How is blockchain revolutionizing the P2P energy trading scene?

Blockchain has been a mighty disruptive force for almost all industries, including the energy industry, and for better. The energy sector, especially the renewable (solar) energy sector, has been embracing the blockchain revolution with open arms since the last few years. The peer to peer trading format in the energy scene would benefit big time through blockchain and smart contracts- the most famous application on blockchain. It was a visionary man from Brooklyn who first pioneered the peer to peer trading in renewable energy scene (solar energy) through blockchain in 2016. He took to the Ethereum blockchain to sell his excess solar energy to a neighbour. Of late, a number of corporations as well as startups too have been exploring the idea of integrating blockchain into the peer to peer trading scene in renewable energy. Check out more at

The post below offers a brief on how blockchain can prove to be a welcome disruptive force in the energy peer to peer trading sector. But, before getting directly into those discussions, we will try to understand the concept of P2P trading in the energy scene and the existing problem.

Peer to peer energy trading

The peer to peer trading in the energy sector refers to a system where a person buys or sells electrical energy from or to another energy user. This system is mostly prevalent within the renewable energy scene. For example, if your solar panels are generating excess energy you can always sell the extra energy to the residential and commercial establishments in your neighborhood. But, the buyers and sellers here would be connected to a common micro-grid.

The rising growth of independent solar energy resources (say solar panels) and DERs (Distributed Energy Grids) has led to expansion of peer to peer trading in the energy scene today.

The problem

The problem with the existing format of peer to peer trading in the energy scene is that the system follows the same protocols of conventional electricity markets. The trading is happening on a peer to peer basis but the entire procedure is governed by a centralized authority, say the utility company. The presence of a centralized authority or middleman makes the process more complicated, time-consuming, and also expensive.

Bitcoin will bring a disruptive shift

So, how would the Bitcoin technology serve as a changing force for the peer to peer trading scene in the energy sector?

Well, blockchain holds the potential to make the whole process much faster, more economical, more simplified, and certainly, more efficient.

Power of decentralization

If you understand the basics of blockchain, you know that blockchain is characterized by a decentralized infrastructure. Well, the power of decentralization is one of the major aspects by which blockchain will revolutionize the peer to peer trading scene in the energy market today. A decentralized infrastructure will cut out centralized governance and eliminate any scope of intermediaries. Backed by blockchain tech, the peer to peer trading scene in the energy sector will be just between the buyer and seller. The utility companies won’t be a direct participant in the trade. The direct trading approach, as facilitated by decentralization, will make the whole process much faster, more affordable, and also simpler and more streamlined.

Security and transparency of trade data

Blockchain tech will also help to bring more security as well as transparency in the peer to peer trading scene in the energy sector.

All the trading data that will be entered into the blockchain would be immutable, i.e. that could not be altered. Thus, there is no way somebody would be able to tamper with the records of the trade. This facility certainly adds an advanced layer of security to all kinds of trading data like invoice, billing, transaction history, and so on.

Another advantage is that blockchain assures complete transparency across its entire ledger. This way, both the seller and buyer will have complete knowledge of all data related to the trading part. It will in turn help to prevent miscommunication between the trading parties.

Power of smart contracts

Smart contracts are undoubtedly one of the ground-breaking applications or use cases of blockchain technology.

The blockchain tech will scale up the peer to peer trading scene in the energy sector through the power of smart contracts. Well, smart contracts can be defined as self-enforceable contracts that function on the basis of conditioned programming. In other words, these contracts are intelligently programmed to automatically execute the specified tasks once the pre-set clauses are fulfilled.

Smart contracts will be able to make the whole peer to peer trading process in the energy sector much faster and more efficient through their inherent nature of automation. Besides, smart contracts will also help to prevent or negate counterparty risks in the trade. The contract can be designed to only process the money to the seller once the buyer confirms about receiving the energy from the seller. On the other hand, the buyer will have his money stored in the escrow wallet of the smart contract. So, the moment he will confirm about receiving energy, the contract will immediately send the payment to the seller. This way, both the trading parties will stay accountable to one another.

Cryptocurrency payments

Blockchain technology will also revolutionize the payment system in the peer to peer trading scene in the energy market. Around 46 million+ adults in America have expressed their desire to own crypto within the final quarter of 2022. The number of crypto ownership will touch 1 billion, if not exceed it, by the Q4 of 2022. With the number of crypto users increasing at a dramatic level, crypto payments in energy trading will certainly make a welcome move.

Wrapping up

Interestingly, as mentioned above, a rising number of companies are showing growing interest in the integration of blockchain tech in the peer to peer trading in the energy sector.

For example, you have a Brooklyn-based tech company that has already started developing a handy application that will facilitate easy direct P2P trading between energy sellers and buyers, residing in the same neighborhood. Another company has developed a P2P trading platform for renewable energy trade.

However, it also calls for a tighter grip on regulation in the blockchain and crypto segments to ensure widespread integration of blockchain in energy trade.