Leveraging blockchain technologies to build short-term energy flexibility markets

Climate change and the resulting urgent need for energy transformation are some of the central challenges facing our society in the coming decades. Political decisions such as the plan of the German government to shut down coal-fired power plants by 2038 indicate that in this process, the use of renewable and distributed energy resources will play a central role in ensuring the generation of electricity. Many studies support this assumption and show that the use of these climate-neutral technologies is required to limit climate change. However, the integration of distributed energy resources into the existing energy grid poses enormous challenges for grid operators in terms of grid stability and security of supply. In order to counteract these problems, in the present thesis, we propose a blockchain-based solution which enables a lucrative and grid-serving integration of distributed energy resources as an extension of the existing energy system. This concept can contribute to increased grid stability and security of supply, and could also help to shape the energy system in a more future-proof, reliable, sustainable, scalable, and efficient way.
Specifically, in this thesis, we investigate whether it is feasible to use blockchain technologies to implement innovative digital markets in the energy sector in a secure and scalable way. Precisely, we explore the usage of this disrupting technology to allow trading of flexibilities between the operators of distributed energy resources and the grid operators for grid congestion management. In this context, grid operators integrate the available flexibility as an operating reserve into their grid congestion management processes while simultaneously, the resource operators benefit from receiving monetary compensation. Specifically, we will design short-term energy markets by developing intraday and day-ahead markets where operators of distributed energy resources and grid operators can trade flexibilities on an hourly or daily basis.
From a technological perspective, the main focus of the thesis is the question of whether and how we can design and implement such blockchain-based short-term energy markets by utilizing the concept of general-purpose smart contracts. For this reason, we utilize the Ethereum blockchain for the implementation of such markets and design an appropriate smart-contract-based architecture in this thesis. To ensure the integrity of market actors, we will investigate how to use cryptographic processes and infrastructures in order to integrate external information about actors from a regulating governmental institution into the blockchain-based energy markets. Furthermore, by using this cryptographic infrastructure, we design a pseudonymous usage of the markets, protecting the privacy of all participants and their trading data. Additionally, we present the application of a proprietary cryptocurrency in order to carry out a fully blockchain-based payment process based on available trading and smart meter data. As a proof-of-concept, we present the implementation of a prototype of the blockchain-based market system. Based on this prototype, we will evaluate the proposed market system in terms of security, scalability, and efficiency.