Blockchain-Enabled Energy Demand Side Management Cap and Trade Model

Global economic growth, demographic explosion, digitization, increased mobility, and greater demand for heating and cooling due to climate change in different world areas are the main drivers for the surge in energy demand. The increase in energy demand is the basis of economic challenges for power companies alongside several socio-economic problems in communities, such as energy poverty, defined as the insufficient coverage of energy needs, especially in the residential sector. Two main strategies are considered to meet this increased demand. The first strategy focuses on new sustainable and eco-friendly modes of power generation, such as renewable energy resources and distributed energy resources. The second strategy is demand-side oriented rather than the supply side. Demand-side management, demand response (DR), and energy efficiency (EE) programs fall under this category. On the other hand, the decentralization and digitization of the energy sector convoyed by the emersion of new technologies such as blockchain, Internet of Things (IoT), and Artificial Intelligence (AI), opened the door to new solutions for the energy demand dilemma. Among these technologies, blockchain has proved itself as a decentralized trading platform between untrusted peers without the involvement of a trusted third party. This newly introduced Peer-to-Peer (P2P) trading model can be used to create a new demand load control model. In this article, the concept of an energy cap and trade demand-side management (DSM) model is introduced and simulated. The introduced DSM model is based on the concept of capping consumers' monthly energy consumption and rewarding consumers who do not exceed this cap with energy tradeable credits that can be traded using blockchain-based Peer-to-Peer (P2P) energy trading. A model based on 200 households is used to simulate the proposed DSM model and prove that this model can be beneficial to both energy companies and consumers.

Automated summary

Global energy demand is rapidly increasing, posing economic challenges for power companies and leading to socio-economic issues such as energy poverty. To meet this growing demand, new sustainable and eco-friendly power generation modes like renewable energy resources are being considered, as well as demand-side management strategies focusing on energy efficiency and response programs. Additionally, decentralization and digitization of the energy sector, along with the emergence of technologies like blockchain, IoT, and AI, offer new solutions to address the energy demand dilemma.