Solar Experiment Lets Neighbors Trade Energy Among Themselves

Source: By DIANE CARDWELL, New York Times • Posted: Tuesday, March 14, 2017

Patrick Schnell, a participant in the Brooklyn Microgrid, with solar panels on his roof in Gowanus. Kevin Hagen for The New York Times 

Brooklyn is known the world over for things small-batch and local, like designer clogs, craft bourbon and artisanal sauerkraut.

Now, it is trying to add electricity to the list.

In a promising experiment in an affluent swath of the borough, dozens of solar-panel arrays spread across rowhouse rooftops are wired into a growing network. Called the Brooklyn Microgrid, the project is signing up residents and businesses to a virtual trading platform that will allow solar-energy producers to sell excess-electricity credits from their systems to buyers in the group, who may live as close as next door.

The project is still in its early stages — it has just 50 participants thus far — but its implications could be far reaching. The idea is to create a kind of virtual, peer-to-peer energy trading system built on blockchain, the database technology that underlies cryptocurrencies like Bitcoin.

The ability to complete secure transactions and create a business based on energy sharing would allow participants to bypass the electric company energy supply and ultimately build a microgrid with energy generation and storage components that could function on their own, even during broad power failures.

“Community members can work both individually and collectively to help meet demand in an efficient way,” said Audrey Zibelman, who recently resigned as chairwoman of the New York State Public Service Commission, which regulates the state’s utilities.

“It takes a central procurer — in this case, historically, the utility — out of the mix,” she continued, “and really sets the market where they’re not buying and selling to the utility but they’re identifying each other’s need and willingness to buy and sell.”

The project is but one example of how rapidly spreading technologies like rooftop solar and blockchain are upending the traditional relationships between electric companies and consumers, putting ever more control in the hands of customers. Across the globe, upstart companies like LO3 Energy, which is designing the Brooklyn experiment with the industrial giant Siemens, are building digital networks that offer the promise of user-driven, decentralized energy systems that can work in tandem with the traditional large-scale grid or, especially in emerging economies, avoid the need for a grid at all.

In Australia, where Ms. Zibelman will soon run the nation’s energy markets, a company called Power Ledger announced the start of a residential electricity trading market based in blockchain last year at a housing development in Perth.

In Bangladesh, where an estimated 65 million people lack access to a central grid, ME SOLshare has been developing peer-to-peer trading networks of rural households with and without rooftop solar systems. Producer-consumers there — known as prosumers — can sell excess power into the network, where neighboring homes and businesses can buy it in small increments with a cellphone.

A Transactivegrid meter at Garry Golden’s home in Brooklyn. Kevin Hagen for The New York Times 

And in Germany, Sonnen, a leading supplier of home batteries and smart energy products and services, has created a web of about 8,000 customers, both with and without solar on their roofs, who are trading their stored energy among one another.

“Peer-to-peer is slowly but surely becoming a reality,” said Olaf Lohr, Sonnen’s head of United States business development. “This really is a very disruptive technology. The customers are also the owners — they are the producers of the energy. There is no centralized feed-in from one big power plant.”

In New York, the Brooklyn microgrid is conceived to work with the conventional grid, which is in the midst of a reboot under Gov. Andrew M. Cuomo’s directives to make it more flexible, resilient and economically efficient while reducing greenhouse-gas emissions. That effort, known as Reforming the Energy Vision, or REV, includes encouraging the development of microgrids and more active community participation.

The ideal power system, said Richard L. Kauffman, who as the governor’s chairman of energy and finance is leading that effort, is one that combines large power plants and transmission lines with clusters of smaller-scale producer-consumers, “where electrons can flow in more than one direction and supply and demand of electricity is dynamic — and that’s different than the grid is today.”

Peer-to-peer power sharing is consistent with that vision, he said, though a number of regulatory changes are necessary for it to take off.

The State Public Service Commission has already taken a few of them, including last week approving new ways to determine pricing for electricity from renewable energy projects that more accurately reflect the value to the grid based on geographic location, timing and other factors yet to be determined. But Lawrence Orsini, LO3’s chief executive, said the state still needed to determine how to define his company and its network of participants before it could get its market up and running, a move he anticipates by June.

“There’s nothing technically infeasible about what we’re doing,” he said. “In order for transactive energy to take off as a whole, regulators have to be comfortable that markets can actually work this way and, more importantly, that people want markets like this.”

Over the past year, LO3 has been working to find those people, using Google Earth to identify homes with rooftop solar installations and then knocking on doors to enlist participants, with some success throughout Park Slope and Gowanus.

On a block of President Street last year, the company carried out two sales of green electricity credits generated by one homeowner’s solar system to a neighbor across the street — tiny transactions, but important in proving the concept’s viability.

Mr. Golden on his roof this month. “We need to make energy a product and a service that people can purchase on their own,” he said. Kevin Hagen for The New York Times 

Those sales involved test versions of renewable-energy credits — numbered certificates that are used to track electricity exported from a renewable system to the grid. Utilities, corporations and other customers can buy the credits to claim green energy use.

In the Brooklyn case, LO3 used the credit sales, conducted over PayPal, to test its approach; it cannot legally buy and sell electricity until regulators determine its market status. Once that occurs, Mr. Orsini said, the company will be able to facilitate the trading of energy among its participants — though they would still pay the utility, Con Edison, for infrastructure fees and services, as customers now do when they choose to use a green energy supplier through the utility.

Mr. Orsini’s team is busy collecting data from meters installed in prosumer homes, measuring production, use and export of the solar electricity to help model the market. They are also testing a smartphone app that customers will be able to use to manage their electricity purchases, setting parameters to control the source — selecting from a range of conventional, renewable, local and bulk options — as well as how much they are willing to spend.

Mr. Orsini said he expected that most users would want to make their choices and then let the system take over.

“No one wants to day-trade energy,” he said. “You’re giving something to people that they haven’t ever had before, and that’s really a way to personalize their energy consumption.”

That is the aspect that appeals to a number of the participants, including Garry Golden of Windsor Terrace, a futurist who consults for a variety of businesses, including electric utilities and infrastructure companies. Mr. Golden installed solar as part of a group purchase that proved so popular with his neighbors that almost a dozen systems are within view of his roof, forming an attractive cluster for the microgrid experiment.

“We need to make energy a product and a service that people can purchase on their own and not rely on a large centralized entity,” Mr. Golden said. He added that it was important to build out infrastructure that would be able to better withstand disasters, both natural and man-made.

Other participants echoed that concern.

“The long-term goal is to be at least partially independent of the grid in emergencies, which was a reasonable argument to join,” said Patrick Schnell, whose Gowanus basement flooded during Hurricane Sandy in 2012, though he did not lose power. “Hopefully it will expand and more people will join and it will be more worthwhile.”

The project includes plans to create a roughly five-square-block area — either around a collection of public housing projects or near a hospital — that could disconnect from the grid and operate independently in case of a power failure.

“It’s a recognition of energy needs beyond your own,” Mr. Golden said. “There’s a microgrid of our community, and that’s great, but the hospitals, the clinics, the schools, large housing complexes — you can feed the energy where it needs to go.”