Local energy trading

local energy trading

At the moment, energy mostly travels one way. It’s generated, bought and paid for, moved to the customer and used. Energy suppliers, amongst other third parties, sit in the middle between the generator and the customer. But the future vision for the electricity grid changes those relationships. In particular, there’s expected to be a growth in small scale energy production at a local level.


Micro-generation is the generation of lots of small amounts of electricity. So, a house with solar panels is considered a micro-generator. They might be able to sell a bit of spare energy back to the grid, through their supplier. But if more people and businesses had solar panels, and access to a trading platform, they could buy and sell energy directly between themselves.

Take that example a step further and add a bit of battery storage into the mix. Now all the neighbours can store their excess electricity and trade it between them as needed. Instead of getting most of their electricity from a supplier, everyone is generating and selling their own energy. That can be used to power homes, businesses or electric vehicles. And because there is little involvement from third parties, the cost should be lower.

That’s the theory. What about in real life? There are several trials running in the UK at the moment. For example, Centrica is working with Verv on a community energy trial in Cornwall that uses a blockchain platform. And EDF recently announced plans for a peer-to-peer trading platform for a housing estate in South London.

Cornwall Local Energy Market trial

The Local Energy Market (LEM) trial has rounded up 200 homes and more than 50 businesses to test a blockchain based peer-to-peer trading platform. This will let people and businesses buy and sell energy locally, rather than getting all their electricity from suppliers.

Domestic customers taking part in the trial will have solar panels and battery storage as well as their existing electricity sources, so that the trial is thorough. Businesses have some form of renewable technology, such as solar or combined heat and power (CHP).[1]

Elmore House trial

EDF Energy is running a trial at Elmore House in South London, alongside University College London and Repowering London. The housing block has solar panels on the roof, which generate the energy for communal areas. Solar panels don’t provide power to individual flats. The trial is due to run between March and October 2019 and it lets residents simulate energy trading. It gives them the opportunity to see how much they would save on electricity bills if they did get a share in the energy from the solar panels.[2]

The future of the grid

Peer-to-peer trading isn’t just a theory that energy companies are testing. It’s one of the innovations that will help transform the way individuals and businesses buy and use their electricity. Although solar and wind power have been around for years now, the electricity they generate mostly has to be used in real time. It hasn’t been stored. Huge improvements in battery storage now mean that it’s possible and affordable to store excess electricity. That means that micro-generation has possibilities beyond generating electricity for personal use or business use.

[1] ‘Centrica Trials Blockchain Energy Trading for Local Market’. 15 May 2018. https://cleantechnica.com/2018/05/15/centrica-trials-blockchain-energy-trading-for-local-market/.

[2] ‘UK trials peer-to-peer energy trading’. The Financial Times, 2 February 2019. https://www.ft.com/content/6d62b494-209a-11e9-b126-46fc3ad87c65.

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