Peer - To – Peer Market of Electricity (Essay Sample)

Name
Institution
Date
Peer - To – Peer Market of Electricity
The current changes in the market have seen new trends coming up in virtually all sectors of the economy. Evolving of technology and desire to be more competitive has been traditionally regulated fields such as power provision developing deregulated approaches to overcome various limitations of the market. One of the trends that continue to generate momentum in the energy sector is peer to peer markets. This involves consumers generating their energy through solar, wind and batteries and selling the surplus power to other users. By selling the energy within a network, the producer is referred to us a prosumer when they sell their excess power often through the existing infrastructure which is commonly referred to as a system. This emerging issue has led to a new approach of ways in which the transactional amount generated by grid fixed fees can be maintained. A review of methods needs to be considered to keep such prices.
One of the strategies that can be used involves prosumers paying a fixed subscription fee to use a network for trade. Since the provision of the system is provided by national grid, it implies that the charges will enable the grid to recover an amount of money from prosumers which would have been raised from the traditional market which mainly involves consumer of power that is now met by the prosumers (Benkler, Y., 2013). Additional, by charging a reasonable fee for the network, more prosumers can be encouraged to do the business, and this can generate more revenue. Emphasis on fee being charged for a system should depend on the amount of power being produced by a prosumer. This is to encourage even the small producers to sell their surplus energy through national networks. The result is to ensure that there is a broad base of revenue generation and this will help in maintaining the amount in the grid fixed fees.
Another approach involves the integration of peer to peer market within the existing natural power grid. The excess power which consumer generate can be channeled into the national grid. This means that transmitting that power will be a duty of the national grid and this initial fee would still apply. However, such costs can be lowered as the prosumer has helped in reducing the cost of power generation by taking the cost from the national grid. In so doing a lot of customers can be reached and thus maintaining the value of transactions of the power. Example, GridX which is a company in Germany, specializing in peer to peer market, practice this by tapping directly into the national grid (Cohen, M., & Sundararajan, A., 2015). In return, all the surplus energy is distributed throughout the country.
Thirdly, there is the issue of lowering grid fixed fees. This should result from an added generation of power by prosumers. Since they cater for the cost of power production, the national network is only left with the fewer cost of transmission of energy and thus can lower the fees. Additional, reducing transactional fee can help to encourage more players in this field and thus the market is broadened. By maintaining a broad base with a significant market share, the transaction in the peer to peer market will help in the maintenance of a steady amount like that in the grid fixed fees (Parag, Y., & Sovacool, B. K., 2016). This can be further be strengthened if more prosumers are encouraged to integrate with the national grid. Moreover, the subscription fees for the use of the network by prosumers can be regulated in such a way the fees are applied depending on the amount of energy one is generating. This helps to ensure market demands factors play favorably. However, great care should be taken to ensure competition is rewarded to encourage more consumers in peer to peer market if the base is to be increased.
Another approach that can be used in ensuring peer to peer market transactional fees takes into account the grid fixed fees is selling of power back to the national grid. Once the customers have generated energy, the excess power should be sold to the national grid. This is to ensure the regulation of the market to protect its stability by maintaining the prices of power. The national grid can be in a position to transmit power since there are existing infrastructure and capabilities. By adding to it, the power can be regulated fairly and thus more stable and fixed fees can be achieved. The only disadvantage of this is a creation of monopoly market. But considering the importance of the sector towards the whole economy, keeping it in check can help in ensuring the stability of prices. Selling can be encouraged to prosumers by coming up with incentives which aim at allowing more and more people to see to the national grid. This can be issues such as access to more infrastructures for power generation and the likes.
Peer to peer market model has brought a lot of implications in how the power system operates. Revolution in this sector which was initially very dormant regarding change mainly with regards to generation of power and distribution has resulted in many changes in how it is operated. The first implication is concerning the production of green energy. This is as a result of tapping of solar and wind sources of energy. These sources are renewable and environmentally friendly and thus are called green energy. With issues of climate change, governments are starting to encourage the production of renewable energy. This has been fueled by various agreements most notably the Paris Climate agreement (Parag, Y., & Sovacool, B. K., 2016). It is such efforts that have to seem various limitations in energy sector been lifted to encourage changes. Solar and wind power has continued to be a champion, and their production is accepted in national grids from prosumers especially at Austria and Germany.
Another implication of these models for operations of the power system is the reduction of energy loss. In a traditional distribution of power involves accumulating power from all the sources of power generation into a national grid. From the grid, the power is redistributed to the market which may be regions far distances. The distance of generation and consumption plays a critical role in determining the amount of power which is lost. The longer the distance the high the amount of power loss. With peer to peer market, the distance is significantly reduced since, in many instances, a prosumer sell their energy in the immediate neighborhood. By reducing the distance of transmission of power, amount of power lost is substantially reduced. This makes transmission more efficient and still helps in conserving energy. Moreover, the various medium of power transmission can be used which are ideal for transmission of power within short distances. Examples include the use of aluminum wire as opposed to copper wire. Copper wires are used for long distance due to cost restraints but lose power at high rates.
Cost-effectiveness is another implication of peer to peer market towards operations of the power system. Traditional, the national grid often has fixed fees which are not demand driven. This is detrimental towards competition and also does not favor the end user who at the time may be using less or more energy. One of the advantages of peer to peer market is that it enabled the customer to gauge the amount of energy one is using and thus be in a position to sell the excess power. In so doing, the cost of energy is lowered by the following; one there is seeking of power that can compensate the cost of production. Secondly, the prosumer can meet access the net billing more efficiently through blockchain. This means that unsteady of waiting for a period of saying one mont