Peer-to-peer (P2P) energy trading is an innovative concept that allows individuals and companies to buy and sell electricity directly with one another. Peers are electricity users and prosumers connected through electricity infrastructure. These participants may be connected to the conventional electricity grid, or partially linked to a microgrid, or entirely dependent on a microgrid. The P2P energy trading idea promotes the sale/purchase of surplus renewable energy among nearby households or communities, thereby expanding access to clean energy at the end-user level.
Operations of P2P energy trading
On the operational front, P2P energy trading can be executed on both large and small scales. Large-scale engagement encompasses clusters or hubs of local communities, whereas small scale consists of a group of neighbouring households. Energy trading occurs directly between a buyer and a seller without the involvement of an arbitrator or an intermediary. Prosumers sell electricity at negotiated prices to consumers, unlike traditional power systems where electricity customers purchase electricity from utilities at fixed or time-of-usage prices.
Growing uptake of DERs
Globally, growing industrialisation, rapid urbanisation and population growth have driven energy consumption to unprecedented levels. Over the years, conventional electricity generating power plants have met rising electricity demand through long transmission corridors that transfer electricity to load centres. These centralised energy systems have historically reduced the cost of energy infrastructure and enabled economies of scale. However, these systems have fallen short in addressing distribution grid bottlenecks, last-mile connectivity, access to affordable electricity and managing outages. Hence, the integration of distributed energy resources (DERs) into the grid has become essential to ensure flexible and resilient electricity utilisation.
DERs have emerged as transformative energy generation solutions, particularly in distant or peri-urban areas. Rooftop solar panels, small wind turbines, micro-hybrid systems, battery energy storage systems, etc. are often installed near load centres such as homes, businesses and industries. These energy systems provide backup power or support centralised energy supply to meet demand. Among DRE technologies, rooftop solar has witnessed widespread adoption in India. According to the Ministry of New and Renewable Energy (MNRE), the rooftop solar capacity stood at 17.01 GW as of March 2025. Mechanisms such as group net metering, gross metering, community solar, RESCO (Renewable Energy Service Company) and hybrid RESCO models, government-backed subsidies and ambitious renewable energy targets have significantly contributed to this growth. With the increasing deployment of DERs, innovative models such as P2P energy trading are expected to gain traction in the future.
Benefits of energy trading through the P2P network
P2P energy trading allows consumers to closely monitor or manage their electricity consumption and costs. It helps local communities to not only utilise clean energy through DERs, but also reap financial benefits from them.
Enhancing energy access for consumers linked to minigrid systems is another advantage. Regions lacking access to the traditional grid often rely on minigrid networks, which utilise solar home systems. Hence, P2P trading enhances energy access in electricity supply-deficient regions.
Further, P2P trading can help balance and manage congestion in transmission networks by offsetting local electricity demand. By implementing distribution-level P2P energy trading, peak demand and grid congestion can be reduced. This lowers the need for large-scale generation capacities and extensive transmission corridors.
Blockchain: A platform for P2P energy trading
Blockchain technology has expanded beyond cryptocurrency transfers to a range of domains such as finance, supply chain management and energy trading. Blockchain is an electronic ledger that secures energy trading transactions and prevents third-party interference. It simplifies the operational layers involved in verifying and confirming electricity volumes and other associated services. Energy transactions on the blockchain platform exhibit benefits such as lower transactional costs, faster settlements, automated and transparent processes, and improved traceability.
Blockchain uses mathematical algorithms to govern P2P electricity trading without a control centre. It facilitates real-time power injection and withdrawal from DER and improves energy management. The pricing phenomenon of energy trading is governed by smart contracts. Smart contracts for energy trading allow members to trade and receive cheaper electricity more quickly. They also automate operations, provide security, reduce expenses, enable dynamic pricing and build trust in decentralised networks.
The energy market has witnessed several P2P blockchain-enabled platforms in recent years. In July 2023, technology provider PowerLedger, in association with Austrian Energy firm Energie Steiermark, launched a platform called smartCOMMUNITY. The platform facilitates P2P solar energy trading and manages electricity pricing, monitoring, billing and voluntary selection of participants for trade execution. These features benefit commercial consumers, who can use the platform to hedge against wholesale electricity price fluctuations.
Promising pilot projects
Recent Indian blockchain-based pilot projects have highlighted the potential of rooftop solar P2P energy trading. Indian discoms such as Uttar Pradesh Power Corporation Limited (UPPCL), Tata Power Delhi Distribution Limited and CESC, along with prosumers and consumers (residential, commercial and industrial), tested the technical feasibility of P2P energy trading using Power Ledger’s blockchain platform. The pilot experiments found that P2P energy trading outperformed feed-in tariffs and retail tariffs in price discovery. Such findings are expected to drive rooftop solar adoption and establish blockchain-enabled P2P energy trading as a mainstream model in the coming years. Another benefit is that increased rooftop solar adoption, driven by P2P energy trading, can help discoms meet their renewable purchase obligation targets and reduce costs by purchasing less power from prosumers.
In a pilot project launched by Power Ledger, UPPCL and the Uttar Pradesh New and Renewable Energy Agency in 2021, the price of traded electricity through the blockchain platform was discovered around 43 per cent lower than the retail tariff. In Uttar Pradesh, where a substantial population remains unconnected to the grid, blockchain-based P2P energy trading has shown immense promise in accelerating the state’s economic development by lowering network tariffs and improving energy availability.
Although P2P energy trading via blockchain is still in the early stages of development, the success of pilot projects is likely to support full-scale implementation in the near future. Further, the introduction of policy and regulatory frameworks could help establish community-level energy markets. Recently, successful execution of pilot projects has attracted the attention of regulatory authorities.
For instance, in August 2024, the Karnataka Electricity Regulatory Commission notified Implementation of P2P Solar Transaction Regulations, 2024. In June 2024, the Delhi Electricity Regulatory Commission issued the P2P Energy Transaction Guidelines, 2024. Globally, in December 2024, China’s National Energy Administration introduced the Guidelines on Supporting the Innovative Development of New Business Entities in Power Sector. Recognising P2P energy trading in policy frameworks is expected to drive the growth of DERs in future.
Challenges and the future outlook
Energy accounting and settlement in P2P energy trading presents a challenge. In states where P2P energy trading has been implemented, open access charges have been imposed on participants. Such charges may reduce the appeal of P2P energy trading and prompt customers to continue buying power from discoms. However, few state-specific provisions exempt such participants from open access charges if they are connected to the same distribution transformer or substation.
Metering also presents challenges. State-specific regulations mandate participants to bear the cost of installing post-paid smart meters or time-of-day-compliant energy meters. High expenses could discourage participation, particularly from low-income households.
The bidirectional flow of energy and data in P2P energy trading has increased the vulnerability to cyberattacks. Without cybersecurity safeguards, attackers may alter DER data by exploiting vulnerable communication channels. Data breaches could disrupt DER control algorithms, smart contracts and communication networks. This could impact trading processes and lead to inaccurate data transmission. Therefore, robust cybersecurity measures for blockchain-based P2P energy trading infrastructure is critical.
Further, blockchain-based P2P energy trading infrastructure is quite capital-intensive. While P2P energy trading provides economic benefits to market participants, the underlying infrastructure including blockchain platforms, network devices, communication networks and other architecture components require significant investments. These expenses may increase levelized power costs.
Nevertheless, in the long term, the utilisation of DERs is expected to accelerate the global energy transition, improving grid resiliency and promoting sustainability. As Nandan Nilekani, Infosys co-founder, remarked, “The next UPI is Energy.” The shift from the consumer model to the prosumer model is poised to transform DER market dynamics. The growing uptake of rooftop solar is the key driver of this shift. Further, with the increasing penetration of electric cars, households will soon be equipped with batteries to charge, making each household a producer, seller and buyer of electricity. This will support the development of a competitive marketplace for P2P energy trading through blockchain.
Government support is imperative for successfully rolling out such energy trading models. In October 2024, the MNRE notified scheme guidelines for the implementation of “innovative projects” under the PM-Surya Ghar: Muft Bijli Yojana. The scheme allocates Rs 5 billion to support rooftop solar expansion, new business strategies and emerging solutions such as blockchain-based P2P solar trading. Set to run until 2026-27, the scheme may be extended further to include additional pilot projects. This could result in broad involvement of rooftop solar users and support the growth of local energy communities where members may exchange energy dynamically or at fixed rates, building stronger communities and delivering shared benefits from renewable energy. Such initiatives could significantly expand the decentralised electricity generation market in India.
