The Advantages and Challenges of the Blockchain for Smart Grids

Abstract

In our current society both the demand for electricity is increasing and the demand for electrical energy as energy carrier is increasing. Renewable sources will play an important role in future energy generation due to societal developments. These distributed energy resources introduce new challenges to our current electrical power system. One of these challenges imposed on our current electrical power system is the introduction of a new grid user, the prosumer, who consumes and produces electrical energy. Another challenge is the intermittent nature of renewable sources such as solar and wind energy. During the past year Blockchain gained momentum as a technology mainly through the evolving industry of cryptocurrencies such as Bitcoin and Ether. Application of the Blockchain to the electrical power system could oer solutions to some of these challenges that the future electrical power system will face. The main goal of this thesis is to identify the opportunities, advantages and technical challenges of applying the Blockchain to the electrical power system. First, as part of the literature study the Blockchain has been studied and the operation of the Blockchain has been analyzed. The Blockchain has been dened as a collective of technologies that can be described as a database, which is distributed among a peer to peer network, combined with securitization elements relying on multiple cryptographic technologies. Second, the opportunities where the Blockchain could be applied in the current electrical power system were identied. In order to study the application of the Blockchain to the electrical power system four case studies have been introduced. These case studies dierentiate themselves in the level of adoption of the Blockchain and the functionality which could be provided to the electrical power system. Ranging from a local peer to peer trading infrastructure to the entire market being operated via the Blockchain with advanced features such as the control of power ows. Third, the various advantages of applying the Blockchain to the electrical power system have been explored based on the proposed case studies. A distinction has been made between advantages which are inherently linked to the characteristics of the Blockchain and the provided functionality to the electrical power system. Fourth, the challenges of applying the Blockchain to the electrical power system have been analyzed and discussed. Based on the dierent case studies a segregation has been made between challenges attributable to the characteristics of the Blockchain and challenges specically linked to the implementation of the case studies. Last, the practical application of the Blockchain to the electrical power system of the dierent case studies have been discussed. Explanation is given how the dierent case studies could be implemented within the electrical power system and what the role will be of dierent parties currently involved within the electrical power system.