Prosumer and distributed energy – definitions, goals and basic assumptions

The growing emphasis on the use of renewable energy sources and the promotion of household energy self-sufficiency are the key factors in the development of distributed energy generation in Poland and throughout the world. In this article, we not only provide and explain the basic definitions, explaining what prosumer energy is, but we also present the key assumptions and limitations that the national energy policy must face as it strives to decentralise the structure of electricity producing locations.

Published: 8-02-2023

What is prosumer energy?

The term ‘prosumer energy’ refers to a system in which energy is produced by its recipients, who are called prosumers. Its characteristic feature is the location of electricity generating installations near the point of its consumption, i.e., houses or buildings housing companies. The basic assumption of the prosumer energy generation is that each household produces its own energy, thus gaining independence from electricity supplies from distributors. Conversely, during low demand, surpluses produced in the prosumer system are returned to the grid, so that when demand increases, the operator can return it to the user.

The most important reasons for investing in prosumer energy generation

The main goal for which the prosumer energy industry in Poland and around the world has been developing so dynamically in recent years is the desire to diversify the sources of electricity or heat while reducing the costs of its production. Developed and developing countries show an increased demand for electricity, which in turn increases the burden for power systems and installations. Of considerable importance for consumers as well is the uncertain situation on the world markets, which translates to significant increases in energy prices. Another factor stimulating the development of prosumer and distributed energy generation is the growing costs of distribution, which account for an increasing percentage of the amounts owed as shown on electricity or heating bills.

At this point we have to mention the increased environmental awareness of citizens, who increasingly rely on renewable energy sources to minimise the carbon footprint and use ‘clean’ electricity to power devices in their households as much as possible.

Elements of prosumer energy generation

The development of distributed and prosumer energy generation is associated with the maximum use of environmental resources and raw materials that can be used in installations producing electricity, for example. That is why there is a growing interest in basic energy resources, such as:

  • solar, hydro, wind energy,
  • biogas coming mainly from farms,
  • municipal waste that can be used for energy purposes.

Due to the low density of buildings and access to open spaces, rural areas are a much more effective environment than highly urbanised areas in the context of green energy production. However, in order for the production to be as efficient as possible, it is necessary to identify the appropriate resources in a particular area and integrate them into the energy system in the proper way.

What is the purpose of prosumer energy generation?

In less urbanised areas, where the energy infrastructure is not as developed as in large cities and consumers often obtain electricity from installations that transmit it over long distances (which results, among others, in certain energy losses), the need to replenish supplies and guarantee the sustainable development of these areas increases the pressure on prosumer energy generation . At the same time, technological development drives the cost of generating electricity in household installations lower and lower, which translates into greater availability of solutions and of installations for energy production in distributed systems.

Who is a prosumer and what does RES mean?

In order to fully answer the question of what prosumer energy generation is, one should start with the definition of a prosumer. The term, which is a combination of the words ‘producer’ and ‘consumer’, refers to a person who produces energy for their own needs, while using it for personal purposes. What must be kept in mind is, prosumers in Poland can only be those who obtaining energy from renewable sources.

RES means renewable energy sources, the exploitation of which does not permanently deplete the source. Sources such as wind, water, geothermal energy and biomass do not run out, but renew themselves in a short time after the energy they provide is used, thanks to which the energy obtained from them is not dependent on finite resources, as is the case with fossil fuels.

Prosumer energy and distributed energy generation

Distributed energy (which is an alternative to the traditional, centralised model of electricity production) is a concept strongly associated with prosumer energy generation. In the traditional system, energy is produced by a dozen or so large energy sources (e.g., coal-fired power plants). This energy is then transmitted over long distances. The idea of distributed energy generation is such market diversification, thanks to which the electricity generation process becomes diversified and more well-suited to the types of resources available in a given area.

Small production units, e.g., prosumers, energy cooperatives, or municipal power plants, are responsible for the production of electricity, as well as heating and cooling, solid, liquid or gaseous fuels in distributed energy systems.

Distributed energy generation vs. renewable energy

It is also worth noting the connection between the distributed energy generation and RES, as installations producing energy in this system very often use renewable resources. However, this is not a hard and fast rule. Often, small facilities that use conventional fuels, such as natural gas, do not produce renewable energy despite the fact that they are classified as distributed energy generators. However, it is enough to replace the natural gas with biomass in the above example to convert to a distributed system using RES.

Distributed energy generation in Poland and in the world

Around the world and in Poland, distributed energy and prosumer energy generation are presented as alternatives to centralised systems in which large enterprises produce electricity, heat, or fuels, and then distribute it throughout the country. Diversification of energy sources helps to increase energy security, while acknowledging  climate change, even as it serves to increase electricity consumption in households. In accordance with the policy adopted by Poland, by 2030 the share of RES in the national energy mix shall be 20%. In individual regions of the country, however, this share may be much higher, and consumers can decide for themselves whether they prefer to buy energy from distributors or produce it on their own through the use of prosumer installations, e.g., photovoltaic systems or solar collectors.

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