IEEE Systems, Man and Cybernetics Magazine - January 2023 - 41

process continues [9], [10], [11]. Figure 3
indicates the advantages and disadvantages
of blockchain technology.
Layers of Blockchain Technology
As shown in Figure 4, blockchain technology
consists of four layers. The bottom
layer is the physical infrastructure. The IT
solution is not actually related to physical
assets, but it is required for the connectivity
of physical assets. The blockchain itself
is on top of the physical layer and it is the
backbone that allows different assets,
individuals, companies, etc., to coordinate
with each other. On top of the blockchain
layer is a middleware layer, the so-called
product layer, and the final one is the
application layer. For instance, the application
layer can consist of an application
that allows customers to charge their EVs
at any charging station and maintain all
settlements regardless of who owns the
charging station, etc. [12]. That application
can be based on blockchain, and accordingly,
all settlements can be handled
through that. However, from the end user's
perspective, there is no need to have deep
knowledge of blockchain development and
its principle operation. Subsequently, the
third layer is a layer of resources to build
any apps on top of the blockchain layer [4].
Such resources can be frameworks or
tracking renewable energy certificates
(RECs) that allow power grid operators to
connect generation assets to customers
and transact in those certificates. Another
example is when power grid operators
focus on connecting physical assets, i.e., a
set of resources related to large-scale
wind farms or solar power plants or even
small devices at the household-level or
behind the meter and when they check
how these components are connected
together to represent those in a way that
they can interact on top of the blockchain
layer. The grid simulation tool is another
resource for grid-connected devices to
trade in hierarchical markets, and mainly
it can be used for power grid operators
who want to look at how this type of system
works.
Applications of Blockchain
Technology in Power Systems
Figure 5 shows the main areas within
the energy sector where blockchain
*Decentralization
*Resilience
* Security
*Proof of
Ownership
Distributed
Ledger
Cryptography
Smart
Contracts
*Automation
Real-Time
Settlement and
Reconciliation
*
(a)
Provenance
*
* Proof of Origin
Transaction
History and
Immutability
Low Transaction Speed Compared
to Centralized Solutions
Storage
Confidentiality (in Public Ledger)
Irreversible Transactions
(in Public Blockchain)
Permissionless
(in Public Blockchain)
(b)
Figure 3. The (a) advantages versus (b) disadvantages of
blockchain technology.
Application Layer
Product Layer
Blockchain
Physical Infrastructure
Figure 4. Layers of blockchain technology.
January 2023 IEEE SYSTEMS, MAN, & CYBERNETICS MAGAZINE 41
IEEE Systems, Man and Cybernetics Magazine - January 2023

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