[Paper Review] Peer to Peer Sharing of Distributed Energy Resources

Siddharth Patel, Ram Rajagopal|arXiv (Cornell University)|Aug 22, 2018

Smart Grid Energy Management10 references4 citations

TL;DR

This paper proposes a peer-to-peer (P2P) rental market for rooftop solar and energy storage in residential settings, enabling non-owners to rent capacity from owners to reduce electricity costs. Using real hourly consumption data from Northern California, it finds that P2P markets generate surplus comparable to centralized models at up to 15% adoption and can incentivize broader DER adoption, though direct subsidies may be cheaper if grid costs rise by more than a few percent due to reduced local matching.

ABSTRACT

As the penetration of distributed energy resources in the residential sector increases, the scope for sharing arrangements expands. We model a peer-to-peer rental market for rooftop solar and energy storage in the residential sector, with households seeking to minimize their electricity costs. For varying adoption levels, we characterize the market rental price, quantity, and participation rate. We find that up to 15% adoption, the peer-to-peer market generates a surplus comparable to that attainable though a centralized sharing model. The peer-to-peer market can incentivize an increase in total adoption in the long run. We find that direct subsidies would be a cheaper way to increase adoption if enabling the peer-to-peer market increases distribution grid costs by more than a few percent. This cost increase would be related to how locally the peer-to-peer market can match renters and owners. We compute metrics of this localness and find that the market clears quite locally for a wide range of adoption rates.

Motivation & Objective

• To model a peer-to-peer rental market for distributed energy resources (DERs) like rooftop solar and batteries in residential settings.
• To evaluate how such a market affects electricity cost savings, participation rates, and total market surplus compared to centralized sharing models.
• To assess the trade-off between enabling P2P markets and direct government subsidies, particularly regarding potential increases in distribution grid costs.
• To analyze the geographic localness of P2P transactions and its implications for grid infrastructure and operational costs.
• To examine the strategic incentives of key stakeholders—utilities, vendors, aggregators—toward enabling or blocking P2P markets.

Proposed method

• The study uses a large dataset of hourly household electricity consumption from Northern California to model individual household demand and DER capacity.
• It defines a net-zero DER asset as a combination of photovoltaic (PV) systems and battery storage, scaled by a single parameter representing household-specific system size.
• A P2P rental market is modeled where owners can rent out unused DER capacity to non-owners, with contracts covering the full period under analysis.
• The model estimates supply and demand functions for the rental market at varying levels of DER adoption, deriving equilibrium rental prices and participation rates.
• It compares total market surplus under P2P and centralized sharing models, using a benchmark from prior research.
• It computes metrics of localness—how geographically proximate renters and owners are—and evaluates the resulting impact on distribution grid costs.

Experimental results

Research questions

• RQ1 To what extent can a peer-to-peer rental market for residential DERs generate surplus comparable to a centralized sharing model?
• RQ2 How does the P2P market affect total adoption of distributed energy resources, and can it create long-term incentives for increased deployment?
• RQ3 Under what conditions is direct government subsidy a more cost-effective policy tool than enabling a P2P market, especially considering potential increases in distribution grid costs?
• RQ4 How locally do P2P transactions clear, and what is the impact of this localness on distribution system costs and grid congestion?
• RQ5 How do the incentives of utilities, vendors, and aggregators align or conflict with the emergence of a P2P market for DERs?

Key findings

• At up to 15% adoption of distributed energy resources, the peer-to-peer market generates a total surplus comparable to that of a centralized sharing model.
• The P2P market can incentivize increased long-term adoption of DERs by enabling non-owners to access solar and storage benefits.
• If enabling the P2P market increases distribution grid costs by more than a few percent, direct subsidies would be a cheaper policy alternative for achieving the same adoption increase.
• The P2P market clears quite locally across a wide range of adoption rates, indicating that most transactions occur between nearby households.
• The rental market may reduce overall distribution grid costs by encouraging local energy exchange—where neighbors consume locally generated solar power—thus reducing the need for long-distance energy transport.
• The current utility tariff structure, which offers low buyback prices for surplus solar, limits the incentive to store energy; a higher buyback rate could reduce P2P market scope by encouraging direct grid exports.