A Sustainable and Resilient Distribution System Restoration Framework Based on Intentional Islanding and Blockchain-Based P2P Insurance

Extreme weather events have raised the frequency of power outages, posing critical challenges to the sustainability and resilience of modern power systems. In such cases, distributed energy resources (DERs) can effectively support the re-establishment of sustainable power supply for critical loads within the distribution network and reduce power outage losses. In this paper, a sustainable fault recovery framework based on an intentional islanding scheme is proposed to partition the distribution system in order to optimize the priority restoration of critical loads, while taking the operational constraints of the system into consideration. In addition, a blockchain-based P2P insurance mechanism is applied to mitigate the outage losses of the network’s users with a higher degree of security and transparency. By linking technical restoration decisions with financial risk-sharing mechanisms, the proposed framework improves economic sustainability and social equity among network users. For this purpose, a multi-layer, multi-objective optimization algorithm is proposed for optimal partitioning of the distribution network, management of DERs, and demand side management of flexible loads in order to minimize the outage losses and the insurance premium, while maintaining satisfactory performance of the network. To validate the feasibility of the proposed algorithm, the 45-node distribution network of Alexandria, Egypt is used. The results show that a reduction in peak load, outage losses, and operational costs are achieved, with an overall saving of 17.34%, in addition to a premium reduction of 41.3%. These results highlight the effectiveness of the proposed framework in enhancing the environmental, economic, and operational sustainability of distribution systems under outage conditions.