Chair of Network Architectures and Services Department of Informatics Technical University of Munich P2P Local Energy Trading on Blockchain Eralp Bayraktar Advisor(s): Dr. Marc-Oliver Pahl Supervisor: Prof. Dr.-Ing. Georg Carle Technical University of Munich (TUM) Department of Informatics Chair of Network Architectures and Services Garching, 24.10.2017
Motivation Batteries? Selling back to state? 13ct/kWh Selling to your neighbour? 29ct/kWh by Solar Choice 2 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Goal Letting people/entities trade local energy amongst each other with low fees and without the need of trust. Buyers => minimize their energy bills Sellers => profit by selling All => less stress on main grid, greener energy, cheaper electricity* 3 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Street Model (Microgrid) I want to SELL 2 kwh for 20 ct/kwh Grid-connected PV System Datasheet I want to BUY 1 kwh for https://goo.gl/hKqL3C 20 ct/kwh 4 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Advantages of Blockchain • Immutable (in transactions) • No need for a central authority • Very high redundancy • Secured by public/private keys and digital signatures • Accountability Shortcomings of Blockchains • Low throughput capacity (i.e. Bitcoin only 7 transactions per second) • Long transaction times (10 minutes for Bitcoin) • More information inherently public 5 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Advantages of Blockchain in Local Energy Trading • Automation of trading processes (self executing smart contracts) • Cost efficient enabling of trading of energy even from small prosumers and consumers 6 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Components 2) Marketplace 1) Logging (Supply - Demand Matching) Who sent whom, when, what No central authority, transparent, trustable 3) Payment Non disputable, fast, low-fee, verifiable payment channel 7 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Underlying Market Comparison [1] proposes a double auction mechanism that is proved to have a Nash Equilibrium, is truthful and strategy-proof. The results are 90-100% close to the global optimal solution. [2]: Extension of [1], it also considers the transmission costs and the physical smart grid graph. Proposes both a centralized and a distributed game-theoretic approach. [3]: Focuses on Vehicle-to-Grid energy selling to profit vehicle owners, uses dynamic programming [1]: Y. Wang, W. Saad, Z. Han, H. Poor, T. Basar ; A Game-Theoretic Approach to Energy Trading in the Smart Grid [2]: N. Yaagoubi, H. Mouftah; Energy Trading in the Smart Grid: A Distributed Game-Theoretic Approach [3]: N. Rotering, M. Ilic ;Optimal charge control of plug-in hybrid electric vehicles in deregulated electricity markets. 8 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Double Auction Good for multiple buyers and multiple sellers. BUY BOOK SELL BOOK 2 kWh @ 16 ct/kWh 3 kWh @ 17 ct/kWh 6 kWh @ 14 ct/kWh 20 kWh @ 18 ct/kWh 3 kWh @ 12 ct/kWh BUY BOOK SELL BOOK 2 kWh @ 16 ct/kWh 2 kWh @ 15 ct/kWh 6 kWh @ 14 ct/kWh 3 kWh @ 17 ct/kWh 3 kWh @ 12 ct/kWh 20 kWh @ 18 ct/kWh 9 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Security Concerns [1] 1) Impersonation Such data is closely correlated 2) Data Manipulation to users’ consumption 3) Eavesdropping data/patterns which have 4) Privacy Breaches been shown to be a privacy concern for users [2] 5) Disputes 6) Denial-of-Service [1] Mustafa A. Mustafa, Sara Cleemput, and Aysajan Abidin, A Local Electricity Trading Market: Security Analysis [2] E. L. Quinn, “Privacy and the new energy infrastructure,” in Social Science Research Network (SSRN), pp. 1-41, Feb. 2009. 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Related Work Blockchain Founded Function Custom Proof-of-Stake* 2016, Australia Local Energy Trading, also Smart Utility Services Custom Blockchain 2016, USA Local Energy Trading Public Ethereum 2016, Germany Sharing economy of electrical vehicle charging stations What are they doing good? What is missing? 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Agenda Motivation Analysis Related Work -- Design Evaluation Conclusion 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Design Public Ethereum Blockchain Logging Smart Contract 4 Market Smart Contract 5 2 4 4 3 1) Prosumer produces excess energy 5 2) Puts SELL order to the Market SC 3) Consumer puts BUY order to the Market SC 4) Orders Match -> Event Published 5) Prosumer receives the event and feeds energy into the smart grid and logs this into the Logging SC 6) Consumer pays the amount 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Evaluation • Quantitative • Different scenarios are emulated and the required number of transactions as well as the computing power is captured. • Scenario parameters •Solar irradiance (N - W - S - E of Germany) •Number of peers (10-100) •Type of peers (0%-10% industrial) • Qualitative •How well blockchain is suited for this kind of marketplaces? •Do shortcomings play a big role? •Are the advantages worth it? 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Conclusion • One of the first works bringing peer-to-peer marketplaces and blockchain together 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Questions? 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Classification of Blockchains Permissions Public Consortium Private Consensus Types Proof-of-Work Proof-of-Stake Proof-of-Authority Most common: Public and Proof-of-Work (Bitcoin, Ethereum, Monero etc.) 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
Smart contracts Smart contracts are like Vending/Ticket Machines. There are limited entry points, and you know what will happen when you put money in and press 46. Trust? Ethereum smart contracts - Coded in Turing-complete Solidity language (js-like) - Immutable - Open source by definition In case of a bug? 1 Eralp Bayraktar | P2P Local Energy Sharing on Blockchain
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