By Tim Larrison, CFO | April 14, 2017
Answering the call for increasing energy self-reliance, a grassroots electricity-sharing model is emerging. “Community microgrids,” comprising community-owned or subscribed solar PV and other renewable energy sources, offer participants and surrounding consumers the security of energy resilience in times of grid failure and protection from energy price increases driven by volatile energy markets. They also give energy producers/consumers (aka “prosumers”) more control over the renewable energy they generate.
One of the most intriguing of such projects in the U.S. is LO3’s Brooklyn Microgrid (BMG), where residents with rooftop solar PV sell their excess energy to their neighbors, instead of relying on net metering to sell it back to their utility, ConEdison. Although the law prohibits energy consumers from selling energy to one another, BMG members are able to execute these peer-to-peer energy transactions using credits in a blockchain ledger. Every BMG prosumer connects to the microgrid through a dual-purpose meter called a TransActive Grid Element (TAG-e). The TAG-e both measures the participant’s energy production and consumption and communicates with other TAG-e devices to record transactions in the blockchain.
What is the microgrid missing?
BMG is not off-the-grid. It relies on the local utility, ConEdison, as a source of backup power and as a voltage source, to synchronize the output of the project’s various solar PV systems.
The next step in microgrid evolution is deploying energy storage, both to serve as a voltage source, and to provide a host of other benefits, such as renewable energy firming, ramp rate control and more, which help stabilize energy flows on the microgrid.
In its core function, though, the energy storage system is but another agent in the peer-to-peer network. As it charges from a resident’s excess solar output, or discharges to provide power in response to a member’s demand it essentially “buys” and “sells” energy.
A battery you can bank on
It isn’t too much of a stretch to imagine future energy storage systems, incorporating open-source, microgrid-sensing software that could participate in blockchain-based transactions (see figure below). If, on a sunny day, there were community members with a glut of excess solar energy, they could use energy storage to keep the excess for later use or sale depending on the going rate for energy.
Sustaining community microgrids will still require the more robust load-balancing capabilities of the utility network. So community members should expect to export and import energy to some extent. But energy storage gives them greater flexibility and control over when they do so.
Blockchain transactions in the energy sector are already happening—even more so in Europe and Australia than here in the U.S. We are seeing our peers across the pond wrestle with the complexities of putting transactive energy ecosystems into practice—and our turn will come. Transparent and efficient pricing of stored energy is just one of those challenges.
Update May 15, 2017: The blockchain-based energy storage transactions hinted at in this blog post have moved one step closer to reality! Our parent company, ENGIE, is among the participants in a new global blockchain initiative for energy called the Energy Web Foundation. Read more about this initiative, spearheaded by Rocky Mountain Institute and Grid Singularity.
¹Most widely known for its use in bitcoin transactions, blockchain is a digital, decentralized database that keeps a nearly inviolable record of all transactions that take place across a peer-to-peer network.
²For European examples, see the EU’s P2P-SmartTest project.