P2P Solar Energy Trading: An Innovative Approach Fraught with Challenges

Challenges range from implementation, awareness, and lack of jurisdictional clarity


Consumers of electricity in a few Indian states could soon become ‘prosumers’ by installing rooftop solar and selling excess power generated directly to other consumers, but questions remain.

The Karnataka Electricity Regulatory Commission (KERC) recently released a draft proposal to enable peer-to-peer solar energy trading in the state using blockchain technology. KERC aims to implement this framework after consultations and has invited comments from stakeholders within 30 days.

Karnataka isn’t alone; Delhi and Uttar Pradesh have also released draft proposals to facilitate peer-to-peer solar trading.

“This policy can benefit people with rooftop solar as they can sell excess energy directly to other consumers. At the same time, consumers will benefit as they can get power at cheaper rates than distribution companies (DISCOMs),” said Ramesh Shivanna, Founder of Pride Group of Companies, engaged in building renewable energy assets.

“You will be able to sell energy like shares are traded in the stock market,” he added.

To participate, prosumers and consumers need to register with DISCOMs and install smart meters at their own cost. A blockchain platform will be used for registration, trading, and settlement facilitated by service providers.

While Shivanna believes that implementing this policy will increase rooftop solar adoption, he said that installing smart meters might become a sticking point.

“The government is already behind on smart meter adoption, and this may become an implementation challenge,” he said, adding that the government will need to run awareness campaigns as most people are unaware of this development.

Smart meters facilitate detailed analysis of energy consumption and negate the need for manual reading of the meter. This will help DISCOMs generate the final bill comprising the peer-to-peer transaction, power purchase from DISCOM, platform fees, and open access charges.

Shivanna also recommended that wheeling and grid charges should be exempted initially to accelerate the adoption of peer-to-peer trading.

Operational Difficulties

While holding much promise, the policies proposed in these states lack clarity around effortless implementation, operation, and dispute resolution.

Amit Kumar, managing director at Altilium Consulting, casts doubt on the implementation of the policy. “There is no provision of customer-to-customer sale that amounts to trading in the Electricity Act, 2003. Thousands of people will go to court as all the traders will be against it,” he said.

Kumar also asked what jurisdiction will resolve issues pertaining to lack of supply or transactions. “You will have to bring in a private party. So, you will have to authorize an alien entity to make decisions,” he said.

DISCOMs are particularly not known for consumer-friendly services, which casts a shadow on the smooth implementation of P2P trading. Only four DISCOMs out of 62 scored an A+ rating in an assessment of consumer service performance in the third edition of the Consumer Service Rating of Distribution Companies, which reviewed ten private and 52 state-owned DISCOMs serving over 320 million customers.

M G Prabhakar, a former member of the advisory committee at KERC, said the draft regulation has “operational difficulties.” “There are a lot of dark areas in the draft. The average consumer will not adopt this policy if there is uncertainty.”

Echoing Kumar’s concerns, Prabhakar questioned the lack of a framework for grievance redressal in the draft. “Who will be the authority in case of a dispute? Consumer courts or the KERC? A business can go to the courts for redressal, but will the average consumer go to KERC for small problems?”

Prabhakar suggested setting up a dedicated agency to facilitate consumers in case of disputes and grievances.

These regulations have the potential on paper to transform the energy landscape, particularly in Karnataka. However, the lack of clarity surrounding jurisdictional issues and dispute resolution mechanisms remains a significant concern.

Additionally, the absence of provisions for customer-to-customer sales in the Electricity Act 2003 may hinder the enactment of the draft policy.

In its current form, this draft policy seems highly impractical.