The prospect of Peer-to-Peer (P2P) Energy Trading in microgrids: two Swedish cases

Abstract: Peer-to-Peer (P2P) energy trading in microgrids is an innovative solution to local energy problems where consumers produce and sell their energy to their neighbours. The idea of a microgrid-based local energy trading enables decentralised energy system and strengthens consumers' participation. In the context of developing countries, microgrids play an important role in securing the mere access to electricity service for many households. Smart microgrids are also relevant for the context of the industrialized countries, where microgrids can have an important role in balancing the baseload and integrating sustainable energy sources such as solar and wind power. Some countries in Europe, such as the UK, the Netherlands, Germany, Spain, or Switzerland are testing P2P energy trading as a solution for their strained grid capacities. The present study explores the prospects of P2P energy trading in microgrids in Sweden. It analyses its drivers and barriers and discusses what changes are necessary to support the evolution of smart P2P energy trading in the case of Sweden. The analysis is based on the Strategic Niche Management Theory (SNM), which frames the analysis along with the regulatory, market structure and institutional aspects. The research design is based on two Swedish case studies in Simrishamn and Gothenburg. The results show national and supra-national (EU level) regulatory aspects are among the main barriers to P2P energy trading. In addition, the current market structure disadvantages small actors to participate. The driving factors include the environmental awareness of the consumers, the interest of the incumbent businesses in new business areas as well as the overall interest of all actors to integrate renewable energy sources into the backbone of the national energy system. Based on the analysis of the two case studies, the main avenues for change towards P2P energy trading include the regulatory reform to clearly set the standards for local energy communities and small emerging actors in the market (aggregator); market structure reformation to create a flexibility market for small actors and a more clear definition of the roles of different actors. It can be said that in decentralized energy systems, consumers are becoming automation and algorithm dependent. One of the suggested reasons is P2P electricity trading is still at an early stage of development and it is difficult for the consumers to understand the complexities P2P systems. Therefore, educating consumers is a crucial first step to facilitate their involvement in the development of local P2P energy trading systems.