Energy Commerce: Developments on a Decentralized Marketplace for Peer-To-Peer Energy Trading to Incentivize Adoption of Renewable Energy Sources

Abstract

Climate change is one of the most dangerous threats to the ecosystem of our Earth and is increasing in its severity year over year. One solution is to replace our existing energy supply, which is largely dependent on sources with detrimental carbon emissions such as fossil fuels, with cleaner, renewable energy sources, such as solar. A problem that has limited the adoption of renewable energy sources is the fact that utility companies often offer poor incentives to their customers for implementing renewable energy production systems, such as solar panels. Thus, this study analyzes the efficacy of a system that takes advantage of a free market design by creating and modifying a marketplace that allows for peer-to-peer energy trading. Within this marketplace, prosumers, individuals who both consume and produce energy, can make a financial return by selling any surplus production to other consumers on a microgrid, a localized, independent electricity grid. Testing market mechanisms, such as auction and bidding strategies in various environments, this study has shown that prosumers can make up to ~35% more than in existing prosumer incentive structures. This study has further shown that there are ways to better financially incentivize individuals to become renewable energy producers, encouraging cleaner energy production, and eventually slowing the detrimental effects of climate change.