The role of prosumers in future energy markets

Active energy consumers and prosumers have an important role to play in the transition to a net-zero compatible energy system, and the decisions they make can help determine how the transition moves forward. If their behaviour is better understood, policymakers, regulators and other stakeholders can ensure that they are properly incentivised to participate and be active in the energy market. The main purpose of this research is therefore to challenge the traditional view of passive energy users driven exclusively by consideration about fuel prices, and to examine the different dimensions which can influence their decision-making process in relation to energy technology adoption and energy trading. The role of prosumers and their potential behaviour and decision-making in future energy markets are therefore investigated in this thesis in three independent but interlinked chapters.

Following an introduction in chapter one, the second chapter focuses on the adoption and diffusion of microgeneration technology among households in the United Kingdom. It investigates the factors and local determinants that influence microgeneration technology uptake, including the role of local authorities and energy communities. The third and fourth chapters utilise survey- experiments to investigate the preferences of prosumers and consumers in Italy, Spain and the United Kingdom, who were offered the opportunity to trade local energy on a hypothetical trading platform. The third chapter empirically investigates consumers’ and prosumers’ willingness to join the energy trading platform and the socio-economic factors, individual preferences and behavioural biases which would motivate their participation. By extending the analysis defined in chapter three, chapter four focuses on consumers’ and prosumers’ willingness to pay and willingness to accept for electricity in the platform, while also studying their trading preferences and the behavioural components of their decision making.

The results found evidence that local policy and local authority involvement can positively influence consumers’ adoption of microgeneration technology, suggesting that local authorities and energy community groups can play an important part in helping consumers take up their role in the future decentralised and democratised energy market. The results also reveal that savings and earnings are not the only factors considered when decisions to become active participants in the energy market are made. Instead, consumers’ and prosumers’ decisions to be active in the energy market are also driven by other individual preferences and behavioural biases, such as their pro-environmental attitudes and their desire for independence from their energy suppliers.

For policymakers and market operators who are planning for future developments in the energy sector, it is therefore necessary to account for these preferences, and for the role that local authorities and energy communities can play in encouraging consumers’ active participation. Consumers need to be put at the heart of the transition in order for these new economic actors to contribute to the achievement of zero emissions targets. Through studying consumer behaviour, this thesis aims to provide a suitable set of recommendations which can be adopted by policy makers with the objective to introduce more appropriate incentives and mechanisms that would promote a more active role of consumers in the future energy market.