**5. Some national blockchain usage models**

The history of the use of blockchain technology in the energy sector can be traced back to April 2016, when residents of Brooklyn, New York, USA tried to conduct transactions to buy/sell solar energy using the blockchain platform. Since then, the approach has been used to support increasingly complex transactions in an everincreasing demand for secure energy supplies in an increasingly decentralized energy environment.

There are different opinions regarding the prospects of the development of blockchain platforms, but an analysis of existing solutions in the power industry has shown that about 12 blockchain projects are currently under development and at the implementation stages. In Europe, the bulk of projects are focused on renewable energy sources. The extraction of own natural energy resources in the EU is steadily declining, as well as production of electricity from them, but the producing renewable energy sources is growing, the share of which in some countries already exceeds 50% [23].

Today, Germany leads the European countries in terms of the number of smart grid projects, followed by Denmark [24]. However, such small state as Estonia with population of 1.3 million also is very interesting because of its progress in digitalization. Despite the small number of citizens and a modest area of the territory, Estonia is 100% equipped with smart electricity meters, and the government of the country is actively using digital technologies [25].

The Estonian energy market is being actively transformed based on the blockchain; this is being done by the European company WePower in cooperation with the Estonian backbone network operator (TSO) Eltring. At the first stage of the project, data on the production and consumption of electricity in Estonia for the year (24 TWh) were transferred to Ethereum, which proved the technical feasibility of transferring such a volume of real data to the blockchain. This data was then converted into 38,973,240,000 Smart Energy Tokens, where each token means a smart contract for the purchase and sale of 1 kWh of electricity. Tokens can be traded and cashed out on the local wholesale electricity market, which is achieved by linking contracts to grid data via the blockchain [26].

Caspar Kaarlep (WePower) believes that the blockchain will help to increase the share of renewable energy sources in energy consumption: the system will clearly fix the source of origin of each kilowatt-hour in the general energy network and give buyers a guarantee that they are purchasing wind energy, and not generated by thermal power plants.

Let us note participation of China in financing the project on introduction blockchain technology to the Estonian power industry. In general, China belongs to one of the leading roles in practical implementation of this technology, which is facilitated by the quite centralized management of economy development, practiced in this country.

China set up the world's first energy blockchain lab in Beijing on May 15, 2016 [27]. Blockchain development has received the status of a self-regulating industry initiative, and blockchain development cooperatives have been opened. The State Electric Grid Corporation became the leader in the implementation of the technology. In November 2017, it submitted a patent application titled "Principles and Methods of Energy Management on Blockchain". The patent describes the structure of the blockchain, which consists of information blocks distributed among the nodes in order to avoid leakage of information, which is possible when it is stored centrally. The information in each block is stored in a binary tree structure, with each data change controlled at the root node of the tree. Through a simple check, the root node can detect that the data has been falsified. This patent indicated the direction of development of blockchain energy technologies in China.

The initial idea of the Chinese power system development was to improve the unified system of planning generation and supply of electricity. Indeed, centralized control reduces the cost of building and operating the power system, however, due to the uneven production of electricity, an imbalance in supply / demand occurs, and, in addition, transmission of electricity over long distances leads to large energy losses.

Since then, a lot of research has been carried out in the Chinese energy sector on the introduction of new network approaches. Distributed macro- and micronetworks, intelligent network agents for decision support, network monitoring systems, etc. were introduced. Not all the technologies have lived up to expectations, but there has been steady progress. Energy microgrids are already widely used, the concepts of the energy Internet and digital management of decentralized production, transmission, distribution and transactions of energy have been implemented. Most of the researches is devoted to the blockchain architecture of distributed energy consumption and optimization of power transmission.

One of the factors, stimulating the development of blockchain in the Chinese energy sector, is the intensive introduction of electric vehicles into operation. New energy vehicle sales in China totaled 1.367 million in 2020, up 13.3% year on year. New electric vehicle production in China was 1.366 million, an increase of 10% year on year, for a total of 4.92 million [28]. It is predicted that electric vehicles will account for more than two-thirds of global passenger car sales by 2040, rising from 3 million in 2020 to 66 million. With the growth of electric vehicles, the demand for charging equipment will inevitably increase. Many private charging stations can share chargers, set charging prices, and use blockchain for billing and payment.

The use of blockchain in energy is not limited to the electricity market in China. This technology is increasingly being used in other areas. Let us mention finance, IoS, logistics, public services, digital copyright, insurance business and social services. These areas cover, basically, all the most important aspects of the country life, so, many research institutions in China have taken up the development of blockchain technology in various aspects.

Currently, Russia is lagging behind Western countries and China in equipping smart electricity meters and deploying renewable energy sources. However, there is essential progress in the use of blockchain for settlements with consumers in the retail electricity market. Steps for the use of "smart" energy in Russia have been determined and a roadmap has been approved to eliminate administrative barriers to payments using blockchain technologies [29, 30].

The Russian electric power industry is a complex technological and economic system that includes more than 700 power plants operating at different levels (wholesale and retail markets), more than 1500 network organizations and millions of buyers (individuals and legal entities) consuming electricity according to different schedules. The functioning of the system requires prompt collection and analysis of a huge amount of information, timely adoption of managerial decisions, economic balancing the system, using collected experience and current data. Digitization of the industry is in progress, and software tools, needed for reliable storage and processing of large amounts of data (big data, blockchain, smart documents and others), are designing and introducing.

The new technologies requires an appropriate infrastructure, the development of stationary and mobile services [31]. In particular, for the use of blockchain technology in the electricity market, a necessary condition is 100% equipping of consumers with "smart" metering devices, integrated into the IoT/M2M (Internet of things and machine-to-machine communications) system, which collects information from the metering devices.

Results of the Russian IoT/M2M market research, conducted by J'son & Partners Consulting LLC (JPC), showed that as of 2018, the number of IoT/M2M devices, connected to the Internet, exceeded 23 million units. The long-term forecast from JPC assumes an increase in the number of connected devices by 2023 to 42 million units [32]. At the same time, it is obvious that the Russian IoT /M2M market does not take into account the need for intelligent electric energy metering devices ("smart" meters) as Internet devices [33].

By 2018, the total fleet of electricity meters in the Russian Federation amounted to about 70 million units. Almost 8–9 million metering devices are needed annually to replace existing and install new meters at industrial production facilities, housing

#### **Figure 1.**

*Dynamics and structure of consumption of electricity meters in 2013–2017 and forecast until 2025 in million units (within the base development scenario).*

and communal services, which is almost completely covered by domestic production [34] (**Figure 1**).

In 2018, the Federal Law No. 522-FZ "On Amendments to Certain Legislative Acts of the Russian Federation in Connection with the Development of Electricity (Power) Metering Systems in the Russian Federation" emphasizes that "the subjects of the electric power industry, consumers of electric energy (capacity) and other owners of electrical energy metering devices are obliged to carry out information exchange of data obtained in the course of providing commercial accounting of electrical energy (capacity) in retail markets and for the provision of utility services for electricity supply, necessary for mutual settlements for the supply of electrical energy and capacity, as well as for those associated with these supplies services, free of charge in the manner prescribed by the rules for the provision of utility services to owners and users of premises in apartment buildings and residential buildings, established in accordance with housing legislation, the rules for organizing electricity metering in retail markets" [35]. The norms of the Federal Law are aimed at unifying the various requirements for presenting a huge amount of information, a standard minimum set of functions for the intelligent electricity metering system, as well as the metering devices themselves.

The retail electricity market in the Russian Federation is represented by various participants: generating, grid, sales and management companies, settlement centers and ordinary consumers of electricity. Disagreements often arise between market participants: for example, between grid and sales companies on the volume of productive supply and the amount of electricity losses. Similar disagreements may arise between management companies and consumers due to the rather complex and non-transparent process of accruing volumes for general house needs (lighting entrances, operation of elevators, etc.). In addition, disagreements may arise due to different periods and methods of taking readings from metering devices. All this leads to disputes, often they are not resolved for a long time. The uncertainty of local data has a negative impact on financial calculations and, in general, on the energy market.

Large-scale work has begun in the Russian electric power industry to ensure transparency of payments and reduce non-payments, using the possibilities of

*Perspective Chapter: Blockchain Technology in the Field of Energetics – Organization of Effective... DOI: http://dx.doi.org/10.5772/intechopen.111445*

digitalization. Thus, a group of companies PJSC "Rosseti" (Rosseti) is implementing a comprehensive digital transformation program, including the design and implementation of pilot projects to test the latest blockchain technologies [30].

A resident of Skolkovo, a company from Yekaterinburg "B41 Blockchain Development", developed by order of Rosseti an automated system for accounting and payment of electricity based on a completely domestic blockchain platform— Nodes Plus Blockchain. The project partner was Sberbank PJSC. The financial institution, acting as a payment bank, provided the server capacities of the SberCloud platform.

In 2019, the developer successfully tested a system for collecting information based on the blockchain platform and presented the results to Rosseti. The project included 12.5 thousand metering devices for electricity, cold and hot water on the basis of two residential complexes in Yekaterinburg [36].

The implementation of systems, based on blockchain technology, in the Russian power industry is focused on obtaining a number of benefits. Decentralization is assumed, when all network participants are directly involved in maintaining the system's performance, and there is not a dedicated center. Automatic distribution of data among its participants guarantees safety and immutability of the information, entered into the blockchain. Transaction transparency is ensured; all participants have access to the entire history of their transactions, up to the very first one. The speed of transactions increases, since they occur directly between users, regardless of their location and without involvement of intermediaries. Additionally, the absence of intermediaries reduces transaction costs.
