A manifesto on Peer-to-Peer energy production

This essay, written in a manifesto form, addresses some crucial issues related to the timely topic of the distributed or Peer-to-Peer (P2P) energy production. It uses the emerging mode of the P2P production in the immaterial field of production (information, culture, knowledge) as a point of departure to realize the dynamics of this new energy technology and shed light on its socio-economic aspects.

Source: Papanikolaou, G., and Kostakis, V. (2011) “An Essay on P2P Energy Policy”, in Acoustic Space No. 8: ENERGY, Ed. by Smite, R., Medosch, A., Mey, K., Smits, R., Riga: RIXC; Liepaja: LiepU MPLab, 26-30.

Excerpts from this first article is followed up by a reportage on municipal initiatives in the U.S.

1. An essay on P2P Energy Policy

George Papanikolaou and Vasilis Kostakis:

A radical change in the organization of information production has been observed during last decades. Two parallel shifts have taken place: the most economically advanced societies are moving towards an information based economy while the declining costs of ICT (Information and Communication Technologies) made them available to a much wider fraction of world population. This led to the creation of a new interconnected environment in which a new social productive and exchange model is emerging that is radically different from the industrial one (Benkler, 2006): we are becoming witnesses of the emergence of P2P production (or just peer production).

P2P production is a third mode of production that has been enabled through internet-based coordination, where decisions arise from the free engagement and cooperation of the people, who coalesce to create common value, without the traditional hierarchical organization (Bauwens, 2005; Benkler, 2006). The online free encyclopaedia Wikipedia; and the thousands applications of FLOSS, i.e. Free/Libre/Open Source Software, are very few examples of the legion of the ongoing P2P production projects. This new paradigm has also been called produsage (Bruns, 2008), almost synonym to what we call P2P production, where produsers (producers + users) simultaneously innovate, produce, distribute and consume, premised on an ethos of sharing, communication and collaboration. The hybrid role of produser represents the merging of producer and consumer roles, as the produser is actively involved in the collaborative and constant development of existing content in pursuit of further improvement (Bruns, 2008).

In P2P production, the productive processes are organized with the aid of distributed networks, from the bottom-up, and are based on the free choice of individuals to cooperate – without financial reward being their basic motive – for the accomplishment of common goals or projects.

If the detachment of the means of production and their accumulation by a class of owners was the necessary condition for the development of the capitalist relations, the reunion of the means of production with producers is the most fundamental condition for the genesis of P2P production. Further, the access to distributed capital leads to the creation of a directly accessible infrastructure that allows for the voluntary and autonomous cooperation of individuals giving rise to the concept of produser.

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 or produsage 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; and the presence of a hierarchical distribution network of one–way energy flows from big producers to small or bigger consumers, create considerable 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.

Hence, P2P energy production can be described as the organization of distributed production systems that are interconnected with a network, which permits energy flows from many to many. It is based on the voluntary participation of individual producers, who ideally use renewable sources safeguarding this way a long term sustainability and ecological balance.

P2P energy production is characterized by multiple advantages: it ensures security (the destruction or malfunction of centralised infrastructures paralyses economical activity) and it is also more effective in facing the strategic dangers posed by climate change. Firstly, 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. 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 P2P 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.

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 (the Creative Commons or the General Public Licenses, 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, produsers 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-spatial 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 utilize 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 favored 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.

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 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 knowledge having small needs for venture capital. The collective participation of the producers 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 utilize them.

The current organization of the network tends towards the establishment of an obligatory intermediary, who will intermediate in all exchanges. As favorable as this deal may seam, 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 shape 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.

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.

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 P2P energy 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, and 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”, 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.

2. Transitioning to renewables on the city level

Frances Beinecke writes:

“While on the national level, America looks unwilling to come to terms either with its addiction to oil or with the need to address global warming, locally, towns are taking on sustainability issues whether through programs such as New York City’s PlaNYC, signing on to the U.S. Mayors’ Climate Protection Agreement, or by tapping the know-how of their citizens in other ways. One such grassroots movement that travels under the “Transition Town” banner is spreading fast across the U.S., UK, and elsewhere with a strikingly practical and optimistic approach to sustainability.”

For more, see here.

Brendan Smith has a similar article in the Huffington Post, with two examples of green municipal utility cooperatives, of which we reproduce one here:

“In western Kansas, rural communities, farms, and businesses get their electricity from Midwest Energy, the electric co-op based in Hays, Kansas. The co-op has pioneered an energy conservation strategy known as “on-bill financing.” It has developed a program called How$mart that provides money for energy efficiency improvements such as insulation, air sealing, and new heating and cooling systems for residential and small business consumers. Co-op members — whether owners or tenants — don’t have to put up any money “up-front.” Instead, they repay the funds through energy savings on their monthly power bills.

Members start with an energy audit to determine potential savings. The co-op develops an individualized conservation plan. Members choose a contractor. If the member moves or sells the property, the deal passes to the next customer at that location.

The program started with a pilot in four rural counties in the summer of 2008; it then spread through rural Western Kansas. A year later it had invested $1 million in more than two hundred rural homes and businesses. It is estimated that customers will save over 400,000 kilowatt-hours per year, enough to power forty homes. That will put 13,000 fewer tons of carbon dioxide into the environment over the next twenty years. The Environmental Defense Fund recently recognized How$mart as one of America’s best energy innovations.”

3. Commentary by Poor Richard:

“In the US, much of the electric grid is municipally owned, community owned (as in “rural electric co-operatives”), publicly licensed, and/or runs over public rights of way. This provides a great deal of public-interest policy leverage over the existing grid.

In the US, I believe the single most important policy for promoting p2p energy is already in place in many areas–that is “net metering” or “reverse metering”. Net metering allows any peer producer to put surplus energy onto the grid. In many cases such locally peer-produced energy, reverse-metered onto the grid, is credited at a subsidized rate above the normal consumer rate for electricity.

Such net metering policies need to be extended everywhere throughout the US.

Meanwhile, in areas where net metering is already in place, I propose that an additional policy initiative be attempted. This would entail allowing each peer-producer and consumer the option to negotiate rates among themselves. Some peer-producers might charge rates higher than the “retail” consumer rate. In this case such producers would operate much like existing “green power” producers. In other cases producers might sell their surplus to preferred consumers (say family-related households or eco-village neighbors) at a discounted rate. Such a practice could be implemented over the existing grid with little more administrative effort than existing “green power” programs require.

As parts of the existing grid are gradually updated and upgraded, it should be possible to build in direct p2p balancing, metering, and billing capability so that no institutional “middleman” is required for adding or withdrawing amounts of energy that are below some threshold adequate to prevent outages or overloads. “

6 Comments A manifesto on Peer-to-Peer energy production

  1. AvatarPoor Richard

    I’d like to add that in the US, gas, electricity, water and telephone service were originally brought to most rural areas by local cooperatives. A Wikipedia page on “Utility Cooperatives” states:

    “Each customer is a member and owner of the business with an equal say as every other member of the cooperative, unlike investor-owned utilities where the amount of say is governed by the number of shares held.

    Many such cooperatives exist in the rural United States, and were created by the New Deal [2] to bring electric power and telephone service to rural areas, when the nearest investor-owned utility would not provide service, believing there would be insufficient revenue to justify the capital expenditures required.”

    Many, if not most, of the community based electric cooperatives now offer members additional services such as energy audits and financing of conservation measures.

    Another successful program in the US is the The Tennessee Valley Authority (TVA). Wikipedia says:

    “The Tennessee Valley Authority (TVA) is a federally owned corporation in the United States created by congressional charter in May 1933 to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee Valley, a region particularly affected by the Great Depression… TVA was envisioned not only as a provider, but also as a regional economic development agency that would use federal experts and electricity to rapidly modernize the region’s economy and society.”

    The TVA has a small “Green Power Switch” program that encourages green energy production within its service area(most of Tennessee, parts of Alabama, Mississippi, and Kentucky, and small slices of Georgia, North Carolina, and Virginia). In many cases net-metering pays the green power producers more than the retail rate for the electricity they produce, and green power consumers also pay a small premium. Some examples of small, local producers of solar power participating in TVA’s Green Power Switch program include:

    Lovers Lane soccer complex, Bowling Green, Kentucky (36 kW capacity)
    Finley Stadium, Chattanooga, Tennessee (85 kW)
    Gibson County High School, Dyer, Tennessee (18 kW)
    Florence, Alabama water treatment facility (30 kW)
    Sci-Quest science museum, Huntsville, Alabama (27 kW)
    Ijams Nature Center, Knoxville, Tennessee (15 kW)
    Bridges Center, Memphis, Tennessee (25 kW)
    Adventure Science Center, Nashville, Tennessee (27 kW)
    Cocke County High School, Newport, Tennessee (9 kW)
    American Museum of Science and Energy, Oak Ridge, Tennessee (15 kW)
    Oak Ridge National Laboratory, Oak Ridge, Tennessee (7 kW)
    University of Mississippi, University, Mississippi (30 kW)
    Dollywood in Pigeon Forge, Tennessee (two 18 kW facilities)
    Duffield-Pattonsville Elementary School, Scott County, Virginia (9 kW)
    Mississippi State University, Mississippi State, Mississippi (15 kW)

    “The TVA was controversial in the 1930s. Historian Thomas McCraw concludes (1971 p 157) that Roosevelt “rescued the [power] industry from its own abuses” but “he might have done this much with a great deal less agitation and ill will.” New Dealers hoped to build numerous other TVAs around the country but were defeated by Wendell Willkie and the Conservative coalition in Congress.” (Wikipedia)

    Although the TVA has been largely diverted from its original New Deal aspirations and coopted by conservative influences (as usual), there is little doubt that it greatly accelerated the provision of electricity and water to its predominantly rural service area, promoted rapid economic development, and improved the standard of living of millions.


  2. Pingback: Más allá de las smart grids: producción distribuida (p2p) de energía - Ecoperiodico

  3. AvatarStefanMz

    @Poor Richard:

    In many cases net-metering pays the green power producers more than the retail rate for the electricity they produce, and green power consumers also pay a small premium.

    Does this mean, that green power consumers pay the difference the producers get more, or do all consumers pay the difference — or how else does the subvention for the producers work? By law? By contract?

    How does it work practically? Do the producers have two meters (one for production and one for consumption)? Or do they use reverse-metering with one intelligent meter?

  4. AvatarPoor Richard


    Good questions. The short answer is, I don’t really know.

    I have several “unverified assumptions” that I have gathered from various things I’ve heard and read. On the basis of those assumptions I opted in to paying a “Green Power Switch” surcharge on my Huntsville Utilities monthly bill. But I wouldn’t be surprised if some or all of my assumptions were wrong.

    If I wanted to get real facts I would go to one or more of the green power producers I listed above, rather than to TVA or local utility PR offices.

    One of my assumptions is that the surcharge I pay goes to various incentives to the green producers in the program. It could be going down some bureaucratic rat hole instead, for all I know.

    I have heard that producers use a smart meter that runs both ways, but I haven’t verified this. It may vary from one utility district to another. The “Green Power Switch” is a TVA program that local utilities like mine can opt into.

    Again, if I or anyone else wanted to know more the best source of information would probably be the nearest participating producer(s).


  5. AvatarPoor Richard

    “…based on the free choice of individuals to cooperate – without financial reward being their basic motive – for the accomplishment of common goals or projects”

    What difference does the “basic motive” make?

  6. Avatarmirco

    accumulators is the base of a new kind of grid, this accumulators on a smartgrid, have to be positioning near the platform roof…where is usefull for a fast recharge of urban auto-buses, done into the 15 second when the people go up-down the veichle…

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