Brooklyn Microgrid – a benefit corporation for local energy @ The Wasted City book

A new approach for grid operations that achieve a sustainable, secure, and cost-effective energy system by providing long-term, locally generated power security prioritized for the community.

The Wasted City book is a collection of work that combines compelling insights on circularity by external professionals, experts, and thinkers with a case-based approach. The latter is pursued by various specialized individuals working directly with CITIES’ international team, casting light on inspiring initiatives that are breaking the linear mold. In total, 16 cases are explored; spanning scales, from the hyper-local to the regional, sectors including food, energy and material waste while focusing on sharing, commodity brokerage, and empowerment. As there is no ‘one-size’ solution to make a city circular, the presented cases demonstrate the heterogeneity of approaches, all of which are critical to further the development of circular cities. Let us introduce you one of them – Brooklyn Microgrid, which builds a peer-to-peer energy market for locally generated renewable energy that is driven by the very community it serves. Alex Thibadoux, our independent researcher, went to get to know them better, read the conversation with Scott Kessler below.


Can you tell me what you do at Brooklyn Microgrid?

I am the Director of Business Development

What is the mission or purpose of Brooklyn Microgrid?

It is to test out the concept of community microgrids and the technologies needed to make them a reality.

Does that involve using blockchain technology?

It does, yes. The sort of technology platform that the microgrid is based around uses a blockchain based platform called Transactive Grid.

How large is your organization?

Pretty small still. I would say there are about 30 of us involved in the project.

 What about your collaborative network? Who are you working with, and do you have any kind of partnerships or any other organizations that you are working with?

Yes, we most recently announced our partnership with Siemens because they are providing a microgrid controller. We also have a partnership with PECI, which is a not for profit that is focused on energy efficiency and does a lot with community engagement around energy. We are also partner with Avale Services who is the installer for our meters and technology. Those are our sort of key partnerships at the moment.

©Brooklyn Microgrid

©Brooklyn Microgrid

 Are you set up as a for-profit company?

Brooklyn Microgrid is a B corp, so we have both profit as well as community and sustainability in our mission. Brooklyn Microgrid is wholly owned by LO3 Energy at the moment. The plan is once Brooklyn Microgrid is more fully developed, we would actually sell a majority share in Brooklyn Microgrid to the community members and the community organizations so that it is truly a community-run organization.

 How is it financially supported right now? Do you have fees? How does it work?

Right now it is supported by initial investment into LO3 Energy. We are also seeking some grant funding from municipal sources, and in the future it will be sort of a mix of funding sources with LO3 providing funding, as well as there being some membership fees of some sort, perhaps transaction fees. There are a variety of different business models that we need to sort of test out and see which one is the most appropriate.

How big is the grid network currently?

Well, the Transactive Grid proof of concept was in a one block area in Brooklyn, so about ten participants on that block, and we shut that down about two months ago and are currently rolling out our next forty meters. Therefore, it is safe to say we will have forty prosumers involved in the network shortly. We will simultaneously start recruiting pure consumers.

Can you explain to me a little bit how the blockchain technology works?

So, blockchain is basically just a distributed database, a distributive ledger, so that you and I have the same information at the same time and any time any new information is added, we simultaneously get it at the same time. So there is no central storage facility for data. There is no bank or credit card intermediary where every time you want to do a transaction you have to route it through them. You and I can have a direct peer to peer transaction. So, what that means for us is that folks can both buy and sell energy directly from their neighbors. Sort of having each person with a solar panel acting as a generator and then anytime anyone else needs energy, they can just source that from them directly via blockchain technology. The way that the market currently works is that there is always some form of some retail energy intermediary so that they are buying energy from the generators, then selling it back to consumers.

As far as how you run the organization, can you tell me, do you have any reporting mechanisms? Or how do you get together for meetings and make self-assessments and decide what to do next, with Brooklyn Microgrid?

Brooklyn Microgrid is still a pretty small group. The folks that are focused on us are all pretty much working in the same office. While we have a regularly scheduled weekly update for the entire team, we are sort of small enough and in such close proximity still that staying updated isn’t really all that hard.

©Brooklyn Microgrid

©Brooklyn Microgrid

 What sectors of the economy do you think you have the most influence on, or will in the future when the technology grows?

The utility sector and the energy sector. Sort of one in the same, but slightly different. We can have very far reaching impacts, because obviously everyone is a participator in the electric grid.

It looked like some of the press was talking about having backup energy supplies. Is that a large angle or is it more of an environmentally friendly energy production technology?

There are a number of angles to be honest. There is grid resiliency, which is making sure that the electric grid saves power in the event of an outage. We had a hurricane in New York City about four years ago that knocked out power to a portion of the city, so we are looking to prevent events like that. There is a sustainability angle in that we are providing a new revenue stream for owners of solar panels and providing them more choice. So you can choose whether or not you want to offset your own consumption or whether or not you want to sell it on the market, given what the realtime cost of energy is. We think you will get better return on your solar panels. We think that will drive outside investment into the area and spur further renewable development, and there is also a circular economy angle where that money that used to be going to green power, so it may be going to sort of wind farms located a distance away from New York City, that money is now going to your neighbors. So, it is staying within the community and providing the economic benefits from within the community and also the environmental benefits, because when you are financing a wind farm that is a while away, the benefits of that wind farm, from a local standpoint, happen near by, and your actual neighborhood here in Brooklyn doesn’t get any cleaner. When you are sending money to your neighbor, you actually are probably coming close to offsetting some electricity that would have come from a smoke stack nearby and therefore, in some micro way, improving the air of your local community.

 If you are producing electricity, do you have the ability to sell it at whatever price you want or is it always at a market rate?

The point is to establish a free market where buyers can set what is their willingness to pay and sellers can set what is their minimum willingness to sell. So you can set your rate, and say “I don’t want to sell any energy under x price.” The downside of that of course is that there has to be a buyer on the other side who is willing to meet you at that price. So we really see this operating in sort of a free market environment. We always want people to get electricity, and so there will always be that lowest possible rate from traditional energy sources, but we think if folks are willing to pay more for a premium product, like local, clean energy, they should be able to do so.

 Do you think this service is a niche role in the city or do you think it could be more widespread and be fairly common?

Oh, I think it could be very widespread and common. There is physical resiliency and then there is the virtual marketplace. So the physical resiliency, you would have to work within the existing distribution network or create new microgrids, and that definitely takes time and is a little harder to do. We are doing that in Brooklyn. We think the virtual marketplace can scale very quickly. In order to buy and sell energy among each other, we actually don’t need any new infrastructure beyond just a few new meters installed. So we think that has the opportunity to scale pretty fast. The physical community microgrid portion scales as well. You obviously have some engineering studies that go along with that, so it is a little slower, but you know we also think that is a compelling story for many parts of US and in other parts of the world.

Is there anything that is preventing your growth right now?

You know, I wouldn’t say preventing it, because we are growing pretty fast, but we definitely are facing off with regulation in each of the markets that we want to work in, and for the most part we are finding very friendly regulators. They are interested in what we are trying to do. They all see electric markets eventually going down this road. They want to be careful and make sure consumers are protected as they go there, and so there is a lot of existing regulation that doesn’t really allow some of the things that we are trying to do. We are working with regulators to try and figure out either how do we get a white space where we can just test this out and show that it works, or what does it take to sort of roll back some of this regulation? So yeah, I would say regulation tends to be what we come up against.

Additionally, is there anything else that could help you grow or be a more mainstream technology?

Yeah, what we are tying to do right now is set up demonstration projects. Find a number of sites across the globe where we can test out the technology, both from a use case standpoint- so there is a number of different ways you can use blockchain technology in our platform and we want to test each one- as well as testing out cultural fit, because regulation varies, culture varies, economics vary depending on where you are, and all of those things are going to impact how people adopt this.

©Brooklyn Microgrid

©Brooklyn Microgrid

Do you have a vision of Brooklyn Microgrid for the future? Is it similar to how it is now, but just larger or do you expect growth in different ways?

It is growing both in terms of width- in terms of number of people enrolled, it is growing that way- and in depth- in terms of what the functions the microgrids providing is. At first, we only have this sort of sale of energy supply, where it is a peer to peer transaction of certain amount of electrons. Eventually where it starts to go is you begin to transact device control. So you sort of virtually store some of your energy on your neighbor’s battery, if that makes the most economic sense. You can transact energy efficiency and demand response. Finally it goes into the real-time economics of operating the grid. So figuring out what is the cost to get energy from Point A to Point B? What are the losses involved in that and pricing that appropriately? That sort of looks like, every time a transformer is used, we know how much that costs. Every time a substation is used, we know how much that costs, and all of these things eventually roll into the idea of basically energy exergy, which is like energy productivity. So right now we really value energy supply and the amount of electrons. What we want to start actually value is how well are those electrons actually used, because that is equally as important. So eventually developing large incentive for utilities to maintain the most efficient and adaptable grid that they can, and making so that energy is much more localized and we don’t have this spread out network where you know we have centralized generation located at a distance away from where it is consumed. Instead we have lots and lots of community microgrids that are all supported by a larger macrogrid, but the microgrids are really the heart of it.

 So, the energy that is produced for the microgrid doesn’t necessarily go back to the larger grid?

In the future, I would say some microgrids are probably exporting energy to larger grids. They probably have a surplus, and other microgrids are running a deficit and are importing. It is all going to be based on location and the people using that microgrid, so there are a number of different factors there, but yeah, that is sort of how they balance among each other. But each one can sort of operate on its own if need be.

Do you have to install any kind of infrastructure to connect them all right now?

Yes. You know, you can do this now on the back of the existing electrical infrastructure, and most utilities are set up so they all have network that could be thought of community microgrids, even though they aren’t operated in that way. The idea is, allow them to sort of separate if need be, and that doesn’t involve installing too much more equipment.

©Brooklyn Microgrid

©Brooklyn Microgrid

Do you have a rough timeline that you are working on now?

Like I mentioned, we are installing the next 40 meters at the moment. At the end of next year, we would probably like to be up to around 1,000 prosumers and consumers if we could be. We are definitely planning on moving pretty fast next year for Brooklyn, and then LO3 is looking to get its other demonstration projects up and running next year as well. So in addition to Brooklyn Microgrid, we should have some other sites come online.


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Created on 19 June 2017

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