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Instead Of Buying Electricity From The Power Company, What If You Bought It From Your Neighbor?

Traditionally, when you want electricity, you buy it from a utility. In the future, you may buy it from the house next door. A Dutch company called PowerPeers is making it happen in the Netherlands.

Instead Of Buying Electricity From The Power Company, What If You Bought It From Your Neighbor?
[Photo: User68c0dd38_589/iStock]

In the Netherlands, a marketplace called Power Peers is linking up home energy producers with consumers wanting clean energy. You can buy the solar power from your parents’ panels even if they live 200 miles away. You can buy your friend’s power when she goes on vacation. And you can create community solar panels and share the power produced locally.

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“Our bigger purpose is to accelerate the transition towards a more sustainable energy society by allowing everyone to access clean energy, including people who can’t have it themselves directly,” says Lars Falch, Power Peers’ managing director.

Holland has about 7 million households, half of which are occupied by renters rather than owners. Add in houses that are not suitable for solar and most of the Dutch population is effectively excluded from buying and home-generating their own power. Hence the need for energy trading, Falch says.

Power Peers is like an Airbnb for energy. On the one hand, anyone with a solar panel or wind turbine can sell power at a set price. On the other hand, anyone can buy that power for a set period (the market is reset every 15 minutes). Consumers can choose several suppliers at once and be guaranteed their lights will always stay on. If their choices aren’t functioning–perhaps it’s a cloudy, windless day–Power Peers backs up the system with its own zero-carbon sources. A monthly subscription costs about $7, not including the power itself.

In time, peer-to-peer energy trading has the potential to reduce prices by cutting out middlemen. But Falch says the cost-dampening effect of Power Peers is limited so far. The platform launched in June and has only “a few hundred” users. Plus, the Dutch government is still heavily involved in the renewables market, narrowing the space for an independent, price-elastic marketplace. Net metering rules mean utilities pay generously for power that home-owners return to the grid.

But the market is likely to open up by the end of the decade: “In a few years, the [government] scheme won’t be existing any more, and you can offer your solar panel at market prices,” says Michiel Ooms, the startup’s head of product. “We hope to mobilize the crowd because it’s going to be cheaper for everyone and we’ll get a lot of decentralized green power because of it.”

To build up marketplace liquidity in its early stages, Power Peers pays producers an above-market premium price for energy they sell. This works out as an extra $50-$100 a year for an average-sized household, Ooms estimates.

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Power Peers is backed by Vattenfall, a big publicly owned Swedish utility, which is likely to lose money if consumers start generating and trading their own power. But Ooms says utilities can also gain from grid-defection by coming up with new subscription-based services that allow flexibility while backstopping the renewable supply in case of technical or weather problems.

“Utilities worldwide see that centrally produced volumes will be reduced dramatically,” he says. “When we connect the dots on local storage, they cannot ignore the need in a subscription based model rather than a volume-based model.” Several utilities have been in touch with Power Peers about potentially licensing its technology.

Falch says a peer-to-peer energy trading could help utilities cut marketing costs. Instead of reaching out to consumers through advertising, they could rely on buyers and selling finding each other through good service and word-of-mouth.

In time, Falch expects to see a small number of Airbnbs-for-energy around the world. Platforms like Power Peers could aggregate the customers of several utilities, enabling more choice both for producers and consumers. “There’s a tendency, not only in the energy market, to give more power to the people. There’s a more democratic way of offering services like energy, and the internet is helping with that,” he says.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.

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