Written by Dr. Basil Amuzu-Sefordzi, Director at TG Innovation Systems.
Peer-to-peer energy trading (P2P) is a burgeoning model of electricity distribution in which individuals sell electricity from distributed energy resources to their neighbours via an online marketplace. Despite its potential to boost rural and urban energy systems, P2P technologies have made little strides in Africa.
In 2017, the technology gained significant attention leading to the emergence of over 120 P2P energy companies worldwide, numerous research papers, predominantly from Australia, China, United States, and selected European countries, and increasing regulations in these countries.
Let’s take the case of Ghana. The World Bank-funded island mini-grid projects in Ghana could be used as case studies to experiment the technology’s feasibility in rural communities. These mini-grids have a six-tier tariff structure that serves a variety of income groups by dispensing an amount of energy (i.e. 275, 550, 1100, 1650, 2200, or 2750Wh) that should last for three days.
In focus group discussions conducted in Pediatorkope and Kudorkope (all in the Volta Lake), it was revealed that customers with higher tariffs, sometimes, do not exhaust their allocated energy, while those on lower tariffs complained of insufficient energy. Interestingly, changing one’s tariff may not be an absolute solution since energy needs continuously change.
P2P systems offer an opportunity to improve energy distribution, ensure value for money, and empower customers. A P2P platform would provide the environment for mini-grid customers to sell surplus electricity to neighbours who occasionally need more electricity but cannot afford the monthly fee for higher tariffs. Such a platform would enhance electricity distribution by providing a dynamic and responsive service delivery.
Moreover, a P2P platform would prevent energy wastage because customers will be more likely to sell electricity to save money compared to keeping appliances on in an attempt to exhaust the remaining allocated energy. Since rural dwellers are often farmers and traders who earn income on a day-to-day basis, P2P platforms would empower them to have full control in matching their electricity access to changing household energy demands and income patterns.
Through virtual power plants, a network of batteries that store solar energy which is later traded among neighbours, P2P platforms offer the opportunity for consumers without distributed energy resources to access affordable clean energy. For instance, a Bangladeshi company, SOLshare, trialled their P2P system among rural dwellers who owned solar home systems and others who did not.
A recent UNFCCC report indicated that the rural dwellers are earning additional income by selling excess electricity, while others have gained access to electricity for the first time. In Australia, a start-up company, Power Ledger, partnered with local universities and industry players to investigate the efficacy of their P2P platform. The study, that lasted for two years (2018 – 2020) and comprised of 48 households, showed that P2P energy trading is technically feasible and can facilitate the delivery of low-cost renewable energy. Nonetheless, the findings indicated that the deployment cost and local tariff structures are barriers to the system’s economic viability. Also, the recent working-from-home paradigm could threaten P2P business models in urban settings since ... Continue reading