Peer-to-peer energy trading is emerging as a promising solution to rising energy bills and increasing demand on aging power grids. 

A new study from the University of Sheffield shows that this model of local energy sharing between neighbors could reduce costs, cut carbon pollution, and encourage more people to invest in clean energy technologies at home — all while helping them earn and save money.

What is peer-to-peer energy trading?

Peer-to-peer energy trading is a system where households generate and share energy directly with one another rather than buying it from a utility company. 

With technologies such as solar panels, electric vehicles, and home batteries or generators, consumers can sell their excess electricity or heat to neighbors, often through smart platforms that set prices dynamically.

This new approach is gaining traction as a way to cut costs, reduce strain on energy grids, and accelerate the shift toward clean energy. 

Why is P2P trading important?

New research from the University of Sheffield suggests this model could significantly benefit household budgets and the environment. 

In a study published in the journal Applied Energy, researchers simulated a neighborhood of 25 homes outfitted with clean technologies. Over two different weeks — one in winter and one in spring — participants traded electricity and heat locally. 

The results: Energy bills dropped by more than $20 per week in both seasons, while overall carbon emissions and pressure on the national grid were reduced.

The simulation relied on a system called a continuous double auction, which allows households to plan their energy usage or sales a day in advance. This gave them more control and encouraged smarter, more efficient energy behaviors.

"Energy companies have been testing the systems in recent years," said Sheffield professor Solomon Brown, who led the study, per a university release. "We hope that our research can support this exploration by demonstrating how the system could work and the impact it could have on energy prices and the environment."

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How P2P trading helps with clean energy adoption

Because P2P trading rewards households that generate their own energy, it creates a direct incentive for more people to install solar panels, heat pumps, remote wind turbines, and EV chargers. These homes can earn money by selling surplus energy when neighbors need it.

This helps reduce reliance on dirty fuel-powered energy plants, especially during peak demand. In the Sheffield simulation, when both electricity and heat were exchanged, EVs charged more during sunny periods and heat pumps were used more efficiently.

While regulations in many places, including the U.K. and state by state in the U.S., don't yet allow full P2P energy trading, momentum is building. Pilot programs are already underway, and this study could help support broader adoption. 

As grid demand rises and energy prices fluctuate, sharing power with neighbors might one day become as common as borrowing any other household staple, providing a smart way to save money and help the planet.

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