Blockchain for Smart Grid Flexibility Handling Settlements between the Aggregator and Prosumers Lasse Berntzen School of Business University of South-Eastern Norway Horten, Norway email: lasse.berntzen@usn.no Qian Meng School of Business University of South-Eastern Norway Horten, Norway email: qian.meng@usn.no Boban Vesin School of Business University of South-Eastern Norway Horten, Norway email: boban.vesin@usn.no Marius Rohde Johannessen School of Business University of South-Eastern Norway Horten, Norway email: marius.johannessen@usn.no Thomas Brekke School of Business University of South-Eastern Norway Horten, Norway email: thomas.brekke@usn.no Inessa Laur School of Business University of South-Eastern Norway Horten, Norway email: inessa.laur@usn.no Abstract—This paper shows how the Ethereum blockchain can register settlements between an aggregator and prosumers in a smart grid. By providing flexible use of electricity to the aggregator, customers get rewarded. The flexibility is valuable for the aggregator since the power infrastructure may be used more efficiently. Blockchain is an exciting technology for handling settlements which, however, also has some clear limitations. For example, the cost per transaction on the public Ethereum blockchain is too high compared to the value of the actual transactions. A private blockchain is an alternative but removes some of the original benefits of using the public blockchain. The paper concludes that blockchain is a promising technology, and a private blockchain is more suitable for transactions containing minimal amounts. Keywords-smart grid; blockchain; Ethereum; smart contract; aggregator; flexibility; Smart-MLA. I. INTRODUCTION Smart grids [1] are electric power grids supported by electronics that keep track of power consumption and production. Typically, smart meters [2] keep track of energy flow between producers, consumers, and prosumers. Smart meters normally connect to a service maintained by the Distribution System Operator (DSO). Prosumers refers to the combination of producers and consumers, with production coming from energy sources like solar panels. On sunny days, the energy production of a household or a building may exceed the consumption. Then the prosumer may sell excess energy to the grid. At other times, the household gets its electricity from the grid, as shown in Figure 1. The price of energy varies throughout the day. The energy price is calculated based on demand and supply forecasts, and the pricing intervals typically differ from one hour down to ten minutes. Figure 1. Prosumers Flexibility occurs when a household or building can delay the use of electricity to a timeslot when the price is lower. A typical example is the charging of electric vehicles. Charging requires a rather large consumption over a relatively short period. If the customer chooses the optimal time, charging will be less expensive. The next step is to transfer the flexibility to an aggregator. In this case, the customer defines some constraints, e.g., the electric car should be fully charged at 7 am. The aggregator then selects the optimal time slots when the actual charging takes place. The flexibility is essential for grid management since it can reduce the chances of overloading the grid and delay investments in upgraded electric power infrastructure. The customer is rewarded for giving up control, either by favorable pricing or a discount on the electricity bill. Blockchain technology has the potential to have a significant impact on the energy sector. Numerous use cases have been proposed, including wholesale and retail energy trading [3][4]. 40 Copyright (c) IARIA, 2021. ISBN: 978-1-61208-869-3 ICDS 2021 : The Fifteenth International Conference on Digital Society