Renewable energy generation is non-dispatchable and notably unpredictable. Furthermore, a volatile electricity spot market means vulnerability to both price and volumetric risk for generation firms. As such, project financiers may be hesitant to invest in renewable energy projects. Electrical offtakers purchase from the same spot market, and thus also suffer its uncertainty. Ideas from the world of blockchain and decentralised finance may present solutions for these cases. This paper proposes tokenised revenue streams \textit{(RevToks)} as a novel mechanism for the electricity industry. A RevTok allows the owning party to directly claim a share of a specific generator’s revenue stream. This is combined with tranching, a technique from finance where priority on a revenue flow is divided based on seniority. Project financiers hold this senior RevTok that entitles them to precedence on generator incomes, ensuring loan repayments. A case study using real-world generation, pricing, and consumption data is formulated. A market simulation is performed in the form of optimisation problem to establish an idea market equilibrium. Junior tranch RevToks can be purchased by electrical offtakers to decrease their budget variance by offsetting fluctuations in their monthly energy bill. The tranched revenue profiles of generators are demonstrated visually. For offtakers, monthly variance is universally decreased. The case study market simulations shows evidence that tranched revenue sharing arrangements show benefits for generators, financiers, and offtakers.

The weather-dependent nature of solar power makes Solar Power Producers susceptible to the unpredictability of sunshine. Temperature-based weather derivatives have recently emerged as an effective volumetric risk cross-hedge for Solar Power Producers, given that temperature positively correlates with solar radiation. Temperature-based put and call options, mostly traded on organized exchanges, require users to pay premiums that are costly and difficult to price. Swap contracts can serve as an economical alternative since they do not require premiums. However, they are only traded over-the-counter and are thus illiquid and liable to counterparty credit risks. For these reasons, a novel blockchain temperature-based weather derivative swap marketplace is proposed that mitigates the risks inherent in traditional swap contracts. The payoff structure and governing mechanisms of the smart contract that underpins this instrument are also developed. A preliminary investigation of this new financial instrument shows its efficacy in hedging volumetric risks of Solar Power Producers.

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

This piece serves as an exploratory study into the combination of blockchain-aware smart meters and radical economic paradigms. Load shedding is examined through this novel lens. Load shedding is an established means of preventing system collapse under emergency conditions. An auctioned load shedding hierarchy method is proposed whereby participating parties bid on tokens (SALtoks) guaranteeing access to supply during load shedding. This method is based on the recently developed Self Assessed Licenses Sold via Auction paradigm developed. Under this paradigm, SALtoks are subject to taxes based on valuations, while also being subject to continuous auction. A case study is performed on a hypothetical island power system. Higher ranking SALtoks are held by larger consumers. The method is found to mitigate economic impacts by allowing industry to maintain supply during load shedding. Smaller consumers, while subject to more frequent interruptions, gain the public benefit of increased income from taxation.

This piece proposes a novel mechanism for peer-to-peer electricity trading whereby energy tokens can only be redeemed in the same part of the day as when they were generated. The aim of this regulatory mechanism is to reduce token hoarding by consumers to better align the physical production and consumption of electricity, which in turn could decrease electrical system losses and minimise the chance of grid imbalances. To establish the effectiveness of this dayparting mechanism a market simulation is performed. This simulation is made up of 24 consumers' and five producers' profiles over a seven-day week. An optimisation is performed to most effectively allocate energy tokens from producers to consumers, aiming to minimise the total energy imported from the larger grid i.e. to make most effective use of local generation. Consumers are permitted to perform a measure of demand response by modulating their demand at certain points while keeping their total energy consumption constant. Allocated energy tokens can be consumed immediately, or during any subsequent daypart to the same type. A series of power flow analyses are performed using the market simulation out-turns to establish the electrical system effects. Consumers are found to move some demand to weekend days when demand is lower but generation is equally abundant. Electrical results reveal a decrease in system losses, as well as less fluctuation from the larger grid supply.

Sub-Saharan Africa requires affordable, reliable, and sustainable electricity to boost its economic, social, and human development. The main challenge posed to the region's electricity sector is the large investment gap needed to finance new power projects. The employment of new and innovative financing options is required to bridge this investment gap. Independent power projects have become one of the fastest-growing sources of new finance in the region. However, their development is constrained by the limited availability of debt finance for project implementation. The limited capital and bureaucratic burden of traditional financial institutions coupled with the high risks in the region ensures that the debt finance required by independent power projects is raised only after an arduous voyage and at high interest rates. We address these challenges by proposing a novel decentralized finance instrument, a blockchain special purpose vehicle that streamlines the processes in the financial layer of a traditional special purpose vehicle -- finance mobilization, revenue collection, and revenue disbursal. Specifically, the proposed decentralized finance instrument facilitates the mobilization of finance for the special purpose vehicle from a location-independent crowd, revenue collection from the electricity offtaker in a risk-mitigated manner, and disbursal of eventual project revenues to investors.

This paper proposes a novel tariff regime for peerto-peer energy trading, with an aim to increase transmission efficiency and grid stability by penalising long distance power transactions. In this scheme a portion of the transacted energy is withheld based on the electrical distance between buying and selling parties, calculated here according to the Klein Resistance Distance. This tariff regime is simulated using a dataset of producers and consumers over a 24-hour period. First, a notional marketplace equilibrium simulation is performed, in which consumers can optimally activate demand response resources to exploit local availability of energy. Consumers are observed to move some demand away from peak times to make use of local generation availability. These simulated market out-turns are then used as inputs to a time series power flow analysis, in order to evaluate the network's electrical performance. The regime is found to decrease grid losses and the magnitude of global voltage angle separation. However, the metric whereby taxes are calculated is found to be too skewed in the utility's favour and may discourage adoption of the peer-to-peer system. The method also attempts to encourage regulatory adoption by existing grid operators and utilities. Some counter-intuitive allocations of tokenised energy occur, owing to specific consumers' demand profiles and proximity to generators.

Contract-for-Difference financial instruments are available to renewable electricity generators in day-ahead electricity markets to allow them to hedge against revenue risk. Traditional CfDs while designed to hedge revenue risk, introduce other new risks such as counterparty credit, margining and third-party risks. We therefore propose a novel financial instrument - an Ethereum blockchain-based dual escrow smart contract, to serve as the mediator in a CfD agreement between a renewable electricity generator and supplier. This financial instrument addresses hedging related risks that result from traditional CfD agreements in day-ahead electricity markets. In this paper, we design the logic of the financial instrument, translate this logic to smart contract codes and demonstrate its expected performance. Overall, the proposed financial instrument has the benefits of reducing hedging related risks inherent in traditional CfDs. Likewise, it enables secure, efficient, cost-effective, consistent, reliable, transparent and frictionless transactions between contracting parties in a CfD agreement.

Ever since the invention of Bitcoin by the pseudonymous Satashi Nakamoto, cryptocurrency has provoked debate in banking and finance sectors, and is sometimes considered a potential successor to fiat currency. Blockchain, the new technology underpinning decentralised and immutable databases, has seen much discussion as a potentially game-changing development. Although many industries are exploring its value, the technology has thus far made only minor impacts. A rapidly expanding base of research has emerged on blockchain's role as a potential disruptor in the electrical energy industry. However, it may be difficult to distinguish hype from more imminently plausible impacts. This paper attempts to serve as a guide for engineering management wishing to make sense of blockchain's potential in electricity. This is accomplished by formulating a novel blockchain industry disruption framework, which exists across three tiers. These tiers extend from ideas with the least effect on an industry to total revolutionary concepts that could completely transform an industry. This taxonomy is constructed by examining existing research into disruption hierarchies and blockchain classification methods. Through the lens of this taxonomy, a literature review is performed on blockchain's role in energy to draw out themes and ideas characterising each tier. The potential likelihood of real-world application of various ideas are discussed, giving consideration to how established industries may be affected or disrupted. The authors provide some conjecture here. Finally, courses of action are suggested for those whose sector may be affected by blockchain.

As submitted to IEEE EnergyCon 2020 Abstract: This paper proposes new tools for predicting and visualising the plausible near term shifts in branch loading that may arise due to output fluctuations from renewable generators. These tools are proposed to enhance situational awareness for control room operators, by providing early warnings of where bottlenecks may manifest in a transmission system. For predicting plausible branch loading shifts, a linear optimal power flow formulation is presented which uses a novel objective function to characterise the maximum loading a branch could be exposed to in the short term. This analysis therefore identifies which branches could become overloaded due to shifts in output from volatile generators. Equivalently, these branches can be seen as congestion bottlenecks which may cause curtailment of renewable generation. To allow the system operator to maintain awareness of such potentialities, these congestable branches are highlighted on a system diagram which is drawn to explicitly portray the electrical distance between components in the network.