Evaluating the added value of blockchains to local energy markets—Comparing the performance of blockchain‐based and centralised implementations

Abstract

The continuous decentralisation of the energy system due to the expansion of renewable energies requires new coordination mechanisms such as Local Energy Markets (LEMs) that are capable of integrating millions of prosumers as active participants. Since the end of the 2010s, the blockchain technology has been discussed as a potential infrastructure for LEMs and as a potential game-changer in the energy industry. In this work, the authors introduce LEM specific technology-independent infrastructure requirements, present a Solidity and Python toolbox that allows to compute a comparative performance analysis between a blockchain-based and a central LEM and evaluate the added value of a blockchain-based implementation compared to a conventional reference implementation. Simulations of a LEM with a periodic double auction and settlement showed that a blockchain-based LEM operation requires more than 140 times the computation time compared to a centralised implementation and cannot fulfil data security requirements. Thus, the authors find that blockchain technology in its current state of development does not add significant value to LEMs. All implemented programmes are published in the open-source project lemlab as part of the research project RegHEE.

A diversified portfolio of tokenised revenue streams can provide hedging opportunities for renewable electricity generators

“…The columns of Figure 9 show each generator's optimised portfolio, acting as a visualisation of matrix p shown in Equation (21). Results are percentages, representing the portion of each generator's investments in their peers' RevToks.…”

“…Matrix p is then defined as the counterpart of the o matrix in Equation (19). Each column vector represents the portfolio of a single generator, as in Equation (21)…”

“…This allows for the autonomously chaining together of constituent financial operations as a means to distribute and claim funds. Much like the underlying blockchain technology [20], DEFI has been the subject of much research attention in the world of energy [21] and is proposed as an alternative means of implementing exotic payment methods and market structures [21][22][23]. This paper attempts to chart and articulate what a potential use-case could look like.…”

Review of Blockchain Potential Applications in the Electricity Sector and Challenges for Large Scale Adoption

“…Future studies and pilot projects should perform a techno-economic assessment of the blockchain technology for different applications and compare it with other alternative technologies. A recent study [185] compared the performance of blockchain technology and a central database for the operation of LEM, which is considered the most promising application of blockchain technology in the electricity sector. They found that blockchain-based LEM required computational time 144 times larger than LEM for 50 bids.…”