Blockchain technology in the chemical industry: Machine-to-machine electricity market

Highlights

• An implementation of blockchain technology facilitating a M2M electricity market.

• Industrial plants are trading electricity with each other over a blockchain.

• Data produced by process flow sheet models of industrial equipment are utilized.

• Technical details and background of blockchain technology are presented.

• This paper explores blockchain technology in relation to Industry 4.0.

Abstract

The purpose of this paper is to explore applications of blockchain technology related to the 4th Industrial Revolution (Industry 4.0) and to present an example where blockchain is employed to facilitate machine-to-machine (M2M) interactions and establish a M2M electricity market in the context of the chemical industry. The presented scenario includes two electricity producers and one electricity consumer trading with each other over a blockchain. All participants are supplied with realistic data produced by process flow sheet models. This work contributes a proof-of-concept implementation of the scenario. Additionally, this paper describes and discusses the research and application landscape of blockchain technology in relation to the Industry 4.0. It concludes that this technology has significant under-researched potential to support and enhance the efficiency gains of the revolution and identifies areas for future research.

Introduction

Industry 4.0 (or the 4th Industrial Revolution) introduces into industry the concepts of machine-to-machine (M2M) communication, cyber-physical systems (CPSs) and the Internet of Things (IoT) [1], [2]. M2M communication refers to the ability of industrial components to communicate with each other. CPSs can monitor physical processes, create virtual copies of the physical world and make decentralised decisions. IoT is a dynamic network where physical and virtual entities have identities and attributes and use intelligent interfaces. An eco-industrial plant (EIP) refers to an industrial park where businesses cooperate with each other and, at times, with the local community to reduce waste and pollution, efficiently share resources (such as information, materials, water, energy, infrastructure, and natural resources) and minimise environmental impact while simultaneously increasing business success [3], [4], [5]. Implementation of the principles of Industry 4.0 and EIPs in the industry could be aided by blockchain technology. For example, blockchain could be used to facilitate M2M commodity (e.g. electricity) trading. For electricity traded on a wholesale market (as in USA, Australia, New Zealand, many European countries and Singapore [6]) such a system could reduce the overhead costs of the traditional trading practice and increase speed of transaction settlements. Those costs include administration associated with billing, reconciliation, hedging contracts and purchase agreements, which may constitute a significant part of electricity price (e.g. in the UK it is 16% [7] and in Australia approximately an eighth [8] depending on the place e.g. in Tasmania 12.2% [9]). Additionally, two extensive reports on the application of blockchain technology in the energy sector by Burger et al. [10], Hasse et al. [11] describe potential use cases and obstacles, including legislative, that need to be overcome before the technology can be widely introduced. A large number of studies has been published on electricity policies, prices, energy management and the impact of those on industrial competitiveness [12], [13], [14], [15], [16], [17], [18].

The purpose of this paper is to explore applications of blockchain technology related to Industry 4.0 and to present an example where blockchain is employed to facilitate M2M interactions and establish a M2M electricity market in the context of the chemical industry. This paper is structured as follows: Section 2 introduces the readers to blockchain technology using the biggest digital currency (Bitcoin) as case study; Section 2.2 describes and discusses the research and application landscape in relation to the engineering industry; Section 3 provides implementation details of the example, including the interactions occurring on the blockchain; Section 4 summarizes the main findings.