We have online platforms to help us lease our homes as accommodation, sell our unused stuff and share multimedia files within minutes. It’s no wonder technology is beginning to emerge that helps us trade electricity directly with each other.
How peer-to-peer electricity works
Say your friend lives on a farm in Orange and has solar. They are generating more electricity than they can use and have adequate battery capacity to store it. You live in Sydney and would like to avoid buying electricity from a major retailer, so you can choose to buy renewable. You would like to buy directly from your friend, for a price mutually agreed, avoiding the middle-man – the major electricity retailer.
In theory, this kind of ‘peer-to-peer’ system would allow you and your friend to:
set your own energy prices, rather than choosing those required by major retailers, thus saving money
choose where to buy energy from and be specific – a wind farm or solar farm and/or the exact provider.
Peer-to-peer electricity in theory
With growing solar and battery storage systems in Australia, it would theoretically be possible to begin sharing or selling to each other. At the moment, all electricity is transferred by a distribution network, or the ‘poles and wires’. The issue is that this ‘grid’ is currently unable to discern where energy is generated and where it is consumed. It is as though water pours into a common bucket and then sprouts out. Your use and billing is estimated by a meter. For this reason, there are software complexities involved in creating a system that enables individuals to negotiate their own prices.
The electricity provider acts as the broker, setting the prices you pay and charging a fee for the power distribution. So, even if you were to buy from a neighbour, you still would need to pay the distributor to move the electricity. The distance it would need to travel doesn’t get taken into account. The pricing is based on a ‘postage stamp’ model.
Further, the electricity retailer is currently required to provide customer protection, enable billing systems and be responsible for equipment damage. Any new system would need to address these needs.
Also, in Australia we have a public network, which means that regulators need to ensure power doesn’t go in and out in an uncontrolled way, creating a technical barrier.
What this means now
While you currently can’t set up on peer-to-peer yourself, there are a number of projects and trials happening that look to circumvent the obstacles.
For example, Reposit allows customers with a solar battery to better manage electricity within their home and sell energy back to the electricity grid.
Another example is Nexergy, which allows people with solar to sell excess energy to their community and for buyers to choose only renewable sources (it still relies on the grid).
There’s also SunTenants, which buys solar from owners and sells it on to renters. Renters buy from the grid when there’s not enough available.
Then there’s West Australian Power Ledger, which is a blockchain platform (the system BitCoin is based on) that will allow users to trade electricity and sell it to retailers by settling trades on pre-determined terms in near real-time.
Professor Anthony Vassallo from the University of Sydney says that a ‘true’ peer-to-peer system will be a reality as the energy market develops.
“It is currently easier to create these systems in newer developments or rural areas that can carry large photovoltaic systems. Say a localised development of 50 townhouses can act as its own distribution network. The developer could obtain the necessary approval to run its own system and sell it on to the individual dwellers, in the way a shopping centre owner has the connection to the network and distributes the power among the stores.”
We’re looking forward to a future in which access to renewables is easy and our electricity use can be set according to household and not big retailer need.