From the Danish policy report: A Whole Systems Framework for Sustainable Production and Consumption
"Centralized infrastructure such as power stations often require extremely large capital investments and many years to build. In many cases these same services can be provided via a mixture of demand-reducing end-use efficiency (such as insulation and efficient appliances) and local, small-scale resource provisioning (for example, solar panels). The resulting avoided cost represents a crucial but widely unrecognized source of capital, particularly for the developing world.
As an example, the manufacture of end-use, energy-saving technologies such as compact-florescent lamps (CFL) or super-efficient windows takes around a thousand times less capital than expanding the electricity supply.
Furthermore, capital from demand reduction is returned ten times faster than it would be for building new electrical infrastructure. Combined with the lower capital requirements, a CFL plant is 10,000 times more efficient than expanded infrastructure.
By reducing demand, power stations and other forms of infrastructure can be built smaller, closer to the end-user, or eliminated entirely. Shifting to a demand-reduction model can provide people with services they want and need in a manner that consumes fewer resources, is flexible and sustainable, and costs less. Historically, providing power and water to large and rapidly growing populations often necessitates huge development projects. These can be expensive, requiring money from multinational lending institutions; can generate tremendous environmental damage and displacement of people; can under-perform expectations; and, by the nature of their size, are inflexible to changes in demand. While the generation of much-needed jobs is often an attractive feature of such projects, in the long run they may be less sustainable than smaller, more efficient, flexible, and regionally appropriate modes of delivering the same services.
Two terms, “decentralized” and “distributed,” are used (roughly) interchangeably to describe this form of infrastructure. The case for distributed electricity infrastructure is exhaustively demonstrated in Small Is Profitable by A.B. Lovins, et al.
Decentralized infrastructure in developed countries
Developed countries can also leverage the benefits of distributed generation as a flexible, cost-effective alternative to replacing aging, centralized energy infrastructures. By reducing overall energy consumption, and thus reducing demand at "the end of the pipe" the distributed generation system mitigates the need to build new energy capacity. In situations that demand a reliable, uninterrupted supply of energy or water, such as data centers or hospitals, decentralizing and distributing the source of both improves source security, reduces the chance of interruption, and allows for better control over locally appropriate efficiency measures.
Samer Hassan / P2P Models:
"The first wave of decentralized solutions has been through federated technology, i.e. multiple central nodes communicating with each other (center, in the figure), where users are free to choose the node to interact with. E-mail is a classic example of open protocol, together with more recent XMPP for chatting, OStatus for microblogging, OAuth for authentication, or SwellRT for real-time collaboration.
The second wave of decentralized solutions has been achieved through fully distributed technology, i.e. P2P networks without classical servers (right, in the figure) but instead ordinary computers (different from classical cluster/grid parallel computing). There have been multiple attempts to offer P2P web services, such as Freenet for censorship-resistant communication, but most of the work and success has been undertaken in the file-sharing, e.g. eDonkey, BitTorrent. The recent appearance of groundbreaking IPFS to store and share files is already being explored as complement of the next wave.
The third wave of decentralized solutions are a new approach towards the distributed/P2P technology explained above, which started with the advent of the first decentralized digital currency, Bitcoin. Despite the wide spectrum of legitimate critics that Bitcoin has received its disruptive effect has been widely recognized. Today, hundreds of new cryptocurrencies (“altcoins”) are arising, each with their own distinctive features. The underlying technology of Bitcoin is the blockchain, the decentralized cryptographic ledger where transactions are recorded. The blockchain has meant a paradigm shift for the implementation of decentralized systems which are trustless, i.e. do not depend on the trust to a central authority. It is a distributed database that maintains a growing list of tamper-proof records (called blocks”). This shared data structure, with its associated protocols, enables distributed identity management, record-keeping of transactions, and distributed computing. It maintains multiple advantages of the cloud (online web services, externalized computing, shared resources) without the drawbacks of central servers maintenance or trust on a provider. This has enabled blockchain-based decentralized solutions for other purposes, e.g. Dropbox-like cloud storage (Storj), domain name management (Namecoin), social networking (Synereo), and a music platform (Ujo). Over the past 3 years, $1.4 billion have been invested in blockchain technology and players like IBM, Samsung, Microsoft, and Deloitte are entering the space." (https://docs.google.com/document/d/1S8yKtUxyPV4OZAACe3JCwCmTN9sarr7g4V4IMSoELhc/edit#)
Decentralized Infrastructure Housing
Housing construction often requires six different kinds of centralized infrastructure (potable water, wastewater treatment, stormwater management, electricity, gas, and communications) before construction can start. These costs are often externalized; that is, they are not included in the prices of the residences. In contrast, Decentralized Infrastructure Housing (DIH) provides all of these essential services, using such features as energy efficiency, photovoltaic generation, composting toilets, and a raft of other emerging sustainable technologies.
Because Decentralized Infrastructure Housing actually looks very different from conventional housing, adoption is problematic—despite the fact that actual quality of life for residents may be higher and total-systems development costs significantly lower.
Likewise, large, centralized development projects that supply energy and water often represent an enormous sunk capital cost that makes energy and water cheap to the end-user. In such cases, incentives to reduce energy consumption may be extremely low for government, utilities, and the individual citizen. Intervention, then, must happen at both the building level, and at the level of planning how infrastructure services are provided in the first place." (http://files.howtolivewiki.com/A%20Whole%20Systems%20Framework%20for%20Sustainable%20Production%20and%20Consumption.pdf)