The development of new technology and the growing ethical concerns of energy consumers have, among other things, led to the emergence of innovative peer to peer trading solutions. Although “Peer to Peer” energy trading implies direct interaction between prosumers and consumers, nearly all peer to peer (P2P) exchanges of energy in Europe are ‘virtual’ not ‘physical’. This means they are purely commercial exchanges, overlaid on top of the public network, which avoids the cost of setting up new wires, necessary when implementing physical P2P energy trading.
Various technology and social factors are driving the P2P trend
Customer pull is driving the market to some extent. More consumers are spending money in accordance with their values whilst householders who have invested in distributed generation are looking to make better returns from exported power, following the winding down of Feed-in-Tariff schemes. Possibilities also arise from new technology; in particular, from the growth of cloud-based software and smart meter rollouts in Europe. Finally, there is a degree of ethical innovation from social enterprises and similarly concerned organisations.
Three business models characterise the P2P ecosystem
An analysis of the new, yet already competitive, P2P market shows that three main business models are being adopted.
- Energy Supplier in Disguise.
- Software Developers: build algorithms to manage P2P trading, often providing this as a Software as a Service model.
- Facilitators: provide the tools and support necessary to setup a P2P community but are not involved in the day-to-day running of the service.
In each of these three categories, some players have chosen to address their end-user’s financial concerns; whereas others emphasise emotional benefits (e.g. use of local and green resources, sense of community).
Different community scale, but, overall, an increasing level of activity
An analysis of the current propositions landscape reveals that communities are built on various scales, from neighbourhood to national level. However, all propositions are showing an increasing level of activity, with some reaching 10,000s of subscribers. As community self-consumption is gaining traction in Europe, we expect local P2P companies to also grow their customer base.
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