Blockchain technology revolutionizes New York's energy grid

Rage Comment : Richard Kauffman, Chairman of the New York State Department of Energy and Finance, issued the REV policy, using blockchain technology to improve New York's power situation in steps, hoping to establish a microgrid network through blockchain to improve the utilization rate of clean energy. New York LO3 has put this concept into practice, integrating the microgrid concept with the Transactive Grid payment infrastructure; power companies have also actively joined the transformation to solve the serious problems in the New York power grid.

Translation: Annie_Xu

New York State is working to transform the existing grid into a distributed platform that encourages large utilities to collaborate with innovators rather than compete with them.

This move had the unexpected effect of providing a good environment for the development of LO3, which uses the Ethereum blockchain to allow individuals to buy and sell electricity directly to each other.

However, Richard Kauffman, the so-called "energy dictator" of New York State, said that the government project is not intended to create a favorable environment for the development of blockchain technology, but rather that the inefficiency of the outdated power grid is ripe for disruption.

Kauffman, whose official title is chairman of the New York State Department of Energy and Finance and who shares an office with Governor Andrew Cuomo, spoke about the current state of the electric grid and the potential of blockchain technology:

"We should build a hybrid power grid that not only has the reliability and cost-effectiveness of traditional central power stations, but also has the innovation and flexibility of distributed solutions, and the electricity in the point network can be transmitted in multiple directions."

For electricity suppliers and individuals, two-way power transmission means that people may soon be able to directly purchase locally produced green energy; this green energy comes from personal solar panels or microgrids built on existing technology facilities.

Payments in the energy sector

This is where LO3 hopes to launch its Transactive Grid project.

Lawrence Orsini, LO3 founder and CEO, said:

“The project we developed is a secure middle layer that allows transactions to be conducted on the blockchain.”

Brooklyn-based Consensys uses the public Ethereum blockchain to build an auditable, transparent peer-to-peer energy trading method. Another related project of LO3, the Brooklyn Microgrid, aims to connect local communities to areas that can be independent of the large power grid.

The grid device can record household consumption as well as the energy generated by solar panels.

The idea is that by integrating the microgrid concept and the Transactive Grid payment infrastructure, community residents can write smart contracts on the blockchain and choose the source and type of electricity they use, and even decide who to buy or give the power to.

Orsini said:

"We want the grid of the future to be completely different from what it is now, and once everything goes well, as a consumer you will no longer be a consumer, but a prosumer."

New ideas for power grid

To lay the foundation for a new distributed power grid, Kauffman issued the Reforming the Energy Vision (REV) policy to make New York State's existing power grid structure cleaner, lower cost, and more resilient.

Power companies have also transformed themselves into distributed system platform providers (DSPPs) and upgraded the existing backward power grid system into a collection of personal microgrids.

REV was introduced in April 2014 after much of New York State was devastated by power outages due to storms in the past few years, including Hurricane Irene in 2011 and Hurricane Sandy in 2012.

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

The existing centralized grid of several power companies makes it unreasonable for a local blackout in the grid to turn into a large blackout in New York State.

“Communities across New York State are looking to gain more control over their energy through grid reconstruction, and these community grids represent nodes in a distributed hybrid system.

Proof of concept

Last week, Transactive Grid executed the first electricity transaction using blockchain technology between two friends in Brooklyn.

At the press conference, Bob Sauchelli, a retired manager of the US Environmental Protection Agency, used his 195 points on the Ethereum blockchain to purchase renewable energy produced by solar panels from his friend Eric Frumin, an environmentalist and labor advocate. Frumin told the media:

"This energy idea combined with changes brought about by community organizing will support the realization of a distributed energy future."

On April 11, 2016, Lo3 co-founder Lawrence Orsini agreed with far-leftist Bob Sauchelli to purchase green energy credits from Eric Frumin using grid-interconnection technology.

Financial support

As part of the REV program, New York State allocated $40 million to support partners interested in decentralizing the electric grid. Of the 150 applicants, including LO3, 83 have received $100,000 in feasibility study funding.

Although LO3 was not selected for the first phase of the project, it met the requirements of the second phase; the second phase has 10 award places, and each company that provides engineering design and business plans will receive a prize of US$1 million.

The state hopes to release a second round of proposal competitions soon, with a comment deadline likely this fall. The winners of the third and fourth rounds will each receive $5 million to complete their projects.

While Kauffman would not comment specifically on LO3 or other applicants, he offered the following remarks on blockchain:

"We are all still thinking about things in the linear world, but the problem is that many things happening around us are taking us to the nonlinear world, and the power industry, like other traditional economic sectors, is inherently not adaptable to nonlinear transformations."