When Michael Guerra, a blunt-talking Brooklyn real estate broker, installed 24 solar panels on his Park Slope rooftop in 2012 during a home renovation, all he knew was that he liked the idea of being able to supply his own green electricity—and to run his air conditioning in the summer without paying exorbitant charges. So he got as many panels as his utility and the state would allow.
“I’m the guy who wanted solar panels on his roof since Jimmy Carter was president,” says the 54-year-old.
Then one day in 2016, he got a knock on his door. Sasha Santiago had been on a nearby rooftop and spied Guerra’s solar panels; he used Google Earth to home in on the right building.
“A strange man rang my bell and—I’m not kidding—said, ‘Hi, I’m Sasha. Can I talk to you about a microgrid?’” Guerra says. “I said, ‘What’s that?’”
Santiago explained that the company he worked for, Brooklyn-based LO3 Energy, was running a pilot program that would permit renewable energy users like Guerra to sell power directly to their neighbors. In effect, the neighbors would become their own small power grid in the middle of the most populous city in the country.
“Oh, this is shared economy. This is Airbnb, this is Uber, this is 21st century,” Guerra remembers thinking. He agreed to be part of the project on President Street. Residents with solar panels on one side of the street sold environmental credits to residents on the other side of the street who had no solar of their own.
New York state allows electricity consumers to use their own solar panels to supply their electricity, but any power produced that the customer doesn’t use feeds back into the larger grid, with consumers being paid for those kilowatt hours. The microgrid system that LO3 had devised would essentially cut out the middleman, using a phone app and smart meters to enable neighbors to strike deals for how much electricity they want to buy from one another and at what price. The technology that makes this possible, Santiago explained to Guerra, is blockchain, the same secure information exchange that makes bitcoin trading possible.
“The idea with blockchain is that everything is done peer to peer,” says Duke University economist Campbell R. Harvey. “With a microgrid, people that have solar panels can actually trade amongst themselves. They don’t have to have a centralized person in the middle that is taking a piece of the action.” In a time when the national electricity grid could be vulnerable to terrorism and climatic events, a new technology “could potentially resolve some of these problems,” he says.
Brooklyn, he says, is “a glimpse of the future.”
Blockchain has been looked at for everything from medical records and voting to international money transfers and even online poker. Its value is the way it maintains the integrity of a transaction by breaking it into small blocks of data that are not controlled by one person and therefore can’t be tampered with.
LO3, which began as an energy think tank in 2012, saw that blockchain would be perfect for creating energy markets, says Scott Kessler, LO3’s director of business development. The sale and purchase of electricity depends on the fast and secure processing of enormous amounts of continually changing data—the availability of a particular type of energy, its value at that instant and any ceiling the consumer might have placed on a contract price.
Blockchain enables the meters to communicate reliably with one another, but it’s the phone app that really puts the control in the hands of the microgrid consumers. The app “acts as your bidder” in the energy marketplace, Kessler says, enabling consumers to determine “what is their willingness to pay for energy.”
Buyers interested in simply getting the best price could opt out of any sort of green energy, relying on whatever energy source is available from ConEd, Kessler notes. Or, “they could play with the percentage and see how cheap can I go to get local green energy.”
“The idea is that it isn’t just rich people with solar panels selling energy to each other, but really, it’s the entire community …So if you’re low-income and you need the cheapest power you can get, we’ll still provide that to you. We don’t want to be dictating.
Picking Brooklyn as the location of the experiment made sense for several reasons, says Kessler.
The community is “environmentally conscious”—not only are there a number of solar panels already set up on rooftops, but many Brooklynites already buy green power and receive a renewable energy credit from ConEd, the New York electric utility.
Brooklyn has a vested interest in “energy resiliency.” When Hurricane Sandy hit Brooklyn, the Gowanus Canal flooded for blocks and power was knocked out to many of the high-rise public housing buildings. “You had folks in wheelchairs with no access to elevators for a week or two, without power, so it was a really bad situation,” Kessler says. With enough battery storage, a microgrid could potentially survive a power outage that affected much larger portions of the city.
The borough’s economic and architectural diversity, from industrial warehouses to historic brownstones, made it a good test subject, Kessler says. That mixture could offer LO3 great feedback about the kinds of energy that might be needed in the future.
The pilot program was successful enough that the microgrid will go live later this year. The next phase of the project will involve 300 households or small businesses that have signed letters of interest, along with 50 generation sites—all solar except for one small wind turbine. In total, those producers generate about 1.5 megawatts of electricity, still just a small portion of the needs of Brooklyn’s nearly 3 million residents. But the point is not to replace the whole grid, but to show that small grids can serve local communities.
It’s hard to get any more local than Roger and Barbara Ditman. Roger, 75, and Barbara, 73, bought their four-story brownstone on 10th Street in 1973 for $63,000. (Today it’s worth $3.5 million.) About five years ago, the retired couple paid $40,000 to install 16 solar panels on their roof—panels that now supply about 95 percent of the home’s electricity. With the solar production and various state credits for the solar panels, the investment is almost paid off, Roger Ditman says.
Signing up for the Brooklyn Microgrid means that their excess electricity could be bought in the community. “To me, it’s the next step,” says Roger Ditman. “It’s taking advantage of something that is totally free. It helps the atmosphere, it helps the country, and it helps the community. What we’re not using gets made available to our neighbors and to the larger community, as opposed to using energy that comes from Arizona.”
Michael Guerra compares the microgrid to the changes in telephone service. “There used to be a central switching station. Now if you look at voice-over IP, you’ve got routers that are distributed around that are talking to one another,” he says. “Microgrid controllers can do the same kind of thing with electricity. They can isolate problem spots,” and create a kind of “island” that would be producing electricity when the rest of the city might be dark.
“After I learned about it,” Guerra says, “I thought, ‘This is definitely happening. This can’t not happen.’”