The Karnataka Electricity Regulatory Commission (KERC) has released a draft proposal to allow peer-to-peer solar energy trading in the state using blockchain technology whereby electricity consumers can become ‘prosumers’ by installing rooftop solar modules and selling excess power generated to consumers directly.

As per the draft regulations, called KERC (Implementation of Peer-to-Peer Solar Energy Transaction through blockchain-based platform) Regulations 2024, prosumers and consumers will have to register with and seek approval from distribution licensees (DISCOMs) on a first-come, first-serve basis to participate in peer-to-peer trading.

The DISCOM and the service provider will then have 15 days to check the compatibility of the peers’ systems for the readiness of exchange. In case of a rejection of the application, a written reason must be provided. However, if accepted, the peer-to-peer participants must provide a schedule in advance for the exchange of energy, both for day-ahead and intraday transactions.

Trading can either be preferential or dynamic. In preferential trading, prosumers will pick their preferred consumers and offer them a percentage of their excess power at a specific price or a mutually agreed upon tariff.

In dynamic trading, prosumers and consumers set their own prices, and the trade may be finalized through a predetermined framework. The final price can be the highest price offered by a buyer, the lowest price offered by a seller, or a market price set by a methodology.

However, if excess energy is unavailable in the peer-to-peer network, the consumer’s needs will be met by the DISCOM. Similarly, if there are no buyers for excess energy, it will be sold to the DISCOM through a power purchase agreement executed between the prosumer and the DISCOM.

To participate in a peer-to-peer transaction, the installed rooftop solar power project must either have net metering or gross metering, and the capacity must not be less than one kW and not more than 2 MW.

Prosumers/consumers must install post-paid smart meters, as per standards specified by the Central Electricity Authority, at their own cost to account for electricity imported and exported.

In case of an outage in the distribution system, no penalty can be imposed on a prosumer or consumer for the failure to complete an energy transaction.

The framework also outlined responsibilities for service providers who will enable peer-to-peer energy trading. The service providers will be responsible for providing and maintaining a blockchain platform to enable registration, trading, and seamless transaction settlement between peer-to-peer partners and ensure that its cloud and communication facilities are flexible enough to accommodate operational or regulatory changes.

Accounting and settlement

The DISCOM must generate the bill as per the provisions of the Tariff Order and Supply Code. It will comprise the peer-to-peer transaction, purchase from DISCOM, fees charged by the service provider, and open access charges.

If a prosumer injects more energy than agreed upon, the settlement of excess energy will be based on the net-feed arrangement between the prosumer and DISCOM. And if the prosumer injects less energy than agreed upon, a payment equivalent to the difference between the going energy rate and mutually agreed upon price must be made.

Alternatively, if a consumer draws less energy than agreed upon, the consumer must pay in full for the energy pledged on the peer-to-peer platform. And if the consumer draws more energy than the contracted demand, a penalty will be imposed as per the Tariff Order or Conditions of Supply, and the settlement will be done first towards the peer-to-peer platform and then to the DISCOM.

The service provider will be required to fetch block-wise meter data each day for actual energy consumption and generation. Any fees charged by the service provider will be prescribed by KERC.

The draft also prescribes that unsettled amounts beyond the due date will result in deactivation from the peer-to-peer platform.

KERC aims to implement this draft policy after consultations with citizens and industry players and has invited comments on the draft from stakeholders within 30 days.

The commission also reserves the right to alter, suspend, modify, or repeal any provision of the provided framework.

In May last year, The Delhi Electricity Regulatory Commission also proposed to amend the state’s net metering regulations for renewable energy to enable peer-to-peer transactions through blockchain or other technologies.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.