The NSW Coalition government has expressed its support for peer-to-peer trading for solar households, which would allow homes and businesses to sell excess solar power to neighbours and peers rather than selling back into the grid.

The idea of peer-to-peer trading is developing significant interest in the industry, particularly with the arrival of software from the likes of Canberra-based Reposit and “blockchain” software being rolled out for trials by the Perth-based Power Ledger.

However, widespread rollout of peer-to-peer trading appears blocked by regulators and policy makers, particularly after a recent ruling against a proposal to make decisions on network tariffs more flexible.

NSW parliamentary secretary Adam Marshall says solar households in NSW, many of whom will soon lose their generous premium tariffs, should have the ability to trade electricity that they generate from their rooftops with other business or other indivisuals with their community.

He says this will turn households into mini generators and retailers, and that should result in falling costs for all consumers.

“What that potentially does is further diversify energy generation in our state. And it will put downward pressure on prices,” Marshall said in an interview recorded in an NBN TV news report.

But Marshall said that any such move is prohibited by the rules that protect investments in poles and wires infrastructure. “We need to get them to change their position,” he said.

“All the infrastructure is there now – anyone who is connected to the grid has the potential to become an energy generator and trader, it’s just the regulations that don’t allow people to do that.”

One of those barriers was reinforced last month when the Australian Energy Markets Commission on Thursday announced it would reject a proposed rule change that would give a network credit to customers sharing and storing more of their locally generated electricity.

Proponents of local generation network credits (LGNCs), which gives value to generation produced locally, said the initiative would have saved $1 billion or more in avoided network costs.

The AEMC decision was seen as throwing a big spanner in the ability of community groups, councils, property developers and townships to share energy that they generate on one their buildings. In effect, it protects the dominance of the energy incumbents.

Proponents of the rule change – which included numerous councils including Sydney, Byron Bay and others – were damming in their criticism of the AEMC and of the modelling it produced that claimed the new rule would add costs to consumers, not remove them.

Geoff Bragg, from the Solar Energy Industry Association, wrote about the attraction of peer to peer trading more than two years ago.

“Just imagine a system where one customer could sell energy to another customer, via the Distribution Network Service Provider (DNSP) who “clips the ticket” for transferring the energy – Peer to Peer Energy Trading,” he wrote at the time.

“Anyone with a smart meter could join the market as a buyer or seller. Customers could set their buy and sell rates for energy for distributed energy via an online portal.

“At any moment a smart meter knows how much energy is being imported or exported, with a data system connecting the 2 or more peers at appropriate intervals, logging the traded energy, and registering a fee for the transportation of that energy.

“If that sounds difficult to do, remember this is an IT and accounting exercise (the physics is sorted already) and think about Peer to Peer file sharing with such protocols as BitTorrent file sharing, with hundreds of peers connected to each other in any one file sharing exercise. It would be a piece of cake for a handful of the right IT boffins.”

Those boffins are now starting to emerge, with the use of Blockchain technology promoted by the Perth-based Power Ledger.

“I think that consumers want to become ‘prosumers’ and become citizen utilities and that this is a technology that will enable them to do that,” says Jemma Green, co-founder and chair of Power Ledger.

Blockchain is a distributed computing accounting protocol that underpins digital currency Bitcoin. To trade electricity utilizing the blockchain, communication hardware must be fitted to a standard digital electricity meter that will keep track of electricity being generated, imported or exported.

This is then converted into blockchain tokens, which are allocated to various accounts within the network – consumers, producers, and prosumers – as trading takes place between the parties.

Bragg has since put into practice his own ideas. His company, New England Solar, and local real estate group Paragon Property Partners are co-developing a unique project near the NSW regional city of Armidale, in the hear of Marshall’s electorate.

This offers buyers the chance to not only build their dream home from scratch in the NSW northern Tablelands, but to become part owners of their own power company: a purpose-built embedded network through which to buy and sell the solar generated on the community’s rooftops – and stored in its batteries – peer to peer.

RenewEconomy tried to contact Marshall’s office to get some more information, but were unsuccessful by publication time.