Looking at both Blockchain and Energy, the concept of trading energy in a Peer-2-Peer fashion is popular. But why is it not up and running everywhere? Will it ever happen?
In this post we covered the basics of what P2P Energy is. How at a high level the concept works and why it has an attractive ring to it. We also covered how the current energy system works and what their main drivers are.
There are thousands of start-ups active on that concept alone worldwide. Yet, only a handful of start-ups have an actual live product. Quite a few projects exist on GitHub, but in production? So why is this concept not flying?
The 3 main forces at hand are:
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The Market: The pricing of supply and demand.
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The Law: The laws that seek to protect us and provide stability, can prohibit newly invented ways of working.
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Usability: As often is the case, new technologies are not as polished and easy to use as other proven-and-used technologies.
The 3 Main Forces
The Market
In P2P Energy, there has to be some form of a marketplace. A (virtual) place where people with supply, can meet people with demand. And there has to be a price mechanism in place that provides value to both sides.
In many countries, there is a Feed-In Tariff. This is a mechanism that has helped boost people installing solar panels on their roofs. It provided a guarantee on the price they will receive when supplying power to the grid. The power is supplied to the grid without any concern or required interaction from the homeowner. It just works and does its magic. But such a market dynamic also puts a floor in any market to be.
The Law
The law on energy topics is part of a framework, intended to protect consumers. They describe roles and responsibilities. They make sure there is always power and that nobody is allowed to cause a black-out.
Due to its rather protective nature, it is hard to try new concepts at large. Laws are rather static, while innovation blazes new trails at ever-higher speeds. Mind, this is not saying that laws are a bad thing; we just need to explore how we can facilitate both innovations while making sure we are still sufficiently protected.
Usability
Today we as consumers are used to seamless experiences. You get a new product or service, it almost installs itself and just works. It is like magic, but better. Looking at the current state of where most Blockchain technologies are at the moment, it is far from that stage.
Try to imagine setting up your Bitcoin node. Doing a transaction has become a lot easier with Bitcoin, but that has been quite a pain. Also, doing a P2P Energy transaction would be fun at first, but not to do so all day long. To lower the barrier for consumers in here, it has to deliver on Plug and Play, but it also has to be automated as far as possible. It is nowhere near being a ‘Killer dApp’ that is required for it to take off.
Next Steps
So does this mean we will never see P2P Energy happen? I believe the lure is big enough and I am happy to see so many parties are tackling these main issues. With all these powers combined and enough time to change some required legal frameworks, this will happen.
So, if you are an energy company, can you just sit back and relax? Let the market solve the issues, so you can buy into the solution when it’s done? I would encourage you to be part of solving this, get a better understanding of the world that is coming.
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Focus on one or two areas close to your company’s DNA. Do you have a track record in creating markets? Are the best legal experts working at your firm? Are your products best in class and loved by customers?
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See if you can partner up with others. Other corporates, or startups. Within your domain, or complementing each other.
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The products you develop in Blockchain I would argue to try and keep them agnostic of the Blockchain technology used. There are quite several good technologies out there, but it is hard to pick the winning technology at this stage. If there ever will be. Be prepared to port your prototype from one tech to another when the world changes.
Get Involved
The vision for P2P Energy is rather clear. Technically it is possible if you look at all the efforts done already. Before it will reach mass adoption there are some large, but known challenges ahead. Given the resources targeting these challenges, I’m sure it will be solved in due time. For the time being, I would advise energy companies to stay or become active in tackling these issues together. If you’re looking for help or a sparring partner, let me know and we can explore this together.
