The economics of prosumers

Prosumers are residential consumers who are both producing and consuming electricity. They utilize photovoltaic panels on their rooftops or small wind turbines for production and contribute to the shift towards zero-carbon futures. These small-scale production facilities are connected to the low-voltage grid. Prosumers are making two types of exchanges with the grid, power injection when their production exceeds their consumption and power withdrawal when their consumption exceeds their production. Self-consumption of electricity at the place of production is an important feature of the prosumer's economic problem. It is the main difference between prosumers and utility-based production facilities. The prices set for these power exchanges with the grid affect the economic return of the decentralized installation. Hence, the incentives to become prosumer. Subsidies, peer-effect and decentralized energy trading also affect adoption. Finally, prosumers may adapt their behavior and shift load to better synchronize their consumption with their production but they may also increase their total consumption due to a solar rebound effect.