A literature review of blockchain technology for efficient peer-to-peer energy trading

Blockchain technology has rapidly emerged as a vital tool to enhance efficiency, transparency, and security in P2P energy trading. This research project systematically reviews the exiting literature on assessing the potential and limitations of blockchain in decentralized energy markets. Key research objectives include analyzing blockchain’s decentralized ledger and smart contract functionalities, exploring predominant research methodologies, and identifying major challenges associated with its integration into energy trading systems. Results have shown that, although blockchain enables peer-to-peer transactions, thereby reducing the need for intermediaries and hence costs, increasing speed, scalability, energy consumption, and regulatory issues are the most important barriers. Furthermore, today's blockchain consensus algorithms, such as Proof of Work, include critical security versus processing speed trade-offs, diminishing its suitability for real-time energy trading applications. Other algorithms, like Proof of Stake, are promising but introduce some centralization vulnerabilities at the same time. The study also brings into focus the need for regulatory frameworks that will enable the adoption of blockchain while consumers are protected and environmental sustainability ensured. These remarks form a basis for future research in optimizing blockchain technologies to ensure scalable and environmentally friendly energy trading solutions.