What is peer-to-peer (P2P) energy trading, and what is a local energy market (LEM)?

A LEM is a geographically bounded market (e.g. a city district) where local producers and consumers trade energy directly with each other, instead of all buying from one central distributor.

A local energy market treats a medium-scale area — a neighbourhood or city district — as an independent trading unit, itself a subunit of the larger grid. Within it, P2P trading lets any participant act as buyer or seller and trade directly through a digital platform, rather than routing everything through a central Local Power Distributor. This cuts out the centralized intermediary, improves price transparency, and rewards local clean generation. The catch it creates: with many small, uncoordinated traders and weather-driven supply, keeping the market's overall supply and demand balanced becomes hard — the core problem the trading infrastructure must solve.