In previous years the energy market existed of a simple relationship between suppliers and buyers. Energy came from power plants and was delivered via power companies to energy using systems in homes or buildings, such as the washing machine and central heating. But the energy market is developing rapidly.
These developments lead to a growing local energy market. For example smart measuring devices, lower prices of renewable energy and new storage systems are reducing the threshold for households to produce their own energy. But what happens with the energy that remains?
Nowadays, prosumers – people who produce more energy than they use – sell the remaining renewable energy back to a power company in exchange for a refund. These companies will, in their turn, sell the energy to their customers. However, the more people that are producing their own energy, the smaller this refund will be. Hence, why wouldn’t the prosumers just sell the energy directly to their neighbors? It can be expected that initiatives will be taken to produce and sell energy in local communities. Energy will be shared within this community, without the intervention of a power company. By doing so, the possibility arises to seek for a ‘somewhere in the middle’ price; the producers of clean energy can earn more, while the consumer gets to pay less. It can be called the “Airbnb of energy”, where community members trade energy adapted to their own needs. Consumers get to choose their specific energy supplier – for example the wind energy from a farmer in the neighborhood – and the producers get to name their own price.
Internet of Things can offer opportunities for the energy sector. Intelligent network devices are able to carry out transactions between generators and users independently. The local energy transaction between for example the solar panels of your neighbor and your own electric car will be converted into a value. The local and autonomously operating systems are connected via internet and share information, allowing them to organize themselves in reaching a common goal: charging the electric car with renewable energy.
The self-organizing market places make it possible to become the boss of your own energy! Nonetheless, decentralizing the energy sector remains a big challenge for the dynamic energy market. Whether peer-to-peer energy sharing communities will play a key role in the future of the energy sector remains to be seen.
Sources:
Blockchain-Based Peer-To-Peer Solar Energy Trading To Be Trialed In Perth
https://www.technologyreview.com/s/544471/renewable-energy-trading-launched-in-germany/
The difficulty with this is that the most renewable energy is produced when there is lower demand. Until we find an effective manner to store the energy to use during down moments it is very expensive to have all this extra capacity on the network. The way the energy market works is that they sometimes have to pay to get rid of there over capacity. Again the same time the energy companies are obligated to buy back the electricity from you when you produce more than you use. You see why this isn’t a sustainable business model.