On sunny days, Martha Cameron’s electric meter runs backwards. There’s a simple reason for that. On the roof of her brownstone, a row house that was built about 1900 in the idyllic Park Slope neighborhood in Brooklyn, she has a solar installation. When the sun is shining brightly, she can’t use all the electricity from her 18 photovoltaic panels, so the excess power is transferred to the power grid. When Cameron installed her solar system in 2010, she was a pioneer. But she was soon joined by five other buildings with solar systems on her leafy street, which is lined with Norway maples and sycamores.
Smart Grids and Energy Storage
A Microgrid Grows in Brooklyn
LO3 Energy, a young New York company, is working with Siemens Digital Grid and Siemens’ startup financer next47, to test a microgrid in Brooklyn. There, neighbors with and without photovoltaic systems are buying and selling solar power from each other on a so-called blockchain platform that automatically documents each transaction. If a hurricane should hit, this isolated network would operate self-sufficiently. The project is a pioneer in the movement toward a distributed energy supply system that draws on renewably-generated sources.
In April 2016, the first transactions occurred among neighbors who didn’t have their own solar systems and those who produced excess solar electricity. With the help of Brooklyn-based energy startup LO3 Energy, residents of Park Slope and the adjacent neighborhoods of Gowanus and Boerum Hill have founded the Brooklyn Microgrid. This pilot project was possible because it was able to fulfill three criteria. First of all, thanks to LO3 Energy’s “TransActive Grid,” which is a blockchain platform – a technology that timestamps each transaction as a chain of secure blocks – every energy transaction was documented. Second, thanks to the Siemens Digital Grid Division, microgrid-specific technical solutions were offered; and third, Siemens startup financer next47 supported potentially disruptive technologies like this through financing, project expertise, and advice.
But the Brooklyn Microgrid aims to do more than merely enabling small-scale trading of environmentally-friendly electricity. In view of the devastation caused by Hurricane Sandy in 2012, the project plans to install battery storage units within the grid in order to keep the lights on at least temporarily during the next storm-related emergency. If possible, local electricity demand will eventually be adapted to solar energy generation. For example, electric cars could be recharged when the sun is shining and the battery storage units need no additional boost.
Self-sufficient microgrids play an important role in environments as different from one another as the Alaskan wilderness and New York City neighborhoods. In an energy market that is growing through distributed energy systems — whether they are based on wind, sun, water or biomass — such grids are becoming increasingly significant. LO3 Energy is benefiting from Siemens’ development of microgrids such as the one that has been operating in Wildpoldsried, a village in southern Bavaria, since 2014. These microgrids include network control systems, switchgear, innovative battery solutions, and smart electric meters.
Collaboration with Brooklyn Microgrid is bringing benefits to the Siemens Energy Management Division because the TransActive Grid platform is based on a decentralized, Web-based bookkeeping system that uses cryptographic technology to save data in a way that is inexpensive and forgery-proof. For example, it can ensure that users receive original replacement parts, because it can seamlessly retrace a part’s journey back to its origins with the help of an RFID chip and the blockchain – one of many potentially interesting applications for Siemens.
Such peer-to-peer business deals — conducted directly from computer to computer — are very cost efficient and have great potential. The total value of the assets now being administered via blockchain all over the world is $1.6 billion, and according to Coinmarketcap, a cryptocurrency platform, these assets grew by an impressive 1,600 percent between 2013 and 2016. Seamus Cushley, a blockchain expert at PricewaterhouseCoopers in Belfast, says that $1.4 billion was invested in blockchain-related startups in the first nine months of 2016 alone.
Preparing for the Next Hurricane
These developments have brought a new dimension to energy trading. Households can now trade very small amounts of green electricity without any intermediaries. Prices can be determined by automatic auctions oriented toward the top price per kilowatt-hour that an energy consumer is willing to pay. However, with regard to the Brooklyn Microgrid, the electricity generated by local solar installations is not the only energy being used by its participants. The energy flowing from the sockets of the microgrid households that don’t have their own solar installations is still primarily electricity from the nearest conventional power plant. What they pay for instead are “environmental attributes” from their neighbors’ PV panels — similar to a credit for green energy that is what consumers have historically been buying when they choose energy generated from renewable sources. Now, they can buy from the actual energy suppliers themselves.
This method is by no means new. Consumers who purchase renewably-generated electricity from utilities are helping to finance power generated from wind, solar, water or biomass that may have been fed into the grid at a very distant location. In Brooklyn, consumers’ electricity payments are now benefiting their neighbors rather than anonymous operators of wind turbines in distant states, for example. However, money is not the main consideration for most project participants. “The neighborhood wants to be prepared for the next hurricane, deal responsibly with the environment, and strengthen its sense of solidarity,” says Scott Kessler, the Director of business development at LO3 Energy.
If it wants to help make this vision a reality, the Brooklyn Microgrid can’t remain limited to just a handful of participants. By early 2017, it expects to include 50 brownstones, apartment houses, schools, a gas station, a fire station, and factory buildings. Its goal is to have 1,000 participants by 2018. It also plans to install battery storage units and even more extensive PV systems. All of this will be supported by the Siemens Digital Grid Division’s Microgrid Management System, which will make it possible to establish a self-sufficient power supply for the microgrid in the event of a city-wide blackout.
A Network of Energy Cells
In order to be successful, blockchain platforms and microgrids require a regulatory framework. In New York State, such a framework is provided by “Reforming the Energy Vision” (REV). The platform’s objectives are to minimize the vulnerability of the power supply system that became visible during Hurricane Sandy, to use more sources of renewable energy, and to reduce costs. The Brooklyn Microgrid is a good test case for these objectives. “A microgrid is a nucleus that sets the stage for an energy future consisting of networks of energy cells,” says Stefan Jessenberger from Siemens’ Energy Management Division. “Blockchain also supports this process, because it makes it much easier to conduct energy trading within cells.”
Siemens Digital Grid, next47, and LO3 Energy all believe in the potential of blockchain-based microgrids, because this technology can be used wherever there are decentralized energy sources. “Our experiences with the Brooklyn Microgrid will certainly flow into future projects,” says Kessler. Meanwhile, Martha Cameron is already very proud of what has been achieved. “We are electricity suppliers,” she says.