Blockchain technology enables secure energy trading between neighbours
Researchers from Monash University and the Queensland University of Technology have harnessed the power of emerging blockchain technologies to transform the energy market.
Peer-to-peer (P2P) energy trading is a new approach for energy management in smart grids and facilitates the integration of a large number of small-scale producers and consumers into the energy market.
While managing these small-scale energy market participants can be challenging, Blockchain technology offers an opportunity for an improved market framework that is decentralised, trustworthy and anonymous.
Blockchain allows energy producers and consumers to directly negotiate and trade energy without the reliance on a trusted third party, enabling a transparent transaction and allowing all participants involved to save money.
Researchers Mohsen Khorasany and Reza Razzaghi, from the Monash Energy Institute, in collaboration with Ali Dorri and Raja Jurdak from the Queensland University of Technology, have proposed a blockchain-enabled P2P energy market that rewards those who trade with local ‘energy neighbours’.
“What we’re proposing is a secure and privacy-preserving environment for decentralised energy trading between producers and consumers. We utilise a grid service charge, defined based on the electrical distance, to encourage participants to trade energy locally, thereby receiving the best price for their energy and reducing the overall power loss or the possibility of overloading electricity grid lines,” said Research Fellow, Dr Mohsen Khorasany from the Department of Electrical and Computer Systems Engineering.
Both producers and consumers are encouraged to negotiate on energy trades locally with nearby agents to bring down the overall energy price. The electrical distance of agents is a key factor in calculating the grid service charges and makes it appealing to agents who trade with their neighbouring agents by receiving a competitive price.
“This approach also takes into account a reputation factor for each participant, based on past performances in delivering the committed energy quota. This ensures that prior to negotiations, participants are able to select their trading partners based on their preferences over the reputation and proximity of the trading partners,” explains Dr Reza Razzaghi from the Department of Electrical and Computer Systems Engineering.
By moving to a fully decentralised market framework, participants no longer need to rely on a centralised entity for their energy trades. This, in turn, preserves the participants' privacy, as they do not need to reveal their private information.
A framework such as this has the ability to harness the power of emerging technologies and future-proof the way consumers and producers trade energy.
To view the research paper, please visit: https://bit.ly/3sTHETn
Acknowledgement of support: This Project received funding from ARENA as part of ARENA's Advancing Renewables Program.