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Energy
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
| Growing energy consumption | High cost of energy | High transmission and infrastructure costs | Rising demand for renewables | Limited energy access |
The main goal of P2P Energy Trading is to increase the use of local renewable energy by enabling prosumers to trade energy easily. Additionally, it can also decrease transmission losses and energy costs while stabilising the grid. Whereas some benefits are likely to be fulfilled with a basic implementation of the solution, the fulfillment of the full scope of potential benefits depends on the functions implemented in a specific project.
Reducing energy bills
Reducing use of fossils
Increasing share of renewables
Reducing GHG emissions
Improving energy supply efficiency
Enhances grid stability
Promoting sustainable behavior
Increasing energy efficiency of appliances
Functions help you to understand what the products can do for you and which ones will help you achieve your goals.
Each solution has at least one mandatory function, which is needed to achieve the basic purpose of the solution, and several additional functions, which are features that can be added to provide additional benefits.
P2P Energy Trading enables the trading of energy at a local scale
Services that allow the user to get information about how to become a prosumer and where their energy is consumed/generated
Services that support prosumers in the implementation of PVs or other sources of renewable energy
Services that enable to use blockchain for transactions
There are various options for implementing P2P energy trading – the differences are mainly based on the level of independence of the established grid.
Participating peers independently and directly negotiate with each other to buy and sell electric energy. Blockchain-based smart contracts may be used to facilitate trading, but P2P markets are also possible without such contracts.
Fully Decentralised Market (Sousa, 2019)
Microgrid setup that includes a subgroup of prosumers (e.g. houses with PV systems).
Each member trades energy within the community or energy collective through a community manager. The community manager can also manage trades with external systems.
Community-based Market (Sousa, 2019)
This can be applied to microgrids or to a group of neighbouring prosumers. Members with common green energy sharing goals must to be able to form a community.
A combination of fully decentralised and community-based markets in that prosumers can individually engage in P2P trading with managed energy collectives in a more nested market design.
Hybrid Market (Sousa, 2019)
The market for P2P Energy Trading is still very young, and still 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)
Required Infrastructure and Costs of a P2P Energy Trading System (BABLE, 2021)
The key supporting factors of P2P energy trading are:
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.
Policies supporting the implementation of such solutions (EU-level or national level):
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)
Energy
Building
Mobility
This measure involves the development of an advanced, data-rich, management system which gains maximum benefits from the retrofitted buildings, sharing energy data through the open platform enabling energy services to be provided that reduce energy use and bills.
Energy
Building
The smart energy and self-sufficient block aims to reduce electric consumption in tertiary buildings through renewable energy, especially photovoltaic.
Energy
ICT
A Virtual Power Plant energy management platform, providing the capability to city stakeholders to actively manage Distributed Energy Resource (generation, storage and load) from a single platform.
Energy
The NRGcoin mechanism replaces traditional high-risk renewable support policies with a novel blockchain-based Smart Contract, which better rewards green energy. For every 1kWh of green energy, consumers pay 1 NRGcoin directly to the Smart Contract, protecting prosumers from policy changes.
Energy
Building
Other
Citizens are involved in the definition of the actual needs and the most appropriate solutions for the energy community. They also participate in the design of the energy community as an entity (legal form, structure, organisation, rules of operation and governance), and management of decisions.
Approximately one-quarter of the energy price is owed by the transportation of the energy. The implementation of a local energy system can shift the energy production from a centralised system to a decentralised system.
Urban resilience is the ability of an urban system and all its constituents across temporal and spatial scales to maintain or rapidly return to desired functions in the face of a disturbance.
According to the Energy Performance of Buildings Directive (EPBD), buildings are responsible for approximately 40% of energy consumption and 36% of CO2 emissions in the EU.
Energy storage systems are used to store energy that is currently available but not needed, for later use. The goal is to create a reliable and environmentally friendly system. As the share of renewables increases, so does the need for storage. With storage, energy can be used when it is needed.
Microgrids are emerging as an attractive, viable solution for cities, utilities, and firms to meet the energy needs of communities by leveraging more sustainable resources, while increasing resilience, reducing emissions, and achieving broader policy or corporate goals.