[p2p-research] P2P Energy Demand/Supply Algorithm and Other Responses // was Re: Update: P2P Social Currency

[marc fawzi]

Continuing the discussion with Emlyn (over at the Open Manufacturing list)
regarding demand/supply management (and market management in general) for
the P2P energy market.

Here is the updated sections from P2P Social
Currency<http://p2pfoundation.net/P2P_Social_Currency_Model>relevant
to P2P energy demand/supply management:

If something jumps at you please let me know. This is an agile process that
maintains order by being open to new information, namely: insights,
comments, questions, disagreements, agreements, etc and last but not least,
any noise that enhances the signal.
P2P Energy Market Management

Abundance without sustainability leads to scarcity.

Sustainable abundance can only come from the whole (from all peers producing
energy) not from one peer or one set of peers producing so much more energy
than everyone else.

Sustainable abundance also requires close matching of demand and supply so
that abundance does not evaporate in times of high demand and does not get
wasted in times of low demand (storage is wasteful and has its own
maintenance and upgrade costs, so it needs to be minimized.)

Below is a simple predictive algorithm for matching demand and supply:
1. Take historical inventory data (after a start-up period) and calculate a
Gaussian distribution with a Mean and Covariance and provide an inventory
level prediction at a set time in the future. 2. Compare the inventory level
prediction to a first Peer Bank-set low inventory threshold. 3. Compare the
inventory level prediction to a second Peer Bank-set high inventory
threshold. 4. Solicit energy replenishment from peers if the predicted level
is below the low inventory threshold, or cancel existing requests if the
predicted level is above than the high inventory threshold. This should
happen without allowing individual producing peers to fill a
disproportionate share of the total replenishment request, and certainly not
repeatedly, i.e. to avoid building a dependency in the market on certain
peers. 5. Record time dependent data related to inventory consumption and
replenishment. 6. Calculate time dependent cumulative-forecast consumption,
cumulative-forecast replenishment, cumulative actual consumption, and
cumulative actual replenishment. 7. Use the new data to update the Gaussian
distribution, Mean and Covariance, and calculate a new predicted inventory
level for the next time period.
Peer Energy Bank

The Peer Energy Bank (or "Peer Bank") is an open, automated, edge-driven
process for orchestrating energy flows between peers, using a dynamic energy
inventory.

Peer Bank can be implemented as a distributed process that is embedded into
the P2P client (see Model's Context.)

It works in the following way:

Under this model, new entrants (new peers) to the community/economy may
import their US or other currency into the economy by investing in their own
local energy production capacity.

At the start of the economy (as a process,) Peer Bank makes a general
request for energy inventory replenishment from all peers, e.g. 1 trillion
Joules (or whatever appropriate starting level for the given
community/economy), and accepts a given quota (i.e. total replenishment
amount/number of peers) from each peer.

Peer Bank builds an inventory of energy by paying the peers using newly
created tokens of energy equivalent in total amount to the amount of energy
in inventory. These "virtual joule tokens" (or tokens for short) have an
absolute value in energy, that does not change, and are redeemable from Peer
Bank in their energy value.

Peer Bank then holds the energy inventory from which is sells energy to
consuming peers (i.e. peers with then-current energy deficit) who pay using
the tokens.

After the initial inventory building cycle, Peer Bank will make periodic
requests for replenishment (see: P2P Energy Market Equilibrium) with on
first come, first taken basis, without a hard quota per peer (as in the
initial inventory building cycle) but must not allow individual producing
peers to fill a disproportionate share of the total replenishment request,
and certainly not repeatedly, i.e. to avoid building a dependency in the
market on certain peers.

Peer Bank uses a demand/supply matching algorithm (see: P2P Energy Market
Equilibrium) that requires a start-up period, during which historical
inventory data is captured to enable dynamic inventory control.

It's important to note that the tokens (currency) are not created from
potential energy stored for use at some undetermined point in future but
from the active short-term inventory that's closely matched to demand, i.e.
immediately usable energy. So when the tokens are created they hold an
absolute value (of actual energy used) rather than a potential value/price
(of potential energy.)

It's also important to note that there is no need to reduce the tokens
(currency) in circulation is not present in this model because the material
basis for the economy is not the potential energy available to the economy,
which can be more abundant than all possible use in the short term, leading
to overflow of currency in circulation beyond what's usable in the short
term, but the land mass (mass = utilization density * volume) encompassed by
the economy, which grows as the population grows, both of which in turn
require more energy and hence the ever increasing need for currency (also
see: Achieving Comparative Economic Advantage and Building Material Wealth.)


Peer Bank is an open, peer-informed, edge-driven process, not a
human-administered central authority. It can be implemented as a distributed
process embedded into the P2P client (see Model's Context) or using whatever
redundant and efficient architecture, but the important thing is that it has
to be efficient.

The "Bank" part of the "Peer Bank" name refers to the storage of energy, not
the currency itself.

p.s.

1) please use this version (above) for any feedback on the inventory
algorithm or peer bank itself.

2) still working on incorporating the other clarifications resulting from
this discussion into the
model<http://p2pfoundation.net/P2P_Social_Currency_Model>

3) Its worth it to join the open manufacturing list... lots of good stuff
there... and high bandwidth action.
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