New York's "Energy Czar" discusses the potential of blockchain in the energy grid

New York State is rebuilding the energy grid as a distributed platform that encourages utilities to collaborate with innovators rather than compete with them.

It’s an unexpected environment for startup LO3, which uses the ethereum blockchain to allow people to sell solar energy directly to other people.

As the state's "energy czar" Richard Kauffman said, it's not that government projects are specifically creating opportunities for the development of blockchain technology, but that the time has come for the incompetent old power grid to be eliminated.

Kaufman, who works in the office of Gov. Andrew Cuomo, the chairman of the New York Department of Energy and Finance, told CoinDesk:

"The network we build should be a hybrid system. This has the reliability and cost benefits of a traditional central site, with products and distributed systems. And, using the innovation and flexibility of a distributed solution, the current can be transmitted in more than one direction."

Richard Kauffman

For energy suppliers and self-employed individuals alike, bidirectional current means they can quickly purchase clean energy produced by local rooftop solar panels, which is like building a microgrid on top of existing infrastructure.

Payment methods in the energy sector

This is what LO3's connected project looks like, Transactive Grid, as shown below.

Transactive Grid Device

Lawrence Orsini, the company’s founder and CEO, said:

“What we are developing is the secure transport layer that allows transactions to be conducted over the blockchain.”

Using Ethereum's public blockchain, and working with Brooklyn-based Consensys to maintain this node, it is possible to build an auditable, transparent, peer-to-peer energy trading method. Another project of the company is called Brooklyn Microgrid, which connects the power grids of various communities into a small area to be isolated from the threat of damage to the large power grid.

The idea is to combine a microgrid concept with the Transactive Grid payment method, allowing neighbors to write smart contracts on the blockchain to choose the energy source and type of energy they need, and even decide who to sell the energy to.

“The multifunctional grid we’re looking at in the future is going to look nothing like it does today,” Orsini told CoinDesk. “If it goes well, as a consumer you’re no longer just a consumer, you’re a prosumer.”

Rethinking the Grid

To lay the foundation for a new distributed grid, in 2013 Governor Cuomo tasked Kaufman with developing a set of policies called the Improved Energy Vision (REV) aimed at making the existing energy architecture more affordable, resilient, and clean.

Power companies were reorganized into distributed system platform providers (DSPPs) and were forced to upgrade existing systems and splice the power grid into people’s microgrids.

Eric Frumin shows off his rooftop solar panels in New York, a week before the first transaction.

According to Kaufman, REV officially began in April 2014, inspired by recent typhoons that knocked out much of New York State’s power system, including Irene in 2011 and Sandy in 2012.

The existing centralized power grid only has a few power companies. If part of the power grid is damaged, it will affect electricity supply in a large area of ​​a state.

Kaufman said:

“Communities in these states want to rebuild energy grids that are more under their control, and their grids can represent nodes in a distributed hybrid system.”

Proof of concept

Last week Transactive Grid held an event where they completed the first transaction using their technology, between two longtime friends in Brooklyn.

At the event, retired U.S. Environmental Defense Agency executive Bob Sauchelli used the Ethereum blockchain to purchase 195 credits of renewable energy produced by solar panels on the roof of his neighbor, environmentalist and labor advocate Eric Frumin .

Frumin said:

“The idea is that organizations and communities can come together to get the public behind distributed energy.”

LO3 co-founders Lawrence Orsini ( center) and Bob Sauchelli (far left) use Transactive Grid to complete energy purchase scenarios

Policy Funding

As part of the REV program, the state set aside $40 million in funding for potential partners interested in building a decentralized grid. There were 150 applicants, including LO3, and 83 applicants received about $100,000 each to conduct their feasibility studies.

As an applicant that was not among these early-stage finalists, LO3 entered the second phase of the competition, where if it were among the top ten, it would be awarded $1 million for its industrial design and business plan.

This fall, New York State is likely to announce the next steps for REV applicants, and the winner of Phase 3 will receive a $5 million award.

While Kaufman would not comment on LO3 or other applicants, he did comment on blockchain technology:

“We are still used to thinking in a linear world, the question is, is there something around us that is taking us into a nonlinear mode? Like other traditional industries in the economy, the existing power industry is not set up for nonlinear change.

Original article: http://www.coindesk.com/new-york-energy-czar-blockchain/
By Michael del Castillo
Translator: lwvwlcn
Editor: Kyle
BTC address: 1JgAwbzQF5W4xiMz5xmDR52m5RKu6VLXoG