Imagine a sunny island or remote area where some residents with little income face regular power shortages and blackouts, or have no access to electricity at all, while other members of the community are wealthy enough to own solar panels that produce even more electricity than required. Here a peer-to-peer trading network can help to connect people to sell excess energy directly from the producer with the surplus energy to the other community members in need. This can empower communities located off the grid to produce, purchase, and sell their own energy locally, negating the need to turn to diesel generators and other fossil fuels often used in such communities.
What is Peer-to-Peer?
A peer-to-peer network – or p2p for short – is a network of people that are individually linked without depending on a hierarchy or a middleman, be it a bank or an energy utility. It facilitates transactions in monetary and physical terms. P2P is similar to a flea market where people meet people to trade individually – but through a digital network on a potentially large scale. A simple example of P2P is a regional neighbourhood platform where people from the same area can engage in trading goods and services. A crowdfunding platform is an example of a large-scale p2p network with peers linked, communicating and trading from all over the world without the interference of an intermediary.
Why do we need decentralised p2p energy solutions?
The current challenge with peer-to-peer energy lies in finding a stable non-corruptible and decentralised platform. If a central agent controls a platform, they are not only responsible for the functionality and integrity, but will also be tasked with maintaining and updating the software. This results in considerable risk, with frequent threats from ever developing attacks and viruses. In addition, a centralised organiser of the platform will compromise all p2p trades either by charging a fee or in some way manipulating the exchange. All of these factors are an ever-present issue with current centralised peer-to-peer solutions.
In contrast, in a decentralised peer-to-peer platform all of these tasks need a consensus, which can be established by a blockchain. However, this technology brings with it some well known limitations, including infancy (very few functioning examples currently exist), high energy demand and regulatory uncertainty.
What can p2p do for climate change?
Similar platforms can be used to track precisely where renewable energy is coming from and even who the wind turbine operator receiving the money for it is, a concept which has the potential to disrupt the markets for green energy particularly in richer countries and enables the growth of reliable energy supply in developing countries.
The technology already exists to support such a project, and can most notably be observed in the Brooklyn Microgrid project, a community based project facilitating p2p energy trading among prosumers through blockchain. The grassroots peer-to-peer energy market began functioning as a proof of concept in 2016, and is set to launch in earnest mid 2019.
Another example showing how p2p can strengthen renewable energies is from an investment perspective: People want to invest into heat storage for renewable energies but lack financial leverage. It is not unreasonable to believe there would be ample interest in investing in such technologies, especially when it brings together fairly consistent expected revenues with the chance to fight climate change at a local level. A trusted p2p network can facilitate such a deal.
In short, p2p networks in the energy sector are democratic concepts where people can act together to help tackle climate change. Not only is the future of p2p energy looking bright, but it stands to play a major role in realising the goal of 100% renewable energy.
An article by Thure Traber, Scientific Advisor of the Energy Watch Group
You want to learn more about Peer-to-Peer Solutions and their role in the energy transition? Visit the URBAN ENERGY FORUM 2019 www.urbanenergyforum.com