What’s peer-to-peer electricity trading, and how can it benefit your organisation?

What are the benefits of P2P electricity trading?

P2P electricity trading works to the advantage of both of the parties involved. The consumers of the power have a range of suppliers from which to choose and competitive prices too. Generators in turn have a wider range of buyers to sell to, and potentially more flexibility with their pricing as well.

Being able to indisputably link the source of power generation and the point of its consumption, which may happen locally, is a prerequisite of peer-to-peer. It may also be financially attractive and positive reputationally, which we explore further below.

Reduction of Third Party Charges (TPCs)

Consumers may be eligible for lower TPCs through establishing a direct supply link to a generator whose metered output then qualifies as unlicensed supply. Such a P2P framework may entitle the consumer to exemptions from certain TPCs - Renewables Obligation (RO), Feed-in Tariff (FiT), Contracts for Difference (CfD) and Capacity Market (CM). This is true to the extent that the direct supply from the generator matches the consumers own usage, within set criteria.

Meeting targets

Creating P2P supply arrangements allies well to sustainability targets through demonstrably supporting local and renewable generation.

Traceability

Renewable generators receive Renewable Energy Guarantee of Origin (REGO) certificates – from Ofgem, the industry regulator – for the power they produce. Renewable generators participating in P2P may allocate a set number of their REGO issue in proportion to the matched output recorded with the end customer.

REGOs help producers to prove they’re generating the kind of power that’s required, while also providing buyers with evidence regarding the source of the power they consume.

Is P2P electricity trading here to stay?

P2P electricity trading is emerging as an energy model in its own right, within a wider electricity landscape. The supporting legislation for P2P was placed on the statute book long ago; subject to the law remaining the same, P2P stands to be an enduring offering.

How is Drax involved with P2P electricity trading?

The Drax P2P offering draws on its power purchase agreement (PPA) portfolio when looking to identify matches between renewable generators and interested customers.

The recent Drax partnership with the technology company Sitigrid allows for the seamless matching of volumes each half-hour between generators and end customers. It also allows for the value that ensues from that matching to be identified and shared.

If you’d like to discuss P2P trading, or to learn more about our Sitigrid partnership, please get in touch.