Is Peer-to-Peer Energy Trading the Future of Renewables?

It’s no secret that we need imaginative new approaches to the U.S. energy supply. As the aging power grid shows vulnerabilities, global conflicts destabilize oil and gas prices, and extreme weather events threaten our infrastructure, U.S. energy consumers stand to benefit from new opportunities for stronger and more reliable power sources.

One concept aiming to modernize the flow of power is peer-to-peer (P2P) energy trading. This emerging approach to the sale and distribution of power makes it possible—and even easy—to buy and sell renewable energy resources within local communities without a larger intermediary. For example, a business or residence with an operating microgrid on the property could sell its excess energy to a neighboring power consumer. This gives energy producers within a community a new way to benefit financially from their power generation resources. At the same time, purchasers have access to a local energy source that undercuts the price of energy sold on the larger grid.

From a technical perspective, this new ecosystem relies heavily on emerging technologies. At the core of many P2P energy trading systems is blockchain technology, which offers a secure and adaptable platform for energy transactions. Then, the sale and purchase of energy can be facilitated with less effort in a P2P system through smart meters and automation. (This is one of several areas where automated processes and artificial intelligence have the potential to improve renewable energy—read more from us on that topic here.)

Once these technologies are in place, participants within a P2P system stand to benefit in a few noteworthy ways:

P2P energy trading can create new economic opportunities. By establishing a system to sell and purchase locally generated energy,? participating community members can access an entirely new revenue stream. These P2P networks can harness energy from various sources, including microgrids, stored energy, EVs, demand response, and more. No matter how a business or individual resident chooses to establish a source of distributed power, it’s very likely that a P2P system will create new opportunities to profit by selling excess energy.

Another significant opportunity for P2P energy trading is that a marketplace is available to everyone in a community, regardless of whether they have the capacity to contribute power. In other words, if a neighboring business or resident hasn’t established their own source of distribution energy generation, but is interested in accessing competitive rates through the community’s trading platform, they’ll be able to do so. In turn, those selling their excess energy benefit from increased demand and more potential purchasers.

P2P energy trading can offer competitive prices and improve efficiency. It can be extremely costly to purchase energy from the larger grid: More than 40 percent of the cost of traditional electricity can go toward maintenance for wires and other physical equipment needed to deliver power. A P2P network presents the chance to generate energy and sell it to nearby consumers at competitive rates with fewer upkeep expenses.

P2P energy trading can fill gaps in our existing energy infrastructure. Some businesses and residences cannot establish their own source of distributed power, whether it’s due to a lease agreement or a lack of physical space (among other reasons). The opportunity to purchase energy from a nearby seller provides a choice where there would otherwise be none. Additionally, individuals in rural areas who don’t have reliable access to electricity can benefit from distributed energy being produced and sold nearby through a P2P system, requiring far less new infrastructure than a connection to any larger grid.

While these advantages are undeniably appealing, progress must happen before P2P energy trading becomes an everyday reality for our communities. First and foremost, we need to increase the availability of localized power that can be bought and sold on these networks by establishing more distributed energy resources across the country. Then, the correct hardware and software (smart meters, trading platforms, analytics tools, and other technologies) need to be made available to interested communities. Finally, all these developments must be supported by state and local policies that encourage a competitive environment for retail energy. Without a doubt, we must address these complex challenges before P2P trades become a part of daily life for most consumers.

Although it isn’t yet possible to know what the future looks like for P2P trading systems, they will continue to draw attention as a forward-thinking way to harness the full power of solar and other clean energy sources. As the renewable energy landscape experiences unprecedented growth, new approaches and high-tech innovations—like P2P energy trading—are certain to open doors for those who continue to engage with the industry’s latest developments.