What recent trials teach us about peer-to-peer power trading

Matthew Farmer 27 August 2020 (Last Updated August 27th, 2020 17:47)

Power Technology takes a look at one of the most recent peer-to-peer energy trading trial, and what it can teach early adopters.

What recent trials teach us about peer-to-peer power trading
SEDA officials are looking to expand rooftop solar generation in Malaysia via peer-to-peer trading. Credit: SEDA.

Peer-to-peer (P2P) energy trading continues to undergo trials across the world, looking at how it might change energy generation and consumer attitudes to renewable energy. Power Technology took a look at how one of the most recent trials fared, and what those involved learned about P2P trading.

P2P technology would enable households with their own power generation installations to sell electricity directly to each other. This would cut power companies out of the process, allowing rooftop solar generators to trade via an online marketplace.

GlobalData senior power analyst Somik Das told Power Technology: “Generators and consumers involved in P2P energy trading mechanisms need not depend on utilities or retailers for their energy, and can make smart, sustainable choices about the usage and distribution of renewable energy.

“The trading platform uses blockchain technology to reconcile demand and supply of electricity to better balance the grid. It also increases efficiency, and reduces the costs of buying and selling electricity.”

The International Renewable Energy Agency (IRENA) has said P2P trading would allow greater grid flexibility. The technology could also increase revenue for energy-generating households, known as prosumers. In some cases, it could allow communities to withstand power shortages or transmission network damage, improving energy access in some cases.

“Empowering consumers while making better use of resources

In July, IRENA listed P2P energy trading as one of its 30 solutions to bring about a “more flexible system allowing for a higher, cost-effective use of renewables.” It said P2P trading would “make renewable energy more accessible, empowering consumers while making better use of their distributed energy resources”.

On Tuesday, IRENA hosted an online seminar with the Malaysian Government’s Sustainable Energy Development Authority (SEDA). SEDA sets the solar feed-in tariff for Malaysia and was tasked by the Malaysian Government to develop a roadmap to decarbonise the country’s energy systems.

As part of this, SEDA has looked to take advantage of the country’s relatively large capacity for solar generation. SEDA CEO Sanjayan Velautham said the levelised cost of solar generation has come down by 80% over the last decade. He explained why SEDA chose P2P energy trading to encourage decarbonisation, saying: “Even in the early days of evaluation, the concept of P2P trading was appealing to consumers in many ways. As in any P2P model, the concept leverages sharing economic benefits, underpinned by digital technologies, brought about by the combination of blockchain, the internet of things, smart contracts, big data, and cloud applications.”

Malaysian trials show importance of data collection

SEDA ran a trial of P2P technology between October 2019 and June 2020. With help from regulating authorities and power utilities, the authority built an energy trading sandbox for prosumers and consumers.

To allow this, SEDA had to build a data aggregator to format meter data from utility TNB and feed it into the trial’s online P2P platform. SEDA technical lead Hasril Izan bin Bahari said automating this would be essential for more widespread deployment.

The trial used historical energy use data to select viable candidates and match them against each other. This avoided “spillage”, when an excess of power led to zero cost, meaning prosumers gained nothing from selling their electricity. Over the nine months, selling prices were set at 10% above the utility tariff and energy trades equated to approximately 41MWh.

bin Bahari explained that Covid-19 limited the scope of the trial, which would have allowed participants to trade energy by offsetting their utility bills. He said: “Trading results show higher levels of untraded in energy during March, because of lower consumption due to the [pandemic] movement control orders. However, towards the end of June, we saw an improvement.”

Despite the general success of the trial, bin Bahari said retailers would still play an important role in settling bills, reducing risks from opening up networks, and becoming the “buyer of last resort”. He also said the P2P process would attract more participants if it were simplified.

P2P energy trading remains a “solution for the future”

The Malaysian trial was one of many carried out over recent years. Das said: “A number of companies such as Centrica, Piclo, Lumenaza, Vandebron, LO3 Energy, Power Ledger, SunContract and Electrify have tested their P2P trading platforms which were implemented in pilot projects that were launched in different countries.

“European countries such as the UK, Germany and Netherlands, the US, Colombia, Australia, Bangladesh, Japan, Malaysia, Singapore and others have started implementing or have successfully implemented P2P energy trading pilot projects which resulted in reduction of overall operational costs of the power system and saving energy bills for customers.”

The Malaysian trial used technology developed by Australian start-up Power Ledger. Their system uses blockchain technology to verify transactions without the need for an overseeing body.

Power Ledger has developed a platform for P2P trading. Beyond this, its platform can manage power within a microgrid, from battery storage, or trace power from purchase agreements. It currently operates across ten countries.

Power Ledger head of business development Vinod Tiwari said P2P trading would encourage photovoltaic solar generation, as 95% of Malaysia’s power come from fossil fuels.

Company co-founder and executive chairman Jemma Green spoke at the IRENA seminar, giving results from the Malaysian trial. She said: “For those markets looking to scale renewables, it’s important to learn from the challenges experienced in other markets with high penetration of renewables.

“In Western Australia, high solar generation during the day can cause issues such as reverse flows of electricity, reactive power, and grid balancing issues, including frequency control challenges.”

Das continued: “Peer-to-peer energy trading is in a nascent stage and is a solution for the future.

“P2P trading will transform power sector through increased deployment of distributed renewable sources such as solar, increases flexibility as consumers have control on their consumption and price, better management of decentralized electricity generators, providing ancillary services to the main grid and improve energy access through microgrids.”