Many remote areas and islands (RAI) are deploying renewable energy (RE), some with ambitious plans to meet 100% of their electricity or even final energy needs with renewables. For most of them, roof-top PV systems offer clear advantages but most of their deployment potential still remains largely untapped. The setup of consistent prosumer policies can provide a means to achieve the islands’ objectives faster and with lower costs to society. This report provides guidance to policy makers on the drivers, opportunities, challenges and implementation strategies of PV prosumer policies that can be considered within a comprehensive renewable energy strategy for RAI. It is based on the frameworks and methodologies developed on the IEA-RETD publications RE-PROSUMERS (2014) and REMOTE (2012). The preliminary results were presented at the IRENA Island conference in Martinique in July 2015, see presentation slides.

1. Remote Prosumers –
Preparing for deployment
Kristian Petrick
IEA-RETD Operating Agent
IRENA Conference: “Island Energy Transitions”
Martinique, 22-24 June 2015

2. www.iea-retd.org 2
IEA-RETD is part of the IEA’s Energy Technology Network
RETD stands for “Renewable Energy Technology Deployment”.
IEA-RETD is a policy-focused, technology cross-cutting platform
(“Implementing Agreement”) under the legal framework of the International
Energy Agency
9 members: CA, DE, DK, FR, IE, JP, NO, UK + European Commission
Background IEA-RETD

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The mission of IEA-RETD is to accelerate the large-scale
deployment of renewable energies
• Created in 2005, currently 8 member countries: Canada, Denmark, France,
Germany, Ireland, Japan, Norway, UK. European Commission to join in 2015.
• IEA-RETD commissions annually 5-7 studies bringing together the experience of
some of the world’s leading countries in RE with the expertise of renowned
consulting firms and academia.
• Reports and handbooks are freely available at www.iea-retd.org.
• IEA-RETD organizes workshops and presents at international events.
Background IEA-RETD

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Remote Prosumers: Preparing the grounds for deployment
IEA-RETD Study
Objective
Providing guidance to policy makers on the drivers,
opportunities, challenges and implementation strategies of
prosumer policies
Approach
Framework and methodology of the IEA-RETD studies RE-
PROSUMERS (2014) and REMOTE (2012) to the special unique
situation of prosumers in remote areas and islands
PSG
Georgina Grenon (FR, chair), Sarah Evangelista (CA), Michael
Paunescu (CA), Rune Holmen (Norway)
IB
Kristian Petrick (IEA-RETD Operating Agent), Wilson Rickerson
(MCG), Toby Couture (3EAnalytics)
Published
http://iea-retd.org/archives/publications/remote-prosumers-
report
Timeframe May to June 2015

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Agenda
• Three major opportunities for prosumers in islands
• Key drivers suggest quick prosumer uptake
• Main challenges are upon utilities
• Strategic framework for prosumers help islands in the transition

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Prosumers = Producers + Consumers of electricity
Introduction
Prosumers
with roof-top PV
Grid
Consume
Produce
Self-consume
with / without
storage
Why are prosumers relevant for islands?

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Reducing generation Costs: PV can be cheaper than diesel
Prosumer Opportunities 1/3
Mainland countries
Gen.
Costs
(mix)
PV
Gen.
Costs
Grid
costs
Taxes
Gen.
Costs
(diesel)
PV
Gen.
Costs
Grid
costs
Taxes
Remote Areas / Islands (RAI)
Int. Costs
PV below retail rate but
above generation costs
of power mix
PV below retail rate
and below diesel
generation costs
Gross
savings
Net sav.
Integration Cost:
Upgrades for grids
and motors,
automation,
storage, etc.
Retail rate
Retail rate

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Exploiting available space to tap full RE potential: Roof-top PV
can supply substantial share of islands’ electricity demand
Prosumer Opportunities 2/3
Mainland countries: Based on data from RE-COM-PROSUMERS, Denholm & Margolis, BMWi, ADEME
Islands: Calculation assuming average 1kW/inhabitant

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On many islands, roof-top PV may be the best (or only) viable
RE alternative
Prosumer Opportunities 2/3
Saba, Caribbean

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Supporting the energy system: Prosumers are best positioned
to absorb the midday PV peak through load shifting
Prosumer Opportunities 3/3
Over-
supply
PV
Supply
Demand
Peak shaving
through storage
noonmorning evening
Demand response /
change of behaviour

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Encouraging roof-top PV generation and self-consumption to
reach RE targets and capture the opportunities
Consequences
Avoid curtailment
Encourage self-consumption
and storage (on-site and central)
If roof-top PV is necessary to reach RE targets
Make best use of m2 available and kWh produced
Avoid grid defections
Provide fair compensation for
injected kWh or system services

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Drivers in islands are rather in favour of prosumer, so uptake
may be quicker than in mainland countries
Drivers of Prosumer Uptake
Economic
drivers
Beha-
vior
Techno-
logy
Nat.
cond.
Enable prosumersConstrain prosumers
Case of Un-
subsidized electricity
Line of “normalised
value” of mainland
countries
PV system costs
Electricity prices
Self-consumption ratio
Insolation
Batteries
Electric vehicles
Awareness, pro-activeness
Roof space, energy demand
PV technology

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Stakeholders’ position in RAI to prosumers is in general similar
to mainland countries
Stakeholders in prosumer uptake
Stakeholders
Line of normalised
value of mainland
countries
Utilities
Governments
Non-prosumers
Technology providers
Enable prosumersConstrain prosumers

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Island utilities may lose business to prosumers but may be able
to increase margins by buying cheaper energy from prosumers
Challenges
Similar business
- trading power Traditional business
Lost business (like EE measures)
- but also reduced fuel costs
New business
- investment
required
Schematic illustration of RAI power market
from utility view point; assumed full roof-top PV
potential utilised (~40%)

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To define a prosumer policy strategy, governments need to
assess all drivers and balance opportunities and risks
1. Evaluate drivers and conditions
Are the conditions in place to support non-
incentivised consumer scale-up?
2. Balance opportunities and risks
Given the trade offs, is support for prosumers
a national policy objective?
3. Define policy strategy
Potential Strategies Going ForwardPotential Strategies Going Forward

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Like mainland countries, policy makers in islands have three
strategy choices
New regulatory and
policy approaches /
paradigms for utility
regulation and grid
management
Prosumer Strategy Choices
Restrictive policies to
avoid structural changes
to utility business and
regulatory paradigms
Enabling policies like
compensation for
surplus production and
transparent
interconnection rules
Incremental
Structural
1. Constrain
prosumers
2. Enable
prosumers
3. Transition to
prosumers
A
B
Potential Strategies Going Forward

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Transitioning to prosumers entails
structural changes especially in two areas
• Supporting utilities in redefining their business model:
• Investing in roof-top PV or providing financing
• Trading power: Buying from prosumers and selling to consumers
• Coordinating between the increasing number of players.
• Regulators to explore approaches like decoupling of energy sales from revenues
• Reconceptualising how energy infrastructure is financed and shared.
• Lenders may need to modify lending protocols to support distributed RE
• Allow re-financing through future fuel cost savings / reduced subsidies.
• Develop micro-finance schemes, on-bill financing, etc.
• Prosumers can contribute to finance RE systems
• Leverage their position as a “test beds” for attracting capital
• Consider (partially) tax-financed energy infrastructure
Potential Strategies Going Forward
Transition to prosumers

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Policies for Transitioning to Prosumers
Potential Strategies Going Forward
3.A Incremental
Transition to prosumers
Incremental
approach
Examples
Prosumer
compensation
mechanisms
 Buy-all/sell-all arrangements or hybrids with net metering
 Net excess generation purchased at full retail rate, or (in islands) at, or
near, the avoided cost rate
Rate Design
 Time-varying prices (this could be positive or negative, depending on the
jurisdiction and level of PV penetration)
 Low fixed charges
 No special tariff
Ratemaking
 Decoupling utility revenues from power sales
 Lost revenue adjustment mechanisms or performance-based incentives
Market Reforms
 Encouraging new, prosumer-friendly business models
 Allowing peer-to-peer power sharing
Tax Reforms
 Shift electricity sales tax to other income sources
 Tax incentives or credits for solar system components, or investments

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Main challenges are upon utilities – but
new approaches are being developed
Policies for Transitioning to Prosumers
3.B Structural Transition
to prosumers
Structural
approach
Examples
Innovative
business models
 Utilities become brokers of new customer relationships, partners with
prosumer service providers, or even financiers of prosumer
infrastructure
New product and
service offerings
 Selling specific “services” such as light, heat, or load management
 Instead of selling electricity as a universal bulk commodity, utilities could
make differentiated offerings based on individual requirements.
New operational
models
 Strengthened and more sophisticated grid operations
 Distribution grids to adapt management mechanisms of transmission
grids, e.g. locational pricing , forecasting, and real time visibility
Emerging
technologies
 Smart grid infrastructure to be more integrated, interactive, and price
responsive.
 More visibility and control at the distribution level, customers more
opportunities to react to electricity market

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Prosumers have the potential to be an integral part of islands’
energy systems
• Roof-top PV prosumers can
• help reduce generation costs
• tap the full RE potential
• support the energy system
• Key drivers suggest faster prosumer uptake in islands
than in mainland countries
• Strategic prosumers framework can support policy
makers and utilities to structure the debate and
manage the transition
Conclusions
Islands will likely be at the forefront of the transition towards prosumers.

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IEA-Reports on prosumers and remote areas and islands are
freely available at www.iea-retd.org
IEA-RETD Publications

22. For additional information on RETD
Online: www.iea-retd.org
Contact: kristian.petrick@iea-retd.org
info@iea-retd.org
THANK YOU!