DERs and the Rise of the Peer-to-Peer (P2P) Energy Marketplace
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- Oct 28, 2020 3:37 pm GMTOct 23, 2020 11:33 pm GMT
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This item is part of the Special Issue - 2020-10 - Distributed Energy Resources, click here for more
As the electric utility industry prepares for changes ushered in by FERC’s approval of order 2222, a great deal of attention seems focused on the management of distributed energy resources and (DER) aggregators. Though the aggregator concept is not new, the debate on how those resources will be managed is becoming far more complex and interesting. According to order 2222, aggregators will be able to compete in all-regional, organized wholesale electric markets. While this benefits competition, there is significant research currently underway to expand the reach of this initiative and bring market accessibility to the microgrid level or individual prosumers. This could potentially circumvent the aggregator market and engage in a peer-to-peer (P2P) environment, thus enabling a completely new energy marketplace to emerge.
The National Renewable Energy Laboratory (NREL) is conducting research in partnership with BlockCypher to pioneer the application of this P2P technology on energy transactions. According to their vision of this energy future, homeowners can sell excess power generated from rooftop solar to others in their community. The next question raised is how it will impact reliability, resiliency, and security for the power grid. Their solution relies in part on the use of blockchain cryptography, which according to NREL, “ensures security and cryptographically signs meter readings to prove energy was generated, then embeds them to the blockchain.” In simpler terms, this creates a virtual ledger that accounts for transactions, data exchange and security.
Of course, NREL’s research is taking place in a lab setting far removed from regulatory and policy concerns with the opportunity to resolve technical issues. Inevitably, regulation will be needed, affecting and possibly shaping these markets. If done well, these changes could benefit electric utilities. According to Michael Khachiki, Co-Founder of Atlantic Power Exchange, “these opportunities reframe the grid operation from unilateral to bilateral operation. Furthermore, grids which have smart metering deployed can maximize their benefits from DERs.” Khachiki goes on to say, “this could reduce peak demand on the grid and lessen the need for increasing capacity and investment in upgrading assets with less than optimal utilization.”
All these multifaceted benefits aside, there is still the challenge to develop a regulatory framework that ensures fair competition, reliability, resiliency, and cyber security. FERC Order 2222 sets up that expectation in the United States.
With these attractive market opportunities, research is also taking place globally in areas like Malaysia, where recent trials had some interesting lessons. One of the biggest takeaways from the P2P energy trading research is as the cost of renewables continues to decline and DER penetration increases, the most pressing challenge is the fast, secure, and reliable exchange of data along a common platform. Currently, few of these applications share compatibility.
Inevitably, as the bigger players in the wholesale energy markets begin to extend their reach into this burgeoning ecosystem, a common platform will emerge. The hope is for a convergence of needs by the prosumers, regulators, electric utilities, and grid operators towards a common solution.
As the cost of renewables continue to decline, residential energy consumers will increasingly become prosumers, and P2P energy trading seems poised to become the next big leap in utility industry.