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This is where LO3 Energy ended up when it developed its Transactive Grid in Brooklyn, a prototype of interconnected households and businesses that share locally generated solar power. The community was motivated by a desire to give environmentally conscious consumers and users the capacity to know they are buying clean, locally generated power as opposed to just helping pay their utility buy renewable credits that fund green energy production elsewhere in the United States. In the Transactive Grid, building owners install solar panels that are then linked together with those of their neighbors in a distribution network, using affordable smart meters and storage units, as well as inverters that allow the grid’s owners to sell power back to the public grid. The magic sauce, though, comes from a private blockchain that regulates the sharing of power among the smart meters, whose data is logged into that distributed ledger. And in the summer of 2017, LO3 took the process a step further by developing an “exergy token” to drive market mechanisms within and among decentralized microgrids such as Brooklyn’s. (Exergy is a vital concept for measuring energy efficiency and containing wasteful practices; it doesn’t just measure the amount of energy generated but also the amount of useful work produced per each given amount of energy produced.) Note that LO3’s microgrid is based on a private blockchain. Microgrids offer one of those cases when this model is likely sufficient, since the community is founded on a fixed group of users who will all agree to the terms of use. That means that some of the large-scale processing challenges of Bitcoin and Ethereum can be avoided and thus that the high transaction power of a blockchain could be harnessed without requiring the implementation of the Lightning Network and other “off-chain” scaling solutions currently under development.
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Michael J. Casey (The Truth Machine: The Blockchain and the Future of Everything)