Peer to Peer Energy Trading

Description

The goal of peer-to-peer (P2P) energy trading is to make renewable energy more accessible, while at the same time empowering consumers to make better use of their energy resources. It works by creating an online marketplace where prosumers who produce their own electricity through distributed energy resources (also called self-consumers) can trade electricity at an agreed-upon price with consumers.

P2P trading helps the grid by lowering reserve requirements, providing ancillary services, and reducing peak demand, while also saving citizens money on their electric bills. Trading power locally eliminates most transmission costs and allows prosumers to sell energy at a greater profit than if it were sold back to the grid, as is currently the standard. By limiting utility involvement in transactions, P2P models enable buyers to save costs and sellers to make a greater profit. They also empower customers to choose where their electricity is sourced from.

Problems to be solved

Data and Standards

• Required hardware:
  • Smart meters and grids
  • ICT network and EMS
• Required software:
  • Platform for P2P electricity trading
  • Advanced power demand and supply forecasting analysis
  • Robust data analytics tool
  • Algorithms/blockchain for automated execution of P2P transactions and reduced transaction costs

City Context

Legal frameworks remain the primary obstacle in most countries around the world as direct P2P energy exchanges are commonly prohibited. This is not the case in the European Union, but some member states have more supportive regulatory regimes than others.

Microgrids are important enablers of P2P markets as they bring technologies and infrastructure in the critical areas of communication, monitoring and control.

Cost Structure

Required Infrastructure and Costs of a P2P Energy Trading System (BABLE, 2021)

Market Potential

The market for P2P Energy Trading is in its early stages of development and faces regulatory obstacles in most countries. Nevertheless, in the last decade, several R&D projects have been carried out, with numerous start-ups emerging. These include companies that allow P2P exchange of surplus energy- LO3 Energy, SonnenCommunity, Hive Power, OneUp, Power Ledger- and companies that allow prosumers to directly choose local renewables- Vandebron, Electron, Picl5, Dajie, Powerpeers.

One can only speculate on market or customer growth forecasts for P2P trading at this early stage of the potentially disruptive industry. However, there are data for two industries that are critical to enabling the formation of P2P markets – distributed generation and smart grids. The global distributed generation market size is expected to grow from USD 58,904.20 Million in 2019 to USD 118,898.35 Million by 2025 at a Compound Annual Growth Rate (CAGR) of 12.41% during the forecast period. The smart grid market size is expected to grow from USD 23.8 billion in 2018 to USD 61.3 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 20.9% until 2023. (markets&markets; prnewswire)

Supporting Factors

The key supporting factors of P2P energy trading are:

1. Reliable platform
2. Good customer service
3. Conducive regulatory framework
4. Reliable grid

Government Initiatives

Policies supporting the implementation of such solutions (EU-level or national level):

• EU Directive 2018/2001
  • “‘Peer-to-peer trading’ of renewable energy means the sale of renewable energy between market participants by means of a contract with pre-determined conditions governing the automated execution and settlement of the transaction, either directly between market participants or indirectly through a certified third-party market participant, such as an aggregator. The right to conduct peer-to-peer trading shall be without prejudice to the rights and obligations of the parties involved as final customers, producers, suppliers or aggregators.”
  • Article 21: Member States shall ensure that consumers are entitled to become renewables self-consumers, subject to this Article.
  • Self-consumers are entitled to…  sell their excess production of renewable electricity, including through… peer-to-peer trading arrangements, without being subject to:
    • In relation to the electricity that they consume from or feed into the grid, to discriminatory or disproportionate procedures and charges, and to network charges that are not cost-reflective.
    • In relation to their self-generated electricity from renewable sources remaining within their premises, to discriminatory or disproportionate procedures, and to any charges or fees.

Stakeholder Mapping

The following graphic shows the goals, the relations as well as possible pain points of the key stakeholders of P2P energy trading.

Stakeholder Map of a P2P Energy Trading System (BABLE, 2021)