Mitsubishi Electric Corporation
Tokyo Institute of Technology

Mitsubishi Electric and Tokyo Tech DevelopBlockchain Technology to Optimize P2P Energy Trading
For more flexible trading environments and expanded use of surplus electricity from renewable energy
TOKYO, January 18, 2021 – Mitsubishi Electric Corporation (TOKYO: 6503) and Tokyo Institute ofTechnology (Tokyo Tech) announced today their joint development of an original blockchain1 technology thatcan optimize peer-to-peer (P2P) energy trading.2 The technology is expected to contribute to more effective
use of surplus electricity from renewable energy by creating trading environments that flexibly respond toshared trading needs, particularly to maximize the amount of surplus electricity available in the market at any
given time. Beginning in April, the P2P energy trading system’s performance will be evaluated to further
optimize the algorithm as required, aiming at the earliest possible commercialization.
1 A distributed ledger technology that connects blocks of transaction information in a chain along a timeline
2 Direct trading of electricity between consumers (users) and prosumers (producers who are also users)

Fig. 1 P2P energy trading using blockchain technology to search for optimally paired orders

In the collaboration, Mitsubishi Electric has taken charge of designing the P2P energy trading system and its
clearing (transaction-completion) functions while Tokyo Tech has handled blockchain technology R&D andthe design of an optimal clearing algorithm.

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Flexible P2P Energy Trading Using Blockchain Technology to Optimally Match Trades
General blockchain technologies, such as those used for trading cryptocurrencies, require a large number ofhigh-performance computers to perform massive calculations, or mining,3 when determining the creator of anew block to record trading information. To clear buy and sell orders, a conventional method4 can be used tomatch conditions and process transactions, but this does not optimize matches.
Mitsubishi Electric and Tokyo Tech have developed an original blockchain technology to optimize P2P energy
trading. Their newly devised distributed-optimization algorithm enables customer computers to share trading
goals and data and then optimally match buy and sell orders using minimal computations. Also, the new mining
method is executable on a micro-computing server (Table 1).
As shown in Fig. 2, using the new technology involves four steps. In the first step, information on buy and sellorders with a common trading goal (market surplus, profit, etc.) are shared by computing servers during apredetermined timeframe. Second, each server searches for buy and sell orders matched to the common goalin the first step. Third, each server shares its search results. In the fourth and final step, each server receives
the search results and generates a new block by selecting trades that best meet the shared goal, which it adds
it to each blockchain.
P2P energy trading benefits consumers by enabling them to engage in direct trading as buyers and sellers andsometimes make trades even above offer prices or below bid prices if the right match is found. In addition,
since new offers and bids can be issued, a customer who fails to make a trade can improve the chances ofmaking a trade by changing the price or quantity in the next offer or bid after refering to the previous offer/bidconditions.
The trading goal shared among consumers can be changed to meet specific needs. For example, if the goal isto maximize the amount of surplus electricity available in the market, the best offer-bid match can be searchedwith respect to this common goal. If a surplus exists, the trading price would likely decrease according tomarket principles and thus demand for recharging electric vehicles would likely increase due to cheaper prices.
As a result, surplus power usage would be maximized without retail power companies having to respond tomarket fluctuations.
If the priority is the profits of prosumers and consumers, the shared goal can be adjusted to increase total
profits, or raise the lowest profits, of all prosumers and consumers. By allowing the shared goal to be adjusted,
the system enables flexible P2P energy trading.
To ensure fair trading, the decentralized search of a solution occurs in parallel on multiple computers where
equivalent5 matches are selected randomly.
3 The use of extensive iterative calculations to search for a value that satisfies an uncommon condition. In a typical blockchain,

the first person to succeed in a search receives a processing fee.
4 A contract method used in the stock and wholesale electricity markets, known as the continuous double-auction method.
5 Orders where all information, except order name, is the same, including order time, price, quantity and type of buy or sell.

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Conventional blockchain
New system’s blockchain

Features・Mining to determine block generators
・Run on high-performance computers
・Mining to optimize trading
・Run on small computers

Table 1 Comparison of blockchains

Fig. 2 Blockchain technology for pairing orders optimally

BackgroundAs a measure against global warming, Japan introduced a feed-in tariffs (FIT) system to enable electric utilitiesto purchase electricity generated from solar and other renewable energy sources at fixed prices. The law forthis system, however, has been gradually retired since November 2019. With buy-seller contracts under theFIT system now expiring, prosumers need to find alternative retail-power suppliers to sell their surplus
electricity at acceptable prices.
As a new method of trading surplus power, P2P energy trading is attracting attention by allowing prosumers
to directly trade surplus energy at optimal prices. Since the current Electricity Utilities Industry Law allows
only retail power companies to sell electricity to consumers, demonstrations are now being conducted to test
the use of blockchain technology for P2P power transactions under the management of retail electric operators,
aiming at verifying the effectiveness of such transactions while identifying any possible issues.

3/4Inquiries
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www.MitsubishiElectric.com/news/###About Mitsubishi Electric Corporation
With nearly 100 years of experience in providing reliable, high-quality products, Mitsubishi ElectricCorporation (TOKYO: 6503) is a recognized world leader in the manufacture, marketing and sales of electricaland electronic equipment used in information processing and communications, space development andsatellite communications, consumer electronics, industrial technology, energy, transportation and building
equipment. Mitsubishi Electric enriches society with technology in the spirit of its “Changes for the Better,”and environmental statement, “Eco Changes.” The company recorded a revenue of 4,462.5 billion yen(U.S.$ 40.9 billion*) in the fiscal year ended March 31, 2020. For more information, please visit
www.MitsubishiElectric.com*U.S. dollar amounts are translated from yen at the rate of ¥109=U.S.$1, the approximate rate on the Tokyo
Foreign Exchange Market on March 31, 2020
About Tokyo Institute of Technology
Tokyo Tech stands at the forefront of research and higher education as the leading university for science andtechnology in Japan. Tokyo Tech researchers excel in fields ranging from materials science to biology,
computer science, and physics. Founded in 1881, Tokyo Tech hosts over 10,000 undergraduate and graduate
students per year, who develop into scientific leaders and some of the most sought-after engineers inindustry. Embodying the Japanese philosophy of “monotsukuri,” meaning “technical ingenuity andinnovation,” the Tokyo Tech community strives to contribute to society through high-impact research.
https://www.titech.ac.jp/english/

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