January 25, 2022

Volume XII, Number 25

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January 24, 2022

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Blockchain Goes Solar

A recent New York Times article reported on an early-stage, solar energy microgrid being formed in Brooklyn, called the Brooklyn Microgrid, that relies on blockchain technology, the innovative database technology used by cryptocurrencies like Bitcoin that promises to transform industries as diverse as financial services, health care, retail, and manufacturing.  The blockchain-based microgrid enables neighboring residents and businesses to join an electronic trading platform and allows residents with solar rooftop panels to sell their excess electricity directly to neighbors within the microgrid.  The use of blockchain technology facilitates secure and verifiable peer-to-peer energy trading, without involving the local electric utility in administering the microgrid.

Blockchain is a type of distributed ledger technology that creates and maintains a complete sale-purchase-delivery transaction history for a commodity, such as currency or, in this case, electricity.  With a blockchain distributed ledger, identical, immutable copies of the ledger are available to multiple participants in the network, not just to a single intermediary, such as the local utility.  The use of blockchain in an electricity microgrid gives participants the ability to meter surplus electricity production from rooftop solar panels and to document securely the sale and use of that electricity by other members of the connected microgrid.  The transaction chain would omit the local utility, which would account for net flows in or out of the collective microgrid, but not for the real-time purchase and sale of surplus solar energy.  The ultimate goal for blockchain-based microgrids may be to build a microgrid with energy generation and storage components that can function largely independently of the local electric utility company’s system, even during widespread power failures.

The project is one example of how the marriage of solar energy and blockchain distributed ledger technologies can redefine the relationship between energy producers and energy consumers, promote solar energy, and create alternatives to the traditional centralized power grid.  That said, creative, light-handed regulatory solutions may be needed from public service commissions to allow blockchain-based sales and purchases of surplus solar electricity, within a microgrid, to occur without causing each seller to become a regulated retail seller of electricity.

© 2022 Covington & Burling LLPNational Law Review, Volume VII, Number 76
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About this Author

David A. Stein, Covinton Burling, data and cybersecurity lawyer
Of Counsel

David Stein advises clients on retail financial services, credit reporting, financial privacy, payments, fair lending, and technology and e-commerce issues. He assists banks, non-bank lenders, consumer reporting agencies, payments and technology companies, and their vendors with regulatory, compliance, supervision, enforcement, and transactional matters.

Mr. Stein has significant experience advising clients on compliance with the FCRA, GLBA, ECOA, EFTA, TILA, TISA, FDCPA, Dodd-Frank Wall Street Reform and Consumer Protection Act, and FTC Act. Mr. Stein is a member...

202 662 5074
Mark L. Perlis, Covington Burling, litigation attorney
Of Counsel

Mark Perlis is a seasoned energy and environmental attorney with a broad-based federal regulatory and litigation practice encompassing all aspects of the electric utility industry.  He regularly represents clients in adjudicatory and rulemaking proceedings before the Federal Energy Regulatory Commission and state public utility commissions, and in stakeholder proceedings conducted by ISOs and RTOs across the country.  Mr. Perlis represents independent power producers, power marketers, traditional electric utilities, and renewables developers.  Mr. Perlis specializes in...

202 662 5446
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