Imagine an energy trading economy similar to the consumer food economy:  the end user can buy their product from whoever and wherever they choose.  They can buy from the big market serving every city and every state at a known price, or they can participate in a homegrown, local economy where their energy comes from a small business located in the next town, from a co-op around the block, or even from their neighbor, at a price that may go up and down according to an agreement made for that day, week or month.  They even have the option of creating their own power and--if they have extra--distributing it at a reduced rate or giving it away to friends and family just as one would with excess homegrown food. 

Peer-to-peer smart grids using blockchain can achieve this model.  In some places, it already has.  Exergy is a microgrid platform located in Brooklyn, supporting peer-to-peer energy contracts between users through blockchain transactions.   This type of peer-to-peer economy with blockchain transactions has several advantages over previous solar models where users sold excess power back to a primary providers. 

First of all, blockchain’s open and transparent system virtually removes the possibility of incorrect or fake transactions.  This increases the security of all transactions.  Additionally, transactions can occur without the need for any kind of centralized supervision, which significantly improves the flexibility of the peer-to-peer market.  Instead, the market works on a bid-for-ownership model that allows transactions to occur as soon as predetermined parameters (like price) are met by both sides.   This means energy is sold at true market value affected by supply and demand, rather than at a stagnant (typically higher) price set by a centralized utility.

This democratization of power also allows users to buy and sell power at lower rates than power from large providers since the intermediary markup has been removed.  It allows anyone to benefit from green energy, even those who cannot afford to install solar panels.  And it allows those who can afford their installation to fully reap the benefits of their energy production. 

Exergy is only one example of microgrid peer-to-peer energy trading.  Other like companies also distribute energy on peer-to-peer grids in Bangladesh, the Netherlands, and Singapore.  These small microgrid programs have developed in some of the most densely populated, most technically advanced areas of the world as well as areas where consistent power from a primary power grid is lacking.

Technology writer Marla Keene works for AXControl, Inc.  Her articles have been featured on Medium, Ansi.org, and various manufacturing and technology sites around the web.