Blockchain based Auction Mechanisms for Transacting Energy

Abstract

Certain factors like increased distributed energy generation, shift towards renewable energy resources, digitalization and excessive data handling are changing the energy sector. Due to economic reasons and concept of clean energy for decarbonisation and reduction of environmental hazards, use of renewable energy resources and small scale energy generation is emerging. With the popularity of smart grids and microgrids, and incline towards local energy trading, centralized energy management is becoming complicated. With all these revolutionary changes, energy industry is moving towards distributed and decentralized systems. Blockchain due to its inherent nature, is being widely studied by researchers in energy sector as a possible solution as blockchain has revolutionized distributed systems and has made its way into different fields apart from decentralized cryptocurrencies. Electric utilities and regulators are researching blockchain and its benefits for energy markets and trading systems.Considering these requirements, we studied energy market models and processes followed by Independent System Operators (ISOs) and presented smart contracts for Unit Commitment (UC) Model which is generally used by ISOs for day-ahead markets and for Economic Dispatch (ED) Model (Double Auction) which is used in real time spot markets. Moreover, to add privacy of the bids and asks submitted by market participants we propose two solutions based on homomorphic encryption. Proposed system is private yet publicly verifiable. Ideated scheme is transparent and trust-less where everyone even an outsider can verify the correctness of results without trusting anyone.