3. Peer-to-Peer Energy Trading
3.1. Prosumer and Consumer Cases
Peer-to-Peer (P2P) energy exchange is a peer-sharing facility where
renewable energy consumers and small cooperative services provide
consumers with energy in homes, offices, etc. Peer-to-Peer (P2P) energy
exchange is a peer-sharing service where consumers of renewable energy
and small cooperative services provide power to consumers in homes,
offices, etc (Figure 3). Indeed, P2P technology provides an opportunity
for a new generation of models in the energy sector [89]. The
authors suggested in [90] that the energy prices will adapt to a
competitive and automated economy due to the shift in electricity
delivery technologies and trends. At the same time, P2P power generation
is traded across the energy industry and is now evolving. The authors
suggested in [91] that P2P assists individual consumers to become
consumers and exchange surplus resources with competitors. The use of
on-site PV characterizes Self-consumption. In this vein, energy storage
will improve self-consumption. The obtained results showed that the
intermittent effect of renewable energy production leads to an
uncoordinated distribution of energy to/from the grid. Thus, utility
networks cannot enhance reward/punish clients. The authors highlighted
the need to allow consumers to self-organize into a group to increase
their personal and group use [92].
Figure 3. Prosumer energy management scheme
The authors stated in [93] that the major components and technology
involved in P2P energy trade are listed and categorized according to
their activities. As shown in Figure 3, Figure 4 for P2P energy
circulation, four-tier levels are suggested.
- Prosumer Power Grid Level (PPGL): Contains all power grid units like
feeders, adapters, intelligent meters, drawings, etc. These units
constitute the physical infrastructure for energy delivery for the
introduction of P2P energy trade.
- Prosumer Information and communication technology Level (ICTL):
Includes network equipment, protocols, software, and data
distribution. Sensors, wire/WLAN connections, routers, switches,
computers, and other machine models are also standard network
equipment. There may be many collaborative mechanisms such as
knowledge sharing and data exchange. The flow of knowledge indicates
the senders and recipients and the quality of each message between
communication appliances.
- Prosumer Management Level (PML): Consists mainly of power grid
management functions. In this layer, efficient energy supply is
managed, and energy flows are regulated. Active energy management is
an example of potential control tasks within a control system, voltage
regulation, and frequency control.
- Prosumer Business Level (PBL): aims to engage with peers and with
private entities. This primarily consists of investors, manufacturers,
Distribution System Operators (DSOs), and regulators in the
electricity industry. Different types of business strategies can be
built to integrate different forms of P2P energy circulation in this
layer
Figure 4. Peer-to-Peer energy trading levels
3.2. P2P Energy Trading
Due to the issues with traditional distributed energy trading and the
blockchain-based paradigm proposed (i.e., infrastructure-based P2P
energy trading), there is a need to include grids with technology for
energy trading. For example, in an ad hoc P2P energy sharing model,
local micro-grids will be combined with potential for energy suppliers
using a blockchain-based network (Figure 5). As a result, customers can
not only import from another consumer, but they can also opt to purchase
electricity from traditional power plants [94]. Because of the
blockchain’s immutability and distributed existence, this model ensures
that all transactions are open to all prosumers and large energy
providers, especially governments. The government should have the forum
in order to gain ownership over the energy sharing market [95]. That
will aid in increasing the appeal and opportunity for all parties
concerned. Since distributors will be compensated for these facilities,
this model will provide more business opportunities for traditional
suppliers. The architecture of this design indicates the presence of
smart devices on both the consumer and power supply sides. The structure
is classified into four levels: Tier power grids, which include both
major companies and countries that either generate or distribute energy
[96]. Data transfer is where much of pre-negotiation and
communication will take place. The transaction is executed in three
stages. First, the consumer expresses his intent to purchase energy.
Sellers apply their offers, and the buyer chooses one of them. Another
important line of communication is between the vendor and the Grid. The
seller must agree to a deal for distributor services. The blockchain
layer is responsible for storing all transactions [97].
Figure 5. P2P energy trading
3.3. Infrastructure-Based Energy Trading
The centralized organization manages traditional electricity trading.
However, prosumers do not need centralized authority for P2P
transactions. Prosumers may directly interact with each other for energy
exchange in the assumption that physical ways of transmitting energy
occur [98]. For e.g., two adjacent houses will communicate via a
wire cable, and the energy can then be transmitted directly. The premise
in the infrastructure-based P2P energy sharing paradigm is that
prosumers have smart meters and IoT sensors mounted on the object on
which they are purchasing energy (e.g. Home-To-Vehicle-V2H/H2V)
[99]. As seen in Figure 6, these devices interact with one another
through the blockchain in order for the transaction between the two
entities to be efficient. Another presumption is that the prosumers have
the functional means to exchange resources with one another. The
proposed architecture in [100] for a pure P2P trade does not have to
include any outside party in the negotiation process. Prosumers and
consumers interact with each other from transactions and behavior. If
consumers have the material resources to transmit electricity, they can
conduct transactions without intermediaries. Since specific
conversations take place on a different network, this removes the
communication strategy from the blockchain system [101].
Another case that fits into the infrastructure-based P2P power-sharing
model is the Brooklyn microGrid [102]. It depends on a limited
number of Prosumers and customers (for example, five
Prosumers/consumers) related to each other. By using smart meters and
e-wallet, consumers may sell excess electricity to neighboring
customers. The transaction is executed using self-executing contracts,
and each participant has access to all transactions. Users can decide
the total cost they are willing to provide and prioritize the type of
energy required (i.e., conventional or Renewable Energy). The Micro-Grid
outages mentioned here are premature, and some operational issues may
appear. One of them is to provide the physical infrastructure for energy
conversion and global scale (for example, dealing with situations where
the seller is not close to the buyer but needs to sell the energy)
[103].
Figure 6. Infrastructure-based energy trading
4. Blockchain Technology in SG
4.1. Motivations of Applying Blockchain in SG Paradigm
SG is considered an advanced strategy that combines digital and network
computing technologies to transform and modernize the traditional grid
heritage in power distribution and a more reliable, efficient and
insightful transmission network [104]. These modernization changes
have arisen due to severe climate change and the need for renewable
energy sources. The overarching goal of these transformations and
modernizations is to change the energy environment by combining
distributed energy supply with sustainability and utilization and
reducing dependence on generations based on fossil fuels. The old
traditional network serves customers with its long-distance transmission
lines, while the innovative network model brings producers and consumers
closer together by installing renewable suppliers as independent
distributors [105].
Although the smart grid and the energy internet are intended to adapt to
dispersed and centralized energy generations, one of the significant
drawbacks to the current architecture is the central structure. Energy
generations, transmission and distribution networks, and markets depend
on primary or intermediate institutions. Smart grid elements connect and
coordinate with prominent organizations that can track, receive, data
process and assist all aspects with adequate control signals in this
centralized environment. Moreover, the energy is usually transmitted
through a long-range network to transfer the powers to the end-users
through the distribution network [106].
Unfortunately, given the penetration of renewable energy and the
ever-increasing number of components, the latest architecture for smart
grid systems raises some questions. Scalability, scalability, high
computing, connection pressures, availability attacks, and the inability
to monitor potential power systems with many components are among the
considerations [107]. As a result, moving to a decentralized
infrastructure is an intelligent network direction that offers more
complex, insightful and proactive functions. The network infrastructure
also evolves and advances towards a fully integrated network with
clustered configurations to increase complex interactions across all
components of the innovative network systems. The synchronization and
usability provided by EI also contribute to the most economical,
efficient and reliable innovative network system service [108].
The energy market is rapidly increasing as the current topic progresses.
The SG was intended to guarantee reliable power delivery, low losses and
good efficiency, and energy supply reliability. The idea allows
individuals to produce power on a limited scale and supply it to the
grid. However, the concept brings complexities to the current
infrastructure, such as how a transaction between these generators and
users is handled, checked, and registered [109]. This segment
demonstrates how blockchain can be used to process innovative grid
transactions. Smart contracts are used to carry out transactions, and
the network functions as a transaction verifier. The blockchain ensures
transaction immutability, ensuring that any transaction between
generators and consumers is completed. It also gives marketing
background immutability, which may be helpful when auditing or resolving
a transaction conflict [110].
4.2. Blockchain Evolution and Structure
The last twenty years have seen a remarkably rapid rise in blockchain
technology, from the first Bitcoin protocol (blockchain 1.0) and the
advance to Ethereum (blockchain 2.0), already referred to as killer
denominations (Blockchain 3.0) (Figure 7). As a result, the
infrastructure has evolved from a simple database to a fully dispersed
cloud storage network [111]. Ethereum’s potential blockchain lies in
developing blockchain technology from a database-only cryptocurrencies
service to a more general infrastructure capable of operating multiple
decentralization applications in various fields, such as financial
services and any sector that could benefit from digital currencies. The
first and second generations of blockchain encountered several
challenges that prevented their rapid adoption [112]. As listed
above, proving possession of an asset without central authority through
the consensus mechanism is a time-consuming process. To execute any
transaction on the Ethereum blockchain, each node must compute all of
the included smart contracts in the network in real-time, resulting in a
slower transaction pace. The blockchain consists of blocks arranged in
sequence in time, secure, and linked using a hash function. The block is
named in time so that it cannot be changed. A block is made up of a
group of transactions [113]. A transaction in Bitcoin is the
transfer of ownership of funds. However, in our case, it can be
exchanged for the payment of electricity. The hachage function is a
mathematical function in one sense that produces a constant output
regardless of the input. A slight adjustment in the information can lead
to significant changes in production. The difference is also exceptional
because it is easy to calculate exit based on the entry, but not
otherwise. When the block is complete or it is time to create a new
block, it is penetrated with a specific hachage function, H (x), where x
is the current block number [114]. The hashtag is then stored in the
next block, to form a ”chain”. The procedure was repeated before the
last block so that the slight change in the block would be notified
quickly because the change is invalid. Bitcoin can be used to change the
owner of a currency or to transfer money from one individual to another.
However, instead of a true identity, the former and subsequent owners
are represented by a specific identifier known as the title [115].
The address is derived from the public key of the private-public key. As
a result, the network will quickly verify the health of the property
owner. Since the blockchain records the complete history of the
purchase, it can be traced back to its beginning, eliminating the
problem of double spending.