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P2P energy trading - Challenges and Opportunities

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Michael Khachiki's picture
Co-founder Atlantic Power Exchange

Michael is Co-founder of developing a platform for P2P energy trading in distributed energy resources sector. To find out more go to:

  • Member since 2019
  • 33 items added with 21,356 views
  • Aug 26, 2019 7:15 pm GMT

This item is part of the Special Issue - 2019-09 - Distributed Energy Resources, click here for more

We commonly refer to Distributed Energy Resources (DER) as smaller power generation assets dispersed along the power grid. The current trend in DERs is in renewable generation technologies however they don’t have to be. Unlike the conventional power generation assets DERs grid connection point is usually at Low Voltage (LV) or Medium Voltage (MV) but can be at the High Voltage (HV) level too.  These differences offer many opportunities and challenges. The customer side benefits include deployment of Virtual Power Plant (VPP) which has economic benefits for the asset owners as well as environmental benefit for community in case of renewable technology assets.

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This also benefits grid operators. Considering most grids reach their peak capacity only fraction of the time, having micro VPPs on the network providing DMR services will reduce the peak demand on the grid. This reduces the need for increasing capacity and investment in upgrading assets with less than optimal utilisation.

These opportunities reframe the grid operation from unilateral to bilateral operation. Furthermore, grids which have smart metering deployed can maximise their benefit from DERs. 

Combining these technologies with Peer to Peer (P2P) energy trading gives rise to an energy ecosystem that has the potential not only to deliver unprecedented economic and environmental benefits, but also it will improve the grid reliability and asset efficiency.

Fragmenting the energy market by introducing many decentralised energy sources also increases competition which benefits the consumers. Increased competition has already started the energy transition shifting the power generation market from fossil fuels to renewables. The benefit of this market transition is not only ecological but has a real financial benefit as the renewables energy generation assets have a lower Levelized Cost of Energy (LCoE).

1     Distributed Ledger Technology perspective

There are many different proposals for P2P power trading market design. Distributed Ledger Technology (DLT) is one approach that solves some of the problems which energy markets share with financial markets, traceability, and volume economics.

Like financial markets, energy markets require keeping track of the currency and their movements. Meaning energy is not created or destroyed but created and used within the market construct. The immutability nature of DLTs allows auditing the energy lifecycle and its movement providing reliable and auditable energy tracking. This allows efficient carbon emission credits trading.

2     Technology Architecture

The approach taken by Atlantic Power Exchange (APX) for P2P technology architecture design is to divide technology stack into domains. The architecture is comprised of 3 domains (diagram below) and layer in a hierarchy. Organising the technology stack this way allows grouping the stakeholders relevant to each domain.

Atlantic Power Exchange Platform Architecture

2.1     Energy Domain

In the energy domain power is produced and is consumed or transferred from the prosumer to consumers. Also, this is where the smart meter resides tracking and digitising the energy quantum. For VPP assets the control function and export triggers may also be in this domain.

The solar power providers and electrician operate in this domain. All the energy related hardware, for example, the solar panels, inverters smart meter and the consumers and prosumer operate in this domain.

2.2     Control and communication domain

In the control and communication domain the digitised energy data transmission occurs. This platform design provides an inclusion for an export signal in this domain. With this functionality a mass coordinated response to demand spikes can mitigate many of the blackout events particularly the events related to the frequency drops.

The communication hardware and the telecommunications providers operate in this domain.

2.3     Token domain

The token domain is where the conversion between energy data and token occurs (Tokenization) as well as the token transaction. The transaction between presumes and consumer (Nodes) is managed and settled in this domain. Our platform manages the payment from consumer to prosumer and interacts with control and communication domain to finalisation of the payments.

3     The challenges

The main challenges which P2P power trading faces are Regulatory restrictions, Domain enablement, and access to the right platform allowing interaction with the control and communication domain.

At APX we have embarked on the journey to develop a platform that allows easy integration with other technologies across the P2P domains.

The global energy transition has increased awareness of the regulators for the need to reframe the regulatory framework. This transition has started allowing more P2P business to enter the market.

The cost of the renewable hardware technologies has and continues to decline. This continually lowers the barriers for investment in DERs in particularly micro DERs.  

With the APX’s platform we can enable the communities with technologies such as VPP to reduce their Carbon footprint and help their communities to do the same.

Michael Khachiki's picture
Thank Michael for the Post!
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