Scalable Blockchain Framework for Decentralized Energy Trading in Smart Grids Using Auction-Based Algorithms

An Ethereum-based solution for energy trading in smart grids

The smart grid is the emerging power grid that uses the advanced communication, control, and automation technologies to generate, transmit, distribute, and trade energy. The flow of energy in the smart grid is bidirectional and the consumers are evolved into active participants in energy trading. The energy when produced in surplus is either sold back to the grid (main energy supplier) or is stored in energy storage systems and traded within the grid with other users using peer-to-peer model. In this paper, an approach is developed that integrates the direct trading mechanism between the users and utility, as well as the peer-to-peer trading model in a smart grid. The advantage of trading with other prosumers (ones that consume and produce energy) in the peer-to-peer (P2P) model in comparison to the direct trading with the utility is studied. The game theory auction-based approach is introduced in the P2P energy trading model. It was concluded that the integration of forecasting models with the auction models increased the overall cost savings of prosumers in the P2P energy trading model.

This review examines the impact of data analytics powered by the Internet of Things (IoT), edge computing, and artificial intelligence (AI) on improving energy efficiency in smart environments, with a focus on smart factories, smart cities, and smart territories. Advanced AI, machine learning (ML), and deep learning (DL) techniques enable real-time energy optimization and intelligent decision-making in complex, data-intensive systems. Integrating edge computing reduces latency and improves responsiveness in IoT and Industrial Internet of Things (IIoT) networks, enabling local energy management and reducing grid load. Federated learning further enhances data privacy and efficiency by enabling decentralized model training across distributed smart nodes without exposing sensitive information or personal data. Emerging 5G and 6G technologies provide the necessary bandwidth and speed for seamless data exchange and control across energy-intensive, connected infrastructures. Blockchain increases transparency, security, and trust in energy transactions and decentralized energy trading in smart grids. Together, these technologies support dynamic demand response mechanisms, predictive maintenance, and self-regulating systems, leading to significant improvements in energy sustainability. Case studies of smart cities and industrial ecosystems within Industry 4.0/5.0/6.0 demonstrate measurable reductions in energy consumption and carbon emissions through these synergistic approaches. Despite significant progress, challenges remain in interoperability, scalability, and regulatory frameworks. This review demonstrates that AI-based edge computing, supported by robust connectivity and secure IoT and IIoT architectures, has a transformative potential for creating energy-efficient and sustainable smart environments.

The popularity of renewable energy is increasing due to its cost effectiveness. However, not everyone can generate and fulfill their energy demand, so energy trading is necessary. Current solutions are centralised and charged at a high fee for energy trading as they have a monopoly in the market. Energy trading requires the storage, verification, and sharing of data related to the trade while keeping records tamper-proof. Traditional database solutions are centralised and susceptible to data tempering. In our proposed scheme, we aim to solve those problems with the help of blockchain technology by storing data on blockchain and verifying transactions with the PoA consensus algorithm for faster processing. We tested our scheme against the Ethereum network and found that our scheme has a significant improvement in cost and processing. In the future, with the help of machine learning, pricing for each transaction can be optimised.

This work aims to present a global thorough review of peer-to-peer (P2P) energy trading. P2P is an emerging bi-directional bilateral energy-trading model. For a P2P trading a player must find an optimal energy buyer/seller as per available network capacity complying with trading rules. This work identifies these requirements as three pillars of P2P trading: power market economics, network capacity allocation, and trading policy and regulation. Market economics contributes all the way from optimal determination of bidding strategy to market settlement for a player’s maximum payoff. A system operator ensures system stability by optimally allocating the network capacity for a requested P2P transaction in the power system. Whereas the trading policy and regulations aid in dispute minimization by controlling the players’ impromptu and irrational trading behavior. A successful P2P transaction requires a synergy between these three stated pillars, yet no previous works have studied them and their impacts collectively. Among the different reported literature in P2P trading, 60–65% have focused on a P2P business model design using market economics, 35–38% on power system for optimal network scheduling and capacity allocation, and 1–2% of which only have delved on the P2P trading policy and regulations requirements. This work articulates each pillar’s significance and reasoning for their interventions at different timestamps in a P2P transaction. A stepwise prosumer-to-business novel blockchain-led P2P model is designed to showcase the same for a comprehensive understanding. Further, a game theory-based numerical optimization model considering network constraints is demonstrated to clarify the problem formulation approach of P2P trading.

Incentive-compatible and budget balanced AGV mechanism for peer-to-peer energy trading in smart grids

Decision letter for "A systematical analysis on the dynamic pricing strategies and optimization methods for energy trading in smart grids"

Energy demand is increasing rapidly due to rapid growth and industrialization. It is becoming more and more complex to manage generation and distribution due to the diversification of energy sources to minimize carbon emissions. Smart grids manage reliable power generation and distribution efficiently and cater to a large geographical area and population, but their centralized structure makes them vulnerable. Cybersecurity threats have become a significant concern with these systems’ increasing complexity and connectivity. Further transmission losses and its vulnerability to the single point of failure (SPOF) are also major concerns. Microgrids are becoming an alternative to large, centralized smart grids that can be managed locally with fewer user bases and are safe from SPOF. Microgrids cater to small geographical areas and populations that can be easily managed at the local level and utilized for different sources of energy, like renewable energy. A small group of consumers and producers are involved, but microgrids can also be connected with smart grids if required to exchange the excess energy. Still, these are also vulnerable to cybersecurity threats, as in the case of smart grids, and lack trust due to their decentralized nature without any trusted third party. Blockchain (BC) technology can address the trust and cybersecurity challenges in the energy sector. This article proposes a framework for implementing a BC-based microgrid system for managing all the aspects of a microgrid system, including peer-to-peer (P2P) energy trading, Renewable Energy Certificate (REC), and decentralized energy trading, that can be utilized in the case of Saudi Arabia. It can integrate cybersecurity standards and protocols, as well as the utilization of smart contracts, for more secure and reliable energy generation and distribution with transparency.

When blockchain meets smart grids: A comprehensive survey

The smart grid idea was implemented as a modern interpretation of the traditional power grid to find out the most efficient way to combine renewable energy and storage technologies. Throughout this way, big data and the Internet always provide a revolutionary solution for ensuring that electrical energy linked intelligent grid, also known as the energy Internet. The blockchain has some significant features, making it an applicable technology for smart grid standards to solve the security issues and trust challenges. This study will present a rigorous review of blockchain implementations with the cyber security perception and energy data protections in smart grids. As a result, we describe the major security issues of smart grid scenarios that big data and blockchain can solve. Then, we identify a variety of recent blockchain‐based research works published in various literature and discuss security concerns on smart grid systems. We also discuss numerous similar practical designs, experiments, and items that have recently been developed. Finally, we go through some of the most important research problems and possible directions for using blockchain to address smart grid security concerns.

The smart grid is widely considered as an efficient and intelligent power system. With the aid of communication technologies, the smart grid can enhance the efficiency and reliability of the grid system through intelligent energy management. However, with the development of new energy sources, storage and transmission technologies together with the heterogeneous architecture of the grid network, several new features have been incorporated into the smart grid. These features make the energy trading more complex and pose a significant challenge on designing efficient trading schemes. Based on this motivation, in this paper, we present a comprehensive review of several typical economic incentive approaches adopted in the energy-trading control mechanisms. We focus on the technologies that address the challenges specific to the new features of the smart grid. Furthermore, we investigate the energy trading in a new cloud-based vehicle-to-vehicle energy exchange scenario. We propose an optimal contract-based electricity trading scheme, which efficiently increases the generated profit.

The integration of blockchain technology into smart grids presents a transformative solution to address the growing concerns surrounding energy data security, transaction transparency, and decentralized energy management. This chapter explores the pivotal role of blockchain in enhancing the functionality and resilience of smart grids, particularly in the context of renewable energy transactions. By leveraging blockchain’s decentralized nature, immutable ledger, and cryptographic security, smart grids can secure data transmission, ensure transparent peer-to-peer (P2P) energy trading, and foster trust among consumers and energy producers. The chapter delves into various case studies that highlight the successful implementation of blockchain as a security layer, demonstrating its potential to mitigate cyber threats, prevent data manipulation, and improve overall grid efficiency. The intersection of blockchain with emerging technologies such as artificial intelligence (AI) and the Internet of Things (IoT) is examined, providing a comprehensive outlook on future developments in smart grid ecosystems. Key challenges, opportunities, and the scalability of blockchain solutions for large-scale energy systems are critically assessed. This chapter serves as a timely resource for researchers, policymakers, and industry stakeholders, offering valuable insights into the adoption and impact of blockchain in the renewable energy sector.

In this paper, we propose a scheme that implements a Distributed Ledger Technology (DLT) based on Directed Acyclic Graph (DAG) to generate, validate, and confirm the electricity transaction in Smart Grid. The convergence of the Smart Grid and distributed ledger concept has recently been introduced. Since Smart Grids require a distributed network architecture for power distribution and trading, the Distributed Ledger-based Smart Grid design is a spotlighted research domain. However, only the Blockchain-based methods, which are a type of the distributed ledger scheme, are currently either being considered or adopted in the Smart Grid. Due to computation-intensive consensus schemes such as Proof-of-Work and discrete block generation, Blockchain-based distributed ledger systems suffer from efficiency and latency issues. We propose a DAG-based distributed ledger for Smart Grids, called PowerGraph, to resolve this problem. Since a DAG-based distributed ledger does not need to generate blocks for confirmation, each transaction of the PowerGraph undergoes the validation and confirmation process individually. In addition, transactions in PowerGraph are used to keep track of the energy trade and include various types of transactions so that they can fully encompass the events in the Smart Grid network. Finally, to ensure that PowerGraph maintains a high performance, we modeled the PowerGraph performance and proposed a novel consensus algorithm that would result in the rapid confirmation of transactions. We use numerical evaluations to show that PowerGraph can accelerate the transaction processing speed by over 5 times compared to existing DAG-based DLT system.

Selection of the most appropriate communications technology for a smart grid (SG) application is far from trivial. We propose such a feasibility assessment starting from identification of key performance indicators (KPIs) required for peer-to-peer (P2P) energy trading and grid control operations from a communications perspective. A set of cross-disciplinary KPIs, both quantitative and qualitative, are considered from communications, power, business, actor involvement, financial, and demand side management categories. They serve as a general baseline for use cases, as there have been few previous works attempting to capture the essential features of P2P SG operations. The KPIs are briefly identified along with their relations to P2P energy trading and grid control. A straightforward comparison of the quantitative and qualitative KPIs' impact on technology selection is not feasible. This paper addresses the comparison with: 1) a prioritization of the KPIs using the analytic hierarchy process; 2) a comparison of technology solutions evaluated in our previous works against the KPIs' requirements; and 3) a total feasibility evaluation of the solutions against selected KPIs. The prioritization shows latency, reliability, security, scalability, robustness, costs of information and communication technologies (ICT) devices, and costs of ICT deployment are the most important KPIs in enabling P2P energy trading and grid control. Further, the technology feasibility assessment enables identification of the most suitable candidates for an SG application.

Nowadays, the proportion of the global supply of green energy sources (e.g., solar and wind) is increasing dramatically. Integrating these sources into the current smart grid is very challenging, given that the smart grid has centralized topology which is costly and inefficient. In particular, the current procedures used in the wholesale energy market are slow, time-consuming and thus expensive for small-scale energy sources (e.g., small-scale solar energy farms). Indeed, these sources are excluded in practice from the energy market. Thus, to integrate the increasing number of small-scale energy sources, there is a need to transform the smart grid into a decentralized system. A promising technology to realize this decentralization is Blockchain. With its characteristics like immutability, security, and decentralization, we believe that Blockchain will be the core technology for the future decentralized smart grid. In this paper, we propose a peer-to-peer (P2P) energy trading system based on Ethereum. The objective is to allow any participant (e.g., big/small producers and consumers) to securely trade energy with minimum cost. The proposed approach moves most of the processing and storage off-chain, with the objective to minimize the cost of on-chain (i.e., smart contract) processing and storage while guaranteeing the security of the trading process. Stable coins are used to pay for the trade so as to overcome the problem of the instability regarding cryptocurrency exchange rates. Our proposal has been implemented, tested and deployed on the Ethereum official test network Ropsten. The results show that the proposed approach implements the P2P trading process with very small cost, making it an affordable solution for all participants, including small-scale sources.