IEEE Electrification - December 2020 - 86

TABLE 2. The participants' data.
Participants

Public Key

Private Key

Bids (Ether)

1

0x929aB5a6bFf983bC888953664886D01666803D9f

3e3x692uf93gyeuu

-

2

0x8dA5ad34728805c60aE7d1B4f0fD0145ce75782B

u32hfas89dh43165

30

3

0x509e76C694D84D74A8736332B1c822045c7cE5A6

43u28jhfas9438f8

20

4

0x1A4545135756CC8Fe5301E50c2E1d2E4A7741880

3c318d9914606339

25

serves as a publishable address in the blockchain. Next,
each participant is authenticated by selecting a private
key as a digital signature before communicating with the
other participants. The pairs of public and private keys are
stored in a participants' blockchain, which provides a tamper-proof attribute for these keys.

Two-Level Blockchain for P2P Transactive
Energy Trading

An Example of a Blockchain Application
This section provides a simple example of an auction that
applies smart contracts to blockchain technology. Assume
that there are four participants, 1, 2, 3, and 4, in the market. Participant 1 intends to sell a painting in an auction
using smart contracts. The following rules are preset in
smart contracts: 1) Participant 1 is the seller. 2) Participants 2, 3, and 4 can bid to buy the painting. 3) The highest
bidder wins. Here, we use the Go Ethereum (Geth), which
is a blockchain development platform. In Table 2, the Geth
platform provides each participant with a unique public
key, and each participant sets up a private key that is privately held.
Assume that participant 2 submits a bid at 30 Ether (a
cryptocurrency used in Geth). Here, Participant 2 provides
his private key as a digital signature. The participants' bids
are listed in Table 3, where participant 2 is declared the
winner because of their highest bid. Accordingly, the
smart contract will transfer 30 Ether from participant 2 to
participant 1. In this case, the participants held an auction
without a third party (e.g., an auctioneer), and the smart
contract automated the contract settlement process.

Blockchain For P2P Transactive Energy
Trading in Networked MGs
The combination of a private blockchain and a PoA consensus method is applicable to the P2P transactive energy
market for the following reasons: First, compared with a
public blockchain, adding a data block is faster and
embedded at a lower cost in the private blockchain. Participants in the private blockchain can easily trade with each

TABLE 3. The results of the auction.

86

Participant

Bidding Price (Ether)

Winner

1

-

-

2

30

✓

3

20

✗

4

25

✗

I E E E E l e c t r i f i cati o n M agaz ine / DECEMBER 2020

other by adding data blocks to a blockchain. Second, the
set of participants in the P2P transactive energy market is
usually fixed (e.g., local MGs in a power distribution system). Accordingly, the DSO can easily determine the
authorized MGs by using the PoA consensus method.

Figure 8 illustrates the proposed two-level application of a
blockchain applied to the P2P transactive energy trading
depicted in Figure 2. We consider that each MG is managed
by a MG master controller (MGMC). In Figure 8(a), each
MGMC at the lower level manages its respective on-site
DERs and demands and determines the optimal DER schedule for maximizing its payoff by selling power to the other
MGMCs. In addition, the MGMCs provide strategic offers/
bids for P2P energy trading with the other MGMCs. Once the
energy trading among the MGMCs is completed, each
MGMC submits its surplus/deficiency information to the
DSO. For privacy concerns, each MG is represented as an
equivalent source/load to the DSO. At the upper level of the
power system, the DSO shoulders the responsibility of managing the grid and reconfiguring the power distribution network for enhancing the local network security and
facilitating the P2P energy trading among the MGMCs. The
DSO will subsequently request that the MGMCs adjust their
trading schedule if the proposed MGMC's P2P energy trading
schedule violates the DSO's distribution network security.
Figure 8(b) depicts a blockchain consisting of two blockchain systems. At the lower level, there is an MGMC blockchain that uses smart contracts to trade energy with each
other. Additionally, the MGMC blockchain manages on-site
DERs in each MG, which then submit the data blocks to
the MGMC blockchain and execute the smart contracts
sent from the MGMCs. In essence, the first blockchain performs two functions, including the P2P trades among MGs,
and the trade within each MG that could occur among
their respective components (e.g., buildings, batteries, generation resources, charging stations, and so on). The second blockchain in Figure 8(b), which is referred to as the
DSO blockchain, is set up for distribution network management. The upper level cloud data center includes the
DSO's operation for managing the distribution grid. The
DSO blockchain collects the data blocks provided by the
MGMC blockchains and sends the smart contracts to the
MGMC blockchains. The two blockchain systems in Figure 8(b) store the data blocks and smart contracts.
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