A digital marketplace is changing the way electricity is produced, traded and consumed in Australia. Two pilot programs, each including about 5,000 households, will allow homeowners with solar panels and batteries to trade electricity in a digital marketplace—the first such network in the world.

The Decentralized Energy Exchange (deX), funded by the Australian Renewable Energy Agency, was launched at the end of February. It connects homeowners to a network of “virtual” power stations of smart grids, forming a distributed energy system. Households with batteries that hold about 5 kilowatts (kW) can operate as a virtual power plant, with capacities in the megawatt range.

A consortium of electricity providers, energy tech startups, energy agencies and retailers, including GreenSync, United Energy, ActewAGL, Reposit Power and Mojo, developed the marketplace. One of the biggest challenges for such a system is ensuring customers are paid for participating in the grid.

The consortium hopes to reduce energy costs, push investment in renewable energy, stabilize the electric grid, and protect it from surges in demand, such as during heat waves. This exchange can create better supported grids, which will lead to cheaper networks and lower electricity costs.

“We are on the cusp of a profound shift in the electricity market and a turning point in Australia’s energy future,” said Phil Blythe, founder and CEO of GreenSync.

The marketplace signifies a shift from a centralized model of large-scale power plants to a more decentralized one including rooftop solar production.

Power will be generated at the outskirts as well as the center of a grid, and deX controls the flow of power according to where there is demand. Exchanges occur automatically, in real time. This smart communication system developed by Reposit Power will control home batteries and link them to the exchange.

This system could be more responsive to surges in energy demand and peak prices. If a line becomes overloaded at a certain time of day, deX will post a problem and households with batteries and solar power can reply with information on whether they have energy to provide.

This exchange could appease some of the utility battles over homeowner solar energy, since households could become active participants in the grid instead of solely energy consumers.

Currently, rooftop solar makes up around 16 percent of renewable-energy generation in Australia, according to the Clean Energy Council. This is estimated to increase to between 20–50 percent, the highest uptake in the world per capita in Australia, where around 1.6 million rooftops have solar panels.