Secure Energy Transactions Using Blockchain Leveraging AI for Fraud Detection and Energy Market Stability

TL;DR

This paper presents a novel system combining blockchain and AI to enhance security, detect fraud, and improve stability in decentralized energy markets, based on extensive transaction data from simulated US microgrids.

Contribution

It introduces an integrated blockchain-AI architecture for secure energy transactions and fraud detection in decentralized markets, utilizing a large real-like dataset.

Findings

High accuracy in fraud detection models

Effective integration of blockchain and AI layers

Enhanced market stability and security

Abstract

Peer-to-peer trading and the move to decentralized grids have reshaped the energy markets in the United States. Notwithstanding, such developments lead to new challenges, mainly regarding the safety and authenticity of energy trade. This study aimed to develop and build a secure, intelligent, and efficient energy transaction system for the decentralized US energy market. This research interlinks the technological prowess of blockchain and artificial intelligence (AI) in a novel way to solve long-standing challenges in the distributed energy market, specifically those of security, fraudulent behavior detection, and market reliability. The dataset for this research is comprised of more than 1.2 million anonymized energy transaction records from a simulated peer-to-peer (P2P) energy exchange network emulating real-life blockchain-based American microgrids, including those tested by LO3 Energy and Grid+ Labs. Each record contains detailed fields of transaction identifier, timestamp, energy volume (kWh), transaction type (buy/sell), unit price, prosumer/consumer identifier (hashed for privacy), smart meter readings, geolocation regions, and settlement confirmation status. The dataset also includes system-calculated behavior metrics of transaction rate, variability of energy production, and historical pricing patterns. The system architecture proposed involves the integration of two layers, namely a blockchain layer and artificial intelligence (AI) layer, each playing a unique but complementary function in energy transaction securing and market intelligence improvement. The machine learning models used in this research were specifically chosen for their established high performance in classification tasks, specifically in the identification of energy transaction fraud in decentralized markets.