June 20, 2024

Everything you want to know about peer-to-peer energy trading

In this blog, we answer common questions about P2P energy trading and energy communities, explaining how these decentralised markets operate and blockchain’s role in the energy transition.

We are witnessing an unprecedented rise in energy demands due to rapid economic development; and now due to increasing power consumption created by AI. 

While the world relied on traditional fossil fuels to meet its energy demands, it was only after the 1970's oil price spike, solar technology gained its position as a promising alternative to traditional fossil fuels. The growing push of renewables on a global scale, government subsidies driving the demand for rooftop solar led to 1300 TWh generation from solar PV alone in 2022.  

This changing energy dynamics has transformed the way we consume and generate energy. Favourable regulations for peer-to-peer trading, solar subsidies hint at the growth of peer-to-peer energy trading initiatives and energy communities across the globe.

As P2P energy  trading gains momentum, a multitude of questions naturally come up. In this blog, we answer the most commonly asked questions about P2P  energy trading and energy communities, clarifying how these decentralised energy markets operate and blockchain’s role in the energy transition.

1. How does peer-to-peer energy trading work?

Any participant with or without renewable energy generation assets can take part in peer-to-peer energy trading (P2P). It enables residential, commercial or industrial customers to trade energy amongst themselves or with the grid and provide dynamic or fixed pricing for participants. Powerledger’s blockchain and AI enabled xGrid platform allows excess renewable energy to be shared among multiple sites among multiple participants. This mechanism creates a sense of local community among the participants. 

2. How is peer-to-peer energy trading beneficial for energy utilities and retailers?
A dynamic price for renewable energy throughout the day encourages load shifting to deal with peak problems on the grid. In the long-run, load shifting would improve grid resiliency and defer the need for grid upgrades, benefitting the utility. Additionally for utilities and retailers, the blockchain based energy trading offers numerous benefits such as,

  • Reduction in customer acquisition costs
  • Transparency in record keeping of green energy
  • Potential for a new revenue stream through micro transaction fees

3. I have a solar rooftop, can I trade my energy with my neighbours and loved ones?

Yes, but while following the local rules and regulations.  With peer-to-peer energy trading, you can sell or gift your surplus clean energy to your neighbours and loved ones. You can also create PPAs for energy trading. Depending on your geography, these P2P transactions can only be through a retailer, a utility or an energy community.

4. What are the financial benefits of buying energy from p2p rather than grid?
Peer-to-peer energy trading helps you get access to cleaner energy at a cheaper rate than what is offered by the grid. 

5. What if I am a prosumer?
If you are a renewable asset owner, you can optimise your assets to  get better returns by participating in P2P trading. P2P sell prices are usually higher than feed-in-tariff.

6. How does an energy community operate?

Energy communities involve RE asset owners/ prosumers, consumers and batteries. 

Participants can trade excess energy within the community (households or business) or sell it to the local grid. Platforms like Powerledger’s xGrid facilitate this process by allowing transparent and efficient energy trading. Imagine buying clean energy from your neighbour to charge your EV or small scale businesses using clean energy sourced from community run their business operations. Excess energy produced is stored in batteries for later use, balancing supply and demand for energy in the community. Powerledger’s xGrid platform offers complete visibility into energy consumption and generation, crucial for establishing transparency and fostering sustainable energy management.

7. How are prices for buying and selling energy determined within the community?

Energy communities can trade energy either with agreed-upon prices (usually lower than feed-in tariff) or dynamic pricing. There are various rules that are applied for price determination. Currently, we configure these rules with the application host (retailer or the utility).

8. What is the role of blockchain in P2P energy trading?
As the world becomes more open to the idea of P2P trading, we see a rise in energy communities across the world, especially in Europe which alone houses over 9000 energy communities. To be able to handle massive transactions from these communities, we need a highly scalable, transparent and decentralised public technology such as Powerledger’s blockchain (PLBC). PLBC can process thousands of transactions per second. It offers numerous benefits in peer to peer energy trading. Click here on the link for further details. 

9. How can businesses benefit from buying energy from P2P energy trading?

There are several ways to benefit, e.g. just buy the energy cheaper from your customers. Or use a Loyalty Solar Swap feature. Using Powerledger’s Loyalty Solar Swap feature,  businesses can buy electricity from their own customers in return for goods and services. It creates positive brand engagement and lets customers know a brand is serious about sustainability. As a business aiming to secure 100% of its energy from renewable sources, Loyalty Solar Swap provides a more cost-effective, straightforward, and genuinely green solution than any other method. It also encourages load shifting to deal with peak periods on the grid, improving grid resilience.

If you’re interested in discovering how Powerledger’s blockchain-backed energy trading platform can benefit you, book a demo with us today.

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