Legal Aspects of Transactive Energy Revolution
The current energy market is undergoing an important transition as energy consumers shift to prosumers, energy customers who also produce energy to cover their own energy demand. This project compares legal approaches to managing this transition in the US and the EU.
The current energy market is undergoing an important transition: Energy consumers are shifting to prosumers, energy customers who produce energy to cover their own energy demand partially or totally. Due to technological innovations, prosumers can not only produce electricity, but also (pro)actively participate in the energy market in the roles of traders and suppliers. The availability of (near-)real-time data provided by smart meters, the emergence of blockchain technology, as well as by the advances in ICT technology and the establishment of online platforms and apps, allow consumers to enter the energy market on par with traditional market players. This leads to the possibility of shared/ collaborative economy in the energy sector, and peer-to-peer energy trading among consumers, also referred to as transactive energy.
However, the risks associated with the prosumers’ trading on transactive energy platforms result in a dilemma for the regulators on both sides of the Atlantic. On the one hand, it is important to ensure that transactive energy develops unhampered, and that the benefits associated to it (e.g. increased distributed energy sources, new revenue streams for prosumers) are fully realized. On the other hand, transactive energy platforms remain fringe innovations, only appealing to a small percentage of energy consumers.
Is there a disconnect between the applicable legal regime and the benefits and the risks associated with the energy prosumers’ trading on transactive energy platforms in the EU and the US?
And if so, how should these regimes be improved? Are there lessons learned from the other side of the Atlantic?
What are the legal pre-requisites for the development of transactive energy platforms?
This research is conducted in three phases.
- A market scan of the energy markets in the United States and European Union is performed, based on available literature and semi-structured interviews with industry professionals.
- Relevant regulatory frameworks related to transactive energy platforms are identified and analyzed. These frameworks are assessed at the EU/ federal and EU Member States/ US state level. The final decision on the EU countries/ US states to consider is to be made on the basis of the market scan.
- Finally, the current and potential obstacles to the development of the transactive energy platforms in the EU and the US are identified and grouped into broad categories.
The analysis in the phases two and three is characterized as doctrinal legal research and takes place based on relevant legal and regulatory frameworks, as well as industry reports, and academic sources where available. It could be supplemented by the semi-structured interviews, if deemed necessary.
Academic Audience: While the topic of transactive energy platforms is prevalent in industry, it has not yet entered the academic sphere. This project will bring the topic of transactive energy to an academic audience and will help facilitate collaboration on both sides of the Atlantic.
Individual and collective prosumers will gain a clear understanding of the possible market roles in relation to transactive energy platforms, and legal provisions applicable to such roles. This understanding will allow market actors to define new products and services on the market, and thus foster innovation.
Distribution and Transmission System Operators (DSOs and TSOs) can use the research results in their strategic decision-making, as well as to influence policy (lobbying). System Operators would thus like to understand the user-centered innovations occurring in the market, as well as assess the possibilities of changing/ expanding their core business under the legal regime.
Policy makers and regulators can apply the project results to assess whether the legal regimes are connected to benefits and risks of the prosumers’ energy sharing on transactive energy platforms, as well as whether the general and the energy-specific legal regimes are clear and consistent. The guidelines developed in the project can be used by the policy makers and regulators to improve the applicable legal regimes.