The Potential Value of Peer-to-Peer Energy Trading in the Australian National Electricity Market

The existing retail market arrangements for investment in distributed energy technologies, including household solar PV systems, are not well aligned with the economic value that these technologies can provide within the electricity industry. In particular, these commercial arrangements fail to account for temporal and spatial variations in costs and benefits across market participants. The study presented here considers peer-to-peer (PTP) energy trading as one potential solution to this misalignment, as it can provide a price signal for better coordination of local generation and consumption. This work assesses the impacts of consumer participation in PTP energy trading when an aggregator facilitates energy trading between residential participants, according to their energy surpluses and deficits at different times. The potential operational financial impacts on solar PV customers, non-PV customers, their retailers, the distribution network service provider (DNSP) and aggregators are modeled under such trading arrangements. Based on these operational cash flows, the potential impacts on investment decisions of consumers whether or not to participate in PTP trading and perhaps to invest in solar PV systems are explored, to understand the potential longer-term implications of peer-to-peer energy trading. This modelling finds that PTP trading via customer ‘pools’ set up by an aggregator has considerable promise to generate benefits for both customers with solar PV systems and customers without them. Conversely, retailers and DNSPs are significantly disadvantaged by the participation of their customers in PTP energy trading under current retail tariff arrangements. The main influences on these impacts are the solar PV penetration rate within the pool of customers, the number of PTP participants and the margin charged by the pool aggregator. In contrast, factors such as the existing feed-in-tariff rates received by participants with solar PV systems have a very limited influence on their trading behavior at PV penetration rates close to existing levels.