Building the stack: How consumers can benefit from integrated renewable energy systems
Guest blog
Together with Integrate To Zero, Consumers International is conducting the first global analysis of One Stop Shops. The project will produce recommendations to improve and scale their implementation around the world. These recommendations will be released at our Global Congress 2023. To find out more, email impact@consint.org.
In this blog, Dan Hamza-Goodacre from Integrate to Zero and Oliver Bealby-Wright from Consumers International discuss the concept of 'revenue stacking' when applied to consumer renewable energy systems, and explore the interventions needed to make these solutions accessible for consumers everywhere.
'The future is already here, it just isn’t evenly distributed'
The future is already here, it just isn’t evenly distributed - a quote about hope for humanity generally, but also more relevant to our global energy system today than at any point in history. Traditional ‘command and control’ delivery of energy supplies to consumers is being both complemented and disrupted by more distributed, local and consumer solutions. These link up buildings with transport and the grid, with energy flowing bi-directionally, balancing supply and demand in real time, and integrating larger and larger quantities of renewables that are helping avoid the worst of the climate crisis.
Or so goes the theory. Huge swathes of the world are suffering from high energy prices, whilst others are still blighted by blackouts and weak grids, mostly powered by planet destroying fossil fuels. Energy consumers of all types (households, communities, businesses and public agencies) want a better deal. A pioneering few are taking matters into their own hands. Consumers are taking advantage of cheaper solar photovoltaics (PV) to become producers as well as consumers of energy – under peak conditions, these producer-consumers (also known as prosumers) in the UK can already power over 13% of the country, almost double the capacity of Europe’s biggest gas power plant. And by 2027, residential solar across Europe is projected to be 73% higher than it was in 2021.
Consumers are also installing on-site energy storage (and not just the lithium type – even a humble water tank can serve as a battery). They are adopting systems that help them shift when they use energy, providing much needed demand flexibility to the system. And they are making this kit available to their neighbours, for example by renting out electric vehicle charge points.
The stack gets bigger
All of these actions have an up-front cost – but, importantly, a significant and growing pay-off, too. Some business models and banks are also helping with upfront financing challenges. It is time to bring these revenue generation and savings opportunities together. The concept of ‘revenue stacking’ has been set out in academic literature as a way for energy storage systems to maximise value by participating in multiple markets simultaneously. But this concept can go way beyond just storage and arbitrage. When applied to consumer energy opportunities more broadly, the ‘stack’ is getting bigger. We identified over 10 sources of revenue and savings from consumer renewable energy systems that are based on six common technologies globally.
Of course, not every part of the stack is available to every energy consumer. Much depends on the level of market access for prosumers granted by a country’s regulatory framework. The full stack may be too costly or difficult to implement for many in the absence of additional support. However, thinking in systems can open opportunities that are appropriate to different consumer needs and contexts, many of which can start to generate revenue and savings very quickly. Solar PV is popping up all around us – on roofs, on garden fences and sheds, on garages and car ports. Solar PV can even increase the productivity of household pastimes such as growing your own fruit and veg, where the use of panels situated over crops can improve yields and provide shade for heat stressed plants. And let’s not forget, the majority of energy consumers of all sizes can still benefit from further efficiency improvements whether for appliances or a building’s thermal envelope.
Residential homes come in all shapes and sizes – as do households budgets – so a creative mindset is key. Electric vehicles and smart charging open up a cluster of opportunities, because they consume large amounts of energy and can be used adaptively for vehicle-to-grid injections, load shifting, selling flexibility products and charge-point leasing. And by clubbing together into energy communities - which increasingly act as flexibility aggregators and sharing platforms – consumers can receive bigger revenues, whilst minimising the up-front costs of installation by collectively purchasing equipment. Even low-income renters whose landlord hasn’t given permission for solar PV can benefit from investing a small sum in distributed renewable generation at other locations in the form of cheaper retail energy or virtual net metering.
What support will consumers need?
While the ‘stack’ makes the economic cost-benefit of renewable energy systems a bigger opportunity, it also introduces more complexities for consumers, with significant barriers to entry. The future is already here, but it really isn’t evenly distributed. Wiley, motivated consumers can work out the optimal system, including by making use of one of the many software solutions such as Homer (in the UK), IHOGA (in Spain) or RETScreen (in Canada). But the majority will need advice and support to navigate the hurdles along the journey to a fully integrated consumer renewable energy system.
This is where 'one-stop-shops’ come in, which offer consumers all the information and services they need to implement ambitious projects in a single place. One-stop-shops can provide consumers with a holistic and tailored plan, including crunching the numbers to estimate future revenue and savings. And they can coordinate the installation process and streamline access to long-term and affordable financing. For example, with Consumentenbond’s integrated online advice portal, individuals can assess their homes, compare different technology and retrofit options, view potential long-term savings, and engage vetted professionals. At their best, one-stop-shop services transform a cumbersome, complex, and costly set of decisions and actions by non-experts into a single entry, accessible offer that consumers can trust. Consumers International is currently conducting a global review of one-stop-shop best practice, to inform recommendations and advocacy that will spur better energy advisory services for consumers around the world.
Finding one supplier for the ‘stack’ is also still a challenge, however leading utilities already offer pay to save, demand response, EV charging installation, air source heat pump financing, and payment for exported energy. In the UK, energy research experts Cornwall Insights found 10 energy suppliers already offering integrated solutions. Energy companies across the globe are evolving from suppliers of electricity and gas, to energy service companies, offering consumers a wider and wider range of opportunities.
It is time to move beyond piecemeal approaches to how energy consumers can participate in renewable energy systems. The revenue and savings ‘stack’ opens the door to do just that. But actions are needed from others. Governments need to implement policies that open up the grid, regulate fair prices and incentivise technology uptake. Banks need to offer preferential financial products and services to help with upfront finance challenges. Energy suppliers need to offer simple contracts, guarantee work and facilitate customer participation in the grid.
With such support a brighter future is possible, one where consumers everywhere can benefit, whilst simultaneously steering the planet towards a climate safe future.