By Muhammad Izzat Aiman Mohamad Zainal ‘Asri and Nur Fadhilah Mohd Shari
Many modern households with rooftop solar panels are quietly transforming into energy producers. In Malaysia, solar panel installations are growing especially in urban and suburban areas. These homeowners are now sitting on potential surplus energy. When a home generates more energy than it uses, the extra power can be stored for later use or be exported to the grid. In many places around the world, that surplus energy is beginning to find a new destination: the next-door neighbour.
Peer-to-peer, or P2P, energy trading creates a local marketplace where homes and small businesses buy and sell their surplus energy directly. The idea is simple. A household with spare solar-generated energy offers the surplus for sale to the neighbours who are in demand of energy. A digital platform measures the energy, records the transaction and facilitates payment. The result can be cheaper local supply, new source of income for prosumers and reduced pressure on long transmission lines. This model is not just theoretical. Several pilots have tested P2P trading in diverse settings.
Powerledger, the Australian developer of a blockchain-enabled trading platform, has piloted the technology in multiple urban and precinct settings to test trading among neighbouring households. Community pilots such as the Brooklyn microgrid have shown how local trading can support community resilience during unexpected power outages. In Japan, commercial services have begun offering local trading solutions supported by AI for agricultural cooperatives. In Malaysia, the Sustainable Energy Development Authority (SEDA) ran a controlled pilot to test how solar panel owners could trade surplus energy under existing rules. These early projects show that technology, market design and regulation can work together when pilots are carefully scoped.
P2P energy trading is supported by several technologies. An Internet-of-Thing (IoT) device such as a smart meter provides households with near real-time measurement of energy generation and consumption. Meanwhile, a distributed network platform such as blockchain provides a secure, tamper-proof ledger technology that records energy transactions and manages payments. To match energy supply and demand, a market matching-algorithm is implemented to pair bids and ensure that network constraints are adhered to. Together, these components let neighbours trade energy in a way that is transparent, fair and auditable.
There are clear advantages to trading locally. First, it enables shorter delivery distances which reduces transmission losses and further improves operational efficiency. Second, prosumers are able to recover some investment by selling surplus energy. From buyers’ perspective, they have the access to local renewable energy supply and sometimes pay less than they would to the energy grid provider. In return, higher local use of solar energy can reduce peak loads and lower carbon emissions associated with energy generation.
At the same time, P2P energy trading raises practical challenges. Conventional energy distribution networks were generally built for one-way flows from power plants to end users. On the contrary, local trades are bilateral which can affect voltage and protection settings. Malaysia’s power grid is in the process of transitioning towards a more bilateral system. This effort is important to ensure that energy trading platforms will not compromise safety or reliability. Second, privacy and cybersecurity must be taken seriously. Platforms that record energy consumption and transaction data must be protected against adversaries and misuse to ensure secure adoption of such systems. Finally, equity is a concern. Early adopters tend to be better-off households that can afford panels and batteries. Without deliberate policies, P2P energy markets risk creating winners and losers within the same community.
Realising P2P energy markets will take a coordinated effort. Regulators must create clear sandbox rules, distribution utilities must test technical safeguards, network platform providers must meet privacy and security standards, and researchers must continue to develop scalable, privacy-preserving data dissemination and payment models.
When these aspects act together, pilot runs can safely demonstrate what is practical and what needs improving. P2P energy trading will not replace the existing conventional grid. Instead, it can complement the grid by unlocking more value from distributed renewables, improving resilience in local communities, and giving households more control over their energy bills.
The technology still needs refinement and widespread adoption will take time. Yet the progress shown in international pilots, together with Malaysia’s own early trials, suggests that this concept deserves sustained attention as part of the country’s broader clean-energy transition.
Muhammad Izzat Aiman Mohamad Zainal ‘Asri is a Postgraduate Student Master of Science (Applied Mathematics), and Dr. Nur Fadhilah Mohd Shari is a Senior Lecturer at the Institute of Mathematical Sciences, Faculty of Science, Universiti Malaya.