Two Brooklyn residents used the Ethereum blockchain today to facilitate a transaction that let one sell energy directly to the other.

The neighbors accomplished the exchange thanks to LO3, a green energy startup working to do to the energy industry what blockchain is already doing to banks.

LO3 co-founder Lawrence Orsini said that the exchange is designed to demonstrate how everyday people can use blockchain to facilitate peer-to-peer exchange.

Orsini told CoinDesk:

“All the projects that we’re working on are squarely focused on the emerging distributed economy, peer to peer concepts. They’re all squarely focused on distributing and decentralizing assets into communities, into people’s hands, the new economy of the future.”

A new kind of partnership

The joint effort called TransActive Grid, struck between between LO3 and decentralized applications startup ConsenSys, allowed Brooklyn resident Eric Frumin to sell excess renewable energy generated from his own solar panels directly to Bob Sauchelli, a former program manager at EnergyStar, a government-backed green energy initiative.

Every unit of energy created by Frumin is being counted and logged on the Ethereum blockchain. Programmable smart contracts are then used to make those units of energy available for sale on the open market. Today, 195 credits were purchased for $0.07 each.

As the power grid is typically set up in his neighborhood Frumin was able to off-set his own energy-consumption with a series of solar panels on his rooftop in Brooklyn. But any excess energy he generated has to be sold back to the power company at a wholesale price.

Sauchelli told CoinDesk:

“With this arrangement, I’m going to pay him the whole premium, it won’t cost me anymore. I’m going to pay him what I’d pay the power company, but he’s going to get the whole premium, not just the wholesale rate.”

This last point was pivotal to Sauchelli’s decision to get involved, he told CoinDesk. While it’s important to him to buy green energy, he said the actual purchase should be as easy as if he were buying from the traditional power company or another green alternative.

Joseph Lubin, co-founder of TransActive Grid and ConsenSys, elaborated further on this point.

“The electric power industry is decentralizing globally due to cheap photovoltaics and raised consumer and regulator consciousness about the efficiency, brittleness and vulnerability of power delivery,” he said. “But still, until now, people have never been able to upload electrons to the grid and sell them to the guy across the street.”

Ready to expand

Currently, environmentally conscious energy consumers can buy what are called Renewable Energy Certificates from for a premium, that are then used to support the creation of green energy elsewhere around the world.

But with TransActive Grid, and another project of the LO3 initiative, Brooklyn Microgrid, that energy — and money — stays local.

“We’ve got five people in Brooklyn that are producing renewable electrons today and putting them on the grid, on a piece of copper that is connected to a house,” Orsini told CoinDesk, who added:

“The odds of those electrons making it to a neighbor are far higher that electrons that are produced in Nebraska. In fact, they’re not going to make it here from Nebraska.”

Image of Transactive Grid box via Michael del Castillo