G B Shaw said: The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

Much of the discussion around Smart Grids is ‘reasonable’. It is mostly oriented towards the existing infrastructure, with the assumption that the existing infrastructure will also have an important role to play in future.

This is a ‘reasonable’ perspective, but what if we were to be ‘unreasonable’? And therefore progressive and also disruptive in the words of GB Shaw?

This article explores the role of customers as creators of energy rather than mere consumers. It explores the creation of a ‘cottage’ industry of Peer to Peer energy producers. In such an ecosystem, the standard would be used to connect the peer producers and the consumers. The standard would be the unifying glue to bring together peer producers with the value being abstracted to higher levels of software and services which create the peer trading ecosystem based on small amounts of energy produced by individuals at ‘home’.

The role of customers as energy producers is a use case for Smart Grids, but it is relatively less explored. And for good reasons; it is disruptive, and it does not really benefit the incumbent providers of energy. But even so, Peer to Peer energy production may be an idea whose time has come.

George Papanikolaou explores this idea further and I summarise some of my thoughts on this discussion

a) The current approach to Smart Grids and Green initiatives is ‘top down’. It predicates infrastructure investment first and needs many players to come together especially large producers of energy.

b) While the traditional approach is beneficial, a more long reaching impact can be realised if we were to empower the customers and create a ‘bottom up’ network of cottage (home) energy producers who create and distribute energy within a social network – and not always for commercial gain. The Internet provides us such a network – but it needs a peer to peer social network to create and distribute energy

c) Producers are unified with the ‘means of production’. This means, the need for an intermediary is reduced. The motivations for the peers may be sustainability and other additional ‘soft’ benefits apart from revenue itself.

d) Energy produced by solar, wind and other means could lead to potential population realignment away from the cities if it is found that small producers are economically viable. This is not as far fetched as it first sounds. The Web has a tendency to commoditize content and services since it tends to make prices globally transparent. However, the Internet cannot commoditize physical goods and energy production will always have a commercial value. Thus, a whole class of middle income energy producers could arise if the methods of production and distribution become economically viable.

To conclude,

I have read Peter Drucker’s books for a long time. In his book the Post Capitalist Society, Peter Drucker says that productivity of nations will arise from infrastructure investments and since many people will no longer be involved in producing goods, the knowledge economy could play an increasing part. The vision of Peer to Peer production of energy brings these ideas together by the ‘ultimate; decentralising of production (to the individual) and by also adding a knowledge component in empowering the individual.

However, the promised benefits of this vision cannot be realised unless we have standards that foster the connectivity and the ecosystem to make Peer to Peer energy production economically viable.

Comments welcome. Happy holidays!