This is really an interesting approach to energy. In some states it is ILLEGAL to compete with utility companies. Hard to believe, and time to change. Here's a good example of what can happen if we, as consumers, get unshackled from old, antiquated regulations and tariffs.
Lets Neighbors Trade Energy Among Themselves
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.
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.
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.
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.
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.”
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