Brooklyn Microgrid Launches Campaign to Create Regulatory Sandbox

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Brooklyn Microgrid, the first energy project in the United States to use blockchain technology for energy transactions, is trying to win regulatory approval that would make it possible for project participants to buy and sell energy to each other.

Brooklyn Microgrid

By Nosyrevy/Shutterstock.com

Run by LO3 Energy as a test project since 2016, the microgrid began in the Park Slope neighborhood of Brooklyn as a way for tenants in a handful of apartment buildings with solar power panels to track the output of their solar and eventually to swap energy among participants.

Blockchain is a secure, online ledger that is an underlying technology for crypto currencies such as Bitcoin. Blockchain is being tested in a variety of industries for its ability to eliminate intermediaries and bring down costs even for very small transactions that otherwise would not be economically viable because of transaction costs.

LO3’s original plans called for the expansion of the Brooklyn Microgrid project to Brooklyn’s Gowanus and Boerum Hill neighborhoods. Those efforts are still under way, but the company’s main focus has shifted to expanding the project to the Borough Park and Bay Ridge neighborhoods in Brooklyn.

“Eventually we want to be in all five boroughs,” Adrienne Smith, Brooklyn Microgrid’s new executive director, said.

Seeking approval for regulatory sandbox

Utility regulations in New York have proved to be an impediment for LO3 in its efforts to scale up the Brooklyn Microgrid project and to make wider use of blockchain technology for renewable energy sales. Only utilities and retail service providers are allowed to buy and sell energy under New York State’s regulatory regime. “No other entity is allowed to exchange energy for money,” Smith said.

But she is trying to change that.

Smith has launched a campaign to petition the state’s Department of Public Service (DPS) to authorize Brooklyn Microgrid to operate as a commercial entity. Her first step was a campaign on Change.org, the online petition platform. The campaign is seeking permission for a “regulatory sandbox” so that Brooklyn Microgrid can enter into commercial energy transactions in Borough Hall, Bay Ridge, and Park Slope. If approved, a fully functioning local energy network would allow participants of the Brooklyn Microgrid project to buy and sell locally generated, renewable energy among themselves.

“Local energy networks provide a wide range of benefits,” Smith said in a statement. “They can help grid operators balance supply and demand for electricity, they can provide consumers with greater choice and cheaper energy, and they can prevent blackouts from extreme heat or snow storms.”

“All we need is [New York] Governor [Andrew] Cuomo to say ‘Yes’ to our campaign request and the network is already installed and ready to go,” Smith said.

So far, the Change.org campaign has gathered 300 signatures, and “the number is steadily rising,” said Smith. She hopes to have a meeting with the DPS and the governor or his office by mid-November, if not earlier. “The plan is to continue promoting the campaign until we achieve our goal of getting a regulatory sandbox approved for Brooklyn Microgrid,” Smith said.

Smith argues that her request — and Brooklyn Microgrid’s goals — fit well with the governor’s Reforming the Energy Vision (REV) plan that is seeking market based solutions to incentivize a cleaner energy sector. New York’s near term target calls for the state to derive 50% of its electricity from renewable resources by 2030.

“We believe that this goal is both imperative and achievable, and that the Brooklyn Microgrid is a tangible and scalable solution for attaining Cuomo’s goal,” Smith said.

The Change.org campaign is designed to act as a “signpost” to attract the attention, and potentially, approval of regulators and the governor, Smith said. It is a step toward “activating the project into real dollars.” A virtual marketplace exists right now with the Brooklyn Microgrid. “We want to be able to allow those solar power prosumers to be able to incentivize more people to adopt renewable power,” she said.

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