Peer to Peer Energy Trading

There are a number of possible approaches to energy sharing. For example:

1. Peer-to-peer: A single entity – for example, a business equipped with a solar array – shares its surplus directly with another entity.
2. One to many: A single entity distributes surplus to several others – as in the case of the example above, or a business that chooses to benefit its employees.
3. Many to one: Here, several entities contribute their surplus to an aggregated ‘fund’ that then manages and distributes the value of the energy, which can be used to enable further projects to occur.

Surplus may be shared directly – across, for instance, a community or micro grid. Alternatively, and more commonly, communities can set up a virtual centralised system that enables each participant to manage their own energy usage.

In any scenario, the surplus may be shared as ‘electricity’ (by netting the value of the energy off another’s bill), or as funds (e.g., revenue from power sold back to the grid on a feed-in tariff).

The benefits of energy sharing

Making the most efficient use of clean energy resources will help Aotearoa decarbonise the national grid and achieve its net zero commitments, while also benefiting the environment. It also helps at times of energy scarcity, by adding additional coordinated sources of distributed generation that can bolster the grid when required.

Community energy-sharing schemes foster local connections. People equipped with energy resources (such as a solar array) effectively become ‘prosumers’: active participants in the energy system/market. Local storage of shared energy using a battery enables participants to cut their power bills and emissions – for instance, by drawing on stored reserves of clean power during peak demand in the mornings and evenings, when solar production is low and grid power is more costly.

More specifically, sharing can alleviate energy hardship. Our poorest households are spending roughly 25 per cent of their income (up from around 12 per cent in 2010) on heating and power. Official data reports around 100,000 homes are disconnected every quarter due to non-payment of bills, but unofficial data estimates the more realistic figure is three times that, due to the number of people on pre-pay power who self-disconnect for periods of days to weeks to save money.  These people are also typically spending more per month on power than a household in good-quality housing, because of the high cost of heating drafty, poorly insulated homes.

Energy sharing can also create resilience by ensuring a more stable delivery of energy; with less reliance on the national grid, a community is better equipped to ride out climate-related events such as storms or flooding. In turn, local energy sharing reduces stress on the national grid.