Decentralized Peer-to-Peer Renewable Energy Trading Using Blockchain and Smart Contracts

Abstract

Rapidly emerging technologies in renewable energy sources like rooftop photovoltaic systems of solar energy and small sizes wind turbines have brought a huge changing force on the traditional pattern of electricity production and distribution. As the number of distributed energy resources increases, the number of prosumers (both producers and consumers) is becoming more widespread. Nevertheless, conventional centralised electricity markets tend to curtail direct energy interchange between the producers and the consumers thereby impeding the effective exploitation of locally produced renewable energy. This paper presents a decentralised peer-to-peer (P2P) blockchain-based renewable energy trading system to overcome this problem through a decentralised model of the renewable energy market. The suggested system also allows the prosumers to easily trade excess renewable energy directly with their immediate customers through centralised mediators like utility companies. The block chain technology offers a tamper resistant, decentralised, digital ledger in which all energy trade transactions are documented and which gives transparency, data integrity, and trust to its participants. Smart contracts are used to automate the important trading procedures such as listing energy, negotiating prices, validating transactions and settling payments and thus minimise the cumbersomeness of operations and cost of transactions. Moreover, the system has smart metres installed to allow real-time energy generation and consumption data that can be used to verify the energy transactions. The solution structure proposed will increase the local use of energy, minimise transmission losses and the efficiency of distributed energy markets. Moreover, the decentralised blockchain network makes the system reliable and secure and provides consumers with more control over the activities of the energy trading process. The discussion of the presented model shows that P2P energy trading with the help of blockchain may help facilitate the creation of sustainable energy systems, promote the utilisation of renewable energy types, and help shape the future of the smart grid system, as well as decentralised energy markets.