Digitalised, decentralised power infrastructures challenge blockchains

Abstract

Electricity generation is decentralising quickly. Simultaneously, final energy use for residential customers electrifies in order to reduce carbon dioxide emissions. Together with ubiquitous digitalisation, this decentralisation and flexibility at the demand side paves the way towards local energy communities and – in its most distributed version – to peer-to-peer energy trading, where customers buy and sell electricity among each other. Although peer-to-peer energy trading is not yet legal everywhere, ‘citizen energy communities’ have been introduced as cornerstones of the energy transition by the European Commission in their ‘Clean Energy for All Europeans’ programme. This paper firstly discusses this digitalisation and decentralisation of the power infrastructure. These trends are supported by distributed information technologies, including peer-to-peer control paradigms. Distributed ledger technologies, such as blockchains, might be one such piece of the puzzle. The second part of the paper investigates whether blockchain technologies, and their associated smart contracts, offer advantages for larger-scale peer-to-peer energy-trading applications over a classic, centralised approach. Different blockchain implementations are investigated and qualitatively evaluated from a scalability, efficiency and trust perspective. The conclusion indicates that in the current state of the art, a trade-off between decentralised and more classical (hierarchically centralised) solutions suits larger-scale peer-to-peer energy-trading applications best.