What is Peer-to-Peer Energy Trading? | Energy Savings

What is Peer-to-Peer Energy Trading?

Australia has over two million solar PV installations, and as this number grows, so does discussion around peer-to-peer (P2P) energy trading. P2P energy trading refers to the buying and selling of energy between two parties connected to the same energy grid.

The prospect of P2P trading fits neatly into the new sharing economy alongside AirBnB, CarNextDoor and RateSetter, which have seen housing, cars and loans transferred from person to person.

Understanding P2P Energy Trading

P2P energy trading turns those who have the means to generate their own electricity, for example through at-home solar panels, into ‘prosumers’ since these individuals are not only consuming electricity but also producing it. P2P trading forecasts the ability for these ‘prosumers’ to earn an income from trading the excess energy they generate.

Perhaps you’re on holiday and your solar panels are producing electricity at home that you won’t need. P2P energy trading would mean selling the surplus energy to your neighbour, a friend or stranger.

The obvious advantages to a system of energy trading among peers is that it is financially beneficial to both the buyer and the seller, it supports renewable energy by making it more affordable and accessible, and it creates transparent dealings where the exact source of your energy can be known.

How Does it Work?

In theory, consumers will be able to set their price limit to 20c/kwh, for example, and producers may choose to sell their electricity at that rate or lower. These agreements may be a one-off, instant transaction or a longer-term contract for weeks, months or even years.

Currently, the National Electricity Market (NEM) enables for electricity transmission across Australian states and territories in the east and south through a cross-state wholesale electricity market. However, exporting energy via the NEM is out of the question for an Australian household as you are unable to join with a generator smaller than 5 megawatts. On the other hand, anyone could engage in P2P lending, from a household with a simple 1.5kW solar panel system to an organisation with significant energy assets.

Understanding Blockchain

Blockchain technologies allow users to place a bid, which sellers can then turn into a trade. It offers an efficient and transparent way of selling that sidesteps complicated energy contracts and back-and-forth correspondence.

While Blockchain, originally devised for the cryptocurrency Bitcoin, is not new, its use as a means to trade energy in Australia is. AGL Energy Limited (AGL) and Power Ledger, the former a listed energy company and the latter a start-up, are two noteworthy Australian companies who have invested in Blockchain technology for the purpose of facilitating P2P energy trading.

Our Recommendation

P2P energy trading trials and projects have already begun, however the reality of P2P energy trading being accessible to all households in Australia is still a little way off. Solar energy customers and those with battery storage will be the first to adopt P2P energy trading if and when it does reach the market, gaining new methods to save or earn money through their energy.

If you are interested in the potential for participating in this new peer-to-peer economy, then consider joining the renewable power market by comparing quotes among renewable energy installers here.