Today if you want to sell excess power from a rooftop solar panel, you don’t have a lot of options. You either sell to the local utility, or you don’t sell at all. More to the point, you also have to accept whatever price the utility offers you. There’s no room for negotiation or choice, because there’s no real market in home-generated power.
That may change in the future. People who think about how distributed generation might affect how we buy and sell electricity imagine something much more freewheeling developing over time–something more like an “energy internet” and less like a captive relationship between utilities and consumers.
There are some early glimpses of this new world already. Last summer we spoke to Vandebron, an Airbnb-type site linking renewable energy producers and consumers. Now, here’s another example of the trend: a start-up based in London called Open Utility.
Open Utility is a peer-to-peer marketplace for renewable power that’s launching a pilot this summer. On one side of the network, it’s signing up 25 energy producers–say, community wind farms and schools with excess solar power. On the other, it’s lining up businesses that want to use renewable energy.
It works like this. Consumers build portfolios of producers they want to work with, setting preferences like “cost is important to me” or “I want to buy only from community developers.” The site then automatically matches demand with immediately available supply from the producer side, depending on the hour of the day and weather conditions. In a sense, the site does the work of a traditional utility in making sure customers keep their lights on, except customers have more choice over the process.
Well, almost. To jump through regulatory hoops, Open Utility has had to partner with a licensed utility that will underwrite the transactions. That company, which hasn’t been named yet, will ensure there’s always back-up power in case the renewables don’t come through. Open Utility needs the traditional utility to sell power to businesses, and it’s not allowed to work with retail customers for consumer-protection reasons.
The incentive for producers is potentially they can make more money for the power they put into the system. Open Utility guarantees a minimum price, and then producers can raise their prices based on what they think consumers are willing to pay. “There’s an element of giving the generator more control if they know the market is going to be in their favor for the next while,” says Open Utility’s co-founder James Johnston. “There are varying levels of interaction that customers and generators can have, depending on whether they want to squeeze the last bit of revenue out of it.”
For now, the project is an experiment, and it’s early days. But Open Utility–which has received about $750,000 from the UK government–could provide a model for a more open market for renewable power, especially if regulations change to allow residential “prosumers” to be involved and utilities have an incentive to underwrite the process.
In the future, anyone with a smart meter to measure their consumption or output could join such a system and have an open relationship with a larger community. That would certainly be better than the closed arrangements we have today.