An introduction to blockchain technology, smart energy grids, and their integration

With the growth of the industrial age, the need for energy is continuously increasing. To provide efficient power distribution, instill minimal losses, ensure high quality, and dependable supply security, the smart grid idea has cropped up in conversations that allows for the generation and sale of power on a small, individual scale. However, the strategy enhances existing system issues, such as how are transactions among both producers and users carried out, validated, and documented. For a start, smart grids use smart contracts to conduct transactions, with the network serving as a transaction verifier. The advantages of smart grids over traditional power distribution systems rest in its innovative offerings to customers who until then, for many years, had few options for choosing between generated energy, most of which are based on fossil fuels. Not only was the equipment used to create energy highly costly, making it unsuitable for small-scale applications or personal usage of the users but also customers who generated their own electricity had it distributed by the power grid and only paid for what they used. However, technological advancements have altered how humans create and distribute power. Automation results in mass manufacturing, which results in less expensive power generators. Inventions enabled energy to be generated from solar power, tidal waves, geothermal power, and other non-conventional sources. This created the opportunity for an area, household, or a single person to produce their own electricity. Whenever a person created more energy than they had use for, they could easily sell the extra electricity to others, therefore acting as alternative energy sources. In terms of power supply, the smart grid provides greater assurance. However, the idea of automating an electric grid complicates the already complex electrical system. On a transactional level, how can we ensure that generators supply electricity after the user has paid. Because the network has so many producers and consumers, it causes issues about who can truly authenticate the transaction and how the process will operate. Traditional energy trading strategies focus on a centralized approach or third-party companies, but that might be vulnerable from single-point failure. As a result, a secure and reliable trading strategy must be installed in the system to ensure the data security of customers. In this regard, a new technology known as a blockchain, which is a chain of decentralized and distributed transaction ledgers that each user retains and maintains, can address the issue outlined above. Many of the issues that inhibit the Energy Internet’s growth can be solved by applying the blockchain’s technical benefits to it. The use of blockchain technology in the energy sector is only getting started, but it has a lot of room for growth in the future. Enhanced security, better data protection, data transparency and integrity, elimination of third-party authority and trust, pervasive solutions, and higher data usability are just a few of the advantages. Restricted adaptability and speed, off-chain service demands, expensive building and maintenance costs, and the need for more experimental studies are among the still thorny issues.