Comparison between Blockchain P2P Energy Trading and Conventional Incentive Mechanisms for Distributed Energy Resources—A Rural Microgrid Use Case Study

Abstract

Peer-to-Peer (P2P) energy trading is a new financial mechanism that can be adopted to incentivize the development of distributed energy resources (DERs), by promoting the selling of excess energy to other peers on the network at a negotiated rate. Current incentive programs, such as net metering (NEM) and Feed-in-Tariff (FiT), operate according to a centralized policy framework, where energy is only traded with the utility, the state-owned grid authority, the service provider, or the power generation/distribution company, who also have the upper hand in deciding on the rates for buying the excess energy. This study presents a comparative analysis of three energy trading mechanisms, P2P energy trading, NEM, and FiT, within a rural microgrid consisting of two prosumers and four consumers. The microgrid serves as a practical testbed for evaluating the economic impacts of these mechanisms, through simulations considering various factors such as energy demand, production variability, and energy rates, and using key metrics such as economic savings, annual energy bill, and wasted excess energy. Results indicate that while net metering and FiT offer stable financial returns for prosumers, P2P trading demonstrates superior flexibility and potentially higher economic benefits for both prosumers and consumers by aligning energy trading with real-time market conditions. The findings offer valuable insights for policymakers and stakeholders seeking to optimize rural energy systems through innovative trading mechanisms.