f. P2P trading
A more novel way of dealing with supply and demand balancing involves peer-to-peer (P2P) trading. In this case, a customer can interact and trade with another customer directly, bypassing the traditional utility.
The buying of electricity from a peer is, in most cases, a financial operation, taking place in the virtual grid. While the trade is accounted as taking place between two peers, the electricity that is traded will still flow over the classic distribution grid, and the receiving peer has no way of receiving the exact same electricity for which he contracted. Although the distribution system operator (DSO) plays a reduced role in these transactions, it will still be important for the maintenance of the distribution infrastructure that is needed for P2P transactions to take place.(1) Chao Long, Jianzhong Wu, Chenghua Zhang et al., ‘Feasibility of peer-to-peer energy trading in low voltage electrical distribution networks’ (2017) 105 Energy Procedia 227.
In addition, the specific entity has to provide a trading platform where bids and offers of electricity can be matched, complete with validation and settlement of the trades. The DSO or the energy retailer could act as an intermediary for these transactions.(2) For an interesting example from Finland, see: European Commission, ‘Working Group Report “Consumers as Energy Market Actors”’ (2015) <https://ec.europa.eu/energy/sites/ener/files/documents/Draft_WG_report_consumers_market_agents_TC_110315_web_version3.pdf> accessed 16 November 2017, 16. Using blockchain technology, this process could take place in a decentralized way, and only the requirement for a common trading interface would remain.
Selling electricity through a P2P trade is a form of positive generation. In theory, P2P trading can occur as both short term and long term. Short-term trades rely on a trading platform to match prosumers for specific trades. While this would be time and labour intensive for a human, it is something that can be achieved by an autonomous entity. Long-term trades are similar to the supply contracts for an indeterminate term that are traditionally concluded with a utility. One example is the situation when a neighbour buys a share of the electricity produced by a windmill on the participant’s property.
The mere element of buying electricity from a peer is not an activity covered by the prosumer concept. This is because the buyer does not have an impact, as such, on the supply and demand of electricity in the grid. Even though he changes supplier, he will still receive his electricity through the standard electricity grid. Consequently, the buying party in a P2P trade will still be qualified as a standard consumer.