Exploring the feasiblity of peer-to-peer energy trading in Ghana
Peer-to-peer energy trading (P2P) is a burgeoning model of electricity distribution in which individuals sell electricity from distributed energy resources to their neighbours via an online marketplace. Despite its potential to boost rural and urban energy systems, P2P technologies have made little strides in Africa.
In 2017, the technology gained significant attention leading to the emergence of over 120 P2P energy companies worldwide, numerous research papers, predominantly from Australia, China, United States, and selected European countries, and increasing regulations in these countries.
Let’s take the case of Ghana. The World Bank-funded island mini-grid projects in Ghana could be used as case studies to experiment the technology’s feasibility in rural communities. These mini-grids have a six-tier tariff structure that serves a variety of income groups by dispensing an amount of energy (i.e. 275, 550, 1100, 1650, 2200, or 2750Wh) that should last for three days.
In focus group discussions conducted in Pediatorkope and Kudorkope (all in the Volta Lake), it was revealed that customers with higher tariffs, sometimes, do not exhaust their allocated energy, while those on lower tariffs complained of insufficient energy. Interestingly, changing one’s tariff may not be an absolute solution since energy needs continuously change.
P2P systems offer an opportunity to improve energy distribution, ensure value for money, and empower customers. A P2P platform would provide the environment for mini-grid customers to sell surplus electricity to neighbours who occasionally need more electricity but cannot afford the monthly fee for higher tariffs. Such a platform would enhance electricity distribution by providing a dynamic and responsive service delivery.
Moreover, a P2P platform would prevent energy wastage because customers will be more likely to sell electricity to save money compared to keeping appliances on in an attempt to exhaust the remaining allocated energy. Since rural dwellers are often farmers and traders who earn income on a day-to-day basis, P2P platforms would empower them to have full control in matching their electricity access to changing household energy demands and income patterns.
Through virtual power plants, a network of batteries that store solar energy which is later traded among neighbours, P2P platforms offer the opportunity for consumers without distributed energy resources to access affordable clean energy. For instance, a Bangladeshi company, SOLshare, trialled their P2P system among rural dwellers who owned solar home systems and others who did not.
A recent UNFCCC report indicated that the rural dwellers are earning additional income by selling excess electricity, while others have gained access to electricity for the first time. In Australia, a start-up company, Power Ledger, partnered with local universities and industry players to investigate the efficacy of their P2P platform. The study, that lasted for two years (2018 – 2020) and comprised of 48 households, showed that P2P energy trading is technically feasible and can facilitate the delivery of low-cost renewable energy. Nonetheless, the findings indicated that the deployment cost and local tariff structures are barriers to the system’s economic viability. Also, the recent working-from-home paradigm could threaten P2P business models in urban settings since there often would be less energy to trade.
For P2P energy trading to be successful in Ghanaian communities, critical technical, regulatory, and policy requirements must be met. Currently, rural mini-grids are equipped with smart meters that monitor real-time energy generation and consumption. These systems are also digitised and provide advanced energy demand and supply analysis. But reliable telecommunication services in rural communities will be required to enhance remote real-time communication among meters, prosumers and consumers, and guarantee platform integrity.
P2P systems have potentials in urban Ghanaian communities. But strong regulations will be required to facilitate their implementation. The absence of robust net-metering regulations to facilitate the dissemination of smart-meters, set price for energy fed onto the national grid, and determine network charges is a significant barrier to P2P systems. For instance, the resumption of Ghana’s net-metering initiative would give an indication of suitable business models that fintech start-ups or renewable energy companies should use to develop virtual power plants that fit the local context. Demonstration projects by the Electricity Company of Ghana or Ghana Grid Company could provide insights into the technology’s feasibility in the Ghanaian context and inform appropriate regulations.
With an aim to build 300 mini-grids in remote communities by 2030, Ghana’s renewable energy strategies could leverage on the absence of incumbent market players in these areas to develop P2P testbeds. Stronger synergies between renewable energy strategies and national electrification programs are required to encourage the decentralisation of power systems in rural areas and improve the utilisation of the national grid infrastructure in urban centres.
The author Basil Amuzu-Sefordzi, PhD is at the University of Western Australia.