Are homeowners with solar and batteries so interested in their domestic energy systems that when they are linked in a peer-to-peer market they are transformed into profit-seeking day traders?

The answer is “not yet”, according to the results of the RENeW Nexus Project, a trial of energy traded among 48 households in Fremantle, Western Australia, between December 2018 and January 2020 using Power Ledger’s blockchain technology.

Seventeen of the 18 participants in the first phase of the trial and 11 of the 29 participants in the second phase were financially worse off when compared to local retailer Synergy’s A1 residential tariff, the report found.

In a retail market where generation makes up only 15-20% of an electricity bill, participants that consumed less energy from the grid were out of pocket because of inflexible supply charges. “Unbundled tariffs that reflect system costs via a high fixed-supply charge favour higher energy consumption because higher energy use brings down the per-unit cost,” the authors noted.

Participants in phase one purchased 19.3% of their energy from peers, with the remainder purchased from the retailer. About two-thirds of participants in phase one owned PV and storage; the rest owned no solar. In phase two, only a third of participants owned PV and storage – and energy bought from peers rose to 38%.

Trading can work

“Participants had a positive view of P2P energy trading and could see its benefits but stated that changes to the tariff structure would be required to make it attractive,” the report found.

Using the existing electricity network and working with the local energy retailer, Power Ledger’s platform enabled households to buy and sell excess rooftop solar energy in near real-time, with residents able to view electricity usage in 30-minute intervals.

“For markets that have retired or are retiring their feed-in tariffs, peer-to-peer and virtual power plant trading market mechanisms can replace FiT income for households and at the same time facilitate a more stable grid, dealing with the grid problems that renewables can cause,” said Power Ledger executive chair and co-founder Dr Jemma Green.

Looking ahead to broader applications the researchers’ modelling found a virtual power plant, in the context of creating a localised energy market, could increase a local area’s ability to be energy autonomous by about 30% where battery system sizes were 15kWh, the authors from Power Ledger, Curtin University and Murdoch University found.

The report said policymakers should consider coupling peer-to-peer trading with the ability for households with batteries to trade via a virtual power plant “to monetise their excess solar at all times of the day, without any subsidy, and also provide services to the grid”. Up to 68% local energy autonomy was possible when half the cohort owned PV and storage.

The report made five recommendations that would encourage investment in PV and storage and unlock benefits to the local network:

  • Introduce dynamic feed-in tariffs or remove feed-in tariff subsidies to encourage load shifting and thereby support distribution networks and reverse flow issues. “Market rules should be revised to allow batteries or VPPs to be able to participate in the market and to incentivise installation of batteries that deliver network and system benefits, not just batteries facilitating self-consumption.”
  • Network and market operators should explore alternative methods and structures of charging for network usage to more accurately reflect the reduced use of the transmission and distribution electricity network brought about by peer-to-peer trading.
  • Retailers should investigate new models that account for the netting off of generation and consumption within their portfolios by offering peer-to-peer trading and VPPs.
  • Educate consumers on the energy system, the changes that it’s undergoing and the reasoning behind proposed reform will need to be a key area of focus for governments, regulators and retailers.
  • A live trial of a localised energy community to determine whether it can provide the hypothesised benefits to the wider electricity system.

Summary of Phase 2 transactions, averaged per half-hourly interval.