Privacy protected product differentiation through smart contracts based on bilateral negotiations in peer-to-peer transactive energy markets

Abstract

Local peer-to-peer (P2P) energy markets have decentralized nature with bilateral negotiations and possibility of product differentiation to respect market participants’ preferences for attributes such as energy source. An extension is presented for a Transactive Energy based decentralized P2P market framework to support product differentiation along with a Hyperledger Fabric (HPLF) open-source blockchain network integration to enable secure P2P energy transactions while maintaining distribution line power flow limits. HPLF is chosen as its permissioned nature enables recording of higher number of transactions per second compared to famous blockchain ledgers such as Bitcoin. There is a need to protect the transaction details while recording on common blockchain ledger as the same buyer may be offering different energy rates to different sellers. Market clearing logic is encoded into smart contracts and a novel smart contract approach is proposed that serves dual purpose. First, it automatically verifies the negotiated energy prices and quantities among buyer–seller pair to validate transactions. Second, it records verified market transactions on common immutable blockchain using private data stores without exposing the transaction details while maintaining verifiability. Numerical co-simulation studies with standard HPLF integration show that participants can inherently align their bidding strategies to suit their product differentiation preferences such as higher prices for renewable energy producers (REPs). Detailed results describing the recording of energy transaction on HPLF ledger as transfer of virtual asset are included to demonstrate operation of proposed smart contract. Further, multi-step market clearing results show that the revenue for such REPs can be increased significantly.