Decentralized Community Energy Management: Enhancing Demand Response Through Smart Contracts in a Blockchain Network

The integration of distributed energy resources (DERs) and digital technologies has accelerated the transition to decentralized energy systems. Among these technologies, blockchain stands out for its ability to facilitate peer-to-peer (P2P) energy trading efficiently and securely. This paper explores the concept of P2P energy trading within community microgrid systems, leveraging blockchain-based smart contracts. The proposed system integrates an incentive-driven demand response program directly into the smart contract framework, offering real-time rewards for load-balancing contributions. By incorporating the microgrid’s Energy Management System (EMS) and transparently recording all transactions on the blockchain, the proposed platform provides detailed data and immediate reward distribution. At the core of our system lies the Supply to Demand Ratio (SDR), ensuring fair energy exchange within the community. Dynamic pricing, enabled by blockchain and Tether (USDT) cryptocurrency, adjusts to real-time market conditions, enhancing transparency and responsiveness in energy trading. This adaptive pricing model fosters a more equitable and efficient trading environment compared to static approaches. Moreover, this system is tailored for community microgrids, emphasizing a community-centric approach. Local prosumers serve as validators in the blockchain network, aligning energy management decisions with community needs and dynamics. This localized engagement promotes efficiency and participation, fostering resilient, sustainable, and user-centric energy landscapes. Through rigorous analysis, we demonstrate the system’s effectiveness in optimizing economic efficiency, reducing operational costs, and increasing compliance rates. By combining blockchain technology with community-focused design principles, the proposed platform represents a significant advancement towards self-sufficiency and resilience in local energy systems.