2019 8th International Conference on Modern Power Systems (MPS)

An Efficient Peer-to-Peer Based Blokchain Approach

for Prosumers Energy Trading in Microgrids
Bogdan Constantin Neagu, IEEE Member, Gheorghe Grigoraș, Ovidiu Ivanov, IEEE Member
Power Engineering Department
„Gheorghe Asachi” Technical University
Iasi, Romania
email: bogdan.neagu@tuiasi.ro, ggrigor@tuiasi.ro, ovidiuivanov@tuiasi.ro

Abstract— The pressure of climate change and the need to
adopt renewable energy sources (RES) have led to an increased
development of microgrid technologies. Their modularizable and
scalable nature presents opportunities for the development of a
new class of players in the power system, i.e. prosumers. The
large-scale integration of RES creates acute challenges to the
existing power systems. In this context, a reliable and secured
balance between energy generation and consumption is highly
required. To overcome these problems at microgrid level, a key
role is played by the peer-to-peer energy trading using the
blockchain concept. In this paper, we present an efficient
approach that can be useful for energy trading using blockchain
from both active participants (prosumers and consumers). The
proposed approach meets the new Romanian regulation
regarding prosumers. The results of the study emphasize that the
proposed methodology could lead to an efficient balance between
local supply and demand with benefits to the participants.
Keywords—peer-to-peer; blokchain; prosumers; trading;
microgrids.
I. INTRODUCTION
The microgrids (μGs) represent a finite group of producers
with local demands (prosumers) mainly through renewable
energy resources. Their presence increases the power supply
reliability, which is useful for distribution network operators
(DNOs) in the case of power outages [1]. The μG energy
markets (micro-markets) enable small-scale participants such
as consumers (residential buildings) and prosumers (defined as
consumers with excess of produced power) to locally exchange
the energy surplus [2].
Consequently, these micro-markets emphasize in an
efficient economic (but also technical) way the balance
between the renewable power generation (solar panels mounted
on the residential buildings) and consumption in μGs [3].
Moreover, these platforms allow the interchange of energy
between prosumers and consumers, with the purpose to
establish self-sustainable μG communities [4].
The electricity suppliers bound by contracts with prosumers
are required to buy the electricity at the weighted average day-
ahead market price from the previous year. Thus, the prosumer
can sell on the market its electricity generation surplus, while
the advantage for the supplier is the exemption from the
payment of the distribution network tariff. Through bilateral
prosumer-consumer contracts, using the innovative blockchain
technology, consumers can obtain electricity at significantly,
lower price offers than from traditional suppliers.
In Romania, the consumers purchase electricity from
suppliers operating on the competitive electricity market. The
commercial market operator OPCOM manages the transactions
between producers and suppliers using a Bilateral Contracts
Market (BCM) and Day-Ahead Market (DAM). Each of these
trading channels has its own dynamics regarding quantities and
prices. From 1 January 2018, according to the National
Regulatory Authority for Energy, the electricity price is
liberalized for all consumers, including residential, which can
purchase electricity from one of the last-resort regional
suppliers, or are free to choose a commercial supplier [5].
Suppliers serving end customers purchase electricity from the
market. The lower the purchase price, the more commercial
offers of the suppliers can be more attractive.
In the European Union, the implementation of smart
metering systems is finished in some countries and is in various
levels of development in others [6]. A special attention should
be paid to the management of the databases with information
provided by smart meters using new technologies such as
Knowledge Data Discovery or Data Mining, Blockchain. In
addition to the metering functions, the smart meters provide, a
wide range of applications: two-way communication between
the smart meters mounted at consumer/prosumers sites and
concentrators (management platforms or traders), secure data
transmission between the participants, remotely controlled
connections on the μGs and specify the limitation of
consumers/prosumers and differentiated time-of-use tariffs [7].
When an electricity provider (i.e. energy market provider,
traders or a local community electricity network) and a
potential customer agree to make a transaction, they determine
the trading variables, such as the sender, the recipient, the
transaction value etc. It should be noted that, at μG level, each
transaction is distributed and encrypted for data validation and
local storage. Each member of the network automatically
verifies, confirms and saves the authenticity of the transaction
data. Furthermore, the traditional intermediaries are not
needed, because the trading process is performed by μG
participants, which become witnesses and guarantees for every
transaction.
The blockchain concept, as a rising technology, proposes
new challenges for the μG based on the decentralized or

978-1-7281-0750-9/19/$31.00 ©2019 IEEE

community energy market, which ensures clear and favourable
applications that allow consumers to be prosumers in a secured
way [8]. The application of blockchain for μG energy markets
has recently earned the consideration of the researchers
worldwide.
In [9], a proof-of-concept operation of a small blockchain
applied for machine-to-machine electricity market with one
consumer and two producers from a chemical factory was
proposed. that the blockchain concept can set up very small-
scale electricity markets such as μG communities. In [10] the
authors show that the use of blockchain technology for
electricity transactions enables μG to become more resilient by
building trust between participatins. These opportunities are
notably with respect to financial payments and electricity
delivery [11]. The P2P concept represents a process in which
the prosumers trade energy in exchange for a deposit with the
consumer [12].
The paper describes a particular approach for prosumers
energy trading in microgrids as an efficient P2P exchange
based on the blockchain technology. Specifically, our
algorithm solves a mathematical model for the latest challenges
regarding both the active distribution networks (the so-called
microgrids) and the newest type of electricity market
participants (prosumers). This paper is organized as follows.
Section 2 describes the concept of the transactive energy in
active low voltage distribution networks (μG). Section 3
describes the proposed approach by formulating the problem
and its solving methodology. In Section 4 a case study is
performed using a test μG with 27 consumers (of which four
are prosumers with solar panels). Finally, Section 5 presents
conclusions.
II. THE TRANSACTIVE ENERGY CONCEPT
In the literature the “transactive energy” paradigm is
defined as a platform tool for grid management taking into
account the market-based incentives, in order to ensure grid
reliability and resiliency, that “uses economic signals and
operational information to coordinate and manage devices'
production and/or consumption of electricity in the grid” [13].
Thus, transactive energy defines the policies, technologies, and
financial drivers convergence in an active prosumer (buildings,
permanent changes in their operation. A new type of electrical
network capable of operating in both islanded and grid
connected mode, with the proper optimization of renewable
energy resources that promises emission free green energy, is
the microgrid. Renewable sources such as solar energy are
frequently operated at capacities to feed all available power
into the grid, maximizing grid output regardless of its state
[16]. However, due to the μG energy markets, small-scale
prosumers and consumers now have a market platform to trade
energy generated locally within their community. In this way,
loss of energy is reduced, because the consumption of energy is
in close proximity to the source. This helps to promote the
sustainable and efficient utilization of local resources, because
the market participants in a μG energy market do not
compulsorily need to be physically connected.
Multiple energy producers, prosumers, and consumers can
be added to form a local community (or virtual for our paper)
and the control can be maintained through local (virtual) μGs.
Blockchain is a very secure system for transactions, which also
provides distributed applications to convey understanding of
each block and data on the system [17]. A good number of
research papers are available on the μG energy markets and
blockchain technology individually but their aggregation is
lacking [8], [10], [18-21].
III. THE ALGORITHM FOR PROSUMERS ENERGY TRADING
This section describes the mathematical model of the
algorithm for selling the energy produced by small-scale
renewable sources (solar panels from residential users)
between the participating agents in the μG markets - prosumers
(Prs) and consumers (Crs). In Fig. 1, the flowchart of the P2P
based blockchain for prosumers energy trading is presented.
Taking into account that “prosumers” are the energy producers
which sell their surplus energy, they can sell the surplus of
produced energy (Wgp) if their own consumptions (Woc) are less
than the own generation. If this constraint is fulfilled, the
blockchain system starts working. First, in accordance with the
flowchart if the energy demand (Wd) quantities are higher than
Wgp, the total prosumers offered energy (Wof) are set taking into
account total generated power (Wg) by prosumers as:
n n n

μGs, and virtual power plants) market [14]. 

k =1
Wofk ,h = (U
k =1
k ,h
g ⋅ I gk ,h ) − W
k =1
k ,h
oc
(1)
In our paper, the P2P contracts are used for selling the
surplus of generated energy from the prosumers. In active Ug and Ig is the generated voltage level and current value, for
distribution networks, the P2P trading process is structured as a prosumer k, at hour h.
four-layer architectural business model, from which three
dimensions for secured energy exchange. The dimensions The total energy losses (ΔWT) for n lines are computed as:
include bidding between prosumers and consumers for a n n n

  Rli ,h ⋅ ( I li ,h ) + (U ⋅ I mi ,h )
2
certain unit of energy through smart contracts, exchanging the Δ WTi ,h = i ,h
m
(2)
energy and settling payments through blockchain technology i =1 i =1 i =1
[12]. In the aforementioned transaction procedure, a ledger is
posted in the blockchain, verified by μG and finally, is where Rl is the resistance and Il is the value of the current flow
accepted by the P2P contracts level. Moreover, the energy on the ith line at hour h, and Um·Im represent the miscellaneous
demands can be met by any prosumer, and energy exchange in power losses. Afterwards, the offered energy (Wof) can be
lieu of digital money takes place through a secured medium for calculated by subtracting (2) from (1):
μG [15]. n n n n

The presence of distributed generation resources in low

voltage networks is in accelerated expansion, leading to
i =1
Wofi ,h = i =1
Δ Wgpi ,h −  i =1
Δ Woci ,h − Δ W
i =1
T
i ,h
(3)

Fig. 1. The flowchart for the proposed algorithm
The total price (PT) for the Wof are determined through the
multiplication with the energy per unit price (PP2P), assured by
negotiating process between Prs and Crs (from a local μG)
using P2P contracts. In next stage, for each available Prs the
Wof status goes online and all Prs are notified by the particular
blockchain system presented in Fig.1. When Wd is greater than
the Wgp the consumers want to buy energy from the local Prs, if
have already signed a P2P contract. Where a provider and a
customer agree to enter into a transaction, they determine the
variables of this transaction by specifying the recipient, the
sender and the size of the transaction, among other things.
When Crs give their demand ledger status, the blockchain
module creates the Wd list in accordance with the required
quantity of energy (Wr) to compare both Wd and Wof list
available in the system. Further, a message to all implied Prs
and Crs is sent with a notification about the transaction status.
If they agree with the transaction status, the Wof will be
transferred from the μG (Prs) to the Crs. The crypto PP2P will
be used as a virtual way of payment.
Another blockchain role in our algorithm is the control if
the power left in the μG satisfies the Wd list or there are no
prosumers who want to sell energy. In this scenario,
transactions cannot be done, and Crs must to wait until selling
offers become available. Then, the Crs can see the
advertisement of selling offers and the blockchain system will
sell the power to the consumers using the first come first serve
(FCFS) rule. The algorithm continues while Wof is greater than
zero or Wd from Crs exist. Finally, if the trading process is
completed the Prs and Crs will get notifications.
IV. RESULTS AND DISCUSSIONS
For testing the proposed approach, a test μG (Fig. 2) with
23 Crs and only 4 Prs (residential with photovoltaic panels)
was used. The μG is supplied from a MV/LV transformer using
LV bundled overhead cable type NFA2X50OL-AL+3x70mm2.
The prosumers have the following installed power for the on-
grid PV panels: 3 kW (P3), 13.5 kW (P12 and P20) and 15 kW
(P22). The simulations are performed using a MATLAB
application for one hour (14.00-15.00) of a working day from
July, considering three cases for Wof injection on μG: the four
Prs (case A), three Prs (P12, P20 and P22–case B) and two Prs
(P12 and P22-case C). In Table I, the prosumers information
regarding the total energy generated (Wg), the own
consumption (Woc) and surplus (Wof) that can be sold to Crs are
presented. It can be seen that the offered energy of the four
prosumers can lead to a profit of 7300 €/year.
TABLE I. PROSUMERS INFORMATION
Type of Prosumers from considered μG (Fig. 1)
Energy P3 P12 P20 P22
Wg (kWh) 2.74 8.94 8.63 9.28
Woc (kWh) 1.15 1.00 1.89 1.27
Wof (kWh) 1.59 7.94 6.74 8.01
PT (€/h) 0.12 0.60 0.51 0.60
Pyear (4000h) 477.2 2381.1 2020.8 2402.7
The total consumption at the considered hour is 57.96 kWh.
Taking into account that the studied μG has only 23 Crs, all of
them require energy at a low price, and sign contracts with the
Prs with a medium price PP2P = 0.08 €/kWh (for comparison,
the price for the kWh bought by the trader is 0.17 €/kWh). It
must be emphasized that total price are computed only for the
energy offered by Prs without miscellaneous power losses.
Moreover, by using the proposed algorithm, all participants
have advantages, because the bidirectional power flow on the
power lines decrease the μG active power losses in all
considered cases, as given in Table II. In addition, the overall
energy exchange between the μG and the utility grid is
reduced. The active power losses are halved.
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