Category Archives: 2018

Peer-to-peer energy trading explained

Australia has more than 2 million solar PV installations, making us number one in the world in terms of the highest proportion of prosumers. While previously, the grid was designed to be one way only, it is now changing to two-way energy flows; facilitating exports of electricity as much as imports. One option to enable a two-way energy flow is local energy sharing or peer-to-peer trading.

What is energy sharing, or peer-to-peer energy trading?

Simply put, energy sharing is where one party produces excess electricity and then shares this with another party. Energy sharing is also known as Virtual Net Metering (VNM) or peer-to-peer energy trading.

Peer-to-peer (P2P) energy trading can be compared to file sharing programs on the Internet, like BitTorrent; to eBay in terms of shopping and to Airbnb in terms of accommodation. Fully enabled P2P trading would cut out the ‘middleman’ and allow transparent dealings between equals, as opposed to being treated as a ‘consumer’ by a corporation.

Peer-to-peer energy trading explained
Peer-to-peer energy trading explained

The party that sells electricity is called ‘prosumer’ because they not only consume energy, they also produce it.

Energy sharing could happen between tenants in a multi-rise, between adjacent buildings, or between anyone on the same network.

For example, if my solar panels at home produce excess electricity while I am at work, I could sell the surplus energy to my neighbour who can’t have solar panels. Similarly, your organisation could have multiple assets and wish to sell electricity to yourself or to donate electricity to neighbouring households or businesses as part of your social commitment.

Advantages of peer-to-peer-trading

The biggest advantages of local energy sharing are that:

  • Energy does not have to be transported from centrally located power plants, reducing electricity transportation costs
  • Energy generation can be based on renewables
  • Energy can be bought from a known source (which allows you to claim energy from a specific project)
  • Energy costs can be lower for the buyer
  • The financial benefit for the generator can be better than a feed-in rate
  • There is choice and transparency in dealing with other consumers

Barriers to peer-to-peer trading

Several barriers exist to P2P trading at present, and it is not known at what time these will be overcome so that consumers can begin to participate and benefit from renewable energy. Some of the main barriers include:

  • Not yet commercialised
  • Immature market for solutions
  • Multiple stakeholders that need to be convinced of the business case (e.g. retailers)
  • Regulatory barriers

Supporting technology – Blockchain

P2P energy trading involves a large number of transactions between prosumers and consumers and needs technology that allows for low-cost authentication, validation and settlement while protecting privacy. One of the most promising technologies to enable this is ‘blockchain’, a distributed ledger technology. Blockchain is mostly known as the technology supporting distributed trading, such as Bitcoin.

With blockchain, transactions are stored in virtual blocks, which are connected together in a chain. A complete history of all transactions that have ever occurred within a particular network is retained. Blockchain technology can offer a cryptographically secure, distributed ledger that can track where electricity was generated, where it can travel to and who used it.

There is no question about where a kWh came from and how it was produced. The technology is transparent and secure and does not require a central entity to store and manage shared data and business process. It will also make it easier for new and smaller players to be involved, right down to the individual solar household.

Current status of P2P energy trading

Progress with peer-to-peer trading is slow. A couple of trials in the residential market have been unsuccessful, partially because there was no funding, but mostly due to the current market situation.

On the one hand, regulated network tariffs mean there are little benefits to local energy trading. On the other hand, there are low levels of installed controllable distributed energy resources, which makes it hard for solution providers to provide value to their customers.

There are a number of trials using blockchain technology that have been or are currently being conducted, examples of which you can see below.

Most other forms of energy trading are heading down the Virtual Power Plant (VPP) pathway like AGL’s VPP in South Australia or Origin’s VPP in Victoria. However, like the blockchain trials, these solutions are not widespread and involve mostly the residential sector.

Blockchain-based peer-to-peer trials

AGL Solar Exchange trial in Victoria

AGL previously used blockchain technology in a desktop/virtual trial using solar panels, batteries and smart air conditioning in Melbourne homes. The aim was to understand the value in P2P energy markets.

Now AGL has launched Solar Exchange, which is an online marketplace enabling solar households to trade their excess solar power in the form of solar tokens. These tokens can be sold to other AGL customers residing in Victoria.

Under the right conditions, a buyer could buy tokens at a lower price than buying energy from the grid, while a household with solar could sell excess solar tokens at a higher price than the solar feed-in tariff. A successful trade of Solar Tokens can only be made if the buyer and seller have chosen compatible trade settings and have compatible solar export and grid usage profiles for the same trading interval.

The Solar Exchange is the largest consumer energy trading trial in Australia, with more than 250 Victorian customers participating since the pilot launched in August 2018.

Power Ledger trials in Western Australia

The Power Ledger Platform enables interoperability between diverse market management/pricing mechanisms and units of electricity (kWh) by way of pre-purchased tokens, called ‘Sparkz’, which are backed by blockchain bond called ‘Power Tokens’.

Sparkz are settlement tokens that are pegged to the local fiat currency (e.g. AUD in Australia, USD in the USA). Sparkz can be traded on the Power Ledger platform within defined trading groups through a suite of APIs that interface with smart meters.

The Power Ledger system tracks the generation and consumption of all trading participants and settles energy trades on pre-determined terms and conditions in near real time.

One promising use case for platforms such as Power Ledger’s is an embedded network, such as apartment blocks or housing developments, where residents can trade their solar energy with one another in a semi-regulated environment.

Power Ledger have implemented several successful trials of their technology under this embedded network scenario in Busselton and Fremantle. In the case of fully regulated markets, where a retail license is required to buy and sell energy on the national grid (such is the case in most of Australia), the ability for blockchain to facilitate true peer-to-peer energy trading on a wider scale than just embedded networks is somewhat constrained.

LO3/TransActive Grid in South Australia

LO3 is a US-based firm known for setting up a microgrid in Brooklyn and Germany, and for the fact that their solution is built on blockchain technology.

The company is focused on the physical transaction of energy, not the financial transactions. They see their strength in the need for fast-acting load responses, storage, controllable generation and reaction time. Their first rollout in Australia is the New TransActive Grid in South Australia.

Up to 6MW of distributed solar generation will be made available on a local energy marketplace, using LO3’s peer-to-peer trading platform. The microgrid will begin with a ‘discrete’ market using Yates Electrical Services’ Small Generation Aggregators License and their associated commercial or industrial customers, who will bid on solar electricity supplied by the firm.

A meter will be added onto a household or business which manages all energy inputs and outputs, giving participants access to cheaper electricity generated by local solar farms. The solar power will come from six locally built PV plants ranging from 200 kW to 1 MW in size (two have already been constructed) that are being sited on ‘redundant’ farmland in South Australia’s Riverland region.

deX

In December 2017, Greensync launched the ‘Decentralised Energy Exchange’ (deX). Normally, behind-the-meter generation capacity is invisible to the energy market operator. However, deX is a digital technology platform that allows utilities to see exactly what distributed energy resources are available at any time on customers’ premises and how they are performing.

deX can remotely control those resources, with the customers’ consent, at times of high demand or volatility to avoid shortages. The platform lists buyers and sellers, records agreements between them, manages event handling and verifies both parties met their obligations.

The deX program started with commercial and industrial system-owners and will expand to include about 1,200 battery-owning households, which will make up about 5MW of a total 11MW of network support. deX partners include retailers Powershop and Mojo, storage and power engineering firms Siemens, Tesla and ABB, and consumer technology suppliers like Geli, Jetcharge, Wattwatchers and Power Ledger. AEMO, ARENA, Energy Networks Australia and the Clean Energy Council are also partners.

Next blog post

In the next blog post, we will delve into greater detail whether peer-to-peer technology is suitable for exporting electricity from your solar PV installation.

Meanwhile, if you need help with your journey to a clean energy future, please contact Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

How to account for exported solar electricity [new approach by Climate Active]

Please refer to the blog post ‘What you need to know about the new Climate Active electricity carbon accounting rules‘ for more updates.

This blog post has been updated in Dec 19 to reflect the re-branding of NCOS to ‘Climate Active’. 

The treatment of energy generated from solar PV systems is an important consideration for organisations who have carbon reduction or renewable energy targets. Most people know that electricity generated from solar reduces their grid electricity purchases and thus their carbon emissions. However, what causes much confusion is how to correctly account for renewable electricity that your organisation has exported to the grid.

How to account for exported solar electricity
How to account for exported solar electricity

Why do solar PV systems send electricity to the grid?

Your onsite solar PV system can export to the grid when there is not enough energy demand at your building – for instance, on the weekend. It may also send solar power to the grid where you have oversized your PV system.

The old way of carbon accounting for exported solar electricity

It used to be that any excess electricity your solar PV systems produced was a carbon reduction ‘gift’ to the grid. You would have calculated your greenhouse gas emissions from electricity based on your grid electricity consumption at the applicable emissions factor, less GreenPower® or LGC purchases. Emissions from your organisation’s self-consumption of solar generation were zero, and solar energy exported to the grid was not accounted for.

Why this approach was problematic for some organisations

One of our clients with multiple sites receives a credit for exported solar energy under its retail agreement. From a billing perspective, the retailer nets off the exported energy against grid-supplied power. Effectively, our client receives a feed-in-tariff equal to retail energy rates at the applicable time-of-use period.

When presented on a bill our client sees a ‘net consumption’ figure on the retail energy section. This figure is captured by their carbon emissions software and emissions are calculated from this net figure. This led to our client claiming the abatement associated with the exported solar energy.

To accurately account for carbon, our client had to query their inverters and had to work with their carbon emissions software provider and their retailer to ensure that correct data was available – in other words, a lot of effort for a small benefit.

Luckily, in October 2018, the Department of Environment and Energy (now the Department of Industry, Science, Energy and Resources) decided to trial a new carbon accounting approach.

The new way of carbon accounting for exported solar electricity

With a recent decision by the Department of Industry, Science, Energy and Resources (formerly Department of Environment and Energy) who administer Climate Active to trial a new approach, you can now claim the carbon reduction from solar exports.

You are allowed to count electricity generated from renewable energy sources and exported into the electricity grid as a credit (or reduction) in your carbon account. The decision was made because exported energy is considered zero emissions and displaces the need for the generation of emissions-intensive energy elsewhere.

Eligibility criteria

To claim exported renewable electricity as a reduction in your carbon account, the exported electricity must:

  • be measurable and auditable, g. via electricity bills that show the amount of exported electricity; and
  • be generated by a renewable energy system under the operational control of the claiming entity; and
  • be generated from a small-scale renewable energy system (below 100 kW). It does not matter if small technology certificates have been received or sold for that generation; or
  • be generated from a large-scale renewable energy system (100 kW and above) that has not created any large generation certificates (LGCs) for the exported electricity; or
  • be generated from a large-scale system that has created LGCs for the exported electricity but have been voluntarily retired.

How to calculate the carbon emissions reduction for exported solar energy

You can calculate the value of the exported electricity by converting the amount of exported electricity into its carbon emissions equivalent. You need to multiply the amount of exported electricity by the scope 2 emissions factor for the state in which the electricity was generated. The scope 2 factor is used as it represents electricity generation as opposed to transmission and distribution.

The emissions value of exported electricity must be calculated using National Greenhouse Accounts (NGA) factors produced by the Department of Industry, Science, Energy and Resources (formerly Department of Environment and Energy). At this stage, you cannot claim indirect electricity consumption calculated using alternative factors (non-NGA).

You can download the 2018 scope 2 NGA emissions factors here: http://www.environment.gov.au/climate-change/climate-science-data/greenhouse-gas-measurement/publications/national-greenhouse-accounts-factors-july-2018

For example, 10,000 kWh of exported electricity generated in NSW and the ACT is worth 8.2 tonnes of carbon dioxide equivalent (CO2-e). The following formulas show you how to calculate this:

10,000 kWh * 0.82 kg CO2-e/kWh = 8,200 kg CO2-e

8,200 kg CO2-e/1,000 = 8.2 kg CO2-e

How to report the carbon reduction

You can report the exported electricity in your Climate Active documentation by summing all total emission sources and then subtracting the emissions value of the exported electricity to give total net emissions.

You can use exported electricity (or Greenpower®/LGCs) to reduce all direct and indirect electricity emission sources, e.g. imported electricity, base building electricity, electricity consumed from street lights or a data centre. For more information on the treatment of LGCs you may also refer to two of our previous blog posts:

Example of a carbon reduction calculation

The following table shows an example of how you would account for your exported solar electricity.

Example carbon account for exported solar electricity

SourceActivity dataScopeEmissions (t CO2-e)
Total net emissions1,495
Electricity1,000 MWh2820
T&D losses electricity1,000 MWh3100
Base-building electricity54 MWh350
Data centre electricity consumption326 MWh3300
Waste21 t325
Water use13 kL33
Paper use9 t310
Business travel – flights574,036 km3190
Food and catering$23,490335
Total gross emissions1,533
Emissions reduced through GreenPower/ voluntarily retired LGCs30
Emissions reduced through exported/ surplus renewable energy8

Conclusion

No matter whether your system is small-scale (under 100 kW) or large-scale (over 100 kW), you can claim the carbon reduction for your onsite as well as your export portion. Bear in mind that if your system is greater than 100 kW, you need to retire your LGCs to claim the carbon reduction benefit.

Carbon accounting can be difficult. If you need help with accounting correctly for your greenhouse gas emissions, or if you want to go carbon neutral, please contact Barbara.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.