Rademics Research Institute

Abstract

The rapid digitalization of energy markets, coupled with the rise of decentralized power generation, has necessitated innovative solutions for secure, transparent, and scalable energy trading. Blockchain technology, integrated with P2P energy trading and IoT-enabled smart grids, presents a transformative approach to decentralized energy management. Challenges related to scalability, interoperability, transaction throughput, and security must be addressed to enable large-scale adoption. This book chapter explores advanced blockchain-enabled mechanisms, including Layer 2 scaling solutions, cross-chain communication, and AI-driven smart contract optimization, to enhance the efficiency of energy trading networks. The role of blockchain in managing renewable energy certificates (RECs) and carbon credits was also examined, highlighting tokenization as a means to improve market liquidity, transparency, and regulatory compliance. Additionally, a comparative analysis of consensus mechanisms and throughput optimization techniques was provided, offering insights into the trade-offs between security and scalability. The integration of AI and machine learning in smart contracts was discussed as a key enabler for predictive energy trading, automated market adjustments, and fraud detection. Future research directions focus on hybrid blockchain models, cross-chain interoperability, and sustainable energy tokenization frameworks. The findings of this chapter contribute to the development of a highly efficient, decentralized, and resilient smart power ecosystem, paving the way for the next generation of blockchain-based energy markets.

Introduction

The integration of blockchain technology into P2P energy trading and decentralized grid control has emerged as a transformative approach to enhancing the efficiency, security, and transparency of modern power networks [1]. With the increasing adoption of renewable energy sources and the rise of prosumers entities that both consume and generate electricity the traditional centralized energy market model faces significant challenges, including inefficiencies in energy distribution, high transaction costs, and lack of real-time market responsiveness [2,3]. Blockchain, as a decentralized and immutable ledger, provides a trustless infrastructure where energy transactions can be securely recorded, verified, and executed without reliance on intermediaries [4]. The adoption of smart contracts further automates trading processes, enabling seamless energy exchanges between producers and consumers in real-time [5-8]. Its potential, blockchain-based energy trading faces critical challenges related to scalability, interoperability, and transaction throughput, necessitating the development of advanced optimization strategies to ensure its feasibility for large-scale adoption [9].

Scalability remains one of the primary obstacles to the widespread implementation of blockchain-enabled energy trading. Conventional blockchain networks, such as Bitcoin and Ethereum, suffer from limited transaction processing speeds and high computational costs, making them unsuitable for handling high-frequency microtransactions in energy markets [10]. The inherent constraints of blockchain consensus mechanisms, including proof-of-work (PoW) and proof-of-stake (PoS), lead to network congestion and increased transaction latency [11,12]. To address these issues, Layer 2 scaling solutions, such as state channels, rollups, and sidechains, have been developed to enhance transaction throughput while maintaining the security and decentralization of the underlying blockchain network. These scaling techniques enable off-chain computation and reduce on-chain data storage requirements, significantly improving the efficiency of energy trading platforms [13]. Additionally, the adoption of hybrid blockchain architectures, combining public and private blockchains, offers a promising approach to balancing scalability with security and accessibility. By leveraging these advancements, blockchain can facilitate real-time energy transactions with minimal latency, supporting the growth of decentralized power networks [14].