Peer-to-peer energy trading: Innovations, regulatory challenges, and the future of decentralized energy systems

Peer-to-peer (P2P) energy trading represents a transformative approach to energy distribution, where consumers, referred to as prosumers, generate and exchange electricity directly with one another. This decentralized model promotes local generation and consumption balancing, reducing reliance on centralized grids and encouraging the use of renewable energy. The development of platforms and technologies, such as blockchain, smart contracts, and Internet of Things (IoT)-)-enabled devices, has enabled secure, transparent, and automated transactions. These innovations facilitate real-time monitoring and energy matching, while artificial intelligence (AI) optimizes pricing and supply-demand dynamics. Microgrids and energy storage solutions further enhance the efficiency and reliability of local energy balancing in P2P systems. However, the widespread adoption of P2P energy trading faces significant regulatory and market challenges. Current regulatory frameworks, designed for traditional, centralized energy markets, often lack provisions for decentralized trading models. Key issues include grid access, tariffs, consumer protection, and data privacy. Furthermore, regulatory barriers differ widely by region, affecting the pace of P2P adoption. Market mechanisms that support P2P energy trading, such as dynamic pricing, demand-response programs, and real-time settlement systems, are also critical for its success. The role of aggregators and intermediaries in facilitating transactions is evolving, as regulatory bodies explore sandbox environments to test these innovative models. This review explores the technological advancements and regulatory landscape shaping P2P energy trading, highlighting successful case studies and identifying future trends. It underscores the need for adaptable policies and robust platforms to unlock the potential of P2P energy trading in building resilient, sustainable, and decentralized energy systems.