Community Energy Groups: Can They Shield Consumers from the Risks of Using Blockchain for Peer-to-Peer Energy Trading?

Abstract

Peer-to-peer (P2P) energy trading is emerging as a new mechanism for settling the exchange of energy between renewable energy generators and consumers. P2P provides a mechanism for local balancing when it is facilitated through distributed ledgers (‘blockchains’). Energy communities across Europe have uncovered the potential of this technology and are currently running pilots to test its applicability in P2P energy trading. The aim of this paper is to assess, using legal literature and legislation, whether the legal forms available to energy communities in the United Kingdom (UK) can help resolve some of the uncertainties around the individual use of blockchain for P2P energy trading. This includes the legal recognition of ‘prosumers’, the protection of their personal data, as well as the validity of ‘smart contracts’ programmed to trade energy on the blockchain network. The analysis has shown that legal entities, such as Limited Liability Partnerships and Co-operative Societies, can play a crucial role in providing the necessary framework to protect consumers engaging in these transactions. This is particularly the case for co-operatives, given that they can hold members liable for not respecting the rules set out in their (compulsory) governing document. These findings are relevant to other European countries, where the energy co-operative model is also used.

Barriers to Peer-to-Peer Energy Trading Networks: A Multi-Dimensional PESTLE Analysis

“…In some developing countries, such as Peru [103], the lack of an appropriate legal framework makes P2P trading even more problematic. According to Schneiders and Shipworth [104], problems like the legal recognition of prosumers, their personal data protection, and the validity of smart contracts have yet to be solved in the UK. They suggested that legal entities can help in providing legal frameworks for P2P energy trading smart contracts in countries using energy cooperative models, but it is unclear who is responsible for data privacy reinforcement.…”

Drivers and Challenges of Peer-to-Peer Energy Trading Development in Thailand

“…This concept provides benefits to the locality in which it operates, such as employment and investment in community assets [32]. Such a model can promote the use of renewable energy in energy communities such as cooperatives that allow residents to collectively benefit from renewable energy systems [33]. At the same time, the grid-comprising generators, retailers, and distribution system operators (DSOs)-can also benefit in terms of reduced peak demand [34], lowered capital and operating costs [35], minimized reserve requirements [36], and improved reliability of the power system [13].…”

Blockchain and Internet of Things for Electrical Energy Decentralization: A Review and System Architecture

“…The distribution networks currently implemented were designed to supply energy to consumption points, not to receive an eventual excess of production. This paradigm shift causes disruptions in the network that impose additional management costs on the part of the competent entities [18]. It is important to mention that these entities have to maintain the balance of the network and for this they may have to overprovision their grid capacity, thus increasing costs.…”