A community microgrid

What if you could share energy with your neighbors during a power outage?  One company in Brooklyn, New York is working to create energy microgrids that would radically change the way energy is bought and sold. Scott Kessler, Director of Business Development at LO3 joins Hari Sreenivasan to discuss this.


What if you could share energy with your neighbors during a power outage?

One company in Brooklyn, New York, is working to create energy microgrids that would radically change the way energy is bought and sold.

Scott Kessler, director of business development at LO3 Energy, joins me now.

All right, so, how does a microgrid work?

What a microgrid?

So, a microgrid is really a physical part of the larger utility network that can sort of separate itself during a severe weather event -- like Hurricane Sandy, that came through New York a few years ago -- and make it so that people within that area are able to stay powered.

If you see photos of Manhattan when the lower half was all out of power, there's little pockets, like right around NYU and the southern part of Battery Park, that still had some lights on.

And that was because they had a microgrid.

So a microgrid requires some energy generation.

So is this from solar energy?

I mean, obviously, there's geothermal and hydroelectric -- whatever -- but, inside a city, is it mostly solar panels that are generating energy?

So that's what tends to get the most attention, but, really, there's a mix of energy sources that are going to be included in projects like ours.

So, there are already over about a megawatt of solar energy in the area of Brooklyn we're working in, Park Slope and Gowanus.

But we also want to develop some assets that enable more flexibility, because the sun isn't available all the time.

So we're looking to install utility-scale storage systems, and we're also looking to install some combined heat and power.

So, there's this other structural hurdle, which is that you and I cannot buy and sell energy to one another.

It's just not possible in the legal sense of the word.

So how does a microgrid work if there's someone with a rooftop solar that might be generating it and a neighbor wants to use it?

So, what we've done is we've utilized block-chain technology to come up with our own metering system, which is a combination of meters and computers that sense electron flow and then can write that to the block chain.

So it enables consumers to conduct transactions with each other at a much faster pace and in a much more efficient way than they ever could before.

So now that we have the technology, all we need now is sort of to get the policy there.

And New York is already on the way to doing that.

New York's currently undergoing what's known as Reforming the Energy Vision, which is a big initiative of Governor Cuomo and the Public Service Commission to reform the way that utilities conduct business here in New York State.

Right now, if I have solar panels, the only thing I can do is offset my own consumption, whereas, in the future, you should have a variety of choice.

You should be able to offset your own consumption, but if there's a market for renewable energy that's produced in a local manner, which we are trying to develop, you should be able to sell to that market.

And if you wanted to do other things with that energy, like store it in your battery, you should be able to do that, as well.

So we're really looking for more variety for consumers and trying to get utilities to a place where they are enabling that choice.

So, when you say block chain, to my mind, bitcoin is the thing that I associate with it.

But bitcoin fluctuates wildly in its value.

Does block chain require your transactions to be in bitcoin?

So, block chain's really just a type of software.

It means that, instead of a centralized ledger of information somewhere, like a data center, it's distributed.

And that's really what all block-chain software is.

Bitcoin's a of block chain, just like Kleenex is to tissues.

So what we've done is we've taken that block-chain technology and applied it to energy.

So we're not even developing a block chain.

You can't send money to your neighbor through our block chain.

What you do is send energy, in electron, kWh form, however you want to quantify it.

Directly back and forth between people.

So, the utility grid, it's best to think of it as having inputs and outputs.

And in the middle, you have all of these wires that are sort of serving as the intermediary.

So we can never track an electron and say that I sent my electron directly to you, but what we do is say, 'We knew Scott sold 5 and you bought 5.'

So we can make that transaction happen that way.

Where do you see this -- let's say best-case scenario, 5 years out, 10 years out, do you see more microgrids popping up?

Or do you see larger-scale utilities using something like this?

So we really see this going towards pushing the concept of exergy, which is the productivity of energy.

Right now we really only look at 'how much energy did you use?'

We don't really quantify 'how did you use it?'

So we really want to get this to a place where you and I, if we are neighbors, are incentivized to have transactions between rather than us having to bring power down from Niagara Falls or other large hydro sources.

Because from a system perspective, that doesn't make sense.

What we want to do is get to a system where there's a big incentive in the network both for you and me as participants and the utilities to have distributed grids, but to have them also be resilient and adaptable so that, if we lose a pocket of it, it forms a self-healing grid and the rest of us can still maintain power during that outage.

So, I also hear kind of a... maybe it's a success-disaster coming.

Let's say lots of microgrids catch on.

Then that means that there are pools of people that are no longer contributing to some of those large-scale infrastructure costs -- right? -- that it costs a lot of money to build a dam and actually have substations and bring the power all the way here.

But, essentially, if I have parts of Brooklyn and parts of Queens and parts of Manhattan no longer paying for it, then that leaves a smaller pool of people actually paying for all that infrastructure.

Wouldn't their rates rise?

Well, so there's always going to be a need for there to be wires for there to be infrastructure, to send these electrons back and forth.

And we think the utilities still play that role, and we think they still need to be fairly compensated for that.

Additionally, even if we do come up with a system which I think we're moving towards, where it's a number of community microgrids, there still needs to be a backbone connecting them all.

Because some of those microgrids will have excess energy, and they'll be sending it out.

Some of those won't have enough energy, and they'll be importing it.

So there'll be sort of a market between community microgrids, and while prices may vary, what you get is, if there's a really expensive price of energy somewhere, that sends a signal to investors to build more solar, build more storage in that community.

So, eventually, you sort of are using market signals to balance us all out instead of sort of large master planning like we currently do, which doesn't really allow communities to provide what input is and what values are.

All right, Scott Kessler, LO3 Energy.

Thanks for joining us.

Thanks so much.