For me, it was around the end of 2014 that I encountered blockchain. Trying to understand this innovation and its Peer-2-Peer property, I imagined if Peer-2-Peer cash could also be translated to Peer-2-Peer Energy. Luckily I have not been alone in this endeavour and plenty of others are now also working in this field. But what exactly is it? This post will provide a High-Level introduction to this fascinating concept.
Energy 101
Reliable & Sustainable
The Energy Industry is known for providing a reliable system. A system that powers almost everything we do as a species on this planet. With the Energy Transition taking shape over the past few years, a lot of sustainable production has been added. Production units that were more decentralised than what the grid was accustomed to. People installing solar panels on their roofs changed from consumer to ‘prosumers’ and fed power back into the grid. Wouldn’t it be nice if you could sell the power you did not need from your panels to your neighbour?
"Wouldn’t it be nice if you could sell the power you did not need from your panels to your neighbour?"
Reliability vs. Innovation
Prosumers feeding power into the grid was something that the Energy Industry was not suited for, but it learned to accommodate that. But people trading energy between themselves, without needing the proverbial ‘middle man’? That was truly unheard of. How would such a system work? How would such a system make sure the grid did not collapse and cause massive blackouts? The (initial) resistance from the Energy Industry was not intent on fighting innovation but mostly fuelled by a culture of being cautious. Making sure there is always power is hard enough with just a few big players. When so many prosumers get active in trading the energy as well, what would that do to maintain the balance in the grid? How would that P2P Energy work?
Removing the Middle Man
Traditionally the energy companies have become the large incumbents. They are the central parties in the energy grid. The Middle Men in Energy so to speak. With Blockchain’s promise of ‘removing the Middle Man from the equation’, how would that work?
Taxi Company
Imagine a large, conventional taxi company. It has a centralised office, many drivers with taxis and it coordinates and dispatches taxis. Clients call the central office, the office dispatches a taxi. Payments are made and somehow fed back to the central office.
Uber
When discussing innovation in the taxi industry, you can’t help but think of Uber. Uber is indeed an innovative company and compared to the old taxi industry, it has no drivers or taxis. It does, however, have a centralised office. A central hub where clients chime in via an app that they are looking for transportation. The central hub that is Uber assigns a taxi and payments are processed through Uber. It is Uber who determines the rules, it is Uber who is the big Spider in this Web.
Removing Uber from Uber?
When I first explored Blockchain and considered the Taxi example, I was wondering if you could remove Uber from Uber, using blockchain. It was a few months after that thought experiment that I learnt of Arcade City. A Blockchain, P2P Taxi service. Arcade City was founded by a few former-Uber drivers who left Uber; they were fed up with the power and control Uber had. Arcade City was a Peer-2-Peer marketplace where drivers and clients could interact. When there was a match (on price, distance, etc.) the driver and client were introduced. Brilliant I thought, we can check that one of our To-Do lists!
So, how does this translate to Energy?
So having seen the concept of Arcade City, how would you translate this to Energy? If you could do P2P Cash, P2P Taxi, how would P2P Energy work? This is where people who have generated power with their solar panels, but currently do not need it. They can make an offer on this P2P marketplace, where others who are looking for power can purchase it. Similar to the taxi case, when there is a match made, the trade is logged and confirmed.
So why would you want this? It potentially takes out the Middle Man, lowering the overhead costs associated with that. It also allows for microtransactions and automation on such a small scale that was not economically feasible before.
P2P Energy Next Steps
Once you see it, you can not un-see it. The beauty of this P2P concept is that it can be applied in so many other fields as well.
But if it truly is this simple, why is this not implemented everywhere? What challenges and hurdles are there? That is material for another post. Want to stay up to date and not miss it, please subscribe.
