In the spring of 2015, Bob Sauchelli answered a knock at his door on President Street in Park Slope, Brooklyn: Did he want to buy solar energy from his neighbor?
Sauchelli, 68, is retired but spent the last two decades of his career working as a program manager at the U.S. Environmental Protection Agency’s Energy Star Buildings program and had even written a book on energy efficiency for buildings and how it could mitigate climate change.
He was already paying for green energy, but it was not being generated nearby. He signed on to participate in a pilot created by TransActive Grid that combines a “microgrid” with blockchain, the technology that gave rise to Bitcoin, to create a local market for renewable energy credits. Soon, he was buying solar power from across the street.
“I was attracted to the benefits that could be simulated here in Brooklyn,” he said. “By switching to a local provider, which turns out to be my neighbor across the street, the money is saved in the community, the environmental benefits are actually experienced here, and by buying green power from my neighbor, I can empower other neighbors to put solar panels on their roofs.”
Renewable energy accounts for only 2 percent of total U.S. electricity sales, but community solar projects are the fastest-growing segment of the market, according to the National Renewable Energy Laboratory.
TransActive Grid, a joint venture by LO3 Energy and blockchain app incubator Consensus Systems, uses a special meter that runs blockchain technology, giving it capabilities not currently available in energy markets. First, it shows solar panel owners how much energy they’re producing, rather than having them trust the local utility to calculate the amount.
The blockchain also enables the direct trading of energy credits, such as between Sauchelli and his neighbor, and dramatically reduces the costs of such transactions.
“[Blockchain] really doesn’t care if it’s transacting the value of one solar panel or a 500 MgW solar plant. It literally costs the system the same amount of energy and overhead,” said Lawrence Orsini, founder and principal of LO3. That could get institutional investors to back local renewable energy production. “With blockchain, it’s just as easy to make micro investments in projects as it is to make larger ones,” said Orsini.
Also, the solar producer can earn more. Utilities charge more to consumers that purchase green energy, but they pay solar producers the wholesale rate. “When you buy green energy, you’re actually not taking energy from some wind farm and piping it via a special cable into your house,” explained ConsenSys’s Christian Lundkvist. “You’re still drawing power from the grid as you normally would, but you’re paying a premium because you’re paying for the act of producing this green energy.” By selling directly to Sauchelli, a solar producer on President Street can charge the premium rate, which is what Sauchelli was paying the national green energy provider anyway. (His monthly electricity bill is about $80 and he pays $15-$20 extra a month for green electricity.)
The project is part of Orsini’s vision to help solve a problem that became apparent when Hurricane Sandy knocked power out in New York City in 2012. Then, even owners of solar panels were out of luck since they needed to be connected to the larger grid. “When the next super storm comes through, should the utility go down, this portion of the grid should be able to stay up so the community can continue to use it,” said Orsini.
TransActive Grid is now jumping through the regulatory hoops required to become a legal energy service company (ESCO) and serve the 230 people waiting to participate. Eventually, it will have two footprints — the physical 10-block microgrid itself and the virtual community of market participants which could someday expand to all of Brooklyn. It’s also in discussions for similar projects in Europe, Africa and Australia.
As it grows, TransActive Grid will learn how much interest there is in local renewable energy. Orsini said, “We’ll see if people are willing to pay more, and decide how important local, free-range, Brooklyn organic electrons are in the community.”
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