# The Potential of Blockchain Technology and Smart Contracts in the Energy Sector: A Review
## 3 Research Methodology and Literature Classification
### Literature Classification
#### 3.2.3 Business Models and Applications (BMnA)
Moreover, the capacity of the DApp to enable energy trading in off-grid rural areas provides a decentralized alternative to meet the surging demand for rural electrification. However, the intricate technical and economic aspects of implementing such solutions effectively must be addressed, particularly in resource-constrained environments. The accommodation of heterogeneity and uncertainty of quantity competition is in the spotlight of [PERSON] et al. [32], who suggest smart contracts as a solution which can benefit households residing in both energy-poor and energy-rich regions, as well as the government. To mitigate solar uncertainty, subsidy design schemes led by the government can help to decrease overall subsidy expenditures. However, mechanism design schemes may be more effective than market competition in terms of cost-effectiveness, but only when the latter is confined to a single region. Developing a P2P energy trading system within VPPs using public blockchain technology presents several significant challenges. These include ensuring true decentralization and scalability without relying on costly intermediary authorities. Furthermore, seamlessly integrating complex power systems with blockchain ecosystems adds a layer of technical complexity. Designing modular smart contracts that can adapt to various use cases within the VPPs framework requires careful consideration. Real-world testing and validation of the proposed P2P energy trading system, including cryptographic testing, is essential to bridge the gap between theoretical concepts and practical implementation. Additionally, addressing potential challenges related to user adoption and interface design is crucial when transitioning to DApps. The work by [34] serves as a relevant example, as they validated a similar approach for P2P energy trading within VPPs using smart contracts on the Ethereum Blockchain Platform. Their use of realistic data in the Ethereum Virtual Machine (EVM) environment underscores the importance of practical validation in the context of blockchain-based energy trading. [PERSON] et al. in [36] propose a hierarchical blockchain framework designed to monitor and decrease carbon emissions. Their framework includes three levels: an upper-level public blockchain for applications, a lower measurement level functioning as a blockchain consortium for measurements with restricted access, and a cross-transfer level facilitating data and information exchange between these tiers. Smart contracts within the Blockchain of Things (BoT) are implemented to maintain system integrity and achieve fair trade status. Emphasizing transparency as a top priority in their design, this framework aligns with the paper's overarching goals, which address challenges related to carbon emission trading and blockchain integration. The challenges highlighted include the necessity to improve transparency, eliminate non-transparency and corruption in existing carbon trading systems, establish robust legislation and tracking systems, and address the complexity of carbon allowance allocation and its impact on participant distribution. Furthermore, the paper identifies the lack of integration in carbon markets as a concern that needs resolution. The authors' ultimate objective is to propose a comprehensive blockchain-based framework to enhance the effectiveness of carbon emission trading while promoting sustainability and equity. [PERSON] et al. [37] introduce ET-DeaL, a secure energy trading scheme designed to enhance energy transfer (ET) systems, particularly within the context of Smart Grids. The evolving energy landscape, driven by increasing energy demand and digitalization, underscores the need for more efficient electricity distribution. Existing centralized Smart Grid systems grapple with performance and reliability issues, necessitating innovative solutions. While researchers have explored blockchain's potential in ET systems, persistent challenges, including data storage limitations, high data storage costs, and data redundancy, require attention.