Multi‐stage energy‐risk adjustments using practical Byzantine fault tolerance consensus for blockchain‐powered peer‐to‐peer transactive markets

Abstract

Abstract The energy risk associated with distributed energy resources is inevitable in peer‐to‐peer (P2P) transactive energy markets owing to mismatches between energy commitments and metered measurements. However, adjusting these possible mismatches by progressive revision of the energy commitments in the rolling time horizon mitigates the energy risk, and thereby mitigates the financial risk for prosumers. In this study, the conditional value at risk (CVaR) is used to estimate the risk value for each prosumer. The energy offers that are riskier than CVaR‐based threshold values are reduced in an ‘adjustment bid’. A new pricing mechanism for these adjustment bids is introduced, which varies with historical deviations of a prosumer from energy commitments. This market framework and pricing mechanism are simulated through a blockchain network hosted on a Python Django server using the practical Byzantine fault tolerance consensus algorithm to guarantee network immutability and data privacy. Efforts to mitigate such mismatches between ex ante and ex post energy values incentivise risk‐aware participation in P2P markets. In addition, the welfare of both prosumers and consumers improves with their participation in the proposed market framework. Furthermore, implementing a network using blockchain technology guarantees the privacy of bidding data and provides a secure transaction platform.

Keywords

• bidding
• blockchain
• energy risk
• microgrids
• P2P markets