Blockchain-based Smart Decentralized Energy Trading for Grids with Renewable Energy Systems

Abstract

The rise of renewable energy sources and smart grids and the almost simultaneous appearance of blockchain technology has, through their synergy, opened a path to a fundamental shift in the very nature of energy systems as we know them. Traditionally, production, distribution, and trading of electrical energy has been a centralized process based on a limited number of regional, vertically integrated monopolies. Today, the share of energy produced using renewable energy systems by former consumers, now termed ‘prosumers,’ is constantly increasing, leading to a decentralized environment in which the line between producers and consumers is getting ever blurrier. In this paper, we first discuss the current state-of-the-art in applications of distributed ledgers and blockchain in the energy sector. For addressing novel challenges which appear in such a decentralized setting, we propose a system based on a lean distributed ledger with aggregator nodes and intelligent-agent trading founded on the notion of a shared supraordinal grid and a common carrier/producer that serves as the medium of exchange and supplier of last resort. We also show how such a pragmatic solution may be extended to allow for a futuristic fully decentralized grid while still respecting the here-and-now.