Challenges of blockchain in new generation energy systems and future outlooks☆
Introduction
Blockchain has been recognized as one of the most promising technologies since the advent of Bitcoin in 2008 [1]. A blockchain encapsulates data into blocks, and these blocks form a linked list in the order specified by a distributed consensus mechanism. The chain structure and the decentralized nature grant many favorable features to blockchain, such as transparency, traceability, and immutability [2], which explains the widespread application of blockchain in various fields. In peer-to-peer (P2P) transactions, using blockchain can reduce transaction cost by getting rid of centralized trusted intermediaries [3], [4]. The traceability, transparency, and immutability make blockchain very popular in commodity tracing [5], [6]. Blockchain can also establish trust and provide data security for cloud computing or edge computing [7], supply chains [8], and health care systems [9].
With the proposal of “Blockchain 2.0” in 2014, the development of the blockchain technology embraces a new climax [10]. Compared with Blockchain 1.0, Blockchain 2.0 integrates smart contracts, a kind of programmable scripts that execute automatically when predefined conditions are met [11]. As a result, the application scope of blockchain has been further extended to automatic transaction settlement [12], system access control [13], content copyright protection [14], and many other services.
In the energy field, the full utilization of renewable energy resources for power generation has always been a hot topic. With the extensive deployment of a large number of renewable energy power generation devices, centralized energy systems are exposing more and more problems, e.g., single point of failure, long latency in inter-regional communication, lack of transparency, and high operation and maintenance expense [15], [16]. In contrast, distributed energy systems have the advantages of robustness against single point of failure, limited information sharing, better capability to scale up, and lower construction cost [17], [18]. As a result, new generation energy systems are more likely to be implemented in a distributed way.
The deep integration of energy technology and information and communication technology (ICT) has become an inevitable trend of new generation energy systems since the concept of Energy Internet was brought about [19], [20]. As one of the most popular ICTs at the moment, blockchain is playing an important role in the revolution of modern energy systems. The blockchain applied in energy systems is also called energy blockchain [21]. In P2P energy trading scenarios where untrusted entities are involved, energy blockchain can guarantee trading transparency and privacy in the absence of trusted intermediaries [22], [23]. In electric vehicle (EV) charging systems, blockchain can support secure energy exchange and efficient demand response [24], [25]. With the help of smart contracts, energy blockchain enables automation, decentralization, and flexibility in the control and management of energy systems [26], [27], [28].
However, as the number of practical blockchain-based projects increases, the limitations of blockchain have become more acute. On the one hand, the blockchain technology is not a new technology, but a fusion of a variety of ICTs including P2P transmission, cryptography, distributed consensus, and smart contract. These technologies themselves may suffer from a series of generic issues (e.g., high power and storage costs, low throughput and high latency, and the lack of scalability [29], [30]), and combining them into a blockchain system does not mitigate these issues. On the other hand, due to the importance and particularity of energy industry, practical energy systems usually have high requirements for trustworthiness, security, and privacy [31], [32]. Unfortunately, these requirements are often compromised for decentralization, one of the most emphasized features of blockchain [33]. This could make blockchain-based energy projects deviate from their expected results [34].
There is no shortage of review papers on energy blockchain. However, most of them, e.g., [35], [36], [37], [38], focus on summarizing blockchain systems and application scenarios. In these works, the limitations of energy blockchain are either omitted or briefly mentioned in a short section. Among them, more than 140 blockchain-based projects in the energy sector are analyzed in [39], one of the most influential review papers on energy blockchain. Although there are a few paragraphs discussing the challenges of energy blockchain at the end of [39], the discussion is more descriptive and technical details need to be expanded. In addition, [38] provides a comprehensive description on how blockchain can be applied in energy trading, renewable energy certification, and demand response. The challenges and future applications of using blockchain in these scenarios are also summarized, but they are only a very small part of the review, compared to the considerable technical details about energy blockchain.
Compared with the prior works mentioned above, this paper contributes a deep and systematic analysis of the generic limitations of blockchain, which, to the best of our knowledge, has not yet been done by existing works. Although the issue of huge energy and storage costs of blockchain has been discussed by many existing reviews [39], [40], we attribute this issue to decentralization and recommend deeper investigation in the side effects of decentralization. Other generic issues discussed in this paper, such as the slow query issue, the Decentralization-Consistency-Scalability (DCS) triangle, the contradiction between transparency and privacy, and real-world trust issues, have not received sufficient attention from existing works.
Given the generic issues analyzed, this paper then summarizes potential solutions for blockchain-based energy systems, which is worth studying in the future. Among the solutions provided, block-free ledgers, post-quantum blockchain, secure hardware assistance, and the improvement of relevant laws and regulations have not been broadly discussed in existing works but are worth further exploration. Moreover, we associate block-free ledgers with directed acyclic graphs (DAG) as they both break the fundamental data structure of blockchain in essence, which makes this paper distinguished from other review papers on DAG [41], [42].
Based on the review in this paper, we argue that blockchain is not a panacea for energy systems. Since blockchain’s component technologies have their own generic issues, using blockchain without choice could sometimes contradict the practical requirements of energy systems. Therefore, it is recommended that the application of blockchain should be accompanied with improvement measures according to the needs of specific scenarios.
The rest of this paper is organized as follows: Section 2 summarizes favorable features of blockchain that makes it popular in energy systems; Section 3 briefly reviews the application scenarios of blockchain in energy systems; Section 4 analyzes the limitations of blockchain and their impacts on energy systems; Section 5 summarizes possible directions for energy systems to deal with these limitations and impacts; Section 6 concludes this paper. A clear picture of the organization of this paper is provided in Fig. 1.
Section snippets
Features of blockchain
Fig. 2 depicts the data structure of a blockchain. In addition to required data and records, each block also stores the hash of the previous block, forming a chain structure. The blockchain contains a genesis block as the head of the chain, which does not store any data and has no previous block.
Blockchain technology is a fusion of multiple ICTs:
- •
P2P network. As the basic architecture for information exchange, the P2P network uses a gossip protocol to disseminate messages over the network.
- •
Blockchain in energy systems
In this section, we will briefly introduce typical scenarios where energy blockchain is commonly applied, as well as the roles that blockchain plays in them. Table 1 enumerates some related works that use energy blockchain in different scenarios, and we will describe them one by one.
Generic limitations of blockchain and impacts on energy systems
In this section, we are going to systematically analyze the drawbacks of blockchain and their potential impacts on energy systems.
Future outlooks for blockchain-based energy systems
Energy blockchain refers to a blockchain system that aims to solve practical problems in energy scenarios. When the requirements of energy scenarios and the generic limitations of blockchain are combined together, the challenges faced by energy blockchain become nonnegligible. In the meanwhile, there are also considerable works aiming to deal with one or more of these challenges. This section will outlook possible directions of energy blockchain by summarizing the improvements in related works
Conclusion
There are a wide range of energy scenarios in which blockchain has been applied. While people are enjoying its theoretical benefits, blockchain has begun to expose its limitations to people in practice. Admittedly, many advantages of blockchain are promoting the energy industry in a more digitalization, informatization, and modernization direction. However, it is worth noting that the energy sector can affect many aspects. First, sustainable energy supply is the fundamental guarantee of the
Declaration of Competing Interest
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
xxx
xxx
Tonghe Wang received his Ph.D. degree in computer science from Georgetown University, Washington, DC, USA, in 2017. He received his bachelor’s degree in mathematics and applied mathematics from University of Science and Technology of China, Hefei, Anhui, China. He is currently a Postdoctoral Researcher in the Department of Automation of Tsinghua University, Beijing, China. His current research interests include distributed computing, energy blockchain and artificial intelligence.
References (263)
- et al.
A motivational game-theoretic approach for peer-to-peer energy trading in the smart grid
Appl Energy
(2019) - et al.
Do you need a blockchain in construction? Use case categories and decision framework for DLT design options
Adv Eng Inform
(2020) - et al.
The rise of blockchain technology in agriculture and food supply chains
Trends Food Sci Technol
(2019) - et al.
Design and management of a distributed hybrid energy system through smart contract and blockchain
Appl Energy
(2019) - et al.
Multi-criteria optimization for the design and operation of distributed energy systems considering sustainability dimensions
Energy
(2021) - et al.
Cyber security framework for internet of things-based energy internet
Future Gener Comput Syst
(2019) - et al.
Review of blockchain-based distributed energy: Implications for institutional development
Renew Sustain Energy Rev
(2019) - et al.
Blockchain technology in the energy sector: A systematic review of challenges and opportunities
Renew Sustain Energy Rev
(2019) - et al.
Design and game-theoretic analysis of community-based market mechanisms in heat and electricity systems
Omega
(2021) - et al.
Blockchain-based framework for supply chain traceability: A case example of textile and clothing industry
Comput Ind Eng
(2021)
MedHypChain: A patient-centered interoperability hyperledger-based medical healthcare system: Regulation in COVID-19 pandemic
J Netw Comput Appl
Blockchain technology in the future smart grids: A comprehensive review and frameworks
Int J Electr Power Energy Syst
NRGcoin—a blockchain-based reward mechanism for both production and consumption of renewable energy
Is a ‘smart contract’ really a smart idea? Insights from a legal perspective
Comput Law Secur Rev
A review of China’s carbon trading market
Renew Sustain Energy Rev
A blockchain based peer-to-peer trading framework integrating energy and carbon markets
Appl Energy
Blockchain in internet-of-things: a necessity framework for security, reliability, transparency, immutability and liability
IET Commun
Privacy-preserving peer-to-peer energy trading in blockchain-enabled smart grids using functional encryption
Energies
Blockchain-enabled security in electric vehicles cloud and edge computing
IEEE Netw
Leveraging blockchain technology for halal supply chains
Islam Civilisational Renew
A comprehensive review on control techniques for power management of isolated DC microgrid system operation
IEEE Access
A survey of distributed optimization and control algorithms for electric power systems
IEEE Trans Smart Grid
Energy Internet: Systems and Applications
Blockchain energy: Blockchain in future energy systems
J Electron Sci Technol
A secure charging system for electric vehicles based on blockchain
Sensors
Blockchain based decentralized management of demand response programs in smart energy grids
Sensors
Blockchain based decentralized management of demand response programs in smart energy grids
Sensors
To blockchain or not to blockchain: That is the question
IT Professional
Blockchain applications in smart grid–review and frameworks
IEEE Access
Blockchain for power systems: Current trends and future applications
Renew Sustain Energy Rev
Application of blockchain technology in sustainable energy systems: An overview
Sustainability
Applicability and appropriateness of distributed ledgers consensus protocols in public and private sectors: A systematic review
IEEE Access
Cited by (73)
Synergistic effect of green trace K2CO3 and CO2 activation of zhundong coal for high-performance supercapacitors
2024, Journal of Power SourcesSystematic analysis of the blockchain in the energy sector: Trends, issues, and future directions
2024, Telecommunications PolicyA bidirectional loss allocation method for active distributed network based on Virtual Contribution Theory
2023, International Journal of Electrical Power and Energy SystemsSecure multi-factor access control mechanism for pairing blockchains
2023, Journal of Information Security and Applications
Tonghe Wang received his Ph.D. degree in computer science from Georgetown University, Washington, DC, USA, in 2017. He received his bachelor’s degree in mathematics and applied mathematics from University of Science and Technology of China, Hefei, Anhui, China. He is currently a Postdoctoral Researcher in the Department of Automation of Tsinghua University, Beijing, China. His current research interests include distributed computing, energy blockchain and artificial intelligence.
Haochen Hua received his Ph.D. degree in mathematical sciences in 2016 and Bachelor’s degree in mathematics with finance in 2011, both from University of Liverpool, Liverpool, UK. From 2016 to 2019, he was a postdoctoral fellow in the Research Institute of Information Technology, Tsinghua University, Beijing, China. Since 2020, he has been a professor in the College of Energy and Electrical Engineering, Hohai University, Nanjing, China. His current research interests include optimal and robust control theories and their applications in power systems, smart grids, and Energy Internet.
Zhiqian Wei is currently pursuing his Bachelor’s degrees in Cyberspace Security and Financial Mathematics, in Shandong University, Qingdao, Shandong, China. His current research interests include blockchain technology and computer system security.
Junwei Cao received his Ph.D. degree in Computer Science from University of Warwick, Coventry, UK, in 2001. He received his Bachelor’s and Master’s degrees in Control Theories and Engineering in 1996 and 1998, respectively, both from Tsinghua University, Beijing, China.
He is currently a Research Professor of Intelligence Science and Technology Division, Beijing National Research Center for Information Science and Technology, Tsinghua University, P.R. China. He is also an Adjunct Professor of College of Energy and Electrical Engineering, Hohai University, P.R. China. Before joining Tsinghua University in 2006, he had worked as a Research Scientist at MIT LIGO Laboratory and NEC Laboratories Europe for about 5 years. He has published over 200 papers and cited by international scholars for over 18,000 times. He has authored or edited 8 books. His research focuses on distributed computing technologies and energy/power applications.
Prof. Cao is a Senior Member of the IEEE Computer Society and a Member of the ACM and China Computer Federation (CCF).
- ☆
This work is supported by National Key Research and Development Program of China (Grant No. 2017YFE0132100) and BNRist Program under Grant No. BNR2021TD01009.