This article by George Papanikolaou appeared in a special issue of the Greek bi-lingual Re-Public magazine, Issue on P2P Energy, 2009
The same issue has articles by Erik Hunting and myself, as well as many others, and they are consistenly interesting.
“Since the direct production process is the one that defines distribution, the single most important innate advantage of P2P production is that it ensures, on a long term and on a stable basis, a fairer and more equal distribution of wealth. In distributed production, argues George Papanikolaou, the largest part of the energy produced is intended for individual consumption, limiting the field of the market to exchanges of energy. A network that allows, without the mandatory intervention of a third party, the reversal of energy flows between peers, delimitates even more the sphere of the market and the official monetary circulation.”
P2P production and energy production
“In the heart of developed capitalist economies, in the sphere of production of immaterial commodities, we are becoming witnesses of a very deep transformation characterized by the emergence of a new form of production. P2P production (or just peer production) overthrows the established notion of economic thinking that humans tackle their production processes either as employees, following the orders of their superiors, or as individual producers in markets. In P2P production, the production procedures are organized usually from the bottom up, and are based on the free choice of individuals-agents of production, to cooperate -without financial reward being their basic motive- for the accomplishment of common goals or projects and with the aid of distributed networks. Since the product of their labor does not have an exchange value, but a use value for a community of users, it is characterized by the production and distribution of the product of labor outside the market sphere (a post-capitalist form of the organization of production).
If the detachment of the means of production and their accumulation by a class of owners was the necessary condition for the creation of the labour market and the development of relations of capitalist exploitation, the reunion of the means of production with individual producers is the most fundamental condition for the genesis of P2P production. Besides the access to distributed capital, the creation of a directly accessible infrastructure that allows for the voluntary and autonomous (without the need to extort the license of a commissioner) cooperation of the producers. In the sphere of immaterial production, this transformation took place mainly through the reduction of the costs of computers and the development of the internet.
The nature of the current technological infrastructure, which makes the production and distribution of energy possible, does not permit us to talk about P2P production in the same way as in the sphere of immaterial production. Technological restrictions, such as limited diminution in relation to performance, the relatively high costs for the acquisition of energy producing equipment, as well as the presence of a hierarchical distribution network of one–way energy flows from big producers to small or bigger consumers, create barriers. Although the horizon for the transgression of these barriers is starting to become visible, it is not imminent: today, it is necessary to plan and effectuate transitional and applicable solutions. Thus, with contemporary limitations, P2P energy production can be described as the organization of distributed production systems that are interconnected with a network:
– that permits energy flows from many to many, – that is based on the voluntary participation of independent individual producers, households or communities, – who ideally use renewable sources safeguarding this way a long term sustainability and ecological balance.
Distributed energy production is characterized by multiple advantages. From a strategic point of view, it ensures security (the destruction or malfunction of centralised infrastructures paralyses economical activity) but is also more effective in facing the strategic dangers posed by climate change. First, because it creates a geographically distributed backbone of production activity that deters the depopulation of the countryside, and then because it is friendlier to the environment. The distributed architecture creates multiple and geographically dispersed positions of dependent work and self–employment in comparison with the concentrative one. Individual producers and communities of producers adopt a more responsible attitude towards the environment in respect to energy consumption and saving, when they are self-producers and partner managers of their energy sources; it is to their own interest to adopt softer technologies environmentally wise, since they suffer directly by the environmental impacts of their choices.
P2P production can overcome the problem of the absence of social approval for energy investments by local societies, a result of the justified distrust with which the plans of the would-be “green energy squires” are treated. In distributed production the main bulk of energy flows is achieved in the interior of local networks by saving the energy that is lost during transmission and by reducing the needs for investments on upgrading the networks’ capacity. The interconnection of the electrical network with the internet permits the formation of smart local networks, where energy demands can be adapted to production, minimizing thus the needs for storing that ultimately reduce energy performance.
The defenders of the current architecture invoke techno-economic arguments such as the high (today) financial performance of concentrative system of electricity production. In these estimates the real cost is obscured, while the negative impacts on society, on the environment, and on future generations are not counted in and remain “external” to the capital performance. We, therefore, have to invent new indexes that will incorporate the real costs for the society and the environment. For the next years the production of energy will remain an important field of economic activity in the context of the market, so that cost issues will continue to have an incumbent influence on the transition strategies. In the medium term, the two architectures will develop coinstantaneously, repudiating and, at the same time, complementing each other.
The conditions of transition
Although the genesis of relations of P2P production in the spheres of free software and cultural production was a bottom up process and was established through legal forms embracing universal property as the Creative Commons, for example), this was made possible because the fundamental prerequisite of the existence of distributed stable capital was already accomplished, via the use of distributed computational power and of a medium (internet) through which, at a low cost, producers could self-organize. On the contrary, the current cost of technological equipment, technical skills, and the existence, in most cases, of small private properties, make P2P energy production today mainly a business for the middle class. In addition, the current architecture of the electricity network deters a similar “from the bottom up” emergence of P2P energy production. Although the slow, from the bottom up development, cannot be ruled out, it is most likely that it will be a parallel “bottom-up” and “top-down” process.
The principal technologies that will prevail in the transitional era (without exhausting the whole picture) are photovoltaic energy production, wind power, and combined heat and power (CHP). The first two use renewable sources, whereas the latter requires raw material that can be differentiated (oil, natural gas, biomass, etc.). The performance of these technologies is greatly dependent on geo-spacial conditions. Since, the access to renewable sources as well as the spatial distribution of human activity is subject to geographical differentiations, we will have to keep an open mind to any technology or mixtures of technologies that can efficiently utilise local wealth and local social conditions. For example, the cogeneration is more suited to dense urban areas where the installation of wind turbines is practically impossible and the use of photovoltaics impinges on the complexity of administrative barriers, especially when it involves the presence of multiple small properties.
The use of photovoltaics is favoured by appropriate architectural design of isolated houses in areas of long sunshine duration, whereas the wind potential is richer in island areas of the country. It may sound trivial, but it actually isn’t: policies have to allow for the biggest possible freedom of choice to the producers as to what modes of production will be used and what types of institutional form the cooperation will take, whereas central planning might be proven catastrophic. In reality, central planning will have to be limited to the formation of a loose regulatory framework of participation that will mainly aim at safeguarding ecological sustainability. The production potential of individuals and local societies will have to be set free in order to organize -using the inventiveness that characterizes collective participation- local networks of energy production and distribution.
Policy measures like subsidizing the Kwh generation/consumption are simple to implement and might be quite effective in a transition period, helping the quick return on investments; enhancing thus the necessary distribution of stable capital. We ought to be cautious, however, because these types of policies can disproportionally burden the economically weaker, disrupting in this way the necessary political and economical alliances that constitute the middle class. In the cases of medium sized installations that primarily serve the needs of a geographic community, various patterns of cooperation amongst producers can be developed. The creation of stock companies with transferable shares should not be subsidized and the property rights, which will be strictly confined to the inhabitants of the local society, must be universal and non transferable.
The ownership, the management, in a few words the architecture of the relations that the distribution network defines, form the meeting and conflict point of different social interests. It becomes, thus, the central focal point of policy making. Its public (and not necessarily state) character will have to be secured, its absolute independence from governmental and large corporations, as well as the priority of its use by small producers against big ones. Local societies must have the right to install and manage their own networks. The technological equipment of the devices interconnecting producers-consumers should have an open design and operate via open protocol standards communication. This way, the establishment of strategic monopoly control in the operations of the network by the state and by large corporations (similar to the current established standard that controls telecommunication infrastructures) will be prevented and innovation will be able to develop. At the same time, an opportunity for development will be offered to many medium–small businesses of intensive knowledges having small needs for venture capital. The collective participation of the users (producers–consumers) through the open architectures will accelerate the maturation of its services.
Open planning can be supported by the research partnerships of universities, research institutes and private companies. Their research results, at least to the extent that tax payers’ money is used, must necessarily and directly fall under the public sphere in the shape of licenses of non exclusive property. In this way, research results could be diffused directly and little businesses that lack the potential to finance research and development can also utilise them.
The current organization of the network tends towards the establishment of an obligatory intermediary, who will intermediate in all exchanges. As favourable as this deal may seam (mainly due to the temporarily high and guaranteed benefits for Renewable Sources of Energy) the intervention of an obligatory intermediary in energy flows introduces a hierarchical element that poses arbitration risks. The sale prices for small producers will finally have to shaped freely and the consumers themselves should be the direct buyers in a smart, emancipated and P2P informed energy market. Such a network must permit the direct interconnection and negotiation of many among many, a fact that requires a different topology and technology of interconnection than the one imposed today.
P2P production and the political conflicts in the era of “green development”
Technological choices are not socially neutral. The dominant public discourse tends to underestimate this aspect and displaces public dialogue in ostensibly technocratic controversies. Behind energy choices and the arguments their defenders evoke, we must detect the interweaving net of corporation interests, social classes, social groups and expressions of political power. We find ourselves in the middle of a crossroads of renegotiation of almost all of the up to date “constants” of our social and political system, under the weight of a systemic crisis and the unprecedented threat of an ecological disaster. The political powers that aspire to rule in this historical period must prove that they can face and manage, in the name of society as a whole, the problem of sustainable development. In this way, the so-called “green development” will be a common appeal of the entire political spectrum. Its focal point is the architecture of the energy–electricity production process. This is where social and class interests meet and clash and the different strategies unfold.
The first strategy is already being implemented, articulated in a clear manner in president Obama’s neo-Keynesian plan. Corporations supported by state expenditure (taxpayers money that is), will assume the task of restructuring the energy mix towards a more sustainable direction, opening a new market of enormous size, capable, as they hope, of driving the capitalist economy to an orbit of development. It is extremely interesting to observe how the, until recently, free market supporters “make a virtue of necessity”. The main bulk of liquidity will be absorbed by huge business interests that will build “green” infrastructures of energy production, whereas with the introduction of new regulatory frameworks consumers will be required to renew their domestic equipment with smart and environmentally friendly appliances. The poorer citizens will subsidize the restructuring and profitability of business groups, and then they will then obligingly consume their products. The reasonable extension of the project leads to a society divided between monopoly producers who will be accumulating economic and political power and energy serfs–consumers of energy. The USA believes that its superiority in know-how will ensure the continuation of their economic leadership. This ambitious plan attempts to salvage the existing system, conserving, at the same time, the social inequalities it reproduces. Regardless of its final outcome, one cannot write off the positive effects, on an international level: the reinforcement of productive capital against parasitic financial capital, the emergence of sustainable development on the top of international political priorities and the boost to develop new, environmentally friendly technologies. A part of these innovations will enhance the potential for low-scale production, unavoidably promoting the development of distributed production.
Since the direct production process is the one that defines distribution, the single most important innate advantage of P2P production is that it ensures, on a long term and on a stable basis, a fairer and more equal distribution of wealth. In distributed production the largest part of the energy produced is intended for individual consumption, limiting the field of the market to exchanges of energy. A network that allows, without the mandatory intervention of a third party, the reversal of energy flows between peers, delimitates even more the sphere of the market and the official monetary circulation. The quality features of the architecture of P2P production build a new economy of autonomy and solidarity that is developed within the capitalist mode of production. P2P energy production launches a triple redistribution: redistribution from the few and large to the small and many; from the city to the countryside; and from the older to the younger generations. The latter not only because younger people as natural carriers of new technologies will secure more jobs and business opportunities, but also because it raises their environmental shares.
In an unstable historical period, submerged in economic insecurity, the middle class senses the opportunity offered by p2p energy production. By investing in it, the energy safety of households in secured, jobs are created, a steady income is generated, while it is also beneficial to the environment. In any case, it is an attractive refuge for the financial reserve, at least against the alternative of a parasitic financial system, which is under the threat of collapse. Under conditions of economic crunch, the tax payers face with hostility the idea to subsidize -in the name of the environment- the creation of private investments the products of which they will have the obligation to buy afterwards. More so, when they can become producers of this commodity. This condition brings political claims for distributed access to stable capital (means of energy production) much closer than we imagine today.
These tendencies are, for the moment, organized in a fragmentary manner through civil society organizations, and civic movements that are often manifested by their resistance to the political and financial choices of organized corporate interests and of a state that operates under their influence. The inevitable progressive awareness will sharpen the political struggles giving them an increasingly positive object of contention. The success of a fast p2p transformation in energy production would require a “partner state”, as Michel Bauwens calls it, i.e. a transformed state that will move from being a patron of corporate interests to being a supporter and organizer of the networks’ productive activities.
The Greek choice
In the core of tacit transformations and political imbalance, that characterizes the contemporary historical period, lies the sharpening of the basic contrast of the capitalist structure between the social character of production and the individual ownership of the product of labour. The emergence of p2p production sharpens this contrast because it points out a positive, feasible direction of struggle that subjugates both of the traditional poles of industrial society, the Left and the Right. As long as this process remains in the sphere of the political unconscious, the powers of progress will be distributed in the whole of the political spectrum – not in a uniform manner. That is the main reason why political parties are torn by internal conflicts and maintain a fluid ideological identity, creating the impression of being a part of an era of ideological confusion. Accordingly, their policy on energy production is characterized by contradictions. For example, the Right-wing implementation of the bill on photovoltaics that foresaw the possibility of subsidies for medium and large scale investments with a secure –-guaranteed by the state— electricity market for decades, led to the known fiasco that trapped investors in the gears of the party’s corrupt administration. On the other hand, expressing the contradictions of polylectic representation, just before its political demise the Right launched favourable regulations for small scale production.
The new government invoked during the election campaign the notion of “green development”, without clarifying its concrete socio-economic content. Its practical choices will inevitably clarify soon the real character of this proclamation. If they adopt, as a strategic choice, the reinforcement of p2p production and the abatement of large entrenched interests mainly in investments of domestic production of the necessary technological equipment, it will have made an important step that will, in the medium term, bear richer and fairly distributed financial fruit. If it delivers public land and money of the state to big business groups that are preparing for the gold- bearing business of electricity production, its policy will face the risk of being crushed by the emergence of a double movement of the sinking middle class, that will, on one hand, resist these investment plans, and on the other, organise towards a positive political direction.
Whatever policy or policy mix is chosen today, p2p production is the inevitable future of energy production and the sooner societies adopt it the more empowered and prosperous they will be.”