A Privacy-Preserving, Two-Party, Secure Computation Mechanism for Consensus-Based Peer-to-Peer Energy Trading in the Smart Grid

Consumers in electricity markets are becoming more proactive because of the rapid development of demand–response management and distributed energy resources, which boost the transformation of peer-to-peer (P2P) energy-trading mechanisms. However, in the P2P negotiation process, it is a challenging task to prevent private information from being attacked by malicious agents. In this paper, we propose a privacy-preserving, two-party, secure computation mechanism for consensus-based P2P energy trading. First, a novel P2P negotiation mechanism for energy trading is proposed based on the consensus + innovation (C + I) method and the power transfer distribution factor (PTDF), and this mechanism can simultaneously maximize social welfare and maintain physical network constraints. In addition, the C + I method only requires a minimum set of information to be exchanged. Then, we analyze the strategy of malicious neighboring agents colluding to attack in order to steal private information. To defend against this attack, we propose a two-party, secure computation mechanism in order to realize safe negotiation between each pair of prosumers based on Paillier homomorphic encryption (HE), a smart contract (SC), and zero-knowledge proof (ZKP). The energy price is updated in a safe way without leaking any private information. Finally, we simulate the functionality of the privacy-preserving mechanism in terms of convergence performance, computational efficiency, scalability, and SC operations.