The challenge

The UK has seen an increase in the uptake of micro-generation, in which individuals or organisations install their own small scale, renewables-based energy generators to produce and use energy. These technologies will play a significant role in the UK meeting its carbon emissions targets and decarbonising its economy in line with the government’s Clean Growth Strategy. However, currently, in the UK, the household-generators must sell the excess of their production back to the national grid at a set price.

In order to maximise the benefit of all energy generated, new markets and approaches need to be developed to facilitate ‘democratised’ energy trading.

What we're doing

The EPSRC-funded ‘Household Supplier Energy Market’ project (HoSEM) grant is researching ‘free trade’ between micro-generators in a peer-to-peer (P2P) energy market. In such a market, any two individuals / households can directly buy from and sell to each other, without intermediating utilities or other third parties. Similar ‘sharing’ platforms’ are already in place in other markets, for example Airbnb in the hotel industry, or Uber in taxi hire (although both of these impose substantial centralisation and intermediation charges).

The Bristol research looks at:

• Whether the infrastructure for P2P energy trading is technically feasible
• Who could provide it?
• What will be the role of the current major power producers in such a market?
• Whether supply continuity can be ensured under the fluctuating generation imposed by the nature of the renewable energy sources
• What regulatory changes are necessary for this market to function?
• What mechanisms, including cyber security and privacy approaches, are needed to engender trust in such a market?

From a technical perspective, the project is exploring ‘distributed ledger’ technology to develop a platform to support P2P household-level energy trading [1, 2]. Distributed ledgers (such as blockchain and block-free ledgers) are distributed databases which rely on a network of peer-users who can issue their own transactions as well as validate their peer’s transaction, digitally record transaction data and together maintain synchronised, agreed upon, and current state of the transactions ledger. This technology gives market participants read and/or write access[3] to records for the production, sale and purchase of energy at low cost per transaction. Transactions are verifiable and secure to guarantee accurate assignment of rights and responsibilities for trades and billing, allowing equal access to all interested participants. Participants set their requirements and algorithms assign sale and purchases via an automated system.

EDF Energy is the industrial partner in this project and is currently testing the concept of peer-to-peer trading between households as part of a trial within a block of flats in London. The Universities of Exeter and Leicester are the other partners on HoSEM project. Exeter researchers are looking at what factors will encourage households/groups to join this peer-to-peer market, while Leicester researchers are taking an algorithmic and game-theoretic view on the peer-to-peer trading.

How it helps

Jim Fleming, EPSRC’s Head of Energy said: “As we move to a low carbon society, we need to make the most of the energy generated by all producers, large or small. This project will look at the technical challenges that need to be overcome to implement a peer-to-peer energy trading system. If successful it will bring power from the people to the people.”

Project lead Dr Ruzanna Chitchyan, an expert in software engineering from the University of Bristol, said: “Perhaps you have installed some solar panels and you would much rather contribute your excess generation free of charge to the nearby homeless shelter instead of selling it back to the utility provider. Or sell it to someone else at a better price or give it to your neighbour. The households that produce the energy should have the power to decide on what to do with it. Similarly, consumers should be able to decide whose energy and at what price they want to buy. The HoSEM trading platform will support this freedom of choice.”

The ‘distributed ledger’ technology used in this project could uniquely meet the requirements for a decentralised and democratised energy system. This technology could provide the ideal tool for a P2P energy trading platform, if the households were to trust the platform providers, and were willing to join this market. The open ledgers could also help develop additional local third party businesses that would provide new value-added services to the energy market.

Further reading and references

[1] J. Murkin, R. Chitchyan, D. Ferguson, Goal-based automation of peer-to-peer electricity trading, From Science to Society, pp 139-151, 2018

[2] J. Park, R. Chitchyan, A Angelopoulou, J. Murkin, IOTA Simulation Model for Energy Trading, 2019, available from: https://cloud.anylogic.com/model/966f6846-62e0-460e-bf69-2a1b00317128?mode=SETTINGS&tab=GENERAL

[3] The ledgers support different levels of access (so called “permissioning): from public open to all participants, to consortium, i.e., open only to the approved consortium members, and private, i.e., open to the ledger owners only. The present research focuses primarily on use of public ledgers.