Blockchain-Empowered Socially Optimal Transactive Energy System: Framework and Implementation

TL;DR

This paper introduces a blockchain-based decentralized transactive energy system that enhances security, privacy, and social optimality, demonstrating significant cost reductions through implementation and simulation.

Contribution

It proposes a novel blockchain framework for transactive energy, along with a decentralized trading algorithm that improves individual benefits and ensures social optimality.

Findings

Decentralized trading reduces individual costs by up to 77%.

Overall system costs are lowered by 24%.

Feasibility confirmed through IoT implementation and real-world data simulations.

Abstract

Transactive energy plays a key role in the operation and energy management of future power systems. However, the conventional operational mechanism, which follows a centralized design, is often less secure, vulnerable to malicious behaviors, and suffers from privacy leakage. In this work, we introduce blockchain technology in transactive energy to address these challenges. Specifically, we develop a novel blockchain-based transactive energy framework for prosumers and design a decentralized energy trading algorithm that matches the operation of the underlying blockchain system. We prove that the trading algorithm improves the individual benefit and guarantees the socially optimal performance, and thus incentivizes prosumers to join the transactive energy platform. Moreover, we evaluate the feasibility of the transactive energy platform throughout the implementation of a small-scale network of Internet of Things (IoT) devices and extensive simulations using real-world data. Our results show that this blockchain-based transactive energy platform is feasible in practice, and the decentralized trading algorithm reduces the user's individual cost by up to 77% and lowers the overall cost by 24%.