Blockchain Acknowledgement in Energy Sector : P2P Energy Trading

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Blockchain Acknowledgement in Energy Sector : P2P Energy Trading

Newborn blockchain technology being accepted one of the top 10 strategic technology is getting more adopted each day by various sectors. Establishing a stable payment/money transaction system remains as a starting point of adoptions. While Bitcoin and cryptocurrencies gathering attention, use cases of blockchain in power systems require deep research and exploration each day. A most popular application is related to the energy market and the studied paper provides a wide perspective of use cases by getting into the technical side also.

Various sectors try to integrate their processes with blockchain technology since the most famous application of this tech released which is Bitcoin by Satoshi Nakamoto in 2008. Bitcoin released as payment/money transaction system but what it represents was bigger than just a cryptocurrency. The traditional system that is currently being used -called banks- executes the process in the databanks as a single authority and this third party placement into the payment system requires trust between bank and bank’s customer. Blockchain provides a new methodology by using cryptographic processes and eliminates trust issues between mentioned relations.

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A most important advantage of blockchain is that it can be used in many ways. One way of using; decentralizing the system, it connects all participants to the system and creates a democratized environment that every node can access every transaction. This environment protects the system from cyber-attacks by using every node as another processor, so there is no single point of failure.

In a basic manner, blockchain is a chain of blocks that contains several information parties and all blocks are shared -and open to examining- to all nodes who are a participant in the system. Each block is connected next block with the previous block’s hash output, with this method whole chain becomes unmodifiable.

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Blockchain technology has numerous applications in the energy sector, most popular ones are P2P energy trading, renewable energy certification, and demand response tracing.

P2P energy trading is a very popular topic in the energy market today, maintaining relations between producers and prosumers in the same grid and provide needs for two parties is hard to handle.

When it comes to renewable energy certification and demand response tracing, blockchain offers new methodology from tracing, control of the grid and coordination of the grid. Grids get controlled by, Distribution System Operators (DSO) and Transmission System Operators (TSO). Many of the grid operators are suffering from:

  • Small prosumers participate in the Demand Response programs,
  • Needing for new ancillary services from distributed units,
  • Mentorship and managing the aforementioned processes.

Blockchain becomes an answer to these problems by establishing;

  • P2P decentralized management in Demand Response in the grid;
  • DR application and distributed resources aggregation;
  • Incentive mechanisms for prosumer in DR schemes.

Another basic feature of blockchain is consensus algorithms, it provides validation of blocks before adding them into the chain. Proof of Work mechanism gives a reward to which node solves the computationally difficult problem before other nodes to satisfy the winner node for its efforts and energy consumption.

Proof of Stake uses less energy than Proof of Work and it chooses the next node which is going to insert the next block. As a platform choice, there are several options such as; Ethereal, Multichain 2.0, Tendermint and Hyperledger Fabric.


As a conclusion, blockchain technology and the energy sector have many common points when it comes to having network distribution and providing infrastructure that can not be cloned by copying or attacking the system. Exchanging any type of goods (in this case it’s electricity) in a system that provides openness to everyone, handling attacks and ensures security, but most importantly decentralized infrastructure creates a most suitable environment for integrating this technology in the energy market. Preparing business models and applying them to the energy sector brings technical challenges -in areas of electric trading, tracing and certification- that is explained in a wider perspective in this article.


[1] Nakamoto S. Bitcoin : a peer-to-peer electronic cash system, vols. 1–9; 2008.

[2] ENTSO-E. Towards smarter grids: developing TSO and DSO roles and interactionsfor the benefit of consumers. ENTSO-E_Position_Paper_ TSO-DSO_interaction.pdf.

[3] Maly RJ. Comparison of centralized (Client-Server) and decentralized (Peer-to- Peer) networking, semester thesis. University of Zurich; 2003.–2003-Wi/SA-2003–16.pdf. [Accessed 4 December 2018].

[4] Jabed M, Chowdhury M, Colman A, Kabir MA, Han J, Sarda P. Blockchain versus Database : a critical analysis, 2018 17th IEEE international conference on trust, security and privacy in computing and communications/12th IEEE international conference on big data science and engineering. 2018.

[5] GruyterD.Potentialoftheblockchaintechnologyinenergytrading.2020.p.1–44.

[6] 23/01/2019 EPEX SPOT markets: focus on flexibility. 2019.

[7] IBM Institute for Business Value. Blockchain reinvents the consumer experience, executive report. [Accessed 3December 2018].

[8] Dutchs G, Steinecke N. Use cases of blockchain technology in energy andcommodity trading. PWC; 2017.

[9] Di Silvestre, M. L., Gallo, P., Guerrero, J. M., Musca, R., Riva Sanseverino, E., Sciumè, G., Vásquez, J. C., & Zizzo, G. (2020). Blockchain for power systems: Current trends and future applications. In Renewable and Sustainable Energy Reviews.

Blockchain Acknowledgement in Energy Sector : P2P Energy Trading was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.