You’ve probably noticed all the fuss about cryptocurrencies, especially now that everyone is raving about the skyrocketing Bitcoin prices after the split last year.

Indeed, the introduction of cryptocurrencies has changed the way people think about the future of the economy and currency.

You’re probably wondering: what do cryptocurrencies and blockchain technologies have to do with your solar energy solution? The answer: everything.

Here is a quick recap: when you own a PV system and stay connected to the grid, you can feed the excess power from your solar panels to the grid and receive credit on your account for the contribution.

When you need more power than your solar array can produce, you can buy it back from your energy provider.

The amount you earn is called a feed-in tariff and it’s set by your energy company.

Now, imagine, instead of being limited to selling only to your energy provider you can sell your excess electricity to anyone in your neighbourhood on your own terms.

Thanks to the technology called blockchain it is becoming more of a reality every day.

It’s called peer to peer trading, or P2P.

Don’t let this concept scare you. While the backend software is complicated, it will all end up in a form of an app on your smartphone.

Here is a simplified concept:

In the era of the sharing economy, you can now rent a spare room on Airbnb or a ride in someone’s car through Uber, right?

Same with electricity: if you have spare kilowatt hours, you can sell them to someone who needs them.

To understand how you can benefit from P2P you’ll need to know what the blockchain is and how it works, what smart contracts and microgrids are, and how to get the most out of energy trading platforms.

It may sound complicated but hold on, we’ll walk you through it.

Terms You’ll Need to Know

First of all, let’s discuss some terms that are used in the industry. They might shine some light on what we’re talking about:


A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. It’s a constantly growing library of ‘completed’ blocks, or in other words, the most recent transactions performed using cryptocurrency. The technology allows market participants to keep track of digital currency transactions without central recordkeeping.


A microgrid is a discrete energy system consisting of distributed energy sources (including demand management, storage, and generation) and loads capable of operating in parallel with, or independently from, the main power grid.

Non-Stationary Energy Consumers

In addition to buildings, houses, and factories that are considered as stationary energy consumers, electric vehicles are non-stationary energy consumers.


P2P stands for "Peer to Peer." In a P2P network, the "peers" are computer systems which are connected to each other via the internet. This term also refers to the ability to complete transactions without a central authority; instead, the currency is sent from one person to another directly.


Prosumer is a term made by mixing together words “producer” and “consumer”. It refers to customers of a platform that allows for both the selling and buying of a product. For example, if the blockchain is applied to the grid, Prosumers will be able to sell and purchase power.

Why Blockchain Will Change the Way We Trade Energy

Now, what does the blockchain have to do with your solar system?

Because this smart technology allows us, common citizens, to transfer money safely without the approval of any other institutions, i.e. banks or governments.

After bitcoin’s success, it became clear that the same technology can be used literally anywhere, from financial and legal sectors to health and solar energy.

The blockchain is safe, stable and doesn’t belong to anybody, yet anyone can use it.

With the help of blockchain, everyone who has solar on their roof (like yourself) can be a local energy provider, selling power at the price you want to sell it, to whomever you wish to sell it to.

So how exactly does blockchain work?

Think of it as a huge library or archive of IOUs. If you would like to buy apples from your neighbour’s garden, you’d put money into the so-called honesty box. If he would like to buy some kilowatts of power from your solar system in return, the neighbour would put some money in your honesty box.

Blockchain technology can register millions of similar transactions in no time at all.

Because it’s not a physical institution, blockchain is controlled, or rather supervised, by a large network of trusted computers, and none of them can dominate the process.

When you and your customer agree to make a deal, you exchange encrypted information.

If everything goes as planned, this transaction gets the ‘thumbs up’ from the network and is marked as genuine, taking its place in the current block of transactions.

The block pairs up with the previous entry in the chain, thereby creating a chain of blocks, or a blockchain.

Here you can find more in-depth explanations, a history of cryptocurrencies, and learn more about the creator of Bitcoin, Satoshi Nakamoto.

Additionally, this book will provide you with great understanding of blockchain and digital money: The End of Money: The story of Bitcoin, cryptocurrencies and the blockchain revolution.

We’ll talk a little bit more about buying and selling later. But what about distribution? How can this technology actually deliver electricity to your neighborhood?

Welcome to the World of Microgrids

Without exaggeration, the third industrial revolution is coming.

In the same manner as we’ve gotten used to buying and selling goods via the internet, millions of people will soon be able to produce energy on their rooftops and share it with each other via microgrids.

Microgrids are devices that form small, smart and autonomous local networks, which bring together energy sources and consumers.

In the future, a smart decentralized energy network will consist of a number of various devices that interact with each other—from smart appliances to solar panels.

In the same way as power plants are located close to the fuel sources, like coal or hydropower dams, microgrids are located close to the solar energy sources and its consumers.

Here you can take a look at the electricity generation map in Queensland.

A microgrid could be as small as three houses with solar panels and batteries, or large enough to encompass a whole community, town, city, or island with designated generation plants of their own.

Peer to peer trading opens up the energy market to anyone who wants to participate in it—as a customer, investor, or producer. Or everything at once.

Now, to trade your energy or buy it on demand you’ll need to understand smart contracts.

Getting Smart with Smart Contracts

Smart contracts are not the typical paper contracts that you’re used to.

They are ‘cryptocontracts’, or computer protocols that control the digital money transfers between parties under certain conditions.

Think of it like a vending machine for money transfers: it doesn’t require supervision of a cashier, but it gives you exactly what you want when you give it enough money.

You can also use it if you’d like to exchange money, property, or shares in a transparent way while avoiding the services of a middleman, government agency, bank, lawyer, or notary.

Smart contract technology allows transactions be automated and run ‘unsupervised’ with amazing accuracy.

But to be invited to the party, you must own some cryptocurrency—like Bitcoin, Ripple, or Ethereum.

Here are a few tips on buying digital coins in Australia.


So How Do You Trade Energy Online?

Compared to what you’re doing now, which is selling excess power to one customer—the grid—blockchain opens up the market and allows customers to buy and sell energy without the involvement of the energy provider.

How do you do it? That’s where energy transaction platforms come in.

For example, Perth-based startup Power Ledger recently became famous by making $34 millions on ICO.

The idea behind an online based software is to allow consumers in groups of apartments or commercial properties to sell excess energy from their solar systems to their neighbours.

It works like this: a special software reads the outputs of electricity meters and records it via blockchain.

When power is being moved from one owner to another, it became a unit called 'Sparkz', which is a digital representation of energy.

In return for a certain amount of kilowatt-hours, you receive a certain amount of coins in your digital wallet.

This is how Power Ledger’s co-founder David Martin explains the technology:

"For the kilowatt-hour coming from your roof into my meter, we agree I'm going to pay you 15 cents for it, and as your kilowatt-hour comes from your roof to my meter, 15 of my sparks go from my wallet to your wallet," he said.

Easy, isn’t it?


Even though the technology may confuse you at the beginning, believe it or not, it will become quite relevant for the Australian market.

In Australia, in the years between 2011 and 2016, more new generating capacity was installed on residential roofs than was connected to transmission networks.

So very soon it’s going to be cheaper to self-supply than to rely on low-cost energy from a network.

So while energy retailers make decisions on prices and, let’s be honest, under-reward consumers with feed-in tariffs, the P2P energy trading concept will give power back to those who have power.

Next Step

If you want to see how much solar or battery storage could save you over the next 5 years, then take our solar saving calculator quiz below!

Or talk to an Instyle Solar expert about the best solutions for home energy storage or PV-panels.

Otherwise, head back to the solar blog to find even more great educational content.

Photo credit: Depositphotos

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