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Blockchain Enables Successful P2P Energy Exchange

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New models of power distribution require new ways to manage them. In particular, as distributed energy resources (DERs) such as rooftop solar become more prevalent, customers may want a way to exchange excess energy between themselves that entirely bypasses their local utility. Because of its ability to log a series of complex transactions in real time, blockchain technology could be a key to success for this peer-to-peer (P2P) model.

How Blockchain Works with P2P

A blockchain platform serves as an electronic ledger that enables users to record transactions in an unchangeable, transparent environment. The platform includes multiple layers of security, promoting trust in the technology to maintain “one version of the truth” even among participants who don’t know or necessarily trust each other.

For example, say 20 households in the Sunny Skies neighborhood want to trade excess solar energy based on the P2P model. Each participant at any given time may buy from or sell to any other participant. Rather than trusting a central entity, such as a utility, to keep track of these transactions, they can be recorded in a blockchain-based database, which requires consensus among all users to validate its actions.

Real-World Examples

At this point, the pairing of P2P and blockchain is still in the experimental stages. As more utilities put the system to use on larger scales, obstacles can be noted and overcome. But, based on some initial projects, the idea holds a lot of promise.

For example, according to Blockchain News, “Australian [energy] trading company Power Ledger has partnered with a subsidiary of one of Austria’s top five largest energy utilities under Energie Steiermark, to deploy a [P2P] energy trading network in and around Graz.” The platform will initially be available to “10 Graz households, enabling those with rooftop solar panels to sell excess renewable energy to their neighbors.”

Power Ledger is also involved in a project in Japan in conjunction with Sharing Energy, a leading provider of solar energy. “Sharing will use Power Ledger’s [P2P] platform to facilitate electricity trading between sellers and buyers using real-time data from existing smart meters.”

LO3 Energy, based in the U.S., provides P2P microgrid ecosystems “to allow households, businesses, schools and other organisations to buy, sell and share energy locally,” according to Australia-based The Fifth Estate. The platform is “cloud-based and leverages a form of private permission ‘proof of authority’ blockchain…. Customers use [an] app to place bids specifying the amount they are willing to pay for the energy made available by prosumers…and local energy producers.”

Notably, LO3 started one of the earliest P2P projects in Brooklyn, known as The Brooklyn Microgrid (BMG), which “promotes decentralization because no longer are members relying on a centralized figure, the public utility, for buying and selling energy.” Rather, “members can directly transact with fellow members in buying and selling renewable energy.”

What’s Next for Blockchain and P2P

Blockchain can add value to P2P in other ways as well. For example, according to Digitalist, “Blockchain offers opportunities to coordinate EV charging. Blockchain can orchestrate the charging station network autonomously, showing drivers where nearby stations are located and how they are being used.” Additionally, blockchain can be used to manage energy use by managing household batteries to “prevent congestion on the high-voltage grid and keep it in balance.” Finally, “Blockchain can reduce costs for public agencies administering [renewable energy certificates, or RECs] by streamlining trade verification and data indexing.

Clearly, both the P2P model and the blockchain platforms that may support it have great potential for furthering the evolution of power distribution. Time will tell how these innovations shape energy’s future.

What do you know about P2P and blockchain? Please share in the comments.

Karen Marcus's picture

Thank Karen for the Post!

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Matt Chester's picture
Matt Chester on Jul 15, 2019 10:53 am GMT

One question I'd have is how complicated would this become for customers to utilize these technologies. For the uninitiated, they sound impressive but also possibly overwhelming or intimidated. Would the heavy lifting be done for them? What would they need to do to get started?

Karen Marcus's picture
Karen Marcus on Jul 15, 2019 6:29 pm GMT

Great questions, Matt. I was wondering the same things myself. For example, is the blockchain database simply the underlying technology, but customers would have an easy-to-use "dashboard" to actually conduct transactions? Would there be an app? Would they need training (and if so, would it be provided by the utility?), or would it be intuitive based on other technology they've used? Perhaps I'll look into it some more and write another article. 

Kevin O'Donovan's picture
Kevin O'Donovan on Jul 16, 2019 6:52 am GMT

Karen, as you mention in reply to Matt, Blockchain will simply be some of the tech under the covers for an 'app' that us consumers would use ... via the app we'd make some decisions on say what type of energy we want,  like say from a renewable source via a REC, what time I want my heating/cooling to turn on depedning on the price at that time etc etc ...

And all via an app ... and just like people using the likes of Uber or PayPal on their devices ... They don't know (nor care...) about all the tech under the covers that provides the Geo location services or the payment services ... 

And while a big believer in blockchain tech, the sooner we in the Energy Industry get to talking more about the 'solution' or the 'service' and less about the tech under the covers, the better ...


Matt Chester's picture
Matt Chester on Jul 16, 2019 11:06 am GMT

And while a big believer in blockchain tech, the sooner we in the Energy Industry get to talking more about the 'solution' or the 'service' and less about the tech under the covers, the better ...

Great point, Kevin. Customers want functionality and they want results, they won't be terribly dazzled by machine learning, data mining, and all the other backend tools that get us there

Karen Marcus's picture
Karen Marcus on Jul 16, 2019 6:31 pm GMT

Yes, agree with you and Matt. For customers, less important than how it happens is that it happens. 

Alan Ross's picture
Alan Ross on Jul 18, 2019 12:57 pm GMT

Good, thought provoking article Karen. 

My biggest concern is that we still need a centralizing, controlling authority, like the utility to make this work, otherwise governments will and they are likely to mess it up. Uber and Air BnB are not good examples in that they do have a central organizing entity...namely Uber and Air BnB corporate. 

Is that what we'll need to make this work? Why not the regulated utilities, muni's or co-ops? Whenever a microgrid doesn't deliver, customers are going to want the utility to back them up, right? We want to break up their power, but we need the power, when we need it. (No pun intended)

Karen Marcus's picture
Karen Marcus on Jul 18, 2019 8:23 pm GMT

Thanks for your comments, Alan. You bring up a great point: where is the accountability when something goes wrong in a P2P system? It seems like existing energy providers are a logical choice to serve in that role. 

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