Energy cooperatives: a missing piece of the peer-to-peer energy regulation puzzle?

Alexandra Schneiders, UCL Energy Institute, University College London

Peer-to-peer (P2P) energy trading, often facilitated through distributed ledgers (‘blockchains’), is emerging as a new mechanism for settling exchanges of energy between renewable energy generators and consumers, as well as matching local supply and demand. It is currently being tested in urban areas, where there are fewer renewable energy installations due to space constraints. The sharing of energy generated by a single installation (e.g. solar panels on the roof of a tower block) between residents, through a P2P blockchain-run energy trading platform, can tackle the disparity in renewable energy generation across the UK. Furthermore, grouping residents into a single legal entity, such as an energy cooperative, could resolve regulatory problems associated with P2P energy trading- such as the legal recognition of prosumers acting as consumers and entrepreneurs, as well as the validity of ‘smart contracts’ programmed to trade energy on the platform.

Energy cooperatives are popular in European countries such as Denmark and Germany, where they benefit from government support. The situation is different in the United Kingdom, where energy cooperatives are fewer and they do not have access to benefits such as feed-in tariffs (FITs) to the same extent as prosumers with small-scale installations. As the number of UK-based projects experimenting with P2P energy trading increases, the potential contribution of energy cooperatives to this phenomenon deserves further analysis. Cooperatives could be a key component in the tackling by P2P energy trading projects of energy use and socio-economic distributional issues in the UK.

The aim of this paper is to answer the question of to what extent energy cooperatives in the United Kingdom, as they are currently legally recognised, could further stimulate peer-to-peer energy trading. The first part of the paper will consider the way in which energy cooperatives in the UK are legally recognised and regulated, drawing comparisons with other countries. It will then explore the ways in which the legal form of cooperatives in the UK (e.g. limited company) could resolve regulatory obstacles associated with P2P energy trading, such as the legal recognition of prosumers and associated questions including contract validity, consumer protection and data privacy.

Research methods will include the analysis of legal texts and literature, as well as interviews of stakeholders at UK and European level. These will include the European Federation for Renewable Energy Cooperatives (REScoop), UK energy cooperatives, and organisations across Europe experimenting with P2P energy trading on blockchains by cooperatives. An example of the latter is the Pylon Network, which is developing a P2P energy trading platform for energy cooperatives in Spain and plans to expand into other European countries.

The results will show whether further government support of energy cooperatives is necessary to enhance the uptake of renewable energy sources by urban communities by means of P2P energy trading. The targeted audience is policy and industrial stakeholders.

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