Solar energy is becoming increasingly more prevalent in our society as we look for more sustainable forms of energy. However, change has been slow: Focused on the short-term, consumers simply don’t see the long-term advantages of switching to green solutions.

Could peer-to-peer energy sharing finally change the tide in favor of sustainable energy?

You may have heard about the possibility of purchasing energy directly from your neighbors as a more affordable and green way to access power, but the implementation of this is still rare. However, peer-to-peer energy sharing has the potential to advance solar energy and bring energy consumption into the 21st century – green, affordable, and easily accessible.

So what will it take to turn household energy sharing into a reality this decade?

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Limitations of solar energy

There are several limitations currently hindering the progression of green energy. Most notable is the fact that both solar and wind energy are variable, and thus hard to rely on day in and day out. It’s hard to take advantage of the wind and sun at all hours of the day because the sun isn’t always shining and the wind isn’t always blowing.

Another limitation is money. For many consumers, green energy implementation is something they’re not able – or willing – to adapt because there is no upfront cost to just stay with the status quo.

Those who have already decided to invest in green energy should consider pairing it with battery. However, installers often lack the required software that can manage solar-plus-storage systems, and these systems often have limited functionalities – for example, charging and discharging batteries based on the pre-defined parameters, without considering external factors.

Solar-plus-storage systems – optimized by peer-to-peer energy sharing – might be the most cost-effective way to introduce solar energy to the population.

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What is peer-to-peer energy sharing?

Peer-to-peer energy sharing solutions are the future of the industry. They are innovative because they enable energy sharing functionality among anyone within the network, allowing families or businesses to experience cheaper, more efficient energy at all hours of the day. For solar installers, this gives another benefit to offer to their customers.

Virtual microgrids are another boon to solar energy. Under a virtual network, users can utilize the main grid and form their own “island” with other people in the network. By virtually connecting several systems together, users can leverage the accumulative capacities of the systems and create a synchronized low-carbon and energy self-sufficient microgrid. Most notably, this allows for peer-to-peer energy sharing with anyone on the microgrid.

So how exactly does this work? In the microgrid, the control system assures that the energy is shared in the most efficient manner. Throughout any given day, the cost of energy can fluctuate drastically: Sometimes it’s expensive, sometimes it’s cheap. The smart battery makes sure that you buy energy when it’s at its cheapest point and sell when it’s most financially convenient.

Any renewable energy you buy from other users in the microgrid will be cheaper than what you could buy from your supplier, while you can sell any energy to others for a higher price than what you would get from the main grid. Plus, energy is consumed locally so transmission losses are mitigated.

Within the virtual microgrid, users also create their own virtual power plant, using solar energy stored during the day. This enables them to aggregate small energy producers to act as a utility to the virtual grid. This removes a sizable hurdle to solar energy usage, as users can store energy gains during the day to use most optimally in the evenings.

All this has a noted financial effect: The payback period for an investment in a solar-plus-storage system is significantly shorter – three to six years, depending on the specific country legislation.

With greater technologies on the horizon, there can potentially be even greater savings. Imagine a future with more ubiquitous electric cars: If you’re charging your car with the main power grid, you’ll end up paying significantly more than those who use their own energy from a battery.

What will it take to put into practice globally?

Before instituting this globally, there are a few hurdles that still need to be overcome. Every country is different and will have different restrictions on peer-to-peer energy adoption.

The most significant problem is communication. Because eco-tech is made up of many complex terms, it can be hard to relate to people who just don’t understand the engineering behind the product. As a green energy provider, you need to put things in easy language for the bulk of consumers in order to motivate them to think of a green future and not just short term benefits.

Legislation brings other problems. Some countries where green energy is popular get a lot of support, while others need a lot of work. On top of that, sometimes a window only opens once or twice a year and energy activists don’t get their bills passed in time. Many countries also have problems with their grid – such as laws regulating microgrids. In some regions, you can’t build your own power grids and are only allowed for what the government says.

We still have a long way to go before making peer-to-peer energy sharing a reality. In Germany for instance, an energy evolution is currently underway: Distributed, home energy solutions are advancing – slowly. Currently, many German households are green but not as smart as they could be: There are still a lot of transmission losses, storage possibilities are limited, and they still largely depend on coal to harmonize the grid.

But the revolution continues – in Germany as well as the rest of the world. With continued improvements in communication, technology, and legislation, we can expect to see peer-to-peer energy finally take a foothold in modern society. With its reliance on sustainable solar power, affordability, and optimization for future technologies, it’s the best way to get smart about energy in the 21st century.

Branislav Safarik is COO at FUERGY, an AI-powered device that helps users optimize energy consumption and maximize energy efficiency of renewables.