Journal of Energy Markets

Decentralized bottom-up energy trading using Ethereum as a platform

Muhammad Faizan, Thomas Brenner, Felix Foerster, Christof Wittwer and Barbara Koch

  • Blockchain technology can improve DER grid incorporation significantly by preventing downtime caused by external factors, reducing dependency on large suppliers and other third parties, and enabling independent bill settlements based on stable-priced tokens.
  • Individual prosumers as well as energy buyers can optimize their profitability once the current system intermediaries are removed and market competition enhanced, which can be enabled by blockchain technology, as demonstrated in a proof-of-concept designed by using the Ethereum’s PoW based private chain as a platform.

In the past decade, there has been a significant increase in distributed energy resources. This transformation has rendered the grid more bidirectional and transformed many small consumers into prosumers. However, these small power producers are not able to optimize their revenue since, currently, they can only sell to local energy suppliers or opt to sell at a fixed feed-in tariff. If intermediaries are eliminated from energy trading, both individual buyers and prosumers can increase their profitability. Blockchain technology could facilitate this scenario. In this paper, the simulated environment of a hierarchical energy trading market using Ethereum’s smart-contract technology is created as a proof-of-concept of using blockchain technology in energy trading. A dynamic grid fee based on electrical network loading is calculated to demonstrate an economic incentive for agents to have flexible load demand as well as to promote local resource utilization. The price volatility of cryptocurrency is addressed by designing a specific energy token for the model.


* All codes can be found at the following github repository link:

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