LO3 Energy’s Community Microgrid Finds a Good Home in Brooklyn

If the refrain means anything, location is everything in real estate. It has also become a rallying cry for foodies, particularly of the locavore stripe. And it could be that location is key for a successful community microgrid, as well.

community microgrid

Brooklyn Park Slope

Location was certainly a key criteria for LO3 Energy when it came to siting their high profile community microgrid project in Brooklyn, one of the five boroughs that comprise New York City.

Brooklyn already had a reputation as a hipster capital, but it is a big city and LO3 had to dig deeper to find the right location for its community microgrid project.

When researching New York City neighborhoods, LO3 had a lot of meetings with community members who would potentially be the first participants in the company’s project. “That paved the way for settling in the neighborhoods of Park Slope, Gowanus and Boerum Hill,” says Scott Kessler, LO3’s director of business development.

In those neighborhoods there was already “a lifestyle tendency to prefer locally produced goods, and there was already a prevalence of solar panels in the community,” says Kessler.

In April 2016, LO3 developed its proof of concept project in Brooklyn’s Park Slope neighborhood. It involves about half a dozen rooftop solar panels on houses on one side of the street and a similar number on the other side. Using blockchain technology the neighbors can buy and sell power among themselves.

Incorporating blockchain technology also gives LO3 another marketing tool. It enables the company to assure customers they are buying renewable energy from actual, nearby solar panels rather than from a distant aggregation of renewable resources.

Blockchain technology is a form of digital ledger, that is, software that enables the movement of data, such as contract information or transaction records, among participants. Blockchain technology does not use a central repository or server, which makes it harder to hack and, therefore, more secure. And because it is automated, blockchain technology dramatically cuts transaction costs, making it feasible to do small transactions that would otherwise be uneconomic.

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As Michael Carlson, president of Siemens Digital Grid USA, has noted, blockchain technology makes peer-to-peer transactions in real time possible at the consumer level. The technology has the potential to remove the barriers to entry for the smallest producers and consumers. Siemens is LO3’s partner in the Brooklyn microgrid project.

Home to largest U.S. cooperative grocery store

Kessler cites several reasons LO3 chose Park Slope as the starting point for the roll out of its microgrid project. The block where the project began is one street away from the Park Slope Food Coop, one of the largest cooperative grocery stores in the country, so “there is already a practice of local resource management,” he says.

In addition, he notes that the neighborhood was severely affected by power outages after Superstorm Sandy, so “there is a desire to make the energy infrastructure more resilient.”

It also doesn’t hurt that the neighborhood is the home to several influential people. New York City Mayor Bill de Blasio and U.S. Senator Chuck Schumer both call Park Slope home. “We hope that making an impact here will translate to other future groups of participants who want to make a microgrid,” Kessler says.

LO3 is now in the process of expanding its Brooklyn Microgrid project to encompass a five-square block area in the adjoining neighborhoods of Gowanus and Boerum Hill.

Gowanus is a mixed residential and industrial area bordered by the famously polluted Gowanus Canal. The neighborhood is in the process of gentrifying with a growing number of artist’s studios and small businesses such as craft breweries sprouting up amid old machine shops.

Boerum Hill is a more established, upscale neighborhood with leafy streets and Federalist buildings. The neighborhoods are also home to housing projects run by the New York City Housing Authority.

community microgrid

Brooklyn Gowanus neighborhood

Income and cultural diversity

Kessler says the “income and cultural diversity in the three neighborhoods” will yield “a model for a community microgrid with high impact.”

Kessler notes that there are many locally owned businesses in Gowanus, and the neighborhood has the highest percentage of women-owned businesses in New York City. It is also home to many non-profit and activist environmental organizations.

Some of those groups were active in the community based campaign of artists and entrepreneurs that have pushed for the clean up of the Gowanus Canal. “Having that type of environmental motivation is what we see as critical to project success,” says Kessler. He notes that several of the local Gowanus businesses have aided LO3’s efforts by hosting events to explain the microgrid concept to more members of the community.

But developing a community microgrid project in Brooklyn is not without its challenges. Real estate costs are high in New York City, as is the cost of living. That raises development costs and limits the opportunity for medium and low income residents to participate in the program.

Kessler notes, however, that LO3 is “working on community finance options that could make it affordable.”

community microgrid

Brooklyn Boerum Hill Historic District

REV makes NY attractive for a community microgrid

Another challenge in New York is that people tend to move frequently, and city regulations do not accommodate programs like Property Assessed Clean Energy (PACE), which creates a mechanism to fund renewable energy additions by shifting costs to a property’s tax bill. “PACE could help residents get solar panels financed for their building, so that they can move freely in the future and not be tied to the solar on their roof,” says Kessler.

Kessler says the biggest challenge LO3 faces is how to structure the Brooklyn Microgrid project so it can sell energy through a utility bill without being subject to the same regulations that govern utilities and other energy suppliers.

Here again, location is key. Kessler says LO3 picked New York for its pilot project because the state is looking for innovative ways to modernize its grid through Gov. Andrew Cuomo’s Reforming the Energy Vision (REV) initiative that is seeking new regulatory models for the state’s energy sector.

Once these problems are solved, Kessler says they will yield “useful models for microgrid projects in future cities.”

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