Blockchain: enabling peer-to-peer electricity trading in a microgrid

Abstract

Technology grows exponentially, and it does so fast that we can barely keep up with it. However, these exponential advances are developed and applied in such a way that it becomes part of our lives. The application of some of the biggest technological breakthroughs are enrooted in our lifestyle in a way some people think it is addictive. However, technology can also liberate us in many ways, because it challenges the status quo. It questions the current systems and offers alternatives as well. Today AI, IoT, Blockchain and Smart Grids are some of the buzzwords we hear in the energy sector, but more than buzzwords, theyre possibilities. However, as technology thrives, the energy demand grows with it in order to power our “lifestyle”. Today, the world energy consumption is 13,511.2 Mtoe. (BP, 2018:8) Unfortunately, the concern for Global Warming and other environmental and social impacts are not growing equally fast, due to current legislation, political interests or elevated prices. There is however, a growing trend for Renewable energy sources which has been adopted and implemented in the past few years in a more serious and planned manner for which some countries are putting great effort in becoming completely REN powered, thanks to different efforts by International Agencies, regulators and commissions. Furthermore, technology leaps into the future every second with new breakthroughs, and promising systems in order to make processes and technologies accessible to everyone. As Prosumers make their way into the electricity-trading sector, the current energy systems need to adapt to them, in order to successfully be able to balance electricity and allow trade. One of such promising technologies, unfortunately quite often used as a buzzword, is Blockchain, which under the right legislation could make the electricity distribution process to allow Prosumers in a Microgrid sell and purchase electricity in an easier and accessible way, without the need of a Utility company, thus making the process more transparent and less costly. The purpose of this Masters thesis is to clearly identify an overview of what are some of the most promising applications of blockchain today for the electricity distribution sector, and then focus on the one application that is already a reality in development in order to allow decentralization and enable its free trade: A Blockchain Peer-to-Peer electricity distribution system in a Microgrid. My motivation to write about this topic comes from the personal need to understand the potential of this innovative application, and how it can improve electricity distribution. Nowadays, the electricity distribution is expensive but its also complicated. It involves too many actors, some of which are truly necessary. My eagerness for a deeper understanding of this topic and the limited information currently available today, drives me to do this research. The core question to focus on during this project is “How can Blockchain be efficiently applied in a Peer-to-peer electricity distribution system within a Microgrid?” In order to answer this question, I will guide you through an overview of the Blockchain Technology, the current electricity distribution system and how the roles of each player in such system might develop towards the Blockchain P2P electricity distribution system. This work also includes a research on how the Blockchain P2P system can be chosen (which type) and how it can be applied in order to reduce the current electricity consumption required by the Blockchain system in PoW consensus model for Public Blockchains. The intended method of approach includes interviews with experts and Blockchain developers in the electricity sector (Utilities and Startups), whitepapers, articles, journals, reports and books from big players in the Blockchain development sector. However, true experts and developers in the Blockchain systems do not write Articles or books, but write in Blogs, therefore in order for the information to be accurate and reliable and based on experts insights, these will also be included. The presentation of results and conclusions have been developed based on the research undertaken, by summarizing what has been considered to be more efficient and some final thoughts and conclusions on the overall blockchain technology applied to P2P electricity trading systems.