justice. At this point, the question arises,
what is energy justice: What criteria define what regulations are in line with energy justice theory?
Sustainability 2019,11, 5286 4 of 16
Scholars identify dierent main criteria that reveal the basic principles of energy justice theory. Initially,
three main groups of these criteria are presented.
Heron et al., emphasize the following main elements of energy justice: (i) cost: how it is
distributed among community members (recognition justice); (ii) benefits: how the availability of
access to a modern energy system is ensured (distributional justice); (iii) decision making: how
due process and proper representation are ensured in the decision-making process (procedural
justice) [
5
]; and Sovacool et al. also emphasizes (iv) globalization: how energy issues are handled
at the international level (cosmopolitan justice) [
6
]. Scholars argue that to implement energy justice,
the above-mentioned elements should be considered when making decisions in the energy sector.
Heron et al. also emphasize that there are two particularly important elements of energy justice:
(i) to ensure just and equitable decision-making and (ii) to provide benefits for all members of society
at each stage of the energy cycle [5].
Accordingly, Ramazan et al. developed criteria for decision making. They presented a decision-
making framework for energy justice, which is comprised of eight principles: (1) availability,
(2) affordability, (3) due process, (4) good governance, (5) sustainability, (6) intergenerational equity,
(7) intragenerational equity, and (8) responsibility [7].
It is worth explaining the criteria of inter-intragenerational equity, as they are not often listed
in the literature. It is widely accepted that the word will face large climate changes in near future
caused by the extensive emission of greenhouse gasses, mainly from the transportation and energy
sectors [
8
]. The policy and economic instruments used to reduce greenhouse gas emissions will impose
dierent burdens on dierent people [
9
]. Intragenerational equity is primarily about how we should
distribute the burdens within particular generations, either within the generation living today or
within future generations [
10
]. On the other hand, intergeneration equity is about the distribution of
burdens between the current generation and future generations, as the costs of mitigation are borne by
the current generation, while future generations benefit from it [11].
Analyzing the above-mentioned elements of energy justice theory, we have found that all of
them contribute to one or several goals listed below: (i) everyone should have access to basic energy
services, (ii) responsible use of energy resources, and (iii) fair activity from business and governmental
institutions. Table 1presents the possible categorization of elements of energy justice theory according
to these aims.
Sustainability 2019,11, 5286 5 of 16
Table 1. Main goals of energy justice theory.
No. Main Goals First Group of Criteria Second Group of Criteria Third Group of Criteria
1. Everyone should have access to
basic energy services.
(i) cost: how it is distributed among community members (recognition justice);
(ii) benefits: how the availability of access to modern energy system is ensured
(distributional justice);
(iii) globalization: how energy issues are handled at international level
(cosmopolitan justice).
(i) to provide benefits for all
members of society at each
stage of the energy cycle.
(i) availability,
(ii) aordability.
2. Responsible use of energy
resources.
(i) cost: how it is distributed among community members (recognition justice);
(ii) benefits: how the availability of access to modern energy system is ensured
(distributional justice);
(iii) globalization: how energy issues are handled at the international level
(cosmopolitan justice).
(i) sustainability,
(ii) intergenerational equity,
(iii) intragenerational equity,
(iv) responsibility.
3. Fair activity from business and
governmental institutions.
(i) decision making how due process and proper representation are ensured in
decision-making process (procedural justice).
(i) to ensure just and equitable
decision-making.
(i) due process;
(ii) good governance.
Sustainability 2019,11, 5286 6 of 16
3.2. The Concept of the Energy Prosumer in the EU
This part identifies the main the main characteristic and functions of energy prosumer in order to
assess their compatibility with energy justice theory.
First, we analyze the concept of energy prosumer comparing definitions which are presented in
the dictionaries and the scientific articles. Second, we investigate whether the term “renewable energy
consumer” used in EU legislation means “energy prosumer”. To answer this question, we track
the term “renewable energy prosumer” through the legislative procedure. The changes of the term
“renewable energy prosumer” during legislative procedure disclose the main discussions concerning
the scope of rights and obligations of “renewable energy consumer” in EU institutions. It allows better
to identify the characteristic attributed to renewable energy prosumer by the EU legislation. Third,
we investigate the role of energy prosumer in the EU energy market, seeking to identify its impact on
the development of the electricity sector.
This part of the article presents the dierent definitions of prosumer, discusses the concept of
prosumer, reveals the peculiarities of the renewable energy prosumer, and analyzes its role in the EU
energy market. The key functions of the prosumer and the key aspects of legal regulation are identified
for comparison with energy justice theory later in the article.
Initially, the prosumer concept was developed by Alvin Toer (1980), in his book, The Third
Wave [
12
]. In this book, Toer argues that in future, the consumer will produce more goods and
services for self-consumption.
The word prosumer is made from two words: “producer” and “consumer” [
13
]. The Cambridge
Dictionary explains that the prosumer is “a customer who helps a company design and produce its
products” [
13
]. The Oxford Living Dictionary gives a slightly dierent definition, “a consumer who
becomes involved with designing or customizing products for their own needs” [
14
]. It might be
observed that the Oxford Living Dictionary emphases that the prosumers produce goods for their own
needs; however, the Cambridge Dictionary does not limit the aim of production only to prosumers
own needs.
In the literature on energy, a prosumer is usually defined as someone who produces and consumes
energy. “A prosumer is someone who both produces and consumes energy” [
15
]. “Prosumers are
individuals who are both able to ‘produce’ as well as ‘consume’ products or services” [
16
]. “Prosumers in
the energy markets are energy consumers who produce or co-produce their energy demand individually
or through collective organizations” [
16
]. “Prosuming refers to when energy customers actively manage
their own consumption and production of energy” [
17
]. Energy prosumers can be grouped depending
on certain features they have: (i) connection to the grid: connected to the grid or self-sustainable (not
connected); (ii) trading: not trading electricity in the market, trading directly, or trading through an
intermediary; (iii) storage capacities: with storage capacities or without storage capacities; and (iv)
functions: actively participating in demand response or passive in demand response.
An analysis of these definitions leads to the conclusion that there is no homogeneous definition
of a prosumer. However, all definitions have the same two components: “produce” and “consume.”
This means that the main feature of an energy prosumer is the ability to consume and produce energy.
All other named features, for example “individually or through collective organizations” or “for their
own need” are additional, and they can be significant only for defining certain types of prosumers:
they are not required features.
3.3. Electricity Prosumers in European Union Legislation
It is important to stress that the word “prosumer” is not used in the newly adopted directives
(EU) 2018/2001 “On the promotion of electricity from renewable energy sources [
1
] and (EU)
2019/944 “On common rules for the internal market for electricity” [
18
]. The directive (EU) 2019/944
“On common rules for internal market in electricity” [
18
] uses the term “active customer,” and the
directive (EU) 2018/2001 “On the promotion of electricity from renewable energy sources” [
1
] uses
“renewable self-consumer.” As this research focuses on the renewable energy prosumer, this part of the
Sustainability 2019,11, 5286 7 of 16
article brings up the question of whether a renewable self-consumer, as defined in the EU directive (EU)
2018/2001 “On the promotion of electricity from renewable energy sources”, is an energy prosumer.
First, we define the main features of a renewable self-consumer. Second, we compare them with the
previously examined required features of an energy prosumer.
Analysis of the evolution of the definition of renewable self-consumer during the legislative
procedure can reveal the most debatable aspects of the energy prosumer in European institutions.
Accordingly, we compare the definitions proposed by the European Commission, the European
Parliament, and the European Council.
In Table 2an analysis of the definition of “renewable self-consumer” is presented. It is obvious that
in its proposal for the directive (EU) 2018/2001 “On the promotion of electricity from renewable energy
sources”, the European Commission linked the definition of “renewable self-consumer” with the
definition of “active customer” [18], stating that a “renewable self-consumer” is an “active customer”
with some specific features. The European Parliament only slightly changed the proposed definition
concerning the place of generation and storage of electricity. However, the European Council
considerably changed the definition of renewable self-consumer, removing the reference to active
customer, allowing Member States to define the boundaries of operation of renewable self-consumers,
and forming the separate definition of jointly acting renewable self-consumers. Later, the European
Parliament adopted [
19
] the proposed definition of the European Council; therefore, we analyze it
in detail.
The analyses of proposed definitions show that the issues concerning the place of operation of
renewable self-consumer were widely discussed in European institutions. The European Parliament
and the European Commission limited the place of operation of self-consumer to his or its own premises
by giving an exhaustive list of possible places. The European Council advocated the viewpoint that
each Member State is in the best position to define the place of operation of renewable self-consumer,
suggesting that each Member State should define the boundaries of operation, without restricting itself
to the premises of renewable self-consumer.
From this analysis, we can determine the essential features of a renewable self-consumer. A person
is a renewable self-consumer if he or she has these required features: (1) he or she is a final customer;
(2) within his or her premises, or elsewhere if allowed by Member States, he or she generates, consumes,
stores, or sells self-generated electricity; (3) the above-mentioned activities do not constitute his or her
primary commercial or professional activity.
As in previous section of the article we concluded that the main feature of an energy prosumer is
the ability to consume and produce energy, now we can conclude that despite the fact that the EU
legislation does not use the term prosumer, a renewable self-consumer obviously is also an energy
prosumer, as a self-consumer performs two required functions: consuming and generating electricity,
and the self-consumer can also sell and store electricity.
Sustainability 2019,11, 5286 8 of 16
Table 2. Evolution of Definitions of Renewable Self-Consumer During Legislative Procedure.
EU Commission [20] EU Parliament [21] EU Council [22] and the Definition in the Directive (EU) 2018/2001 [1]
“renewable self-consumer” means an active customer as defined
in Directive [MDI Directive]
“renewable self-consumer” means an active customer or a group of
customers acting together as defined in Directive... of the European
Parliament and of the Council [on common rules for the internal market
in electricity (recast), 2016/0380 (COD)]
“renewable self-consumer” means a final customer operating within its
premises located within confined boundaries or where allowed by
Member States, on other premises,
who consumes and may store and sell renewable electricity
which is generated within his or its premises, including a
multi-apartment block, a commercial or shared services site or a
closed distribution system,
who consume and may store and sell renewable electricity which is
generated within their premises, including a multi-apartment block,
residential area, a commercial, industrial or shared services site or in the
same closed distribution system,
who generates renewable electricity for its own consumption, and may
store and sell self-generated renewable electricity,
provided that, for non-household renewable self-consumers,
those activities do not constitute their primary commercial or
professional activity;
provided that, for non-household renewable self-consumers, those
activities do not constitute their primary commercial or professional
activity;
provided that, for non-household renewable self-consumers, those
activities do not constitute their primary commercial or professional
activity;
“jointly acting renewable self-consumers” means a group of jointly
acting renewable self-consumers according to Definition (aa) who are
located in the same building or multi-apartment block;
Sustainability 2019,11, 5286 9 of 16
3.4. The Role of the Energy Prosumer in the Electricity Market
It is expected that an energy prosumer will play an important role in meeting basic energy
policy goals.
The energy prosumer will add additional renewable energy generation capacity that is essential for
the energy system, as the consumption of electricity by residential consumers will increase significantly
as a result of the increased usage of electric vehicles and heat pumps. It is anticipated that the
implementation of the distributed generation and energy prosumer concept will help to cope with the
growing demand for electricity, and it will increase the use of renewable energy.
The energy prosumer will not only add additional generation capacity, but also install smart
technologies that will allow him or her to participate actively in demand management according to
electricity market price signals. Seeking to pay a lower price for electricity, energy prosumers will be
able to modulate their demand. Leal-Arcas et al. emphasize that the transformation from consumers
to prosumers will aect both small and large consumers [
23
]. The energy prosumer will also be able
to act through intermediaries (like aggregators) rather than directly. Accordingly, it is expected that
consumers will consume electricity when the price is low, and they will reduce their consumption
when the price is high.
Renewable energy prosumers will increase the competition in the electricity market, because the
number of energy suppliers will increase, and the market power of big players will reduce.
The implementation of distributed generation technologies (renewable energy technologies, such as
solar roofing, wind energy, or combined heat and power) will lead to the development of not only
individual energy prosumers, but also jointly acting energy prosumers and energy communities, in this
way significantly increasing the number of dierent types of players in the market.
Overall, energy prosumers should add renewable energy generation capacities and increase the
usage of renewable energy, actively participate in demand management, and increase competition
in the market. The directive (EU) 2018/2001 “On the promotion of electricity from renewable energy
sources” predicts additional benefits from decentralized generation: the utilization of local energy
sources, increased local security of energy supply, shorter electricity transportation distances and
reduced energy transmission losses, and it will foster community development and cohesion by
providing income sources and creating jobs locally [1].
The EU had no uniform legal regulations for energy prosumers. Consequently, in the Member
States, the legal regulations varied widely, and they were not always favorable to energy prosumers.
The European Commission strongly supported the idea of encouraging energy prosumers in its
2016 proposal for new energy legislation, and it gave significant importance to prosumers in the
development of the energy market. In the impact assessment for the European Commission proposals
for new energy directives, [
25
] the European Commission described the vision of the electricity market
in 2030 and beyond. “The 2030 electricity market is highly flexible and provides a level playing
field amongst all forms of generation as well as demand response
. . .
and active consumers” [
25
].
In addition, the European Commission stressed that it is essential to put the consumer at the heart of
the electricity market. The European Commission set out a new role for future consumers, not only to
consume electricity, but also to store and generate it. This means that the traditional understanding of
the role of the consumer is changing. The consumer is becoming a prosumer. Undoubtedly, the concept
of the shared economy is coming alive in the electricity market [3].
In the European Union, the consumer has always played a very important role in the liberalization
and (de)regulation of energy markets [
16
]. However, now the role of the customer is shifting from
a consumer, who actively looks for the cheapest energy supplier, to the prosumer, who generates,
consumes, stores, and sells electricity. In the third energy package, the consumer was considered a
driver of competition [
16
]. Today’s energy prosumer is responsible not only for simulating competition,
but also for investing in renewable energy technologies, which increases the share of renewable energy
sources, and in this way, it decreases the EU’s dependence on energy imports, and it contributes to the
achievement of climate targets [16].
Sustainability 2019,11, 5286 10 of 16
Seeking to stimulate consumers, the European Commission considered four main options: (i) not
to develop the EU policy framework for self-consumption for renewable energy; (ii) to develop
non-binding guidance on self-consumption; (iii) to develop a binding framework, enabling consumers
to generate renewable electricity for their own use without their suppliers’ permission; or (iv)
additionally to the third option to enable distance self-consumption [
25
]. As an impact assessment
showed that third and fourth options would be the most eective at increasing the usage of renewable
energy, these options are set in the directive (EU) 2018/2001 “On the promotion of electricity from
renewable energy sources” (Self-consumption, Art. 21), and energy communities are being encouraged
(Energy communities, Art. 22) [25].
The European Commission seeks to set the common framework for the functioning of the energy
prosumer in the energy market. Initially, Article 21 of the directive (EU) 2018/2001 “On the promotion
of electricity from renewable energy sources” [
1
] obliges Member States to adopt laws that produce
favorable conditions for consumers to become energy prosumers. This means that in all Member States,
the energy prosumer will participate in the energy market. Also, the same article of the directive (EU)
2018/2001 “On the promotion of electricity from renewable energy sources” spells out the main rights
of energy prosumers for all Member States. The rights of energy prosumers can be divided into two
main groups: (i) operational rights and (ii) financial rights.
The first group of rights is related to the activities undertaken by energy prosumers: (a) to generate
electricity from renewable energy sources, (b) to consume generated electricity, (c) to store any excess
of generated electricity, and (d) to sell any excess of generated electricity, including through power
purchase agreements, electricity suppliers, and peer-to-peer trading arrangements.
These activities enable the energy prosumer to choose between two options. The first option is
that the energy prosumer can become sustainable and strive to disconnect his or her facilities from the
grid, seeking to avoid any costs related to the grid, system maintenance, and stability (flight from the
grid). This option is not preferable, as it would increase the grid maintenance cost for the remaining
grid users.
The second option is that energy prosumers can actively participate in the electricity market,
and they can contribute to supply and demand management. However, only well-developed short-term
markets can ensure that energy prosumers will not seek to disconnect from the grid, but they will
actively participate in the market. The European Commission emphasized that adequate market
design is crucial for the smooth integration of renewable energy into the market. Therefore, together
with an energy prosumer concept, the short-term electricity market that would open the possibility
for energy prosumers to participate actively in the electricity market is under development. It is
anticipated that the prosumer will use the grid for three purposes: as a “virtual battery” in the net
metering case, as a back-up when their own generation is inadequate, and as a way to sell excess
electricity. Only energy prosumers who actively participate in the market can significantly contribute
to demand and supply management.
Also, it is very important that energy prosumers gain economic benefits from participation in
the electricity market. The final energy price, which is paid by the final consumer, consists of many
elements. It can be divided into three major components: energy production, a network component,
and taxes and levies. The statistical information shows that only 36% of the final bill is the energy
production price, 26% goes on network costs, and the remaining 38% is levies and taxes. The structure
of the final energy price shows that consumers can be encouraged to move from passive to active
market participants – reducing their costs in all or some of these areas.
The second group is financial rights. There are five: (i) the activities of energy prosumers can
be charged only in proportion and without discriminatory charges, (ii) the right to operate electricity
storage facilities without liability for any double charge, including grid fees for stored electricity that
remains within their premises, (iii) the right to get payment for power generated and fed into the
electricity grid, (iv) the right to get aid under support schemes, and (v) the right not to be charged for
electricity produced and consumed on their premises. It is worth discussing some of them.
Sustainability 2019,11, 5286 11 of 16
First, the European Commission seeks to create a favorable financial environment for electricity
storage activities, and while they are not economically sustainable yet, they can play a vital role in
supply and demand management. Therefore, the directive (EU) 2018/2001 [
1
] ensures that Member
States will not charge energy prosumers for the storage of electricity that they consume, except in the
case of net metering when grid is used as a “virtual battery.” However, individual Member States will
decide on the application of storage charges for stored electricity not for self-consumption, but for sale.
Second, the right not to be charged for electricity produced and consumed on the premises is not an
absolute right. The Member States can set certain charges for generation capacities exceeding 30 kV,
if necessary, to ensure the financial sustainability of the electric system. Third, the energy prosumer
still is not economically sustainable, as market-based support schemes will be needed for small-scale
self-consumption systems during the transition [25].
To conclude, the European Commission wants all Member States to create a favorable environment
for energy prosumers. The directive (EU) 2018/2001 “On the promotion of electricity from renewable
energy sources” should harmonize the activities of energy prosumers and the financial conditions
under which renewable self-consumers act. The legal framework considers two basic interests: (i) to
stimulate the activities of energy prosumer to get all possible benefits from them and (ii) to ensure the
stability of grids and the rights of grid users.
3.5. Legal Status of Household Energy Prosumers
The changing business environment creates situations in which the same person using the same
facilities is acting as both a private individual and a professional. The question arises: Does such a
person lose all rights, which are guaranteed by consumer protection law? It is important for prosumers
to maintain consumer status, while consumer protection law prevents businesses from engaging in
fraud or unfair practices against consumers. Also, it provides additional protection for the most
vulnerable consumers. In addition to general consumer rights, energy consumers have certain specific
ones [26]:
to have their homes connected to the local electricity network and to be supplied with electricity;
to choose any energy supplier from the EU oering services;
to change energy suppliers easily, quickly, and without any extra charge;
to receive clear information on energy contracts and the right to withdraw from the contracts;
to get information on their consumption and to be billed based on this information;
to get information about energy eciency measures and energy produced from renewable
energy sources;
to get easy and quick dispute resolution;
to get energy performance certificates for their homes;
to get access to a single contact point for information.
The new directive (EU) 2018/2001 “On the promotion of electricity from renewable energy sources”
expressly states that energy prosumers maintain the rights and obligations of the final consumer.
It means that energy prosumers remain the subject of protection of consumer rights law. The question
is whether household prosumers in all sectors maintain the rights of a consumer, or whether this
protection is granted only to energy prosumers.
The directive (EU) 2018/2001 “On the promotion of electricity from renewable energy sources”
expressly states that self-consumers maintain their rights as consumers (Art. 21). However, an analysis
of case C-498/16 [
27
] against Facebook leads to the conclusion that applying the EU legislation and case
law on consumer rights, some self-consumers would lose their status as consumers. This conclusion is
based on several findings.
First, the court was interpreting Article 15 of Regulation 44/2001, which limits consumer status
to “matters relating to a contract concluded by a person, the consumer, for a purpose which can be
regarded as being outside his trade or profession” [
28
]. In his opinion, the Advocate General outlined
Sustainability 2019,11, 5286 12 of 16
two fundamental criteria that help to define the legal status of a contractor. First, consumer status is
an abstract right; it is directly related to every individual contract, and it means that the legal status
of contractor depends on the nature of the contract. Second, the purpose of the contract should be
outside the trade and profession activities of the person, which means that if a person is engaged
in economic activity, even if it does not bring an immediate profit, he or she will lose the status of a
consumer (par. 29–31) [27].
First, the Court of Justice of the European Union (CJEU) explained that when judging on the status
of a contracting party, the individual contract must be evaluated. The CJEU stated that the “position of
the person concerned in a particular contract [must be considered], having regard to the nature and
objective of that contract
. . .
since the same person may be regarded as a consumer in relation to
certain transactions and as an economic operator in relation to others” (par. 29) [
26
]. According to this
explanation, an energy prosumer can be considered a consumer only when he or she uses services and
electricity for consumption purposes; however, all activities concerning selling electricity to the grid
operator or in the market should be considered commercial.
Second, the CJEU emphases that the aim of the contract is very important in deciding whether
the person is the consumer or not. We can separate prosumers into major types. Some prosumers
only “store” electricity in the grid, and they use it when their own generation is not enough (net
metering case). So, relations with the distribution grid operator of such prosumers have no commercial
purpose. However, other prosumers trade electricity in the market, and their contractual relations
with market participants have a purely commercial purpose, because the prosumers receive income
from the energy they sell. According to the court reasoning, such prosumers cannot be considered
as consumers: “Only contracts concluded outside and independently of any trade or professional
activity or purpose, solely for the purpose of satisfying an individual’s own needs in terms of private
consumption, are covered by the special rules laid down by the regulation to protect the consumer
as the party deemed to be the weaker party. Such protection is, however, unwarranted in the case of
contracts for the purpose of a trade or professional activity” (par. 30) [27].
Also, the court considered the situation in which the same contract had a double purpose:
satisfying an individual’s own needs and commercial or professional activities. The court explained
that such contractors could enjoy consumer protection rights “only if the link between the contract and
the trade or profession of the person concerned was so slight as to be marginal and, therefore, [it] had
only a negligible role in the context of the supply in respect of which the contract was concluded,
considered in its entirety” (par. 32) [27].
To sum up, according to the preliminary ruling of the CJEU, not all household energy prosumers
would be subject to consumer protection law. Energy prosumers fall into two main groups for consumer
rights protection law. According to the ruling of the court, one group of energy prosumers that acts as
consumers (the trading activity is only marginal) would enjoy consumer protection; the other group,
which acts for commercial purposes, would lose the consumer protection in relation to contracts
that have commercial purposes. However as mentioned above, the wording of the directive (EU)
2018/2001 “On the promotion of electricity from renewable energy sources” guaranties all household
energy prosumers the protection of consumer law, even when their activities have commercial or
professional aims. Consequently, such legal regulations can be considered as part of a support scheme
for energy prosumers.
3.6. Energy Justice and Energy Prosumers
In the previous parts of the article, we discussed the energy justice theory and the role of the
energy prosumer in the market. We concluded that legal regulation based on energy justice theory
must ensure (i) access to basic energy services for everyone and (ii) responsible use of energy sources.
The question is whether energy prosumers will help to meet these goals. It could be concluded that
an energy prosumer will be in line with energy justice theory only if a proper legal framework is
Sustainability 2019,11, 5286 13 of 16
implemented, but that unregulated energy prosumers may even prevent the achievement of the goals
of energy justice by increase the existing intrageneration inequity.
On the whole, the energy prosumer will generate electricity from local renewable energy sources
for his or her own needs, and he or she will sell the excess generated electricity. Such activity will
increase the usage of local renewable energy sources, lead to lower volumes of imported energy sources,
and significantly contribute to the security of supply domestically. It will also have a positive impact
on sustainability and the reduction of greenhouse gas emissions. As a result, energy prosumers are
very important to reach eciency and sustainability, and thus to manage the energy transition in a
cost-eective way [
16
]. They will play a central role in achieving energy policy goals [
16
], ensuring the
responsible use of energy resources.
Additionally, the emergence of energy prosumers will significantly increase private investment in
renewable energy technologies. The increasing demand for renewable energy generation facilities will
foster the development of new renewable energy technologies and competition between developers
and producers. However, it is very important to ensure that all consumers have the financial ability to
invest in these technologies; otherwise, the goal of intrageneration equity will not be reached, or it may
even be damaged. Without government support, energy prosumers will only increase inequity among
low- and high-income consumers. Low-income consumers will be unable to make initial investments
in generation facilities and to benefit from being energy prosumers. Therefore, it is very important to
establish a proper support scheme for energy prosumers for the installation of generation facilities.
Energy prosumers will help to ensure energy availability for remote areas, where the construction
of electricity lines is very expensive and economically unjustifiable. Self-sustainable, renewable self-
consumers or energy communities will be able to generate electricity using local renewable energy
resources and decentralized self-generation technologies will guaranty a certain set of minimal
energy services for local consumers. However, the energy prosumer is not a panacea for energy
poverty. Renewable energy sources, like other energy sources, are distributed unevenly. From a global
perspective, energy prosumers will deepen the inequality between states having many renewable
energy sources and those lacking the appropriate renewable energy sources for electricity production.
In some places, consumers simply will have no adequate access to energy sources, so they will be unable
to enjoy the benefits of renewable self-consumers. Consequently, existing energy inequality among
states will not be solved by the introduction of energy prosumers. For this reason, governments should
promote the development of energy technologies, allowing for energy prosumers to use dierent types
of renewable energy sources. The only possible way to diminish inequity among states is to develop
economically feasible energy generation technologies for dierent renewable energy sources.
Energy prosumers may increase the aordability of energy. As the final energy price is composed
of electricity generation, transportation, supply, and tax costs, energy prosumers should cover only the
generation cost, which is mainly related to the installation of facilities. At this point, it is obvious that
the aordability of electricity for low-income consumers will be increased only if a fair support system
for installation of generation facilities is set up. However, self-generation will considerably reduce
energy bills and the risk of price volatility.
Energy prosumers can also reduce energy prices in the market. Selling excess generated electricity,
they will increase the supply of cheap electricity into the grid. This will have a positive impact on
energy aordability for consumers who buy energy from the grid. On the other hand, there are concerns
that energy prosumers will not use the energy grid, and that this will lead to a significant increase in
electricity transportation prices for those who cannot generate electricity themselves. However, as it
is anticipated that energy demand will increase dramatically, and that the load on grids will be very
high, energy prosumers will help to balance the grid, as they will not require the additional capacity
of the grid to ensure their supply of electricity. Likewise, it is very important to create favorable
economic conditions for energy prosumers to participate in the market and to remain connected to the
grid to sell electricity. Also, participation in the market by energy prosumers is very important for
Sustainability 2019,11, 5286 14 of 16
the implementation of intrageneration equity, as it allows for benefits for a broader range of energy
market participants.
The responsibility aspect is closely related to the introduction of energy prosumers to the market.
As discussed above, energy prosumers are often not economically sustainable yet, except in places with
abundant solar and or wind resources. Accordingly, governments are responsible for creating a legal
and financial environment that allows energy prosumers to penetrate the market, creating social and
economic benefits. Also, governments are responsible for investment in the research and development
of renewable energy technologies, which will increase the competitiveness of energy prosumers in
the market.
In a centralized energy market, all the responsibility for the proper functioning of the energy sector
falls on the government and the big energy companies; however, now energy prosumers will also have
responsibilities, as they are becoming important players in the energy market. Energy prosumers are
becoming responsible not only for the eective use of electricity, but also for eective use of energy
sources and for reasonable participation in the energy market.
4. Conclusions
Over time, the development of energy law has been influenced by many drivers that represented
the narrow interests of individual groups; however, it lacked a societal goal. The newly emerging
energy justice theory strives to balance the interests of dierent groups, setting the following aims of
legal regulation: (i) everyone should have access to basic energy services, (ii) responsible use of energy
resources should be ensured, and (iii) the activity of business and governmental institutions should
be fair.
The energy prosumer is the final consumer who consumes and generates electricity. European Union
institutions recognize that energy prosumers can significantly contribute to energy policy and climate
goals. Accordingly, the European Commission has proposed new legislation that should stimulate
the development of energy prosumers and harmonize the legal regulation of energy prosumers in all
Member States. The directive (EU) 2018/2001 “On the promotion of electricity from renewable energy
sources” establishes the set of activities that energy prosumers will be allowed to undertake and their
main financial rights. The legal framework considers two basic interests: (i) to stimulate the activities
of energy prosumers to get all possible benefits from them and (ii) to ensure the stability of the grid
and the rights of grid users.
The directive (EU) 2018/2001 “On the promotion of electricity from renewable energy sources”
guarantees to all household energy prosumers the protection of consumer law, even when their activities
have commercial or professional aims. Consequently, such legal regulation can be considered as part of
a support scheme for household energy prosumers, as according to general norms and the case law of
the CJEU, consumer law would apply only to energy prosumers who consume self-generated electricity.
An energy prosumer will help to meet energy justice goals: to ensure that everyone has access to
basic energy services and to ensure responsible use of energy resources. However proper legal regulation
is required to avoid a possible increase in intragenerational inequality. First, the government should
provide support for low-income consumers, as only then can intrageneration equity be achieved.
Second, seeking to ensure equality among places with dierent energy sources, the government
should promote the development of generation facilities using dierent renewable energy sources.
Third, the short-term electricity market, which will allow energy prosumers to participate, should
be developed.
Author Contributions:
Conceptualization, D.M.; Prosumer concept analysis E.D., R.U.; Legal environment
analysis J.K., S.M.; Writing—original draft, S.M.; Writing—review & editing, J.K., D.M., and R.U.
Funding:
This article has been elaborated in the project iDistributedPV. This project has received funding from
the European Union’s Horizon 2020 research and innovation program under grant agreement No. 764452.
Conflicts of Interest: The authors declare no conflict of interest.
Sustainability 2019,11, 5286 15 of 16
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The transition to renewable energy sources is crucial for combating climate change and enhancing energy security. However, along with well-acknowledged benefits, the energy transition may impose overlooked and unintentional risks to sustainability, stemming from patterns of trade between countries. The buildup of solar and wind energy capacity requires critical metals and equipment that are often imported, while too ambitious renewable energy and climate policies may lead to the offshoring of energy- and carbon-intensive industries, resulting in carbon leakage. This study uses principal component and cluster analyses to estimate indicators of trade-related energy security and carbon dioxide emissions embedded in trade of the sixty-four countries. The analysis indicates that wealthier countries, particularly those that are not energy self-sufficient, are more likely to utilize solar and wind energy. Solar and wind energy use is also associated with higher imports of embedded energy and emissions, as well as imports of metals and equipment required for renewable energy production. In contrast, energy-self-sufficient countries, being net exporters of both energy and energy embedded in products, barely use solar and wind for electricity generation and hardly import metals or low-carbon technologies. This study highlights the need to account for possible cross-border dependencies and displaced emissions, which may result from higher reliance on distributed renewable energy sources.
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This paper focuses on two equity dimensions of climate policy, intra- and intergenerational, and analyzes the implications of equity preferences on climate policy, and on the production and consumption patterns in rich and poor countries. We develop a dynamic two-region model, in which each region suffers from global warming, but also has an inequality aversion over current consumption allocations. Inequality aversion generally lifts the consumption path of the poor region, while the rich region must take a greater share of the climate burden. Furthermore, with inequality aversion, the optimal climate policy generally leads to higher investment in clean capital in the North and in dirty capital in the South, thereby allowing the South to pollute more and develop faster. The optimal policy may even require the poor region to increase emissions relative to the uncoordinated business-as-usual case. Introducing local pollution and transfers confirm the main results.
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With the availability of cheaper technology and the rise of digitalisation, consumers can actively participate in markets and also offer their own services or self-/co-produce products and services. Active consumers are fundamental building-blocks of the European Union’s goal to achieve smart, sustainable and inclusive growth in Europe. In the energy sector active consumers play a key role in promoting competition, ensuring affordable energy prices and security of supply, as well as contributing to the EU’s environmental and climate goals. By engaging in more efficient energy use, consumers are crucial actors to manage the energy transition. However, the present legal framework does not fully facilitate this active role. The aim of this article is to answer the question how EU law conceptualises and supports the active role of consumers in the regulation of energy markets.
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Energy law is gaining prominence among legal subjects. In the three spheres of academic, professional and public life, there is an increasing realization of the potential importance of energy law. The underlying objective of this paper is to contribute to the creation of a theory of energy law through advancing what this should encompass. Energy law has addressed particular issues in the energy sector but it has not had a holistic view of the sector, in particular, concerning the issue of energy waste management, which remains a serious problem. The conditions for a more holistic approach to manage energy resources are emerging and in the future it may be expected that energy law will have a core theoretical framework. This framework is important as it will in essence provide energy law with a ‘spirit’ or a raison d’être. The theory proposed here is on the Evolution of Energy Law and the centre-point of this theoretical perspective is that to-date there have been Five Stages in the Evolution of Energy Law. In understanding what have been the key stages (or drivers) in the development of energy law it will give the energy law scholar an understanding of the motivation(s) behind the formulation of energy law.
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Prosumers are agents that both consume and produce energy. With the growth in small and medium-sized agents using solar photovoltaic panels, smart meters, vehicle-to-grid electric automobiles, home batteries and other ‘smart’ devices, prosuming offers the potential for consumers and vehicle owners to re-evaluate their energy practices. As the number of prosumers increases, the electric utility sector of today is likely to undergo significant changes over the coming decades, offering possibilities for greening of the system, but also bringing many unknowns and risks that need to be identified and managed. To develop strategies for the future, policymakers and planners need knowledge of how prosumers could be integrated effectively and efficiently into competitive electricity markets. Here we identify and discuss three promising potential prosumer markets related to prosumer grid integration, peer-to-peer models and prosumer community groups. We also caution against optimism by laying out a series of caveats and complexities.
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This paper provides a survey of top-downmodelling analyses of carbon (C) abatementmitigation costs, distributional effectsand ancillary benefits in the Nordiccountries, the U.K. and Ireland. Specialemphasis is placed on the effects ofrevenue recycling and tax exemptions.According to the analyses, modestemissions reductions can be met withoutsubstantial costs for the countriesstudied, and a strong double dividend isfound in some analyses. The gross domesticproduct (GDP) or welfare effects are mostlyin the range of –0.4 and 1.2 percent whenC emissions are reduced by 20–30 per cent.Lowest costs are obtained without taxexemptions and with tax revenues used toreduce distortionary taxes. Ancillarybenefits are mostly in the range35–80/MgC-1, i.e., about the same order ofmagnitude as the mitigation costs.Distributional effects are mostlyregressive, unless the tax revenues aredistributed in lump-sum fashion with equaltransfers to each household.
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Many countries are implementing or at least considering policies to counter increasingly certain negative impacts from climate change. An increasing amount of research has been devoted to the analysis of the costs of climate change and its mitigation, as well as to the design of policies, such as the international Kyoto Protocol, post-Kyoto negotiations, regional initiatives, and unilateral actions. Although most studies on climate change policies in economics have considered efficiency aspects, there is a growing literature on equity and justice. Climate change policy has important dimensions of distributive justice, both within and across generations, but in this paper we survey only studies on the intragenerational aspect, i.e.., within a generation. We cover several domains including the international, regional, national, sectoral and inter-personal, and examine aspects such as the distribution of burdens from climate change, climate change policy negotiations in general, implementation of climate agreements using tradable emission permits, and the uncertainty of alternatives to emission reductions.
  • R Sari
  • E Voyvoda
  • M Lacey-Barnacle
  • E Karababa
  • C Topal
  • D Energy İslambay
  • Justice
Sari, R.; Voyvoda, E.; Lacey-Barnacle, M.; Karababa, E.; Topal, C.;İslambay, D. Energy Justice: A Social Sciences and Humanities Cross-Cutting Theme Report; Shape Eenergy: Cambridge, UK, 2017.