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This is the authors' ACCEPTED version for publication in IEEE Xplore. Citation reference: L. Ali, M. I. Azim, J. Peters, N.B. Ojha, V. Bhandari, A. Menon, V.
Tiwari, J. Green, S.M. Muyeen, and M.G. Simoes " Blockchain-integrated Local Energy Market and P2P Trading Benefits for Participants and Stakeholders " In
the 15th Annual IEEE Green Technologies (GreenTech) Conference, Denver, Colorado, 2023, Paper #1570881049.
Blockchain-integrated Local Energy Market and P2P
Trading Benefits for Participants and Stakeholders
ine 5: eail address or ORCID line 1: 3rd Given Name Surname
line 2: dept. name of organization
(of Affiliation)
line 3: name of organization
(of Affiliation)
line 4: Cddress or ORCID
Abstract— This paper presents a local energy market (LEM)
model to conduct peer-to-peer (P2P) energy trading between a
number of participants by dint of the Ethereum-based
blockchain technology. The proposed LEM mechanism is
structured by considering relevant functional constraints while
energy trading is arranged between several participants in the
presence of other stakeholders including energy retailer and
network operator. LEM participants’ mutual bidding intended
P2P trading, actual settlement, and final billing are executed
using the smart contracts in Ethereum blockchain to record
LEM transactions and related data in an unchangeable and
distributed fashion. Lastly, a case study is performed in an
Australian suburb with 300 LEM participants, and the
simulation results are benchmarked with an existing business-
as-usual (BAU)scenario. The simulation results outline that the
formulated LEM mechanism 1) reduces the electricity cost of
participants remarkably while improving their self-sufficiency,
2) minimises power grid export and import, and 3) retains
income margins for the energy retailer and network operator.
Keywords— Blockchain, local energy market, peer-to-peer
trading, energy retailer, network operator.
I. INTRODUCTION
Modern energy sector is experiencing a major transition
due to the rapid uptake of distributed energy resources
(DERs). The proliferation of small-scale DERs at the
residential level is also conspicuous. For instance, Australia
has already experienced remarkable installation of solar
photovoltaic (PV) systems, figuring more than 20% of its
residential customers [1-2]. Feed-in-tariff (FiT) is the most
common scheme to incentivise these solar PV owners – often
termed as prosumers. However, the FiT rate is getting scaled
down – due to a number of policies adopted by the authority.
For example, it is now around 3 c/kWh in Western Australia
(WA). This has created a substantial dissatisfaction among
existing prosumers and made it difficult to convince other
non-solar customers to become prosumers [3].
To this end, the perception of local energy market (LEM)
has come to the light over the past few years – which aims at
propelling clean energy integration into the electricity network
by creating a sub-electricity market to manage energy
scheduling, trading, and services in both technically- and
economically-feasible manner [4]. LEM can facilitate peer-to-
peer (P2P) energy trading among prosumers and consumers to
receive phenomenal financial returns in contrast with the
business-as-usual (BAU) – in which energy is bought/sold at
time-of-use (ToU)/FiT prices [5]. However, several
challenges exist to establish a functional P2P trading model as
it needs to incorporate multifarious goals of prosumers and
consumers while settling the market efficaciously [6].
Recently, severalinteresting proposals have been made to
structure P2P trading as a participant-centric strategy.
Participants' behaviour; attitudes; and subjective norms are
prioritised to organise P2P trading in [7]. How place
attachment; climatic variations; and political orientation
influence trading are also analysed in [8-9]. Moreover, the
most striking factor that really motivates participant to engage
in P2P trading; i.e., electricity cost reduction; is identified in
[10], and the commensurate determination of P2P trading
source size and price to lower electricity cost are emphasised
in [11]. The authors in [12] also adopt advanced constraint
optimisations to formulate P2P bidding virtually, analyse
price components associated with P2P trading, and accelerate
local energy usage respectively with an intention to cut down
energy usage expenditure. In [13-14] authors used different
optimisation techniques for sizing and profit maximisation of
renewable energy resources and proposed architecture for
energy trading.
As for executing P2P trading securely, most contemporary
research studies rely upon blockchain technology. This is
because the blockchain platform can store transaction history
of different participants on a reliable and secure database. In
addition, participants are provided with access to the database
to cross-verify transactions in a trustworthy fashion [15]. As
such, various blockchain-enabled P2P trading mechanisms to
have been proposed. For instance, a multi-time-scale
autonomous energy trading framework based on blockchain is
developed in [16]. A blockchain-empowered P2P market
flexibility model is designed in [17]. The authors in [18]
formulate a cryptocurrency-driven token trading for active
participants. Furthermore, smart contracts on the blockchain
are also applied for automated P2P market settlement.
However, both participant- and blockchain-oriented case
studies do not consider the incorporation of energy retailers
and network operators – which are equally important bodies
as energy retailers systematise the electricity bill while
network operators monitor the local energy flow.
Given this context, this paper presents a blockchain-
integrated LEM framework; in which solar PV - and battery
energy storage system (BESS)-facilitated P2P trading
(considering export and import limits assigned by the
network operator) is carried out in a decentralised way
ascertaining the financial interests of participants, energy
retailers, and the network operator. The proposed framework
is also validated with real-field data in the context of
Australia – where the National Electricity Market is
undergoing an unprecedented price hike and a well-
functioning LEM has the potential to offer productive
services at the residential level. The main contributions are:
• A blockchain-integrated LEM framework – is proposed
for P2P trading governed through smart contracts.
• A LEM business model is developed to monetise not only
P2P participants but also energy retailers and the network
operator.
• Finally, a case study is conducted using real-world energy
and price data and the performance is judged in
comparison with the BAU practised in Australia.
1Liaqat Ali*, 1M. Imran Azim, 1Jan Peters, 1Nabin B. Ojha, 1Vivek Bhandari, 1Anand Menon, 1Vinod Tiwari,
1Jemma Green, 2S.M. Muyeen, and 3M.G. Simoes
1Powerledger, Level 2, The Palace, 108 St George’s Terrace, Perth, WA-6000, Australia
2Department of Electrical Engineering, Qatar University, Doha 2713, Qatar
3Department of Electrical Engineering, University of Vaasa, Wolffintie 34, 65200 Vaasa, Finland
*Corresponding Author Email: la@powerledger.io
This is the authors' ACCEPTED version for publication in IEEE Xplore. Citation reference: L. Ali, M. I. Azim, J. Peters, N.B. Ojha, V. Bhandari, A. Menon,
V. Tiwari, J. Green, S.M. Muyeen, and M.G. Simoes " Blockchain-integrated Local Energy Market and P2P Trading Benefits for Participants and
Stakeholders " In the 15th Annual IEEE Green Technologies (GreenTech) Conference, Denver, Colorado, 2023, Paper #1570881049.
Fig. 1. An example of P2P energy trading between a prosumer and a
consumer in the presence of two retailers and a network operator.
The reminder of the paper is organised as: Overviews of
the LEM framework and blockchain-integrated structure are
discussed in Section II and Section III respectively. The
proposed business model formulation is demonstrated in
Section IV. Numerous simulation results are presented in
Section V, and the paper is wrapped up in Section VI.
II. AN OVERVIEW OF LEM FRAMEWROK
In the LEM, participants are given an opportunity to
execute P2P energy trading among each other to satisfy the
energy demand while energy exchange with the grid becomes
the second priority. LEM participants are directed to place
their P2P trading bids in a forward-facing market to receive
maximum returns from their locally produced energy. An
example of P2P energy trading at the LEM platform between
two participants (e.g., a prosumer and a consumer) in the
presence of two retailers and a network operator is exhibited
in Fig. 1, in which Retailer-1 has 60 prosumers with solar PVs
and BESSs, 60 prosumers with solar PVs, and 30 consumers.
Whereas Retailer-2 has 150 consumers only as displayed in
Fg. 2. A ToU tariff structure with peak and off-peak time
slots is considered to maximise P2P trading volumes to attain
maximum monetary gains. Fig.1 illustrates how various TOU
tariff components, such as network operator margin;
retailers’ margin; and taxes, are retained while P2P trading
price is settled between a prosumer and a consumer in the
LEM platform.
III. BLOCKCHAIN INTEGRATION INTO LEM
Blockchain is a distributed, secure, and encrypted
database incorporating a chronologically arranged set of
Fig. 2. Considered LEM architecture
Fig. 3. Blockchain integration with LEM.
transactions designated as blocks – that are driven by
consensus protocols and immutable characteristically. Smart
contracts are the agreements between participants written and
executed in a blockchain to guarantee the occurrence of
transactions automatedly. Ethereum is one of the blockchain
platforms for creating decentralised applications. Ethereum
provides the smart contracts that allows the computation of
the state of the Ethereum network after each new block is
added to the chain.
Fig. 3 shows the Ethereum based blockchain integration
into LEM, where energy exchange takes place at the first
infrastructure layer and participants are physically connected
through a distribution lines. In the second layer, decentralised
application (DApp) connects users with smart contract and
blockchain. In the third layer, smart contract are created for
the energy users, received bidding data, performed P2P
bidding and settlement. In the final layer, blockchain
technology is used to store bidding data, record P2P
transactions and billing information.
DApp contains the user interface (UI) and web3 interface
which allows participants to place their bid orders and view
information about energy traded. On other side, admin not
only can view P2P trading information on UI screen but also
have permissions to deploy smart contract, execute P2P
trading, billing and settlement. In the architecture as overall,
participants receive the financial benefit through local P2P
trading, admin organises the LEM trading activity, and
blockchain provides a platform for P2P trading.
IV. PROPOSED LEM BUSINESS MODEL FORMULATION
The main objective of the proposed LEM business model
is to minimise the electricity cost of all participants (both
prosumers and consumers) without hampering the financial
interests of energy retailers and the network operator. Let
be the index of each participant in . If buying and selling
costs are denoted by
and
at each P2P trading slot
, the proposed objective function of of each participant
is given by:
(1)
subject to price, energy, and BESS constraints.
where
and
are defined at each trading slot
with length as:
This is the authors' ACCEPTED version for publication in IEEE Xplore. Citation reference: L. Ali, M. I. Azim, J. Peters, N.B. Ojha, V. Bhandari, A. Menon,
V. Tiwari, J. Green, S.M. Muyeen, and M.G. Simoes " Blockchain-integrated Local Energy Market and P2P Trading Benefits for Participants and
Stakeholders " In the 15th Annual IEEE Green Technologies (GreenTech) Conference, Denver, Colorado, 2023, Paper #1570881049.
(2)
(3)
In (2) and (3),
and
refer to
unit buying and selling costs respectively in c/kWh – where
the sets of buyers and sellers are symbolised by and
respectively. Further, buying and selling quantities are
indicated by
and
respectively –
which are calculated in (4) and (5) as follows:
(4)
(5)
where
and
are power demand and solar PV
generation of each participant . In (3),
On
the other hand,
in (4). BESS-charged power via
in-house and peers are signified by
and
respectively. Whereas
and
imply BESS-
discharged power via in-house and peers respectively. Note
that BESS is considered to be charged and discharged via in-
house and/or peers.
Price constraints
and
(6)
and
(7)
where
denotes FiT rate in c/kWh in (6).
(also in
c/kWh) is the ToU price – which consists of energy price
, energy retailer margin
, network operator margin
, and taxes
(if applicable) paid by each LEM
participant as per BAU. In a P2P trading slot ,
energy retailer margin and network operator margin are
represented by
and
respectively in (7) while
(if applicable) remains the same.
Power constraints
and
(8)
(9)
and
(10)
(8) describes that
and
are limited by maximum
import limit and maximum export limit
– which are predefined by the network operator to
maintain the operational safety of the electricity network. The
P2P buying and selling quantities are matched in (9). Any
mismatch at a given trading slot is settled outside the
LEM at either ToU or FiT price, but the electricity grid-
friendly constraints to handle mismatch is illustrated in (10)
– where total power import and export as per BAU are
symbolised by and respectively.
BESS constraints (in-house management)
(11)
(12)
;
(13)
;
(14)
(11)-(14) capture BESS constraints for in-house charging
and discharging, where is the state-of-charge (SOC) –
limited by minimum and maximum SOCs indicated by
and
respectively.
and
are charging and
discharging efficiencies respectively.
and
indicate minimum and maximum charging
capacities respectively. Whereas minimum and maximum
discharging capacities are signified by
and
respectively.
BESS constraints (P2P trading)
min
;
, (15)
;
, (16)
(17)
min
(18)
;
, (19)
(20)
BESS charging constraints via peers are shown in (15)-
(16).
is bounded by peer-charging rate
and
available charging capacity
.
is solar PV
power at the peak time. (17)-(20), on the contrary,
demonstrate BESS discharging constraints via peers.
is constrained by peer-discharging rate
and available
discharging capacity
.
implies power demand
at the peak time.
V. CASE STUDY AND ANALYSIS
In this section, the proposed LEM framework is validated
in an actual Australian suburb with real-world residential data
[19]. The complete LEM architecture with participants,
retailers and the network operator are depicted in Fig. 2. The
existing ToU tariffs and FiT rates in Australia are taken from
[20-21]. Nevertheless, proposed architecture is tested on local
Ethereum. Ganache-CLI v6.12.2 is used to create personal
Ethereum Blockchain in desktop and the smart contracts. The
LEM platform cost is considered as 0.5 c/kWh as
demonstrated in Fig. 1. The P2P transactions among
participants are conducted every 15 mins apart and the
This is the authors' ACCEPTED version for publication in IEEE Xplore. Citation reference: L. Ali, M. I. Azim, J. Peters, N.B. Ojha, V. Bhandari, A. Menon,
V. Tiwari, J. Green, S.M. Muyeen, and M.G. Simoes " Blockchain-integrated Local Energy Market and P2P Trading Benefits for Participants and
Stakeholders " In the 15th Annual IEEE Green Technologies (GreenTech) Conference, Denver, Colorado, 2023, Paper #1570881049.
Fig. 4. All pparticipants’ savings (AU$) and percentage bill reduction on
average of consumers, prosumers (PVs), and prosumers (PVs and BESSs)
performance is compared with an existing BAU practice in
Australia in terms of electricity cost reduction, grid import and
export minimisation, impacts on retailers’ and network
operator’s margins, and self-sufficiency.
A. Daily Electricity Cost Reduction of Participants
It can be seen in Fig. 4 that if the LEM participants trade
via P2P, the energy bill reduction for consumers, prosumers
with PVs, and prosumer with PVs and BESSs become 2%,
11.5%, and 22.9%, respectively on average. The average
energy usage cost reduction for consumers (BAU vs LEM) is
small (e.g., within 0.5 AU$) due to the fact of insignificant
difference of grid buy rate and maximum buy rate in the
LEM. There is an appropriate reduction in electricity bill (i.e.,
around 1 AU$ on average) for prosumers with PVs on
average as they sell their excess power in the LEM at a price
much higher than the FiT rate LEM Strikingly, the energy
usage cost reduction is significant for prosumers with both
PVs and BESS as they sell excess solar PV power to other
peers and make additional money by selling/buying BESS
power at a higher/cheaper rate.
Fig. 5 captures the daily in-house power management
profile of one sample LEM participant (i.e., a prosumer with
solar PV and BESS). The consumption (blue in colour) shows
the total consumption before solar and BESS. The yellow
curve shows the total solar PV generation before being
absorbed by load and BESS. The BESS charging (positive)
and discharging (negative) are displayed in green. The main
meter curve (red in colour) is the net of all other values and
shows the energy exchange at the grid connection point.
B. Power Trading with Grid Minimisation
It is evident from Fig. 6 that power sold and bought to and
from the grid are minimised by 10.8% and 17.1%
respectively with to the introduction of the proposed P2P
trading-empowered LEM framework. The power sold to the
Fig. 5. Participants power flow analysis
Fig. 6. Power trading with the grid comparison.
grid during off-peak hours is lowered because excess solar
PV power are sold to charge the BESSs of other LEM
participants. In this case, both solar power sellers and BESS
power buyers are incentivised more than the FiT and off-peak
ToU prices respectively. Likewise, the reduction in brought
power from the grid during peak demand is caused as some
LEM participants buy power from the discharge of BESSs of
other participants. Here, BESS discharge sellers and demand
buyers trade at an optimised LEM rate which is higher than
the FiT rate but lower than the peak ToU price.
C. Retailer’s and Network Operator’s Margins
The daily fee paid to the retailer remains the same in case
of BAU and proposed LEM. However, the grid fee (that is the
retailer’s margin in ToU price) is reduced as energy is traded
at the P2P rate. Since the retailer gets its margin for every P2P
transaction, Retailer-1 with different types of LEM
participants (as its customers) receives increased mount of
margin (i.e., 2% more than BAU) as noticed from Fig. 7(a)
Contrarily, the margin of Retailer-2 is kept unvaried (please
see Fig. 7(a) as it has only consumers.
As observed from Fig. 7(b), the network operator’s income
margin is marginally increased in LEM by 0.4% compared to
BAU due to an increase in trading volume during mid-day
when BESSs are charged from other participants through the
LEM platform. Although the network operator may not
receive attractive economic gains in terms of enlarging its
margin, the proposed LEM framework can assist them in
reducing their budget to maintain the network infrastructure
againt congestion, peak demand supply, and solar soak as the
proposed LEM model brings down trading with the grid
during off-peak and peak periods.
D. Self-sufficiency of Participants
Self-sufficiency is defined as the amount of total power
demand satisfied locally (not from the grid), e.g., using solar
PV and BESS. Fig. 8 shows the average self-sufficiency of the
participants in the LEM in contrasting with BAU. The
proposed LEM enhances the self-sufficiency of participants
(a)
(b)
Fig. 7. Daily income margin of a) retailers, and b) network operator
This is the authors' ACCEPTED version for publication in IEEE Xplore. Citation reference: L. Ali, M. I. Azim, J. Peters, N.B. Ojha, V. Bhandari, A. Menon,
V. Tiwari, J. Green, S.M. Muyeen, and M.G. Simoes " Blockchain-integrated Local Energy Market and P2P Trading Benefits for Participants and
Stakeholders " In the 15th Annual IEEE Green Technologies (GreenTech) Conference, Denver, Colorado, 2023, Paper #1570881049.
Fig. 8. Self-sufficiency BAU vs LEM
by 4%, which is motivational to encourage electricity
customers to join in the LEM.
VI. CONCLUSION
In this paper, a P2P trading-facilitated LEM model has
been presented using Ethereum-enabled blockchain
technology. The proposed LEM structure has considered a
number of operational constraints while allowing participants
to trade in the P2P market in a decentralised fashion in the
presence of retailers and the network operator. Further, smart
contracts have been executed in Ethereum blockchain to
record P2P bidding and transactions settled among
participants. Lastly, a case study has been performed in the
context of an Australian suburb, where the participation of
300 participants has been considered – 180 consumers, 60
prosumers with solar PVs, and 60 prosumers with solar PVs
and BESSs. It has been found from the simulation results that
the proposed LEM framework has successfully reduced
participants electricity cost, minimised power export/import
to/from the grid, retained/slightly increased income margins
for retailers and the network operator, and improved self-
sufficiency of the participants.
The findings of this paper can contribute greatly motivate
electricity consumers to take part in the LEM flexibly. In
addition, retailers can get an option to buy less energy from
the National Electricity Market (which is volatile in Australia
with sudden price hike) to satisfy its contracted consumers
and save money. Moreover, the network operator can get
relief of local congestion problem and subsequent
investments caused by excessive unused local penetration.
The future work will incorporate advanced techniques to
improve the privacy and security of blockchain technology in
the proposed LEM model. Another blockchain platform, such
as Solana, will also be tested to speed up P2P transactions and
settlement in the LEM.
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