India has commenced an ambitious shift towards building a sustainable energy economy and aspires to have 450 GW of renewable energy by the year 2030, which will lead to a paradigm change in India’s energy mix. Renewable energy is set to emerge as a key energy source, redefining energy matrix at all levels — globally, regionally, and nationally.

Our steadfast commitment is towards building a decarbonised, sustainable energy economy, with renewable power playing a key role in ensuring energy access. Distributed energy resources (DERs) like solar photovoltaics (PV), battery energy storage systems (BESS), and electric vehicles (EVs) are witnessing exponential growth and will likely become the mainstay of power generation in the next few years, owing to the government’s policy-driven targets.

Building a robust and decentralised renewable energy system, backed by technology, will be pivotal to building a sustainable and responsive energy economy, at the local level. Peer-to-peer (P2P) energy trading has emerged as a next-gen management system for smart grids and is the most efficient when equipped with DERs to trade energy.

The emerging ecosystem of local renewable energy generation will allow enterprises, commercial establishments, and residential consumers to become self-reliant, and increase investment in ‘clean’ energy sources.

DERs allow flexibility in power generation, eliminate grid disturbances, and provide affordable prices at significant value to the end-users.

With the increasing deployment of the DERs, the P2P trading has been developed like a local energy market. P2P trading involves a decentralised network between peers at a local level, with the involvement of ‘prosumers’, that is the consumers who also produce renewable power. The P2P market serves as a dynamic online marketplace, where the prosumers can sell their excess electricity to their neighbouring consumers.

A P2P trading model can be established among neighbours within a local community via a micro-grid, as well as on a larger scale among various communities via distribution grids leveraging blockchain technology, thus creating an efficient and secure process for stable data transmission. In the power sector, blockchain allows a range of possibilities — from P2P exchange to creating a global energy ecosystem, with added advantages like lower transaction costs, network transparency, etc.

P2P trading can greatly reduce overall operational costs of the power system, ultimately reducing cost of electricity for the consumers. A well-functioning P2P electricity trading scheme encourages consumption of electricity at the right time of the day, therefore decreasing the peak load.

P2P in the Indian context

In India, structural mechanisms, including smart grids, digitalising the entire ecosystem and conducive regulatory frameworks are needed for P2P trading to find relevance. India’s Smart Grid plans are under progress with structural transformations being made in the distribution system, generator-consumer integration and system operations.

For instance, the Electricity distributor BSES Rajdhani Power Ltd (BRPL) has partnered with Power Ledger, an Australian specialist in blockchain-based renewable energy trading, to install a P2P energy trading trial in Delhi. The government of Uttar Pradesh and the India Smart Grid Forum (ISGF) have been working on a pilot project to introduce blockchain technology to rooftop solar power segment. Recently, Tata Power DDL rolled out live P2P solar energy trading, a first of its kind in Delhi

P2P trading can result in an efficient and reliable power supply, help the distribution companies efficiently manage peak demand, reduce transmission and distribution losses, and avoid over-loading of distribution transformers (DTs) and network congestion.

Extensive power capacity augmentation, improvement of electrical grid networks and digitalisation of the system operations will strengthen the physical infrastructure needed to mainstream the local markets and P2P trading.

The writer is Senior Vice President – Business Development, Indian Energy Exchange