Enabling Short-Term Energy Flexibility Markets Through Blockchain

Climate change has put significant pressure on energy markets. Political decisions such as the plan of the German government to shut down coal power plants by 2038 are shifting electricity production towards renewable and distributed energy resources. The share of these resources will continue to grow significantly in the coming years. This trend changes the ways how energy markets work which mandates fundamental changes in the underlying IT infrastructure. In this paper, we propose a blockchain-based solution which enables an economically viable and grid-serving integration of distributed energy resources into the existing energy system. Our blockchain-based approach targets intraday and day-ahead operating reserve markets, on which energy grid operators and operators of distributed energy resources can trade ﬂexibilities within the schedulable energy production and consumption of their resources. By utilizing these ﬂexibilities as an operating reserve, renewable and climate-friendly technologies can contribute to maintaining the grid stability and security of supply while simultaneously creating economically interesting business models for their operators. We propose to define blockchain-based short-term energy markets by utilizing the concept of general-purpose smart contracts and cryptocurrencies. This enables direct and decentralized trading of energy ﬂexibilities without any intermediary or central instance. We demonstrate the feasibility of our approach through an implementation of a prototype of the proposed markets based on the Ethereum blockchain and provide a detailed evaluation of its efficiency and scalability.