During even a brief shopping trip through Brooklyn, the value placed on “local” becomes immediately apparent. Stores overflow with regionally sourced, locally crafted, made-in-Brooklyn everything. Now, a new energy startup based in the borough wants to trade on the exclusivity of locally sourced power with a new neighborhood solar grid.

The broad contours of the Brooklyn Microgrid, an effort to create a localized, sustainable energy market in the neighborhoods of Park Slope and Gowanus, may sound a little like the beginnings of a promising Portlandia sketch. But this test run in small-scale energy trading, which has already recruited and linked up dozens of consumers and residents with solar panels, is a significant experiment in making renewable power more affordable and attainable.

“We’re creating a market where people can pick their energy supply,” says Sasha Santiago, who runs marketing and community engagement for LO3 Energy, the tech company that developed and now runs the Brooklyn Microgrid. “I don’t have a rooftop, but what if I could invest into community solar and battery storage? People could have bigger stakes in how their neighborhoods work.”

By linking up neighbors who have solar panels with those who want to buy clean energy, the Microgrid will harness new energy technology and the power of the market in a novel attempt to change how we power our homes. According to the founder of LO3 Energy, Lawrence Orsini, the project is merely connecting pre-existing technology. The real test is demonstrating the business model and convincing utility regulators to shift the rules to allow the concept to flourish.

It’s not disconnecting, it’s building a new market

To fully grasp the value of what it’s trying to become, it’s important to understand what the Microgrid isn’t. The idea may conjure up visions of going off-grid and creating a completely independent energy system. That’s not how it’s going to work, at least for the foreseeable future.

Right now, the Microgrid seeks to become a virtual peer-to-peer trading system, set up on blockchain software (the same system that runs Bitcoin). At its outset, special monitors installed in the homes of consumers will track their energy consumption and generation. This data will form the basis of a virtual market that will allow residents to sell energy to each other.

Currently, ConEd, the New York state utility, allows owners of solar panels to “sell” their excess power back to the grid for credits in a process called net metering. It also allows everyday consumers to purchase green power: They pay a slight premium to support remote solar and wind installations. The Microgrid will basically localize these options and allow locals to buy and sell credits on the fly, based on the prices they set (everything will still be sent through existing transmission wires and infrastructure). Eventually, that would mean a Brooklyn Microgrid consumer could pay a premium for local electricity to support a solar installation a block away.

According to Scott Kessler, director of business development, the Microgrid wants to become a platform provider and market maker first, eventually proving to bigger players, such as ConEd, that this concept can work.

Energy technology goes local

The Microgrid is possible because technology has significantly changed the energy equation in recent years, making more decentralization possible. For much of the last century, electricity was centrally produced, distributed, and sold through massive state utilities. Recently, a new generation of products, such as the Tesla Powerwall, has hinted at the possibilities of home energy generation and storage, all while the rate of home solar installation has skyrocketed (a full 95 percent last year alone) and the price of solar power has plummeted. Add in a new generation of internet-of-things connected technology, and homeowners can suddenly generate electric power and monitor their usage much more cheaply and efficiently than ever before.

Governments have also seen the value of local energy generation, both in terms of sustainability and resilience, and a handful of states have begun encouraging production. The Microgrid found a home in Brooklyn because the state is relatively progressive on energy regulations and policy; in 2014, Gov. Andrew Cuomo announced a new program called the Reforming the Energy Vision initiative, which supports microgrid projects. As far as the specific location in Park Slope, the neighborhood has a high concentration of existing solar panel installations and buildings with uniform height.

Kessler says that a local trading market, and, eventually, a true local grid, could potentially make the cost of power even lower and more efficient. Lots of electricity is lost via transmission from distant power plants. When local power generation is connected directly to local users, drawing power from solar cells would be much cheaper. The Microgrid is even set up for community ownership, so the neighborhood would eventually own their own power system.

Monitoring and making a case

Right now, the Microgrid is still in an early testing phase. LO3 has set up special meters in the homes of the 50 prosumers (those who have solar panels) and consumers (those who will use the energy), which record the type of data that would one day be used in a peer-to-peer market. A companion mobile app allows users to manage their purchases, providing the ability to select their energy sources and, eventually, determine how much they’re willing to pay.

The Microgrid has already run small tests to prove the viability of trading between households, but needs a regulatory change to operate the market. Once it obtains the right market status from New York state, it can start facilitating trades between its members.

One of the participants, Daniel Power, a Windsor Place resident who owns PowerHouse Books, a local retailer, purchased solar panels for his home a few years ago to support green power and send his son a message: If you have the means, you should invest, make a statement, and help fund the push toward green power.

He’s excited about the growth and potential of the Microgrid, and has even hosted meetings for the project in his store. One day, Power might even be able to power PowerHouse Books through the energy generated on the roof of his home.

Milton Ross, a retired schoolteacher in Park Slope, installed his solar panels on his brownstone on Park Place in November of 2015. For him, it was about cost savings; the installation cost $27,000 up front, reduced to just $10,000 with rebates and tax credits. Now, he’s able to power his home and then some, and could foresee selling some of his excess power to the Microgrid.

Flipping the switch

Eventually, once the market is in place, the Microgrid has plans to expand locally. Santiago says outreach has already engaged public schools, churches, and local nonprofits, all of which have large rooftops amenable to solar generation. Eventually, the plan is to get a thousand or so consumers with the app in their hands, and meters in their homes, to get a better data set for improving the market.

“We want people to see how we can take the meter off the wall and place it in your hands,” says Santiago.

This project is one of a handful of similar tests of local power generation taking place across the world, in places as diverse as Germany and Bangladesh. But LO3’s vision expands well past Brooklyn. Once this flagship is established, they want to start setting up sites around the world, potentially launching up to 10 in the next year.

While New York and California are moving the fastest in terms of embracing the types of regulatory changes needed to make decentralized energy generation a reality, Europe and Australia are where things are taking off.

More sites means better local response, a key aspect of making the microgrid concept more mainstream. And, as Orsini says, since producing energy is the dirtiest thing we do on the planet, these local solutions can add up to a significant global impact.