The concept of P2P (Peer-to-Peer) energy harnessing blockchain (the technology behind cryptocurrency) has been in discussion for some time as the technology has seen greater visibility and increasing adoption, particularly given the rise in cryptocurrency usage. Essentially, blockchain is an open, distributed ledger that records transactions in code. Any transactions are recorded in ‘blocks’ that are then linked together on a ‘chain’ of previous transactions.
P2P energy trading, which harnesses blockchain, is a new exchange system where individuals generate their own renewable energy and share the excesses, at a given price, with their local community. The energy is stored in what Fintech Circle[i] term a Virtual Power Plant (VPP), which facilitates the control and monitoring of assets. Before each day of trading starts, the system uses a means of forecasting, often AI-based, to predict approximately how much energy will be created. Some of the benefits are discussed below:
According to Elena Odier of the University of Warwick, P2P energy “is cost-effective for the peers involved as they become prosumers: they produce and consume the energy. There is also no middleman involved, which leads to lower costs and higher flexibility on the products since there is no commission. Additionally, although there is a disintermediation, all the transactions and documentations are virtualised and stored automatically. The energy is tokenised and each block on the blockchain stores the contract between the producer and the buyer of the energy traded. This leads to all transactions being in the same formats and conforming to the same protocols.”[ii]
Source: EDF[iii]
The concept of P2P energy has been discussed as far back as 2017 when the WEF highlighted how the non-profit Energy Web Foundation (EWF) started developing an open source, scalable blockchain platform with the aim of creating a market standard for the energy industry to build upon and run their own blockchain-based solutions. “EWF’s first use case, EW Origin, creates a marketplace where all smart meters on solar PV can communicate. It also records the provenance of renewable electricity generated, with clear details of source type, time, location and CO2 emissions.”[iv]
P2P energy is now being harnessed in a new programme launched by Rebel Energy and UrbanChain, which aims to provide one hundred per cent renewable energy to UK homes. At present, 3,000 households across the UK have signed up to participate in the new P2P energy exchange programme, allowing them to receive traceable renewable energy from local sources. The project utilises UrbanChain’s ‘eChain’ product as a dedicated market for renewables and a mechanism to decouple renewables from the gas market. eChain is a Peer-to-Peer energy exchange system that takes care of profiling, aggregating, matching, balancing, settling, billing and managing generation and consumption in an accurate, transparent and secure way[v]. The platform also uses AI to address intermittency and fluctuation in the renewables market.
The Rebel Energy & UrbanChain tie-up plans to offer consumers traceable energy as an alternative to the National Grid, where roughly just under 50% is currently generated from renewable sources.[vi] “The only way to move the energy transition forward is to decentralise the generation of energy,” Dan Bates, CEO of Rebel Energy, told E&T Magazine, “People increasingly want to know exactly how their energy is generated so that they can make informed choices. We are working together to make the electricity supplied to customers fully traceable to the UK farm where it was produced.”[vii]
This new partnership follows a smaller research project undertaken in 2019 by the University of Bristol in collaboration with EDF, who notably are also exploring other projects utilising blockchain. The EPSRC-funded ‘Household Supplier Energy Market’ project (HoSEM) tested the concept of P2P trading between households as part of a trial within a block of flats in London.[viii] Jim Fleming, EPSRC’s Head of Energy, said at the time: “As we move to a low carbon society, we need to make the most of the energy generated by all producers, large or small. This project will look at the technical challenges that need to be overcome to implement a peer-to-peer energy trading system. If successful it will bring power from the people to the people.”[ix]
A 2021 article by Deloitte agreed argued that P2P energy trading is a potential catalyst for a shift towards a new paradigm and could offer not only financial benefits but reduce consumption and increase efficiency: “P2P energy trading, through market-based transactions, can incentivise at decentral level both peak shaving and investments in production that correlate more closely with consumption. Government subsidies could then encourage the creation of micro-grids that are resilient and whose residual profile does not correlate with the overall system’s residual profile. We believe that businesses should actively explore the financial and environmental impact that P2P energy trading could have.”[x]
[i] Using blockchain for P2P energy trading - Fintech Circle
[iii] Peer-to-peer-trading | R&D UK Blog | EDF (edfenergy.com)
[iv] Blockchain can revolutionise the energy industry in Africa | World Economic Forum (weforum.org)
[v] Technology Can Solve The Energy Market Crisis | UrbanChain
[vi] How much of the UK’s energy is renewable? | National Grid Group
[vii] UK homes receive traceable renewable energy through P2P exchange | E&T Magazine (theiet.org)
[viii] EDF launches blockchain P2P solar and storage trading pilot in South London (smart-energy.com)
[ix] peer2peer-energy | Cabot Institute for the Environment | University of Bristol
[x] https://www2.deloitte.com/nl/nl/pages/energy-resources-industrials/articles/peer-to-peer-energy-trading.html
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
