Blockchain-Based and Blockchain-Agnostic Architectures for Energy Markets – A Journey Through Research, Experimentation, and Standardization

Written by Sri Nikhil Gupta Gourisetti¹, Umit Cali², Farrokh Rahimi³, Claudio Lima⁴, Hayden Reeve¹, and D. Sebastian Cardenas¹

Transactive energy market researchers have been exploring blockchain’s capabilities to enforce secure transactions that prevent repudiation, maintain user privacy, and ensure the confidentiality and integrity of all transactions. Despite blockchain’s promise to act as a trust anchor between disparate entities to enable distributed energy market architectures, some of questions about the long-term challenges for a production-ready blockchain solution pertaining to scalability, interoperability, and security remain largely unanswered.

A formidable amount of existing research in this area clearly demonstrates two aspects:

1. An opportunity: Blockchain shows promise to augment and even revolutionize energy markets in a distributed ecosystem with a mix of utility and non-utility owned DERs.
2. A Challenge: To assist with long term scalability and interoperability, there is a strong need for standardization and blockchain-based frameworks for transactive energy systems and smart contracts.

From a practical applications point of view, one must distinguish between two categories of use cases where blockchain is considered and assessed for use in the electricity sector:

1. Use cases and applications where conventional non-blockchain solutions do the job satisfactorily, but blockchain “can also be used” and integrated with legacy solutions.
2. Use cases and applications where conventional non-blockchain methods fall short of meeting the combination of emerging industry requirements such as lowering barriers of market entry for distributed energy resources (DER) while augmenting market efficiency, security, guarding against double sale and associated market manipulations, and streamlining settlement processes. This is the area where blockchain-enabled technologies offer the most promise. 

Blockchain technology should be seen as an enabler at the software layer that offers the following features (1) trust between untrusted entities; (2) data integrity by using cryptographic hashing; (3) confidentiality by enforcing access controls and incorporating peripheral security controls for increased security through encryption, (4) configurable or controlled availability of data by using an immutable ledger with transactional records, (5) logic process automation by using smart contracts or platform-level enforcement of governance and rules, and (6) fault-tolerant operations by using a consensus mechanism. The blockchain technology’s modularity can take advantage of these features to support physical market operations. However, at its current maturity, behavioral and performance inconsistencies exist across the attributes offered by the various blockchain platforms. Blockchain is evolving fast, and will continue to do so, so research and development activities in the marriage of blockchain and energy markets should strive to stabilize and standardize elements pertaining to the immutable ledger, smart contracts, consensus mechanisms, and associated protocols and processes in a technology-agnostic fashion. Such direction will help realize real-world deployments that are interoperable, thereby increasing market adoption.

In recent research advancements, a reference framework and a smart contract templates architecture for a transactive energy market, based on blockchain, have been designed and published. The framework and the architecture [1] are designed based on the energy services interface, as specified in the IEEE 2030 Smart Grid architecture framework concept, while maintaining the necessary cybersecurity constructs required to support fair, secure, and efficient market operation. The blockchain-based transactive energy systems (TESs) framework (see Figure. 1) and the smart contract templates are designed to be blockchain-agnostic, to not only facilitate the energy market mechanisms, but to also assist with meeting cybersecurity requirements, such as access control management (including identification, authentication, and authorization); data security and integrity; and resilience management (decentralization, scalability, and performance during faults).

Figure 1. Blockchain in the world of Transactive Energy Systems – a mixture of promising opportunities and worthwhile challenges.

The research artifacts have been thoroughly instrumented and demonstrated [2] using a real-time, 5-minute, double-auction energy market to provide a strong validation of blockchain’s applicability in TESs. The modular software artifacts are designed to fully support machine-to-machine transactions that can be directly integrated into complex grid operations, such as automated market bidding and self-sufficient, resilient grids.

Standardization is a set of procedures and processes that are used to propose, implement, and develop a group of rules and procedures created by various stakeholders and participants, including but not limited to experienced industrial and academic professions. The IEEE P2418.5 Blockchain in Energy Standards Working Group (see Figure. 2) is collaborating with various research teams and industry initiatives to explore and mature blockchain’s applicability to broader power grid applications.

Figure 2. Overall summary of the IEEE P2418.5 Working Group activities and workflow.

The objectives of the IEEE P2418.5 Blockchain in Energy Standards Working Group are as follows [3]:

• Develop an open, interoperable, and holistic guideline that will depend on the reference framework and architecture for the energy sector (primarily for the power industry, secondarily for the oil and gas industries and their derivatives).
• Identify the initial reference framework and map the framework with energy use cases for which blockchain technology can be implemented.  The use cases are determined by the working group members and industrial surveys.
• Evolve the initial reference framework and architecture and, most importantly, the iterative and consensus-based exchange mechanism by interacting with other associated groups, such as the IEEE Blockchain-enabled Transactive Energy (BCTE) Initiative [4], etc. and between the working group members via weekly or bi-weekly meetings.
• Disseminate the findings and results to the wider community using standards documents, reports, articles, position papers, webinars, panels, and similar activities.

The IEEE P2418.5 Working group is addressing the aforementioned challenges through its Task Forces (TFs): (1) TF Use Cases, (2) TF Interoperability, (3) TF Cybersecurity, and (4) TF Smart Contracts.

References:

1. Gourisetti, Sri Nikhil G., Widergren, Steven E., Mylrea, Michael E., Wang, Peng, Borkum, Mark I., Randall, Alysha M., and Bhattarai, Bishnu P., “Blockchain Smart Contracts for Transactive Energy Systems.” United States: N. p., 2019. Web. doi:10.2172/1658380.
2. Gourisetti, Sri Nikhil G., Sebastian-Cardenas, D. Johnathan, Bhattarai, Bishnu P., Wang, Peng, Widergren, Steven E., Borkum, Mark I., and Randall, Alysha M., “Blockchain smart contract reference framework and program logic architecture for transactive energy systems”. United States: 2021. https://doi.org/10.1016/j.apenergy.2021.117860.
3. IEEE P2418.5 - Standard for Blockchain in Energy, https://standards.ieee.org/project/2418_5.html
4. IEEE Blockchain Transactive Energy (BCTE) Initiative Position paper, https://attend.ieee.org/bcte/.

This article edited by Geev Morkyani

To view all articles in this issue, please go to November 2021 eNewsletter. For a downloadable copy, please visit the IEEE Smart Grid Resource Center.

Sri Nikhil Gupta Gourisetti is a Cybersecurity Researcher and the cyber systems team lead at  Pacific Northwest National Laboratory. He works on smart grid and connected buildings projects   addressing the resiliency and interoperability challenges. He is the Principal Investigator for  multiple Department of Energy (DOE) projects, including non-intrusive Cybersecurity tools  development to enumerate vulnerabilities and threats, blockchain explorations in power and   energy, and physics-based power systems modeling to detect anomalies and forecast failures in  complex quasi-distributed sensor networks. He is also an advisor on a DOE project that is  developing digital twins for hydropower systems. Sri Nikhil leads the cybersecurity task force   under the IEEE P2418.5 Blockchain Standards Working group and an active member of DOE’s  Cybersecurity Capability Maturity Model (C2M2) working group.

Dr. Umit Cali has 20 years international experience in the fields of energy systems, data science, blockchain technologies, ICT, energy markets and economics as professor, entrepreneur, researcher and CTO. Dr. Cali is also co-founder of US (NSF SBIR funded) and Europe based technology start-up companies which are active in advanced energy informatics and blockchain. He is working as associate professor of Energy Informatics (AI & Blockchain) in the Norwegian University of Science and Technology. He is also serving as Vice Chair of IEEE Blockchain in Energy Standards WG (P2418.5) and Chair of IEEE TEMS Special Interest Group on Energy DLT. Umit is the leading author of “Digitalization of Power Markets and Systems using Energy Informatics book.

Farrokh Rahimi has a Ph.D. in Electrical Engineering from Massachusetts Institute of Technology (MIT), along with over 50 years of experience in electric power industry. In his current role as Executive Vice President, Market Design and Consulting at Open Access Technology International, Inc. (OATI), Dr. Rahimi oversees development of OATI’s energy market design and related consulting activities. He is also a key contributor to OATI’s Smart Grid and Grid Modernization solutions as well as microgrid development activities of USA Microgrids, a recently established OATI company. He is a member of Grid Wise Architecture Council (GWAC) as well as a number of Smart Grid and Grid Modernization task forces and committees collaborating with IEEE, NERC, NIST, WECC, and NAESB. He has contributed extensively to IEEE Blockchain in Energy initiative and related activities.

Claudio Lima, Ph.D., is a global executive and thought leader in advanced blockchain, IoT, and AI digital transformation technologies, with expertise in energy (utilities, oil & gas), smart city, and telecom/IT. He is co-founder of the Blockchain Engineering Council, chair of the IEEE Blockchain Energy Standards WG, and chair of the IEEE Blockchain Transactive Energy Initiative (BCTE). He headed the Sprint Advanced Technology Labs Digital Media Initiative (DMI) in Silicon Valley, California, and the IEEE 2030 Smart Grid standards, as Vice-Chair. He is currently leading global efforts on Blockchain/DLT standardization, interoperability and energy smart contracts in government and corporate enterprise blockchain. He’s also Advisory Board Member of the US DOE Department of Energy BLOSEM Blockchain project. Dr. Lima earned a PhD in Electronic Engineering at the University of Kent (UKC/UK, 1995). He can be reached at clima@blockchain-eng.org.

Hayden Reeve is a senior technical advisor at PNNL where he manages the transactive systems program. He has more than fifteen years of experience assessing and developing advanced technology solutions for grid-interactive efficient buildings, renewable generation, and aerospace energy systems. Most recently this has focused on the development of advanced building control strategies, fault detection and diagnostics technologies, and investigation of distributed energy resources for improved grid flexibility. He has a PhD in Mechanical Engineering from the University of Washington.

D. Jonathan Sebastian-Cardenas is an Electrical Eng./Computer scientist with knowledge and interests in grid cybersecurity, distributed systems, blockchain technology, software engineering & power system simulators. Areas of current interest include IoT cybersecurity, Distributed consensus methods (DLTs/Blockchain), Physics-driven anomaly detection systems, and Smart contracts/DApps for grid applications.