Peer-to-Peer Energy Trading: Empowering Decentralized Finance in the Energy Sector

Abstract

This chapter examines the growing convergence of peer-to-peer (P2P) energy trading and decentralized finance (DeFi) as a transformative force within contemporary energy markets. In an ideal decentralized energy ecosystem, producers and consumers engage directly through transparent, automated, and secure digital platforms that ensure fair pricing, efficient resource allocation, and inclusive financial participation. Such a system is expected to minimize intermediary dependence, enhance market responsiveness, and promote sustainable energy practices. However, existing energy infrastructures continue to rely heavily on centralized market mechanisms, regulatory rigidities, and limited financial accessibility, which constrain innovation and restrict equitable participation. Prior studies on blockchain-enabled energy trading and distributed energy resources emphasize operational efficiency and transaction transparency, while DeFi literature highlights liquidity enhancement and automated financial governance. Yet, these research streams frequently remain disconnected, offering limited insight into their integrated market 262 dynamics and socio-economic implications. Moreover, empirical evidence on regulatory adaptation, risk governance, and long-term scalability remains fragmented. Addressing these limitations, this chapter advances an integrative conceptual framework grounded in decentralized market theory and platform ecosystem models. Through analytical synthesis and selected case analyses, it demonstrates how smart contracts, decentralized exchanges, and liquidity mechanisms can enhance trust, resilience, and financial inclusion in P2P energy systems. The findings provide strategic guidance for policymakers, utilities, and innovators seeking to institutionalize decentralized, sustainable, and equitable energy marketplaces.