Blockchain Technologies

for Smart Energy Systems

Fundamentals, Challenges, and Solutions

©ISTOCKPHOTO.COM/NICO EL NINO

chain-based smart energy projects The Potential for

NAVEED UL HASSAN, CHAU YUEN, in different domains. The majority of Blockchain Applications
and DUSIT NIYATO blockchain platforms with embedded The continuous expansion of smart
combination of blockchain technol- energy systems for industrial, com-

I
ogy solutions are computing- and mercial, and domestic ­a pplications
n this article, we discuss the resource-intensive and, hence, are presents several new challenges and
integration of the blockchain not entirely suitable for smart en- ­o pportunities [1], [2]. Smart inf ra -
into smart energ y systems. ergy applications. We consider the re- structure (SI), re newable e ne rg y
We present various blockchain quirements of smart energy systems sources (RESs), and electric vehicles
technology solutions, review and accordingly identify appropri- (EVs) are becoming widespread [3],
important blockchain platforms, ate blockchain technology solutions [4]; energy and carbon trading pos-
and describe several block- for smart energy applications. Our sibilities are increasing [5]–[7]; and
analysis can help in the development energy management (EM) through de-
Digital Object Identifier 10.1109/MIE.2019.2940335 of flexible blockchain platforms for mand-response management (DRM)
Date of current version: 23 December 2019 smart energy systems. programs is becoming more common

106 IEEE INDUSTRIAL ELECTRONICS MAGAZINE ■ DECEMBER 2019 1932-4529/19©2019IEEE

[8], [9]. To take full advantage of vari- chain can facilitate numerous smart the introduction of a blockchain, inter-
ous opportunities, it is necessary to energy applications. For example, Fig­­ mediaries and brokers can be elimi-
understand the requirements of smart ures  1 and 2 depict the blockchain nated because data recorded on the
energy systems and focus on technol- concept and its potential role in two blockchain are verified by a distrib-
ogies that might fulfill them. emerging smart energy applications. In uted network of nodes. Automation
In recent years, there has been an Figure 1, blockchain technology is be- can be achieved through computer
increased interest in the blockchain and ing used to facilitate P2P energy trad- programs called smart contracts, which
its integration into various application ing (ET). In this application, energy are stored on the blockchain and define
domains. The blockchain is, essentially, prosumers can trade surplus energy the contractual obligations as well as
a digitally distributed ledger that is with their neighbors. However, with the transfer of assets between peers.
maintained and updated by a decen-
tralized network [also called a peer-to-
peer (P2P) network] operating according
to well-defined protocols [10], [11]. A con- 5) Seller transmits energy units

6) Buyer settles the energy bill

and sends the transaction to
vergence of several technologies related to the buyer.

the blockchain network.

to network, data, consensus, identity,
and automation management is essen-

bidder is selected.
4) Successful
contract to the blockchain network.
tial for the successful creation and im-
1) Energy seller sends smart

plementation of a blockchain [12]–[16]. In

surplus energy for bidding.

3) Consumers bid
addition, there are also multiple technol- 2) Energy seller offers for surplus energy.
ogy solutions in each category. A block-
chain has several unique features,
such as decentralization, creation of a
trustless network (in which nodes can
resolve conflicts without a centralized
authority), tamperproof data storage,
fault tolerance, and auditability. How-
ever, the choice of technology solutions
has a significant impact on the resulting
blockchain features and performance.
The use of the blockchain in smart
energy systems is a topic of tremen-
dous research interest because further 7) The blockchain network verifies all of the 8) New data
development of these systems could transactions through consensus and blocks are added
generates new data blocks. to the blockchain.
potentially benefit from the integration
of new and innovative technologies.
Due to its unique features, the block- FIGURE 1 – The P2P ET with the help of the blockchain.

5) The blockchain network verifies all of the 6) New data

3) Solar energy information is transactions through consensus and blocks are added
1) Prosumer transmitted to the blockchain network. generates new data blocks. to the blockchain.
enters into a
contract to sell 4) Power flows
green energy into the building
to the consumer. from the main power
grid, but it is not
possible to
distinguish green
energy units.

2) Smart contract is sent to

the blockchain network.

7) The building verifies renewable energy by accessing the blockchain.

FIGURE 2 – The distributed green EM with the help of the blockchain.

DECEMBER 2019 ■ IEEE INDUSTRIAL ELECTRONICS MAGAZINE 107

 ing blocks for various smart energy
applications. To summarize, our major
There are several research articles, projects, and contributions are as follows.
ongoing trials that aim to leverage unique blockchain ■■ We present a review of blockchain
fundamentals and discuss various
features to advance the digitalization of smart blockchain building blocks, which
energy systems. include network-, data-, consensus-,
identity-, and automation-manage-
ment techniques.
Another application of the block- efforts in the Internet of Things (IoT) ■■ We review existing blockchain plat-
chain is shown in Figure 2 for the verifi- are also discussed in [20] and [21]. forms and classify representative
cation of green energy. Once energy is None of these articles identify the ex- blockchain-based smart energ y
added to the grid, it becomes difficult act choice of blockchain technology projects into SI, ET, GI, and EM do-
to distinguish the green energy from solutions for different smart energy mains. We show that a large number
traditional energy. However, a consum- systems and applications. of projects use blockchain build-
er can verify the renewable energy gen- Blockchain technology is relatively ing blocks that are computing and
erated by the prosumer through the new, and, although it holds tremendous resource intensive and, hence, less
use of blockchain technology. These potential, solutions and implementa- efficient in terms of data and iden-
examples demonstrate the overall con- tion platforms are still developing. The tity management.
cept of blockchain technology and its choice of blockchain technology solu- ■■ We list 16 requirements for smart
use in smart energy systems. However, tions that can fulfill the requirements energy systems and organize them
the exact blockchain technology solu- of various smart energy applications into four categories: decentralization
tions (network, data, consensus, and (such as those in Figures 1 and 2) is not and trust, data management, secu-
so on) that must converge to fulfill the entirely obvious. In this article, we pro- rity, and scalability. Based on these,
requirements of these applications are vide a review of blockchain building we determine blockchain building
not obvious. blocks, followed by the identification of blocks that are suitable for smart en-
There are several research articles, the most suitable blockchain technol- ergy systems and applications.
projects, and ongoing trials that aim to ogies according to the requirements ■■ We further customize blockchain
leverage unique blockchain features to of various smart energy systems. For technology solutions for multiple
advance the digitalization of smart en- example, blockchain-network-manage- energy applications within each do-
ergy systems. A review of blockchain ment techniques can be classified into main (i.e., SI, ET, GI, and EM).
technology in the energy sector can be public, consortium, and private catego- ■■ We also identify open research ar-
found in [17]–[19]. In [17], Andoni et al. ries. Similarly, data-management tech- eas related to blockchain technology
provide a comprehensive review and niques can be classified as on-chain that are necessary to fulfill the fu-
classification of 140 blockchain-based (all data are stored on a blockchain) ture needs of smart energy systems.
projects in the energy sector. In [18], and off-chain (only data hashes are
Ahl et al. explore the potential challeng- stored on a blockchain) types. The Blockchain
es of blockchain-based P2P microgrids Different combinations of these op- In this section, we present the block-
and discuss a framework that incorpo- tions result in blockchain implementa- chain and various blockchain-building
rates technological, economic, social, tion platforms with varying features technologies for network, data, con-
environment, and institutional dimen- and performance. We review important sensus, identity, and automation man-
sions; the article suggests the inclusion existing blockchain platforms and a agement. The key points of this section
of economic, social, and environmental few representative blockchain-based are also summarized in Table 1.
dimensions to bridge the gap between smart energy projects in four domains:
technology and institutions. SI, ET, green initiatives (GI), and EM. Blockchain Fundamentals
In [19], Musleh et al. review block- Through this review, we show that exist- A blockchain is a decentralized, digital-
chain-based smart grid projects and ing blockchain platforms are not entire- ly distributed ledger. A set of transac-
discuss frameworks for further block- ly suitable for smart energy systems. tions, which may indicate the transfer
chain integration in smart grids. Ac- Therefore, to achieve appropriate inte- or exchange of monetary value or digi-
cording to these frameworks, the gration of blockchain technology solu- tal assets, such as information, servic-
creation of a cyber layer designed for tions for smart energy applications, we es, or goods, is produced and collected
blockchain applications, aggregation first consider 16 requirements that rep- by a distributed network of computing
of computing resources in microgrids, resent the needs of a broad selection of nodes (a P2P network). A time-stamped
and smart grid protection and securi- smart energy applications. We analyze data block (containing these transac-
ty issues can be leveraged to achieve the suitability of different blockchain tions) is created through a decentral-
better integration of the blockchain in technologies for fulfilling them and de- ized consensus mechanism among
smart grids. Blockchain integration termine appropriate blockchain build- the nodes according to predefined

108 IEEE INDUSTRIAL ELECTRONICS MAGAZINE ■ DECEMBER 2019

protocols. The newly created block Blockchain Technology Solutions the block creation process accord-
also contains reference to the block Blockchain creation and maintenance ing to publicly defined protocols
that came before it (parent block) in requires network, data, consensus, iden- and algorithms.
the form of a cryptographic hash, thus tity, and automation management. In ■■ Consortium (N2): A consortium block-
establishing a link between the blocks. this section, we present various block- chain network is a permissioned
The new block is added in front of its chain technology options in each cat- network. The ability of a node to join
parent block, and a chainlike structure egory and discuss their advantages the network or access the block-
of blocks is obtained; hence, we get and disadvantages. chain is controlled by a group of
the term blockchain (as shown in Fig- organizations, which assign permis-
ures 1 and 2). Network Management sions to nodes across their organi-
Once a blockchain grows to a suf- Blockchain network management can zations to join the network and read
ficient size, transactions recorded on be classified into three categories [12]. or modify the associated consor-
it become practically immutable and ■■ Public (N1): A pubic blockchain net- tium blockchain. In some situations,
resistant to change. Moreover, with work is truly decentralized and nodes outside the consortium may
a blockchain, a “trustless” network of permissionless. Any node can join also be allowed to access and read
nodes is also created. In a trustless net- or leave the network. The nodes the consortium blockchain contents
work, nontrusting nodes can interact have full permission to maintain to achieve greater transparency.
with each other without a centralized a complete copy of the blockchain However, such nodes are not allowed
entity or an intermediary, and conflicts (referred to as public blockchain). to modify the blockchain state.
are automatically resolved with the All of the nodes can issue transac- ■■ Private (N3): A private blockchain net-
help of protocols. tions, and they can participate in work is another type of permissioned

TABLE 1 – THE BLOCKCHAIN TECHNOLOGY SOLUTIONS IN DIFFERENT CATEGORIES WITH THEIR ADVANTAGES AND DISADVANTAGES.
CATEGORY SOLUTIONS DESCRIPTION ADVANTAGES DISADVANTAGES
Blockchain network Public (N1) Any node can join or leave the Complete decentralization with Vulnerable to Sybil attacks, high latency,
management network. no single point of failure and less scalable
Consortium (N2) The network is controlled by a More suitable for regulated Network management issues when
group of organizations. industries organizations leave or join
Private (N3) The network is controlled by a More scalable, more private, and Permission management could
single organization. less expensive to maintain become a single point of failure, more
centralized
Data management On-chain (D1) All of the validated transactions Greater transparency, auditability, Huge storage burden, less scalable, not
are stored on the blockchain. and data availability suitable for resource-constrained nodes
Off-chain (D2) Only the hashes of important Smaller storage requirements, Conventional databases required to
data are stored on the blockchain. suitable for resource-constrained host off-chain data
nodes
Consensus management PoW (C1) Nodes compete to solve an Suitable for public networks Wastes tremendous amount of
appropriate hashing puzzle. (prevents Sybil attacks) resources, high latency, less scalable
PoS (C2) Nodes are picked according to Suitable for public networks Prone to nothing-at-stake attack, less
their economic stake. (prevents Sybil attacks), relatively democratic
more scalable
Voting based (C3) Voting schemes are based on the More suitable for consortium and Networking and scalability issues
BFT algorithm and its variants. private blockchain networks, low (cannot scale beyond a few hundred
latency nodes)
Authority based (C4) Trusted nodes create a new block Highly scalable, eliminates Requires trusted nodes in the network
in a round-robin fashion. message exchange, more energy
efficient
Identity management Self-sovereign Each node owns and controls Guarantees more privacy Requires a pool of identity providers
identity (S1) its identity without disclosure of
personal data.
Decentralized Central server and personal data Establishes more trust in the More centralized and less private
trusted identity (S2) disclosures are required. network
Automation Deterministic smart Information from any external Provides greater automation and Execution necessitates sequential
management contracts (T1) party is not required. eliminates human intervention processing
Nondeterministic This solution depends on Provides more flexibility and Nondeterministic nature, requires
smart contracts (T2) information from an external functionality external party availability
party.
BFT: Byzantine fault tolerant; PoS: proof of stake; PoW: proof of work.

DECEMBER 2019 ■ IEEE INDUSTRIAL ELECTRONICS MAGAZINE 109

 network. It is controlled by a single ■■ Proof of stake (C2): In a proof-of-stake form identity-proofing by gather-
organization, which allows only a (PoS) algorithm, nodes are selected ing attributes from an ecosystem
limited number of nodes within to create new blocks in a pseudoran- of identity providers. Each node is
the organization to join the network dom fashion. The probability of a allowed to create multiple keys as
and read or modify the state of the node being selected is proportional required to keep its identity private.
private blockchain. to its economic stake in the network. Nodes can also selectively disclose
This algorithm is also suitable for a their attributes to maintain priva-
Data Management permissionless blockchain and pun- cy. Sovrin and uPort are examples
A blockchain records transactions ishes misbehaving nodes by confis- of self-sovereign identity-manage-
and stores data. There are two broad cating their stake in the network. ment systems.
techniques for blockchain data man- However, this method is prone to ■■ Decentralized trusted identity (S2):
agement [13]. nothing-at-stake attacks. This method requires a central
■■ On-chain (D1): In on-chain data man- ■■ Voting based (C3): In permissioned server to perform identity-proofing
agement, all of the transactions are blockchain networks where only of nodes. In the initial stage, a node
stored on a blockchain. The size of known nodes can join the network, must provide identity proof (per-
the blockchain continuously grows, consensus among validating nodes sonal information) to the central
and storage requirements keep on on the contents of a new block can server. After this bootstrap phase,
increasing. This method is not suit- be achieved through voting mecha- node identity is recorded in the
able for resource-constrained nodes. nisms. Voting schemes are based blockchain for later validation.
■■ Off-chain (D2): In off-chain data man- on Byzantine-fault-tolerant (BFT) Verified nodes can then create
agement, only the hash values of algorithms and its variants, such further keys as needed. ShoCard
data transactions are stored in the as Tendermint and Federated BFT. and BitID are examples of a decen-
blockchain, while raw transaction With this method, multiple rounds tralized trusted-identity manage-
data are stored using traditional of voting might be required to ment system.
techniques. With this method, the reach consensus, and there is also
amount of storage needed at net- a significant networking overhead, Automation Management
work nodes is significantly reduced. which has a negative impact on net- Automation management on a block-
However, there are additional re- work scalability. chain is carried out with the help of
quirements, such as the synchro- ■■ Authority based (C4): A proof-of- smart contracts, which may define con-
nization of the database with the authority (PoAu) algorithm can also tractual obligations, custody or transfer
blockchain and availability of a serv- be used in certain blockchain net- of digital assets, and rights and privi-
er for hosting raw data. works. In this mechanism, autho- leges of nodes. Smart contracts pro-
rized (trusted) nodes in the network vide greater automation and replicate
Consensus Management create a new block in a round-robin actions that are generally performed
The choice of node/nodes entrusted to fashion. The PoAu method eliminates by trusted third parties or intermediar-
create a new block depends on the con- message exchange among nodes ies. Turing-complete programming lan-
sensus algorithm adopted by the block- for consensus building and is more guages that can support arbitrary logic
chain network. Consensus algorithms resource efficient. However, the in- and computations are generally needed
allow all of the nodes in the network to clusion of trusted nodes reduces to develop smart contracts. We can
agree to the same worldview of the state the trustless nature of the resulting broadly classify smart contracts into
of the blockchain. There are different blockchain network. two types [16].
types of consensus algorithms [14], [21]. ■■ Deterministic smart contracts (T1): A
■■ Proof of work (C1): In a proof-of-work Identity Management deterministic smart contract does
(PoW) algorithm, nodes compete to A blockchain network relies on pub- not require any information from an
solve an appropriate hashing puzzle lic key cryptography. Each node has a external party. All information nec-
that requires expensive comput- pair of public/private keys to sign and essary to execute a smart contract
ing resources. The block created verify transactions. There are different can be obtained from the data al-
by the node that is the first to solve ways to manage the identity and entitle- ready stored on the blockchain.
the given puzzle is accepted by the ments of blockchain nodes [15]. ■■ Nondeterministic smart contracts (T2):
network. This method is useful in ■■ Self-sovereign identity (S1): In this A nondeterministic smart contract
permissionless networks to avoid method, every node owns and con- depends on information (called ora-
Sybil attacks, in which a single node trols its identity without relying on cles or data feeds) from an external
may vote multiple times with differ- an external authority for attestation party; for example, it may need ex-
ent identities to influence the vote or verification of node credentials. ternal weather information for exe-
outcome. However, PoW is energy There is no central server, and per- cution. It provides greater flexibility
intensive and wastes a tremendous sonal data are not necessary for at the expense of greater vulnerabil-
amount of resources. identity creation. Nodes can per- ity to external attacks.

110 IEEE INDUSTRIAL ELECTRONICS MAGAZINE ■ DECEMBER 2019

 There are many blockchain technolo- Review of Blockchain Platforms Used (C1) consensus algorithm is currently
gy solutions. The combination of block- in Smart Energy Systems used, but there are plans to switch to
chain building blocks also results in Blockchain platforms combine network-, PoS (C2). The platform can support
different tradeoffs and varying block- data-, consensus-, identity-, and automa- self-sovereign (S1) and decentralized
chain features. In addition, the require- tion-management technologies for the trusted (S2) identity-management
ments of smart energy applications creation of blockchain-based projects. techniques as well as Turing-complete
are also diverse. However, before iden- Blockchain integration in smart energy programming languages (Solidity and
tifying the best possible blockchain applications is being carried out by us- Serpent), which can be used to create
technology solutions for various smart ing either open source or proprietary deterministic (T1) and nondeterminis-
energy applications, we first provide a blockchain platforms. Popular open tic (T2) smart contracts.
brief review of existing blockchain plat- source platforms include Ethereum,
forms and efforts to integrate them into HyperLedger, Tendermint, and Energy HyperLedger
smart energy systems. Web Foundation (EWF). Proprietary HyperLedger is an open source block-
platforms are developed to suit the re- chain-development platform support-
Review of Blockchain Integration quirements of specific applications, and, ed by the Linux Foundation [24]. This
Into Smart Energy Systems sometimes, these platforms also devel- platform can be used to set up consor-
In this section, we review some block- op proprietary management protocols tium (N2) and private (N3) networks. It
chain integration efforts in smart energy and algorithms. The majority of open supports on-chain data management
systems. We do not intend to provide source and proprietary platforms are (D1) and voting-based consensus (C3)
a complete survey; a comprehensive nonmodular [22]. algorithms as well as self-sovereign
review and classification of 140 block- (S1) and decentralized trusted (S2)
chain-based projects in the energy sec- Ethereum identity-management techniques. Tur-
tor is available in [17]. Here, we present Ethereum is a generic open source block- ing-complete programming languages,
some selected platforms and projects chain-development platform govern­ such as Java, Go, Solidity, Fabric, and
in each smart energy domain to dem- ed by Ethereum developers, and it is Rust, allow the writing of deterministic
onstrate that most of these efforts do widely used for developing blockchain smart contracts (T1). However, sup-
not use blockchain technologies cus- applications for smart energy sys- port for nondeterministic smart con-
tomized for energy applications. This tems [23]. This platform was developed tracts (T2) through oracles is not
review will further help us identify for public (N1) blockchain manage- yet available.
the most suitable blockchain technol- ment. However, the open source code
ogy solutions according to the require- of Ethereum can be easily modified to Tendermint
ments of smart energy systems. The maintain consortium (N2) and private Tendermint is another application-ori-
contributions of this section are sum- (N3) networks. Ethereum supports on- ented framework that can be used to
marized in Table 2 and Figure 3. chain data management (D1). A PoW set up a public, consortium, or private

TABLE 2 – A REVIEW OF THE BLOCKCHAIN PLATFORMS USED IN SMART ENERGY SYSTEMS.

BLOCKCHAIN TECHNOLOGY SOLUTIONS

PLATFORM NETWORK DATA CONSENSUS IDENTITY AUTOMATION PROJECTS

N1 N2 N3 D1 D2 C1 C2 C3 C4 S1 S2 T1 T2
Ethereum ✓ ✓ ✓ ✓ × ✓ ✓ × × ✓ ✓ ✓ ✓ Bankymoon
TheSunExchange
Brooklyn Microgrid
NRGCoin
HyperLedger × ✓ ✓ ✓ × × × ✓ × ✓ ✓ ✓ × Car eWallet
Tennet & Sonnen
SunChain
Tendermint ✓ ✓ ✓ ✓ × × × ✓ x ✓ ✓ ✓ × GridChain
EnerChain
Brooklyn Microgrid
EWF × ✓ ✓ ✓ × × × × ✓ ✓ ✓ ✓ ✓ Slock.it
GridSingularity
Share&Charge
Proprietary — — — — — — — — — — — — — Nasdaq Linq
Solar Bankers
PROSUME
Here, ✓ is used if the platform supports a certain technology solution, × indicates that it does not support the solution, and — means that information is
unavailable or diverse.

DECEMBER 2019 ■ IEEE INDUSTRIAL ELECTRONICS MAGAZINE 111

 network of P2P nodes (N1, N2, N3) [25]. list of domains and considered applica-
This platform supports on-chain data tions in each domain are presented in
management (D1) and voting-based Figure 3. A short notation for each ap-
(C3) consensus algorithms as well plication is also introduced for further

(EM-4)
EV
as self-sovereign (S1) and decentral- use in the article. For example, SI-1 no-
ized trusted (S2) identity-management tation is used for an automated meter-
techniques. It supports various Turing- ing infrastructure (AMI) application.
complete programming languages that The scenario in Figure 1 represents an
Distributed

(EM-3)
currently allow the writing of determin- ET-2 application, whereas that in Fig-
EM istic smart contracts (T1). ure 2 represents an EM-3 application.
Due to space limitations, we discuss
EM

EWF only a few representative projects in

The EWF blockchain platform is sup- each domain. Further details of these
(Real Time)
(EM-2)

ported by more than 70 companies, projects can be found in [17], [20], [29],
DRM

and its aim is to integrate and acceler- [30], and the references therein.
ate blockchain technology in smart en-
ergy systems [26]. The EWF platform Blockchain Projects in the SI Domain
(Contract)

is Ethereum compliant, but it is more ■■ Bankymoon: This project is related

(EM-1)
DRM

customized for smart energy applica- to an AMI (SI-1 application). Smart

tions. It can be used to set up consor- meters compute and communicate
tium (N2) and private (N3) networks, energy consumption of an indus-
and it supports on chain-data man- trial or residential building at regu-
Incentives
(GI-2)

agement (D1), the PoAu (C4) consen- lar intervals for billing automation
sus algorithm, and self-sovereign (S1) and reduction of electricity theft
as well as decentralized trusted (S2) incidents [31], [32]. However, in the
identity-management techniques. De- Bankymoon project, blockchain-en-
GI

terministic (T1) and nondeterministic abled smart meters are being devel-
Smart Energy Systems

Certificates

(T2) smart contracts can be developed oped to further automate financial

(GI-1)

FIGURE 3 – The smart energy system domains and applications. AMI: automated metering infrastructure.

in Turing-complete C and C++ program- transactions. These meters can be

ming languages. Tobalaba, which is the loaded with cryptocurrencies, and
test version of this platform, is already payments can be settled in real
available for developers. time through smart contracts. This
project is being developed using the
(ET-1)

Proprietary Platforms Ethereum platform.

P2P

Several proprietary blockchain plat- ■ ■ TheSunExchange: This endeavor

forms also exist for smart energy ap- involves asset management (SI-2
plications. For example, Solar Bankers application). The high initial costs
ET

is developing a proprietary consensus of RES technologies could become

Wholesale

algorithm called Obelisk, which runs a barrier to taking communities off-

(ET-1)

on their Skychain blockchain [27]. The grid. However, this issue may be
idea is based on developing a trusted resolved by creating shared assets
consortium of nodes that generate and in smart energy systems, such as
validate data blocks. Similarly, PRO- by purchasing solar photovoltaics
Monitoring
(SI-2)

SUME is also developing a proprietary (PVs) through crowd-funding [33].

Grid

blockchain-based platform to support TheSunExchange project allows

a multitude of smart energy applica- users to purchase solar panels and
tions [28]. In Table 2, we provide a sum- lease them to earn passive income.
Management

mary of blockchain technology solu- Blockchain integration enables

(SI-2)
Asset
SI

tions supported by these platforms. transparent management of assets

and the administration of the solar
Review of Blockchain-Based Smart energy produced by these assets.
Energy Projects Therefore, this project can be also
We review blockchain-based smart en- be classified as an example an EM-3
(SI-1)
AMI

ergy projects in the four smart energy application, which is related to dis-
domains: SI, ET, GI, and EM. These do- tributed EM.
mains are broad and cover several in- ■■ GridChain (PONTON): This venture
teresting and useful applications. The addresses power grid monitoring

112 IEEE INDUSTRIAL ELECTRONICS MAGAZINE ■ DECEMBER 2019

 (SI-3 application). In power grids, RES uptake, several countries and In Table 2, the blockchain platforms
IoT sensors in the transmission states issue green certificates and used for these projects are also iden-
and distribution systems facilitate carbon credits [7], which can also tified. It should be noted that several
monitoring of grid parameters to au- be traded. However, with greater blockchain platforms (except EWF)
tomate fault diagnosis and to main- integration of RESs in power grids, were not developed exclusively for
tain power-balance for grid stability the management of these certifi- smart energy applications. Therefore,
[34]. Blockchain integration can fur- cates is becoming challenging. In the embedded technology options in
ther help in achieving transparency this context, Nasdaq Linq aims to these platforms are also not entirely
and fixing liability. In this context, bring efficiency, quick verification, suitable for these applications. For ex-
the objective of GridChain project and elimination of paper records ample, a large number of projects use
developed by PONTON is to enable for green-certificate management Ethereum, which embeds a computing-
real time power balance and con- through the integration of the block- intensive PoW algorithm. Similarly,
gestion management by providing chain. This project is being devel- several platforms lack the ability to
coordination between various grid oped using a proprietary platform. support off-chain data management
entities. This project can also be ■■ NRGcoin: This endeavor concerns a nd nondeterministic sma r t con -
classified as an example of real time the management of incentives for tract management.
DRM application (EM-2). green behavior (GI-2 application). In addition, most of the blockchain-
In this project, NRGcoins are given based smart energy projects are still
Blockchain Projects in the ET Domain as a reward to incentivize local in the development or trial phases,
■■ EnerChain (PONTON): This project production and consumption of and real-world implementations are
deals with a wholesale-energy-trad- green energy. It should be noted rare. In this context, to guide further
ing ET-1 application. The integration that 1 NRGcoin is equivalent to research and development in this field,
of the blockchain into energy-trad- 1 kWh of energy. The use of virtual there is a need to identify appropriate
ing applications achieves greater currency in this project creates blockchain technology solutions ac-
transparency and automation. The additional value around its block- cording to the requirements of smart
EnerChain was also developed by chain. However, unlike Bitcoin, energy systems. In the next section,
PONTON to enable wholesale ET in these coins are not mined but are we discuss these and, accordingly,
European regional power markets. issued by the blockchain develop- identify the appropriate choice of
It aims to offer wholesale-energy- ers. The smart contract framework blockchain technology solutions for
trading solutions in different time of NRGcoin is based on the Ethe- various applications.
frames, including day ahead, month- reum platform.
ly, quarterly, and yearly. Choosing Appropriate Blockchain
■■ Brooklyn Microgrid: This concept Blockchain Projects in the EM Domain Technologies
is related to a P2P energy-trading DRM is an important concept in smart In this section, we present suitable
ET-2 application, which is shown in energy grids; however, blockchain- blockchain technology solutions ac-
Figure 1. In smart energy systems, based projects for EM-1 and EM-2 ap- cording to the requirements of smart
prosumers can engage in decentral- plications are relatively rare. energy systems; then, we describe the
ized ET activities where they can ■■ Key2Energy: This project is related customization of these solutions for
directly trade energy with other to distributed EM (EM-3 applica- various applications. We summarize
prosumers or consumers [35], [36]. tion). The blockchain is used for the key contributions of this section in
The Brooklyn Microgrid is an exam- EM in multi-apartment buildings. Tables 3 and 4.
ple of the real-world development The objective is to maximize the
of a blockchain-based P2P energy- profit of each structure by selling Requirements of Smart
trading solution. In this project, PV energy and minimizing the en- Energy Systems
prosumers can directly sell their ergy cost of shared facilities in We first discuss a total of 16 require-
surplus energy to their neighbors the building. Platform details of ments (R1–R16) in four categories that
(without needing any brokers or in- Key2Energy are not available. are applicable to the broad selection
termediaries), energy transactions ■■ Car eWallet: The number of EVs with of smart energy applications listed in
are recorded on the blockchain, and batteries is increasing. Due to mo- Figure 3 and the scenarios depicted in
payments are settled automatically bility, the management of EVs and Figures 1 and 2.
through smart contracts. their energy consumption becomes
quite challenging [37]. Car eWallet Decentralization and Trust Requirements
Blockchain Projects in the GI Domain is related to EVs (EM-4 application), ■■ Decentralization (R1): Due to the
■■ Nasdaq Linq: This venture involves and it provides a blockchain-based inclusion of RESs and mobile loads
the management and trading of solution for car sharing, car rental, (EVs), the architecture of smart
green certificates and carbon cred- and EV charging. It also allows auto- energy systems is becoming decen-
its (GI-1 application). To encourage matic processing of payments. tralized. Efficient implementation

DECEMBER 2019 ■ IEEE INDUSTRIAL ELECTRONICS MAGAZINE 113

 TABLE 3 – THE SUITABILITY OF BLOCKCHAIN TECHNOLOGY SOLUTIONS IN FULFILLING SMART ENERGY SYSTEM REQUIREMENTS.

BLOCKCHAIN TECHNOLOGY SOLUTIONS

NETWORK DATA CONSENSUS IDENTITY AUTOMATION

CATEGORY REQUIREMENT N1 N2 N3 D1 D2 C1 C2 C3 C4 S1 S2 T1 T2
Decentralization Decentralization (R1) ✓ ✓ ✓ — — ✓ ✓ ✓ ✓ ✓ × — —
and trust
Conflict resolution mechanism (R2) × ✓ ✓ — — ✓ ✓ ✓ ✓ × ✓ ✓ ✓

Intermediaries (R3) — — — — — — — — — — — ✓ ✓

Nonrepudiability (R4) — — — ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Data management Tamperproof record keeping (R5) — — — ✓ × ✓ ✓ ✓ × — — — —

Data correction and erasure (R6) × ✓ ✓ — — × × × ✓ — — — —

Data backup (R7) ✓ ✓ ✓ ✓ ✓ — — — — — — — —

Privacy protection (R8) × ✓ ✓ × ✓ × × × ✓ ✓ × — —

Security Authentication (R9) × ✓ ✓ — — — — — — ✓ ✓ — —

Authorization (R10) × ✓ ✓ — — — — — ✓ ✓ ✓ ✓ ✓

Data integrity (R11) — — — — — — — — — ✓ ✓ ✓ ×

Auditability (R12) — — — ✓ ✓ — — — — ✓ ✓ ✓ ✓

Scalability Throughput (R13) — — — × ✓ × ✓ × ✓ — — × ×

Latency (R14) — — — ✓ × × ✓ × ✓ — — — —

Process automation (R15) ✓ ✓ ✓ — — ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Cost (R16) × ✓ ✓ × ✓ × ✓ ✓ ✓ ✓ × ✓ ✓

Here, ✓ is used if blockchain technology is suitable, × indicates that it is not suitable, and — means that it is unconcerned.

TABLE 4 – BLOCKCHAIN CUSTOMIZATION FOR VARIOUS SMART ENERGY APPLICATIONS.

DOMAIN APPLICATION BLOCKCHAIN TECHNOLOGY OPTIONS REMARKS

SI AMI (SI-1) (N2, N3), (D2), (C2, C4), (S2), (T1) Blockchain integration is more suitable in new smart meter
rollout programs.
Asset management (SI-2) (N2, N3), (D2), (C2, C4), (S1, S2), (T1) Blockchain integration is more suitable to track-shared or
crowd-funded RES assets.
Grid monitoring (SI-3) (N2, N3), (D2), (C4), (S2), (T1) Latency requirements are a few milliseconds; even PoAu (C4)
might not be able to fulfill these.

ET Wholesale (ET-1) (N1, N2), (D2), (C1, C2, C3, C4), (S1, S2), (T1, T2) Blockchain integration can eliminate existing brokers, but initial
implementation costs could be high.
P2P (ET-2) (N2), (D2), (C2,C3), (S1, S2), (T1, T2) The high potential for blockchain integration is due to the localized
nature and lack of P2P trading platforms.

GI Certificates (GI-1) (N1, N2), (D2), (C1, C2, C3, C4), (S1, S2), (T1) Blockchain integration can eliminate existing brokers, but initial
implementation costs could be high.
Incentives (GI-2) (N2, N3), (D2), (C3, C4), (S2), (T1) N3 can be established if all users belong to the same
utility company.

EM DRM (contract) (EM-1) (N2, N3), (D2), (C2, C4), (S2), (T1) C2 is to be avoided if the stake of a node is low, and S2
is listed due to KYC requirements.
DRM (real time) (EM-2) (N2, N3), (D2), (C4), (S2), (T1) Latency requirements are a few milliseconds; even PoAu (C4)
might not be able to fulfill these.
Distributed EM (EM-3) (N2), (D2), (C2,C4), (S1, S2), (T1, T2) T2 can be used if external weather information is needed.

EV (EM-4) (N2), (D2), (C2, C3, C4), (S1, S2), (T1, T2) C2 or C3 can be used if they reduce costs. There is a high
potential for blockchain integration.

114 IEEE INDUSTRIAL ELECTRONICS MAGAZINE ■ DECEMBER 2019

 of various applications in different and retrieval from a single database in the case of malfunctions or con-
domains necessitates decentralized also requires permanent availabil- flicts, safeguard commercial and
networking and control. ity of the data hosting node. Thus, financial interests, or fulfill regula-
■■ Conflict-resolution mechanism (R2): a single point of failure is created in tory requirements.
Smart energy domains involve in- centralized systems. Data collected
teractions between multiple non- in various smart energy system do- Scalability Requirements
trusting nodes; therefore, some mains are often critical and, there- ■■ Throughput (R13): In smart energy
mechanisms (entities or technolo- fore, necessitate adequate backup systems, a single node often produc-
gies) are needed to mediate be - to ensure smooth operations. es a small amount of data. However,
tween nodes to resolve conflicts. ■■ Privacy protection (R8): In various a large number of nodes are involved
■■ Intermediaries (R3): In several smart smart energy systems, there is a in building meaningful applications.
energy applications, intermediar- high requirement to keep data and If the data requirements of a single
ies are required to support the ac- node identity private. For example, node are considered as a single
tivities of the principal players. The smart meter data reveals private in- transaction, then a large number of
role of the intermediary arises due formation about the habits, sched- transactions happen every second.
to the operational and technological ule, and behavior of users. Therefore, smart energy systems
limitations of the principal players. need high data throughout.
For example, financial transactions Security Requirements ■■ Latency (R14): Smart energy applica-
between consumers and generators ■■ Authentication (R9): Authentication tions require low latency to ensure
are mostly settled through banks. is concerned with determining the smooth monitoring, control, and
Similarly, brokers or energy-trading identity of a node in the system to operation of appliances, equipment,
platforms are necessary to match block unauthorized access. A node and processes. The latency of some
the buying and selling requirements can be authenticated through its critical applications, such as that
of generators and consumers. unique credentials in the system (e.g., needed for grid stabilization, is only
■■ Nonrepudiability (R4): Nonrepudi- public key, address, name). Smart a few milliseconds.
ability refers to the availability of ir- energy systems often involve critical ■■ Process automation (R15): Smart ener-
refutable proof of who performed a data and infrastructure. Therefore, gy systems are built on the promise
certain action even if the nodes are authentication is always required in of making RES integration, energy
not cooperating. In smart energy all of the smart energy domains. transportation, and ET more effi-
domains, nonrepudiability is need- ■■ Authorization (R10): Authorization cient. This can be achieved through
ed to establish liability. deals with managing the access increased process automat ion ,
and privileges of various nodes in the re­­sulting in a reduction in human
Data-Management Requirements network. In smart energy systems, in­­tervention and simplification of
■■ Tamperproof record keeping (R5): nodes have varying roles and, there- legacy procedures.
Recording, trading, and transport- fore, need different authorization in ■■ Cost (R16): Smart energy systems in-
ing electricity, assets, and other re- individual applications. In addition, tegrate novel technologies and new
sources is necessary in various smart there is also a role for regulatory bod- equipment (smart meters, sensors,
energy systems. In some situations, ies and government agencies. There- and so on), which helps reduce vari-
electricity flow occurs almost imme- fore, appropriate authorization and ous operating costs. However, high
diately, whereas financial settlements, the ability to detect any violations of upfront expenses due to equipment
for example, are carried out later. privileges and rights is necessary in replacement or technology upgrades
Therefore, it becomes important to such systems. is a major barrier to the adoption
store data in a tamperproof manner. ■■ Data integrity (R11): Data integrity of various concepts. In this context,
■■ Data correction and erasure (R6): In refers to the detection of unauthor- all of the smart energy domains can
the event of malfunction, hacking, ized changes in data. A decentral- benefit from cost reductions.
or tampering of sensors or equip- ized architecture requires that a Based on these requirements, we
ment, wrong data could get record- large number of critical messages be can determine the suitability of block-
ed. If such events are detected or exchanged between various nodes, chain technology solutions for various
reported, data correction or data and data integrity violations can re- smart energy systems and applica-
erasure becomes essential. With in- sult in safety problems or harmful tions. The suitability analysis is pre-
creased automation, all of the smart attacks on the critical infrastructure. sented in Table 3. It was carried out by
energy domains need a certain abil- ■ ■ Auditability (R12): Auditability is matching the features, advantages, and
ity to correct and erase such erro- concerned with the ability to recon- disadvantages of the various block-
neous data. struct a complete history of a cer- chain technology solutions discussed in
■■ Data backup (R7): Data loss can cre- tain event or action from historical the “Blockchain” section with smart ener-
ate inconvenience, disruption, and records. In smart energy systems, gy system needs. Based on this analysis,
financial loss. Similarly, data storage auditability is needed to fix liability the consortium (N2) and private (N3)

DECEMBER 2019 ■ IEEE INDUSTRIAL ELECTRONICS MAGAZINE 115

network-management methods emerge tralized trusted (S2) identity manage- schemes may be used for ET-1 and
as more suitable options for such sys- ment is a more desirable option. ET-2. Similarly, for both applications,
tems. Off-chain data management (D2) Moreover, the necessary automa- the choice between deterministic and
can fulfill more conditions than on-chain tion, if needed, can be managed with nondeterministic smart contracts (T1,
data management techniques. Similarly, the help of deterministic smart con- T2) can be made based on the avail-
authority-based consensus manage- tracts (T1). The asset management SI-2 ability of information inside or outside
ment (C4) is the best consensus algo- application has relatively low privacy the network for the execution of smart
rithm for smart energy systems, and self- and throughput requirements. For this contracts. With this information, the
sovereign identity management (S1) and application, the choices of network-, necessary ingredients to build the best
deterministic smart contracts (T1) can data-, consensus-, and automation- blockchain for the P2P-energy-trading
fulfill more requirements. This analysis management are the same as for SI-1. scenario depicted in Figure 1 can be
enables quick identification of appropri- For managing shared RESs, PoS (C2) is easily identified.
ate blockchain technology solutions for a more fitting option. However, when
smart energy systems. However, vari- there are low latency needs, the PoAu GI Domain
ous smart energy applications, such (C4) algorithm is preferable. For iden- The privacy requirements of green-
as P2P ET and distributed green EM tity management, self-sovereign (S1) certificate (GI-1) applications are less
(as shown in Figures 1 and 2), also have and decentralized trusted (S2) identity stringent. Suitable blockchain technol-
slightly different needs. Hence, there is management are suitable. However, if ogy solutions for this application are
a need to further customize blockchain know-your-customer (KYC) require- the same as those identified for the
technology solutions for various smart ments are not applicable, then the ET-1 application. Regarding behavior
energy applications. self-sovereign (S1) technique can also incentives, for a GI-2 application with
be used. A grid-monitoring application less stringent latency and throughput
Customization of Blockchain has extremely stringent latency needs requirements, the choices of network,
Technology Solutions (on the order of a few milliseconds). For data, identity, and automation manage-
The requirements of smart energy ap- this application, network-, data-, iden- ment is the same as those identified
plications differ from each other, ne- tity-, and automation-management op- for the SI-1 application. However, for
cessitating further customization of tions are the same as those identified consensus, the voting-based (C3) tech-
blockchain technology solutions. For for the SI-1 application. However, due nique can be used if there are a limited
example, some applications need low to extremely low latency requirements, number of nodes in the network, and
latency, some necessitate high privacy only PoAu (C4) is an ideal consensus PoAu (C4) methods can also be adopt-
protection, and so on, [38], [39]. In this management solution for this applica- ed to conserve resources.
section, we further identify appropri- tion, and even this algorithm can fail
ate blockchain technology solutions to achieve the necessary performance. EM Domain
for the various smart energy applica- For the contract-based DRM (EM-1)
tions shown in Figure 3; this discus- ET Domain application, viable technology options
sion is summarized in Table 4. The wholesale-energy-trading applica- are the same as those identified for
tion has relatively low privacy require- the SI-1 application. However, for a
SI Domain ments; therefore, public and consor- real-time DRM EM-2 application, due
The AMI SI-1 application has rela- tium network-management techniques to extremely low latency requirements,
tively relaxed latency and throughput (N1, N2) are most appropriate. N1 should only the PoAu (C4) algorithm is a good
requirements. For this application, be used if a trading platform is being choice; all other options remain the
consortium (N2) and private (N3) net- developed across multiple regional same as those determined for EM-1. For
work-management techniques can be markets. For a more localized P2P-en- the distributed-energy-management
used. Private network management is ergy-trading (ET-2) application, only (EM-3) application, suitable technology
preferred if data are directly handled the consortium network-management options for network, data, identity, and
by the utility. Since smart meters are technique (N2) is suitable. For both automation management are the same
resource-constrained nodes, the off- applications, the off-chain data-man- as those chosen for the ET-2 applica-
chain data-management (D2) tech- agement (D2) technique is ideal. For tion. However, for this application, due
nique is more suitable. For consensus consensus, all of the options are ac- to relatively low latency requirements,
management, the PoS (C2) and PoAu ceptable for ET-1. For ET-2, PoW (C1) the PoS (C2) and PoAu (C4) techniques
(C4) algorithms are better options. should be avoided because it is more are more appropriate for consensus
This application needs high privacy resource intensive. The PoAu (C4) al- management. Finally, optimum technol-
protection; however, due to the regula- gorithm should also be avoided for the ogy options for the EV (EM-4) applica-
tory and registration requirements of ET-2 application because it requires tion are the same as those chosen for
smart meters with a utility company, trusted nodes in the network and di- the ET-2 application, except that, for
self-sovereign (S1) identity manage- lutes the trustless feature of the block- EM-4, we can also use the PoAu (C4) al-
ment cannot be used. Instead, decen- chain. Both of the identity management gorithm to conserve resources.

116 IEEE INDUSTRIAL ELECTRONICS MAGAZINE ■ DECEMBER 2019

Blockchain Technology Gaps for further improvements in the consen- Conclusion
Smart Energy Systems sus-management techniques for smart Blockchain technology is novel but com-
Blockchain is still evolving, and there energy applications; for example, the plicated, and its integration into any
are several technology gaps that could use of implicit consensus (proposed in domain requires the convergence of
limit its adaptation in smart energy sys- [40]) may be explored. appropriate building blocks to achieve
tems. Here, we discuss some of them. the desired objectives. Existing block-
Identity Management chain integration efforts in smart energy
Network Management In several smart energy applications, systems mostly use open source block-
Management of a blockchain network due to KYC requirements enforced chain platforms with embedded func-
requires appropriate protocols and algo- by regulators, a decentralized trusted tionalities. These platforms are not en-
rithms. These protocols are necessary identity scheme must be used. This tirely designed for energy applications,
for forwarding transaction, disseminat- has fewer advantages compared to a and the development of blockchain-
ing data, discovering nodes, maintaining more private self-sovereign identity- based energy projects through these
a list of misbehaving nodes, and limiting management scheme. Recovering com- platforms may not provide the expected
the number of peer connections. The promised identities can also become blockchain integration benefits.
performance of these protocols has a a challenge in some smart energy sys- In this article, we adopted a system-
direct impact on the latency, through- tems, particularly for nodes with pri- atic approach through which we first
put, and speed of transaction process- vate or critical data. collected the requirements of smart en-
ing. In this context, there is a need to ergy systems. After detailing the needs
develop delay-aware, security-aware, Automation Management for each smart energy domain, we de-
privacy-aware, and scalable network- The security of smart contracts is critical, termined the most suitable blockchain
management protocols for blockchain because if a smart contract is not well building blocks for the respective smart
integration into smart energy systems. written and secure, it may be hacked or energy systems. Accordingly, we identi-
Moreover, the protocols must also pro- invoked under different circumstances fied blockchain technologies that meet
vide flexible parameters to achieve vari- that may not represent the actual inten- these conditions. We further custom-
ous tradeoffs according to the latency tion of the original programmer. Non- ized blockchain technologies for vari-
and throughput requirements of smart deterministic smart contract manage- ous smart energy applications in the SI,
energy applications. ment presents an even bigger security ET, GI and EM domains.
challenge. Smart energy applications The analysis in this article can help
Data Management involving critical data and industrial in the design of flexible blockchain plat-
The implementation of off-chain data infrastructure necessitate appropriate forms customized for smart energy sys-
management, which is generally need- programs and templates for the de- tems and assist with reaping the most
ed for resource-constrained nodes in velopment of secure and well-written benefit out of blockchain integration into
smart energy systems, is more challeng- smart contracts. Smart contract execu- smart energy systems. Significant new
ing as it requires the synchronization tion often require sequential process- research in blockchain technologies is
and availability of conventional data- ing, which can slow down transaction still needed to meet the diverse and often
bases. In this context, determination of verifications. Therefore, the develop- stringent latency, privacy, and security re-
the optimal amount of data that should ment of appropriate sharing techniques quirements of smart energy applications.
be kept on-chain and off-chain for vari- for parallel processing is necessary to Moreover, modular blockchain platforms,
ous applications is important. Storage match the high performance demands in which embedded technology options
of off-chain data in a tamperproof man- of various applications. can be changed on demand, would also
ner is also difficult. Furthermore, data be necessary to support and accelerate
models and database schema can vary Lack of Suitable Implementation blockchain integration in a wide variety of
across different organizations or appli- Platforms smart energy applications.
cations. Novel techniques for handling Many popular blockchain platforms
multiple types of data models, data- are nonmodular, and they do not embed Acknowledgment
base schema, and query processing on the appropriate technology solutions This work was supported in part by the
the blockchain are also necessary. for smart energy systems. For example, Lahore University of Management Sci-
the platforms lack support for off-chain ences Faculty Initiative Fund Pakistan
Consensus Management data management and nondeterministic and, in part, the Natural Science Foun-
The PoAu algorithm is the fastest con- smart contracts, which are generally re- dation of China and Jiangsu Province
sensus-management algorithm. How- quired for resource-constrained nodes. under grants 61750110529, 61850410535,
ever, the latency and throughput re- Therefore, the development of open and BK20161147.
quirements of some applications are source and modular blockchain plat-
extremely stringent (measured in mil- forms with appropriate embedded tech- Biographies
liseconds), and even PoAu may fail to nologies to support multiple smart en- Naveed Ul Hassan (naveed.hassan@
fulfill these. There is a clear need for ergy applications is critically needed. lums.edu.pk) earned his B.E. degree in

DECEMBER 2019 ■ IEEE INDUSTRIAL ELECTRONICS MAGAZINE 117

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