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Description

The goal of peer-to-peer (P2P) energy trading is to make renewable energy more accessible, while 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) and consumers can trade electricity at an agreed upon price.

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 greater profit. They also empower customers to choose where their electricity is sourced from.

Problems to be solved

Growing energy consumptionHigh cost of energyHigh transmission and infrastructure costsRising demand for renewablesLimited energy access to consumers in mini-grid set-ups

 

Benefits

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 stabilizing 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.

Main Benefits
  • Reducing energy bills

  • Reducing use of fossils

  • Increasing share of renewables

Functions

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.

Mandatory Functions
    Enable energy to be traded at a local scale
Potential Functions
    Informing prosumers

    services, that allow the user to get information about how to become a prosumer and where their energy is consumed/generated

    Supporting the installation of renewable energy sources in the district

    services, that support prosumers in the implementation of PVs or other sources of reneable energy

    Facilitate transactions using blockchain

Variants

There are different options to implement P2P energy trading - the difference mainly is based on the level of indepence of the established grid.

 

Description

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.

Figure 1. Fully Decentralised Market (Sousa, 2019)

Supporting City Context

Microgrid setup that includes a subgroup of prosumers e.g. houses with PV systems

Description

Each member trades energy within the community or energy collective through a community manager. The community manager can also manage trades with external systems.

Figure 2. Community-based Market (Sousa, 2019)

 

Supporting City Context

This can be applied to microgrids or to a group of neighbouring prosumers. Members with common green energy sharing goals need to be able to form community.

Description

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. 

Figure 3. Hybrid Market (Sousa, 2019)

Stakeholder Mapping

Stakeholder Map

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

Business Model

Market Potential

The market is 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 & Costs

Driving Factors

The key supporting factors of P2P energy trading are:

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

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.

 

Legal Requirements

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:
      • 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

Data 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

The creation of this Solution has been supported by EU funding

Use Cases

NRGCoin

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.

Sustainable Energy Management Service (SEMS)

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.

Smart energy and self-sufficient block

The smart energy and self-sufficient block aims to reduce electric consumption in tertiary buildings through renewable energy, especially photovoltaic. 

Smart City Central Energy Controller

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.

Related Solutions

Local Energy System

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.

Building Energy Management System

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.

Smart Microgrids

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.

Energy Storage Systems

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.

Bi-directional Electric Vehicle Charging

Bidirectional electric vehicle charging refers to EV chargers that allow not only for charging the battery of the EV but also for taking energy from the car battery and pushing it back to the grid when needed.

Energy Efficient Retrofitting of Buildings

Improving energy efficiency of the building stock in a city needs strategic and long-term thinking. Complex ownership structures, market barriers, diversity of building typologies, consumer preferences and multiple stakeholders involved makes energy efficient retrofitting a big challenge.

District Heating & Cooling Systems

State-of-the-art district heating and cooling systems are paving the way for municipalities to reduce overall carbon emissions and to speed up the energy transition through the efficient distribution of heat and cold from renewable energy sources.

Municipal Energy Saving Systems

The supply of energy to households, public buildings and services accounts for the majority of GHG emissions in the majority of municipalities. Energy Saving Systems represent punctual solutions to optimise energy consumption.

Virtual Power Plant

VPPs are a response to the growing number of distributed energy resources (DER) making their way onto the grid, as VPPs allow their production to be pooled to achieve the flexibility and scale needed to trade in the electricity market; unleashing gains for prosumers, aggregators, and grid operators.

Smart Home System

The majority of public funding for energy efficiency within the EU is proposed in the building sector. The federal funds for energy efficiency in residential buildings added up to €97 million in 2019. A Smart Home System is one possibility to improve residential energy efficiency.

Smart Lighting

Smart streetlights enable the reduction of running expenses associated with public lighting by delivering several value-added services to cities and citizens.

Public Charging System for Electric Vehicles

The current EU regulation on emissions for cars is the strictest worldwide. Along with further restrictions the thresholds cannot be meet with conventional cars only anymore. One alternative technology, reducing the local emissions, are electric vehicles.