By School of Environment, Resources and Development
10 March 2025: Climate change, driven by emissions from fossil fuel-based energy production, demonstrates the critical need for a transition toward clean and renewable energy sources. As consumers increasingly generate their own electricity from renewable sources such as solar and wind, the potential for peer-to-peer (P2P) trading emerges. Due to this phenomenon, the conventional, centralized electricity market struggles to accommodate this shift as there is an absence of effective governance in the decentralized market. To foster trust and fairness among all the participants, transparent, secure, and equitable access to energy transactions should be ensured. In this regard, the latest blockchain technology provides decentralized ledgers which are immutable, secure and of great significance. Smart contracts running on blockchain orchestrate the flow of information among peers and grid, facilitating decentralized energy trade.
At the School of Environment, Resources and Development (SERD), at the Asian Institute of Technology (AIT), Doctoral scholar Maya P, from Sustainable Energy Transition academic program at the Department of Energy and Climate Change, has conducted her research on exploring peer-to-peer electricity trading supported by blockchain, under the supervision of Prof. P Abdul Salam. In this work, a P2P electricity trading market for buildings in AIT campus is envisaged where buying/selling electricity assets from peers is encouraged instead of purchasing it directly from the grid.
A blockchain-based app is created for buying and selling energy directly between users. It runs on the Ethereum network using a secure smart contract written in Solidity. Users connect through MetaMask to make transactions. Energy is turned into digital tokens for easy trading. The app has a simple web interface where users can place bids. It is tested with Mocha/Chai tools and runs on a Windows 10 laptop.
In addition to actual energy (kilo Watts), the right to purchase unused energy (negative Watts/ negaWatts(nW)) can also be traded. This would be useful when energy consumption is capped with a preset limit and further demand is penalized by higher prices. In all types of trade, the psychological perception of gain/ loss by peers can lead to irrational decisions in the market. Hence a peer matching framework is developed based on cooperative game theory and behavioral economics (Prospect theory) maximizing the overall benefit from multiple asset trading. The strategy followed is to prioritize clean energy(kW) over both negawatts and trading with the grid. This approach ensures that market clearing price is always lower than from-grid price and greater than feed in tariff, guaranteeing financial benefits for peers and improved energy security.
To address the additional cost component introduced by blockchain transactions are with a cost (gas fee) accounting for resource consumption in the validation process. This variable cost is regulated by complexity, urgency and network traffic. Any transaction that fails to meet the gas cost would not be executed. Usually, the cost is shared equally by all peers, which may seem unfair and slow down the adaptation of new technology. Hence a market aware cost sharing method for any buyer-seller pair is employed where peers are charged pro rata to the benefit from transactions. Higher the energy supply in the market, greater share of transaction cost is borne by prosumer, whereas a consumer is allocated with a bigger share of an energy deficit market.
There could be a security threat to the market by continuous execution of unwanted trades to drive the blockchain to an out-of-gas state, resulting in denial of service (DoS) for genuine trades. Hence, gas computation must be adaptive to market conditions, fixing a threshold count for truthful trades with nominal gas fee and exponentially rising values thereafter. While successfully preventing unruly executions, the additional gas fee charged on benign transactions is as low as 20%.
The study establishes the benefits of realistic socio-technical modelling for multi-asset trading energy markets governed by blockchain technology. The directives for effective policy making as revealed from the study are roles of peers, types of assets and interaction between different markets. Although blockchain is proved to be effective in trust management, the concerns about transaction cost and out-of-gas exception must be addressed by linking them with market conditions. In summary, transition towards local energy markets governed by the latest digital technologies is a promising step towards a sustainable future.
The work is impactful in supporting SDG 7(Affordable and clean Energy), and 13(Climate action).It also promotes sustainable cities and communities(SDG 11) and SDG 12,responsible consumption and production.
Publications:
- A Review of Peer-to-Peer Transaction Loss and Blockchain: Challenges and Drivers in the Roadmap to a low carbon future, Frontiers in Energy Research(2024)
- Implementation of a blockchain based DApp for P2P electricity trading, ICEPE (2023)
- Design and Development of P2P NegaWatt Trading DApp with Blockchain,APPEEC(2023)
- Analysis of Systemic Risk due to Transaction Cost for a Smart contract for P2P Electricity Trading, PESGRE( 2023 )
- Combined kiloWatt And negaWatt Trading with Blockchain , i-PACT(2023)
- P2P Energy sharing with Federated Learning and Blockchain , ICUE(2024)
