Ontario Utilities and the Smart Grid
Transcription
Ontario Utilities and the Smart Grid
MaRS Market Insights Ontario Utilities and the Smart Grid: Is there room for innovation? 01 Content Lead and Market Analyst: Jesika Briones, MaRS Market Intelligence Authors: Jesika Briones and Nicolette Blase Acknowledgements: Some participants in our research chose not to be identified by name in this report. We thank them for their support of this project, and we also thank the following individuals and organizations for their participation: Dan Guatto, Burlington Hydro Inc. David Curtis, Hydro One Networks Doug Bond, Hydro One Brampton Networks Inc. Jim Buter, Horizon Utilities Corporation John Mulrooney, PowerStream Inc. Matthew Weninger, Guelph Hydro Electric Systems Inc. Michael Angemeer, Veridian Connections Inc. Norm Fraser, Hydro Ottawa Limited Steven Scott, Enersource Corporation Sushma Narisetty-Gupta, Toronto Hydro-Electric System Limited Disclaimer: The information provided in this report is presented in summary form, is general in nature, current only as of the date of publication and is provided for informational purposes only. Specific advice should be sought from a qualified legal or other appropriate professional. MaRS Discovery District, ©January 2012 02 Table of Contents Introduction / 04 The world stage: Who’s who in smart grid development / 05 Assessing utilities / 05 Assessing technologies / 06 Ontario: A snapshot of 10 utilities and their smart grid activity / 07 Burlington Hydro Inc. / 07 Enersource Corporation / 08 Guelph Hydro Electric Systems Inc. / 09 Hydro One Brampton Networks Inc. / 10 Hydro One Networks / 11 Hydro Ottawa Limited / 13 PowerStream Inc. / 14 Toronto Hydro-Electric System Limited / 16 Veridian Connections Inc. / 18 Horizon Utilities Corporation / 19 The role of the regulator / 20 Background / 20 Smart regulations / 20 The broader context / 21 Conclusion / 22 Endnotes / 23 03 Introduction Although much has been said about the consumerization of the smart grid, Ontario entrepreneurs can still benefit from more insight into the specific technology needs of utilities so they can be alert to potential business opportunities. There is a misperception that only regulators and system operators have full access to details about the utilities’ infrastructure and about the activities they are undertaking to modernize the grid. However, this information is available to entrepreneurs and other stakeholders—the question is knowing where to conduct research. With improved knowledge of what projects interest utilities, Ontario startups will be better positioned to develop their products and enter the market. The purpose of this report is to summarize where utilities’ smart grid policies and technologies now stand and where they are heading. It highlights the global frontrunners in the race toward the smart grid, and outlines how industry stakeholders (regulators, policy-makers, utilities, vendors, academics and customers) can assess which utilities and technologies are considered as the “smartest.” The role of the Ontario regulator is discussed in view of smart grid implementation, as are the policy-setting objectives and challenges it currently faces. This report takes an up-close look at 10 of Ontario’s utilities, examining their characteristics and the innovative projects they are undertaking. To contextualize Ontario’s overall progress, the report also looks at innovative regulation in the international market. 04 The world stage: Who’s who in smart grid development Countries the world over are embracing the smart grid. By using technology that enables communication between the electrical grid and the appliances that use energy, smart grids create a more efficient flow and consumption of electricity, and can be designed to integrate renewable energy into the system. Energy providers embrace the smart grid, which reduces operating costs and waste, helps providers better anticipate and distribute power, and enables them to better meet growing demand. Consumers benefit from the smart grid too, because it gives them the opportunity to better manage their consumption and costs. business and home (save condos and multi-unit buildings) with a smart meter. This landmark step makes possible time-ofuse (TOU) rates which better reflect true market prices and the variable costs of power generation based on supply and demand. As of September 30, 2010, the process of smart meter installation was 94% complete, with over 4.3 million meters in place. By the end of 2010, Ontario utilities had moved approximately 1.6 million customers to TOU billing and were working to implement this system for all customers.3, 4 As shown in Figure 1, China is at the forefront of the global advance, having earmarked $7.32 billion in 2010 for investment in smart grid infrastructure. The US follows next, with investment set at $7.09 billion, and Japan and South Korea are in the third and fourth positions. Spain led Europe in 2010 with an investment of $807 million, putting it fifth overall in the world.1 Deployment is easier said than done, however. Here in Ontario, the Smart Grid Working Group (SGWG) of the Ontario Energy Board (OEB) recognizes that inconsistency among local distribution companies’ interpretations of the smart grid makes collaboration difficult. As indicated by the summary of its meeting of March 1, 2010, each utility has a different level of technical maturity.5 Figure 1: Top 10 countries for smart grid investment, 2010 Assessing utilities The lack of unity of vision for the smart grid makes both collaboration and implementation difficult. To counter this, many tools have been developed by academic and private organizations to guide utilities in their implementation of new technologies. One such tool is the Smart Grid Maturity Model (SGMM), developed in 2009 by the Software Engineering Institute at Carnegie Mellon University. As shown in Figure 2, this model ranks smart grid implementation at five different levels. Figure 2: Smart Grid Maturity Model (SGMM): Levels, descriptions and results Source: General Electric Company. (2010, November 9). Top 10 countries for smart grid investment. http://www.gereports.com/top-10-countries-for-smartgrid-investment/ These frontrunner positions, however, are set to change in the next few years. India is ramping up its deployment of smart meters and expects to have approximately 130 million operating by 2021, which will catapult it to third place worldwide in the implementation of smart grid technology.2 It is worth noting that while some of the countries above are still working to deploy smart meters, Ontario has already invested $1 billion in smart meter infrastructure. According to the Ontario Smart Grid Forum Report of May 2011, the province is the first jurisdiction in North America to equip every small Source: Software Engineering Institute. (2009). An overview of the smart grid maturity model (SGMM). A 2011 report on the SGMM showed that this assessment model has an international draw, with 60% of participating utilities located in the US, 16% in the Asia-Pacific region, 11% in Europe and the Middle East, and 13% elsewhere in the world. 05 The most recent maturity model suggests that utilities that have taken the SGMM Compass survey (a self-assessment tool) more than once are making progress in their efforts to modernize the grid. Overall, this study shows that utilities are just beginning to implement smart grid technologies, with average maturity levels concentrated at Level 1 (Figure 3). Figure 3: Average and range of maturity scores for all SGMM Compass survey responses The authors suggest that utilities aiming to boost their intelligence quotients should concentrate their efforts in these three areas: 7 i. Drive company cultural change (i.e., ensure that employees understand the company’s strategies and goals, and why they matter) ii. Improve “lean” and “green” processes (to reduce costs, making way for innovation and growth) iii. Spend wisely on technology investments (to meet strategic goals and abide by regulatory frameworks while still delivering customer value) Figure 4: UtiliQ ranking breakdown: 2010 Source: http://www.nxtbook.com/nxtbooks/energycentral/iu_20100708/ index.php?startid=10#/12 Assessing technologies Source: Software Engineering Institute. (2011). Smart grid maturity model update, 2011. What makes a utility intelligent? Intelligent Utility magazine teamed up with IDC Energy Insights in 2009 to develop an assessment tool that takes a different measurement approach than the SGMM Compass. Called the UtiliQ, it ranks the top 25 US “intelligent” electric utilities. They define “intelligent companies” as those that “apply information to energy, maximizing [their] reliability, affordability and sustainability from generation to end users.” Beyond technology investments, they also recognize investments in people and processes. One of the goals of this ranking system is to help utilities “benchmark their intelligence and measure progress against their stated goals and objectives.” In 2010, five specific criteria, called “intelligence metrics,” were used to gauge utilities’ performance:6 • • • • • Productivity Renewable energy Smart initiatives Demand response/energy efficiency IT investment Using these intelligence metrics, UtiliQ assigns a performance score and then puts these numbers together to arrive at a “utility intelligence quotient.” Figure 4 shows a sample breakdown of the UtiliQ ranking. While it is important to track and recognize how utilities are progressing in the smart grid landscape, it is also critical to monitor the growth of the underlying technologies, i.e., the wide range of hardware, software, application and communications technologies that produce the smart grid. Right now, these are at different levels of maturity and are advancing at varying rates. Some technologies are proven, while others have yet to be demonstrated or deployed on a major scale. An International Energy Agency report notes that projects around the world are focused on smart grid technologies, and it advocates a coordinated, integrated approach to maximize investment and to leverage the lessons learned from demonstration or deployment projects.8 Figure 5 highlights a sample of smart grid technology areas and contrasts their maturity levels and current development trends. Figure 5: Smart grid technologies: Maturity levels and development trends Source: International Energy Agency. (2011). Technology roadmap: Smart grids. 06 Ontario: A snapshot of 10 utilities and their smart grid activity The profiles below feature 10 of Ontario’s utilities, highlighting their characteristics and the innovative projects in which they are engaged. Burlington Hydro Inc. www.burlingtonhydro.com Address 1340 Brant Street, Burlington, ON L7R 3Z2 Company description Energy services company in the power distribution business Communities served City of Burlington, Ontario Number of clients 65,000 residential and commercial customers Assets Burlington Hydro maintains 32 substations and almost 1,600 km of medium-voltage distribution lines to deliver electricity. Company ownership The company is wholly owned by the City of Burlington. Utility’s definition “It’s a shift in the way we conceptualize energy and the way we use energy. of smart grid As a utility, we used to have a system where energy would flow one way—now we are moving to a system when energy will flow many ways. The smart grid has to enable us to deal with elements on the grid that were never there before, such as advanced switching (an element of self-healing), energy storage and meeting the changing needs of customers (i.e., with enhanced reliability systems).” Innovative projects • Pure Electric Project: Using an all-electric vehicle, this project will study the operating characteristics of an all-electric fleet vehicle in practical, real-world working conditions. • The Power to Conserve: This initiative promotes community-wide conservation programs for consumers. • Distribution Automation: Using innovative S&C Electric technology, a “self-healing grid” has been created in the heart of Burlington to protect the city’s most mission-critical assets from outages. • Smart Meter Deployment: This initiative is to help consumers learn more about smart grids, timedifferentiated prices and in-home energy management tools. • Building GridSmartCity™: This program explores major elements of the smart grid and their interaction to advocate for investments that best represent the interest of customers. Working with Pure Electric Vehicle Demonstration academia University of Waterloo The University of Waterloo is a key research partner in the Pure Electric Vehicle Demonstration and will develop assessment and management tools to help integrate plug-in hybrid electric vehicles (PHEVs) into the electricity grid. It will also monitor the performance of both the vehicle and the grid and submit study results and recommendations for future projects. McMaster University As part of its extensive involvement with the Pure Electric Vehicle Demonstration, McMaster University will have its engineering faculty research charging stations and their impact on utility operating systems. As well, its science faculty will probe the psychology of how customers interact with electric vehicles, and the DeGroote School of Business will examine relevant economic and market dynamics. What is unique a) GridSmartCity™: This project works with an innovative electric vehicle (EV) to explore major elements about this utility of the smart grid and their interactions simultaneously. This will allow Burlington Hydro and its GridSmartCity™ partners to acquire key insights into smart grid-related initiatives to advocate for investments that best represent customers’ interests. According to Burlington Hydro, this is the first time so many commercial and utility partners have assembled around such an effort. b) This utility recognizes the value of energy storage to increase grid reliability. Opportunities for GridSmartCity™ is a model forum for enhanced collaboration between local distribution companies, major entrepreneurs customers, suppliers and other energy-focused organizations. 07 Enersource Corporation www.enersource.com Address 3240 Mavis Road, Mississauga, ON L5C 3K1 Company description Energy services company in the electricity distribution business Communities served Mississauga, Ontario Number of clients 200,000 residential and commercial customers Assets Enersource’s electrical system spans more than 5,000 km. It operates 65 municipal substations and more than 25,000 distribution transformers. Company ownership The City of Mississauga owns 90% of Enersource, and BPC Energy Corporation (Borealis), which is part of the Ontario Municipal Employees Retirement System, owns 10%. Utility’s definition For Enersource, the smart grid means utilizing the distribution system to its utmost so that people can of smart grid work and live in their community at the lowest cost possible. Innovative projects • Integrated-operating model (IOM): This is a system implemented through a company called Intergraph. The system offers control-room operators a single interface to monitor and respond to a vast volume of data coming in from different points of the smart grid. An outage notification in a meter is connected to the IOM system, which allows operators and field crews quick detection and accurate information to remedy any problems. • Customer communication: Using social media, Enersource keeps customers aware of the status of outages and other energy-related news. Enersource has also upgraded its customer care and billing system. Working with Discussions with the Waterloo Institute for Sustainable Energy (WISE) are ongoing, concerning academia opportunities for asset management and research. Enersource, recognizing that academic research and testing can lead to practical and innovative solutions, welcomes academic partnerships. What is unique The company is dedicated to cost-effective solutions. Before it decides whether to implement a new about this utility technology, Enersource performs a diligent analysis based on a systematic asset (i.e., hard infrastructure) management process. Opportunities for Enersource assigns a lower priority to experimenting with its infrastructure than to concentrating on its entrepreneurs customer interface and on innovative ways to connect with customers. This connection now happens chiefly through the company’s conservation programs. It is looking for new ideas and pilot programs pertaining to elements of the customer interface (e.g., in-home displays, social media, billing systems), as well as to energy efficiency. 08 Guelph Hydro Electric Systems Inc. www.guelphhydro.com Address 395 Southgate Drive, Guelph, ON N1G 4Y1 Company description Energy services company in the power distribution business Communities served City of Guelph and the Village of Rockwood Number of clients 50,000 homes and businesses Assets • Size of service area (Guelph and Rockwood): 93 km2 • Total overhead lines: 429 km • Total underground cable: 620 km Company ownership Municipally-owned Utility’s definition “An automated, widely-distributed energy delivery network, characterized by a two-way flow of of smart grid electricity and information, which will be capable of monitoring everything from power plants to customer preferences to individual appliances. It incorporates the benefits of distributed computing and communications to deliver real-time information and enable the near-instantaneous balance of supply and demand at the device level.” Innovative projects • Renewable generator connection upgrades: Guelph Hydro anticipates the majority of renewable energy connection requests will pertain to solar projects (rather than biogas or wind). While its distribution network is designed to accept an influx of renewable energy generation, the utility foresees expanding the system to accommodate future needs. • Geographic Information System (GIS) software developed by Guelph Hydro has earned industry recognition and has been licensed for use by 15 other Ontario utilities. The software links customer information with the location of electricity network infrastructure, global positioning of service vehicles and staff, and weather information (such as lightning strikes), enabling the efficient dispatch of repair crews in the event of an outage, as well as remote access to work orders and site information for field crews. • Green Energy Act (GEA) Plan projects: Guelph Hydro has proposed a number of innovative projects as part of its GEA Plan, which is currently under review by the Ontario Energy Board. Projects include: · In-Home Display Messaging Project · Electric Vehicle Charging Station Project · Smart Grid High School Education Project · Smart Grid-Smart Home Demonstration Project Guelph Hydro expects to receive notification regarding the status of its GEA Plan and these potential projects in early 2012. • ZigBee®-enabled smart meters: As part of its smart meter rollout, Guelph Hydro has incorporated an innovative, secondary communications chip (ZigBee®) in all of its smart meters, which will advance customer education, energy conservation and home automation opportunities. Working with Guelph Hydro has worked with the University of Guelph and Ontario Centres of Excellence on projects in academia the past, and further collaboration with these entities and others on GEA Plan projects is a possibility. What is unique In 2011, the Ontario Energy Association named Guelph Hydro as “Large Company of the Year” for about this utility excelling in a number of areas, including leadership in the field of sustainability. Guelph Hydro is unique for its deployment of ZigBee® chip-enabled smart meters throughout its service territory, for the recognition of its leadership in GIS technology, and for being among the first utilities in Ontario to conduct an electric vehicle survey of customers. Its distribution network is relatively modern, allowing it to better accommodate such projects as electric vehicle charging or implementing sophisticated system modelling and planning tools. Opportunities for Collaboration with entrepreneurs on proposed GEA Plan projects is a possibility for Guelph Hydro. entrepreneurs 09 Hydro One Brampton Networks Inc. www.hydroonebrampton.com Address 175 Sandalwood Parkway West, Brampton, ON L7A 1E8 Company description Energy services company in the power distribution business Communities served City of Brampton Number of clients 137,000 homes and businesses Assets Hydro One Brampton delivers electricity to its customers through 2,231 km of overhead primary distribution lines using some 13,500 pole structures, as well as 2,926 km of underground primary cables. The primary voltage is stepped down to utilization voltages through approximately 15,600 transformers owned by local distribution companies (LDCs). Company ownership Hydro One Brampton Networks is a subsidiary of Hydro One Inc. and is part of the Hydro One family of companies. Utility’s definition For Hydro One Brampton, the smart grid means connectivity of devices with customers. of smart grid Innovative projects Smart meter integration: Once the smart meter infrastructure is implemented, there may be an opportunity to process power outages into the Outage Management System (OMS). Many smart metering systems can provide a “last gasp” notification when power is lost at individual meter locations. These notifications are then processed into the OMS system, automatically alerting the control centre of the outage in less time than would a phoned-in report from a customer. The InService OMS is designed to handle outage information from this source; however, an additional interface is required to communicate between the smart meter network and the OMS system. The estimated timeframe for completion of this project is 2013. Working with Hydro One Brampton is not working with any academic partners. academia What is unique All of Hydro One Brampton’s business applications are custom-developed using the programming about this utility language, RPGIV, and Computer Associates Cool/2E 4GL. Opportunities for The utility needs a data storage system to hold all the smart meter data it has collected, and needs entrepreneurs software to properly analyze it. 10 Hydro One Networks www.hydroone.com Address 483 Bay Street, North Tower, 15th Floor Reception, Toronto, ON M5G 2P5 Company description Hydro One is the largest electricity transmission and distribution company in Ontario. Communities served Hydro One’s transmission system is one of the largest in North America and is linked to five adjoining jurisdictions through 26 interconnections. Its distribution system is the largest in Ontario and spans roughly 75% of the province. It also operates small, regulated generation and distribution systems in a number of remote communities across Northern Ontario that are not connected to Ontario’s electricity grid. (Source: Hydro One. Transforming Energy: 2010 Annual Report. Number of clients • • • • Large-user customers: 412 Remote communities served: 21 Rural and urban distribution customers: approximately 1.3 million Local distribution companies: 75 Assets • Hydro One distributes electricity though its 123,500 circuit-kilometre low-voltage distribution system, serving Ontario’s rural areas and municipalities. • The utility transmits energy through a 28,951 circuit-kilometre high-voltage network. Transmission lines are overhead except for 282 circuit-kilometres of underground lines in urban areas. • Hydro One owns and operates 26 facilities that interconnect its transmission system with systems in neighbouring provinces and states, which can accommodate imports of about 4,600 MW and exports of about 6,000 MW. • The utility’s transmission system includes 284 transmission stations and 1,008 distribution and regulating stations. (Source: http://www.hydroone.com/OurCompany/Pages/QuickFacts.aspx) Company ownership The utility is a Crown corporation established under the Business Corporations Act (Ontario) with a single shareholder, the government of Ontario. Hydro One owns and operates nearly all of Ontario’s electricity transmission system. In 2010, it accounted for about 96% of Ontario’s transmission capacity, as measured by revenue. Its subsidiaries include: • Hydro One Remote Communities Inc. • Hydro One Telecom Inc. • Hydro One Brampton Inc. Utility’s definition “Hydro One’s distribution strategy is focused on incorporating smart grid technology, providing of smart grid reliable service over a diverse geography, supporting the connection of renewable generation, seeking efficiencies through productivity initiatives and remaining open to opportunities to rationalize the distribution sector.” (Source: Hydro One. Transforming Energy: 2010 Annual Report.) Innovative projects The most important project the utility has underway is its Advanced Distribution System (ADS) project. With the first phase being implemented in the Owen Sound area, the project will examine how best to manage the network as distributed generation, demand and supply controls, and access at the distribution level become more available options for customers. With a system that is no longer radial, Volt/VAR controls are needed to ensure that power quality is not affected. The ADS project has four main objectives, with the first one being of primary importance. The project aims to: 1. Integrate over 10,000 distributed generators of various sizes and complexities into the distribution system (as a result of the response to the Green Energy Act’s Feed-in Tariff program). 2. Advance and automate the distribution operations needed to improve the reliability of distribution. 3. Leverage the smart meter system to restore power outages quickly and minimize the number of customers affected. 4. Add new data sources to the asset planning and analytical tools for the distribution network. Over 2012, the utility will test the effectiveness of the first phase. If successful, the ADS project will be rolled out across Hydro One’s distribution network. 11 Working with In conjunction with Ryerson University, Hydro One has established the Centre for Urban Energy. This academia unique venture will research innovative and practical solutions for urban energy issues. This partnership will not only enable the utility to identify solutions for integrating new technologies, but it will also help foster energy-sector leaders of tomorrow. Hydro One has also teamed up with the University of Western Ontario and the University of Waterloo to build partnerships that promote innovative electrical engineering solutions to connect clean and renewable energy. These initiatives include student scholarships and awards. (Source: Hydro One. Transforming Energy: 2010 Annual Report.) In recent years, the utility has worked with Mohawk College, Northern College, Algonquin College and Georgian College as part of a campaign to recruit technologists and technicians. More recently, it has set up a research collaboration to study electric vehicles (EVs). Through this venture, Hydro One is working with a GM EV, which is helping to advance its research in the field. Hydro One also maintains many non-academic research partnerships, such as those with the Electric Power Research Institute (facilitating connections with large US utilities), Kinectrics (the research institute run by Hydro Québec) and CIGRE (which is Paris-based, facilitating partnerships with European and Asian utilities). What is unique Hydro One defines itself as being ahead of the curve in terms of technology adoption. It constantly about this utility measures its progress against industry standards, such the IBM smart grid maturity model, and monitors its best practices against those of other large utilities that use the same technologies. To not become a testing ground for innovative technologies, Hydro One avoids relying on specific tools, so that decisions are not based on tools that may later prove ineffective. Opportunities for Because of its size and reach, the company has the ability to work with entrepreneurs and can offer entrepreneurs opportunities to small companies that they would not otherwise find in Ontario. 12 Hydro Ottawa Limited www.hydroottawa.com Address 3025 Albion Road North, PO Box 8700, Ottawa, ON K1G 3S4 Company description Energy services company in the power distribution business Communities served City of Ottawa and the Village of Casselman Number of clients 300,000 Assets Hydro Ottawa has 84 distribution stations, 2,700 km of underground cable, 2,700 km of overhead lines, 42,500 transformers and 48,600 hydro poles. Company ownership The utility is wholly owned by the City of Ottawa. Utility’s definition “Modernization. The world is changing and our customers’ expectations are going up and technology is of smart grid dramatically accelerating. We want to bring the power system closer to the customer, and vice versa, so we can make the most of technology already implemented, such as smart meters.” Innovative projects Hydro Ottawa is keen to keep customers informed and satisfied by helping them to understand and adjust their electricity consumption, and by applying solutions to restore power quickly when outages happen. Efficient communication concerning power outages is a key smart grid objective for the utility, and WEBMAPS is the newest piece of this strategy. With updates every 15 minutes, the system provides customers with details on the location, cause and extent of outages, as well as the estimated time of power restoration, if known.9 In tandem with its smart grid activity, the company also promotes reducing energy use in general. Some of its conservation programs include: • Fridge and freezer pickup: This program collects fridges and freezers over 15 years old for free and recycles them in an environmentally-friendly way. • Heating and cooling incentive: Using financial incentives, this initiative encourages customers to install energy-efficient heating and cooling systems. • Conservation Owl: A staunch environmentalist adopted by Hydro Ottawa as its ambassador of energy conservation, this owl spreads his message on Facebook as well as on Twitter, where he “twoots.” Working with Algonquin College academia Hydro Ottawa runs an apprenticeship program for those interested in becoming certified Stations Electricians. As part of the program, participants rotate annually through each major component of the utility’s department training. Algonquin College is establishing itself as a leader in energy conservation, upgrading existing campus infrastructure to improve building performance and decrease power consumption. In doing so, the college is promoting energy awareness throughout its entire community. In February 2008, Hydro Ottawa recognized Algonquin’s effort with the “Companies for Conservation” award. Carleton University In partnership with Hydro Ottawa, Carleton University opened the Hydro Ottawa Laboratory for Smart Grid Technologies in November 2011. This venture enables Carleton students to experiment with the emerging smart electricity infrastructure, to learn about integrating alternate and sustainable power sources and about improving the efficiency and reliability of the energy supply. What is unique Hydro Ottawa is striving to leverage technology to deliver improved service and communications about this utility to customers. In 2010, the company received Chartwell Inc.’s “Best Practices Award in Outage Communications” for its automated system that fields information about power outages and relays effective and up-to-date information to employees and customers. Opportunities for Hydro Ottawa foresees opportunities for entrepreneurs. Currently, the utility is reviewing a few pilot entrepreneurs projects with entrepreneurs in the Home Area Networks (HANs) field. 13 PowerStream Inc. www.powerstream.ca Address 161 Cityview Boulevard, Vaughan, ON L4H 0A9 Company description Energy services company in the power distribution business Communities served Alliston, Aurora, Barrie, Beeton, Bradford, West Gwillimbury, Markham, Penetanguishene, Richmond Hill, Thornton, Tottenham and Vaughan Number of clients 330,000 Assets PowerStream’s distribution system consists of 2,551 km of overhead circuit wires and 4,830 km of underground cable. Peak demand is 2,000 MW. Company ownership The company is jointly owned by the municipalities of Barrie, Markham and Vaughan. Utility’s definition “The smart grid uses new technologies to optimize distribution for the benefit of the end customer.” of smart grid Innovative projects Please refer to PowerStream’s smart grid map below (Figure 6): Figure 6: Anticipated target areas, PowerStream PowerStream is currently pursuing the following projects: • Digital fault indicators (DFI): This new technology employs a device that monitors power line loading and temperature and communicates to the PowerStream control room when a fault has occurred, also giving information on the fault type and duration. This technology uses the same Sensus Flexnet Advanced Metering Infrastructure (AMI) communications system used by smart meters. • Meter in a can: This project involves installing smart meters inside transformer boxes to streamline the process of reporting a problem (obviating the situation where, for example, a dozen different home smart meters report the same problem). Other benefits of this technology include the ability to: · monitor and report overloading of transformers · detect power diversion · optimize circuit operation · control smart chargers used with EV (electric vehicle) technology • Self-healing grid: This new technology uses existing control and switching systems to automatically sense, isolate and immediately respond to power system disturbances, while continually optimizing its own economic and operational performance. 14 Working with Queen’s University academia Using data from the smart meter system, this partnership studied the impact of electric vehicle (EV) charging on residential distribution assets, and determined that two or more Level 2 EV chargers would overload the transformers. Its report recommended a controlled smart charger solution to avoid the overloading situation. In 2011–2012, Queen’s will study opportunities and issues associated with vehicle-to-grid electricity transfer from EVs. This technology has the potential to shift load from the middle of the day to the middle of the night. The study also addresses the potential repurposing of the EV battery once it has reached end-of-life as a transportation energy source. University of Waterloo Communications and storage research: 1. Waterloo is evaluating the effectiveness of using rotating energy storage technology within PowerStream’s distribution system. 2. Waterloo prepared a MITACS (Mathematics of Information Technology and Complex Systems) project titled “Protection Coordination Planning with Distributed Generation (DG) and the Impact of DG on Safety, Equipment and Distribution System Operation.” The project identified and evaluated the protection and control issues associated with renewable generation on the distribution system. 3. Waterloo undertook a project to investigate the size of backup storage required to absorb excess generation during light load and bright sunlight to keep the voltage from exceeding established highvoltage limits. Georgian College Electric vehicle program: PowerStream is working with Georgian College to demonstrate and pilot several areas of technology associated with EVs—namely, smart-charger control using smart meter input, vehicle-to-home energy transfer and Level 3 high-rate EV charging. What is unique PowerStream has identified clear areas of opportunity to help its organization lead in the development of about this utility a reliable and cost-effective grid for the benefit of the customer. The company relies on the vision of its senior management and the knowledge and training of its employees, giving them the power to decide whether a “smart solution” is beneficial to the customer. Opportunities for PowerStream is currently working on projects with General Electric, Better Place, Schweitzer, Sensus/ entrepreneurs Horstmann, Temporal Power and others to identify smart initiatives. As a growing utility with an increasing number of clients, PowerStream is actively seeking to be a leader in applying new technologies that fit with its overall mission and vision and to do so in a prudent, costeffective manner. To support entrepreneurial activities, the company has leveraged financial support programs such as NRCAN Eco II, the Smart Grid Opportunities Fund, the Ontario EV Infrastructure Fund, and the OPA’s support funding for conservation and demand management. 15 Toronto Hydro-Electric System Limited www.torontohydro.com Address 14 Carlton Street, Toronto, ON M5B 1K5 Company description Through its subsidiaries, Toronto Hydro Corporation • Distributes electricity and engages in conservation and demand management activities. • Maintains and operates the street lights in the city. Its principal business is Toronto Hydro-Electric System Limited (THESL). It’s the largest municipal electricity distribution company in Canada and distributes approximately 19% of the electricity consumed in Ontario. Communities served City of Toronto Number of clients Approximately 700,000 Assets • • • • • • Control centre: 1 Operation centres: 8 Poles: approximately 139,900 Length of overhead wires: over 15,000 km Length of underground wires: over 10,400 km Total transformers across the city: approximately 60,500 (Source: http://www.torontohydro.com/sites/corporate/Newsroom/FactsAtAGlance/Pages/FactsataGlance.aspx) Company ownership The company is wholly owned by the City of Toronto. Utility’s definition “An intelligent, continually evolving electricity network that delivers value in meeting customer needs and of smart grid expectations.” Innovative projects The company’s projects include: • Feeder automation · Application of peer-to-peer communicated SCADA (supervisory control and data acquisition) switches to isolate and sectionalize a feeder during a fault and restore non-faulted segments • Transformer monitoring · Installing monitoring devices and associated hardware, similar to that of the smart meters, to acquire more information about grid activity via transformer data • Power-line monitoring · Monitors primary system for power quality, conductor temperature and system losses • Electric vehicle charging stations and the integration of electric vehicles · Smart Experience Program—a pilot program that introduces electric vehicles into the grid and allows Toronto Hydro to study driving behaviour and its impact on the grid • Community energy storage · Project to develop and install three 250 kW/250 kWh units to demonstrate functionalities in dynamic load levelling, integrated communication and buffering intermittency of distributed generations Working with University of Toronto academia A study is underway with the University of Toronto to evaluate the short-circuit contribution of distributed energy resources in the Toronto Hydro distribution system. Ryerson University The project to help modernize the Toronto Hydro network involves integrating systems through enhanced and advanced communications architecture. The goals are to develop a data-rich, scalable and interactive grid that provides customers with more direct control over their electricity use and gives the utility company improved planning, measurement and response tools. (Source: http://www.ryerson.ca/news/news/ Research_News/20110712_grids.html) 16 What is unique THESL has established a smart grid community where prioritized initiatives can be tested, processes about this utility developed, customer feedback incorporated and operating procedures created. The company has also developed a 25-year smart grid roadmap (Figure 7), which highlights the areas it is currently targeting or anticipates it will target. Figure 7: Toronto Hydro smart grid roadmap: 25-year vision Source: Toronto Hydro-Electric System Limited. (2011, August 1). THESL 2012 GEA Plan, p. 13. Opportunities for THESL is an amalgamation of six utilities and operates with a wide array of legacy equipment. In the entrepreneurs opinion of THESL, the utility provides an ideal testing ground for vendors to develop and assess new solutions, noting that if vendors prove their solutions in its complex environment, then it is likely that with small adjustments they can deploy the same solutions at other Ontario or North American utilities. Currently working • Temporal Power: With Temporal Power, THESL is exploring the potential of integrating flywheel energy with the following storage technology into the Ontario electricity grid. entrepreneurs • Opus One Solutions: THESL is pleased to be working with this Toronto-based consulting organization, which is focused on the innovation, selection, development and effective application of technology. 17 Veridian Connections Inc. www.veridian.on.ca Address 55 Taunton Road East, Ajax, ON L1T 3V3 Company description Energy services company in the power distribution business Communities served The cities of Pickering and Belleville, the towns of Ajax, Port Hope and Gravenhurst, and the communities of Uxbridge, Bowmanville, Newcastle, Orono, Port Perry, Beaverton, Sunderland and Cannington Number of clients 115,000 Assets Veridian Connections has 639 km2 of service territory and 2,301 km of distribution lines. (Source: http://www.veridiancorporation.ca/2010-annual-report/#/2/) Company ownership Veridian Connections is a wholly-owned subsidiary of Veridian Corporation. The City of Pickering, the Town of Ajax, the Municipality of Clarington and the City of Belleville jointly own Veridian Corporation. Utility’s definition For Veridian, the smart grid is the application of existing and new technologies into the distribution of smart grid system that allows for the improved integration of renewable generation, which ultimately delivers better results to the customer through increased reliability and customer service. Veridian sees that the implementation of the smart grid might be different for each utility, depending on its specific needs. Innovative projects • Outage Management System: This automated system enables operators in a control room to monitor hundreds of square kilometres of service area and to pinpoint and track the extent of any power outage. Not only does this system enable crews to be dispatched directly to the critical point on the grid, but the company can also keep customers informed online about expected repair times and locations. (Source: Veridian Annual Report, 2010. http://www.veridiancorporation.ca/2010-annual-report/) • “IntelliTEAM®”: According to Veridian, this project will create the largest self-healing electricity distribution network in Ontario. The system will be installed in south Ajax, providing service to more than 6,000 customers. With an investment of approximately $1.8 million, this project will use innovative technology built by the S&C Electric Company to identify power distribution problems and reroute and restore service. The expected results will be reduced outages and costs, with a more efficient use, and therefore longer lifespan, of wires and transformers. (Source: http://www.veridian.on.ca/pdf/news-releases_2008_ Nov%2028_Veridian-Goes-Smart-Grid.pdf) • Electric vehicle charging station pilots: Two different electric vehicle charging-station pilots are underway right now. One is with Better Place in conjunction with another utility, and the other is with the Durham Electric Vehicle Group, all members of the Durham Strategic Energy Alliance (DSEA). Working with University of Ontario Institute of Technology (UOIT) academia Electric vehicle project: The vehicle will be used as part of the automotive engineering program’s participation in AUTO21 (Canada’s national automotive research program) and vehicle-to-grid communications testing. (Source: http://www.newswire.ca/en/story/739299/veridian-ceo-donates-plug-in-hybrid-solar-electric-vehicle-to-uoit) Energy Research Centre: Veridian has been involved in supporting the new Energy Research Centre at UOIT, through work with the board of governors and through its financial support for labs. The centre, now opened, will play an important part in preparing the next generation to implement new forms of alternative generation and energy systems. Smart grid will be a focus of this energy centre, and the university is participating in an application to the Ontario Smart Grid fund with Veridian and a number of other DSEA members. Veridian is also involved with Durham College’s alternative energy centre. The intersection of energy and transportation will be important for the development of sustainable communities. Through its work with municipal shareholders, DSEA members, the UOIT Energy Research Centre and Automotive Centre of Excellence and Durham College, Veridian is playing a key role in developing the sustainable communities of tomorrow—economically, environmentally, and socially. 18 What is unique The company has leveraged its utility expertise by partnering with current key industry players about this utility to develop projects (such as “IntelliTEAM®”) that can be translated into national or international opportunities in the future. Veridian has started looking at non-traditional ways of raising capital (e.g., external funding or private investment) to test innovative projects in the province. Opportunities for Veridian is reviewing what it needs to add and how it can access investments to fund some of its entrepreneurs innovative ideas with the Durham Strategic Energy Alliance, and is hoping to partner with private-sector companies in the future. With its DSEA partners, Veridian has recently submitted an Ontario Smart Grid Fund proposal. Electric vehicle (EV) charging pilots may also allow Veridian to access some of the $80 million funding for EV charging infrastructure. Horizon Utilities Corporation www.horizonutilities.com Although in the early stages of progress toward implementing the smart grid, Horizon Utilities Corporation is examining ways to initiate their activities in this space. The utility serves the communities of Hamilton and St. Catharines, with 237,000 residential electricity customers. Horizon is exploring a joint venture with McMaster University and Mohawk College with regard to electric vehicles and charging stations. 19 The role of the regulator Bringing Ontario’s power grid into the twenty-first century will require the support of an array of stakeholders, including regulators, policy-makers, utilities, consumers and technology vendors. To achieve this, legislators and energy-sector leaders need to develop policies that foster modernization. Implementing an innovative system will be above all an issue of change management, and Ontario’s regulators are in a prime position to lay the groundwork. Background In May 2009, the Green Energy and Green Economy Act (GEA) was given royal assent, defining “smart grid” as “the advanced information exchange systems and equipment that when utilized together improve the flexibility, security, reliability, efficiency and safety of the integrated power system and distribution systems.”10 In November 2010, the Minister of Energy issued a directive to the Ontario Energy Board (OEB) to complement the GEA. It provides a set of objectives to guide utilities and local distribution companies (LDCs) in establishing their smart grid plan and investments. Read the Ministry of Energy’s directive to the OEB. To learn more about the three areas of focus and 10 policy objectives of this mandate, please visit http://www.ontarioenergyboard.ca/OEB/_Documents/ Documents/Minister_directive_smart_grid_20101123.pdf. The directive outlines three areas of focus as well as 10 policy objectives to guide the OEB. The three focus areas are customer control, power system flexibility and adaptive infrastructure—and of these, the third is of greatest significance to entrepreneurs, as it concerns accommodating the use of innovative technology. Appendix C of the directive sets out the goals of adaptive infrastructure:11 • Flexibility: Provide flexibility within smart grid implementation to support future innovative applications, such as electric vehicles and energy storage. • Forward compatibility: Protect against technology lock-in to minimize stranded assets and investments, and incorporate principles of modularity, scalability and extensibility into smart grid planning. • Encourage innovation: Nest within smart grid infrastructure planning and development the ability to adapt to and actively encourage innovation in technologies, energy services and investment/business models. • Maintain pulse on innovation: Encourage information sharing relating to innovation and the smart grid, and ensure Ontario is aware of best practices and innovations in Canada and around the world.11 Smart regulations To guide the implementation of the smart grid in Ontario, in February 2011 the OEB selected participants for their Smart Grid Working Group (SGWG) to advise OEB staff on technical aspects and other issues that affect policies and direction offered by the OEB. In November 2011 the SGWG released a discussion paper which addressed the issue of innovation and adaptive infrastructure. One of the OEB’s objectives is to encourage economic growth and job creation in Ontario through the adoption of the smart grid and its associated innovation. The working group, recognizing that products had been developed and businesses had grown from the introduction of smart meters and time-of-use pricing, noted that economic development was also likely to stem from implementation of the smart grid. However, although some ideas about how a regulatory path could facilitate economic development were suggested, the SGWG is still working on how OEB policy could directly achieve this goal.12 But the SGWG was clear that with respect to adaptive infrastructure (the “flexibility” and “forward compatibility” elements of the minister’s directive), the OEB should support open standards, particularly around software development. As well, it recommended that technology innovation and adoption be evaluated on the basis of their ability to ensure future functionality and meet future requirements, and not just on the basis of cost. Regarding the directive to “encourage innovation” and “maintain a pulse on innovation,” the SGWG concluded that the best way to foster innovation in the sector was to build a collaborative environment. It proposed a regular forum, comprising SGWG members and diverse stakeholders, which could exchange and debate ideas on the smart grid from both a local and global standpoint.13 Wondering how energy distributors are regulated? To learn about the OEB requirements for licensed Ontario distributors and how projects are evaluated, please see SGWG’s Staff discussion paper: in regard to the establishment, implementation and promotion of a smart grid in Ontario. 20 In Ontario, at the start of 2012, the consultative process is ongoing, and issues associated with the implementation of the smart grid will continue to be examined. As the recommendations listed above indicate, innovation in this regulated sector remains in the early stages. Nevertheless, this situation is common even in more mature and developed markets, such as in the US, where regulatory issues rate as a top concern among utilities. As Bob Jenks (Executive Director, Oregon Public Utility Commission) observes in his article, “Why Smart Grid Advocates Should Learn About Utility Regulation,” part of modernizing the electricity system is developing an informed and realistic methodology to identify what needs to be changed and how to achieve those changes— and that understanding the complexities of current policy is critical. He writes, “The smart grid has the potential to change our electricity system in fundamental ways. But to effectively create positive change, it’s necessary to understand the present [electricity system].” He emphasizes that we have to learn to build out of what we already have, recalling a tenet he followed as a community organizer in college, “I start where the world is, as it is, not as I would like it to be.”14 A paradigm shift is needed to address some of the challenges. In Bloomberg Businessweek, David J. Leeds (analyst, GTM Research) points out the need to revise the compensation scheme for utilities; currently, since their revenues are tied to how much power is sold, it is in their interest to sell more power, not less. New regulations could introduce new rate structures and business models, giving utilities more reasons to drive energy efficiency and earn revenue in ways other than the direct sale of electricity..15 (Read Leed’s full article, “The smart grid needs smart regulations.”) The broader context In gauging Ontario’s approach and its progress in implementing the smart grid, looking at a broader international context is useful. The United Kingdom and Italy are two jurisdictions that are breaking new ground to modernize their regulatory framework. They were recently studied by Christine Müller (WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH) for her submission to the “Fourth Annual Conference on Competition and Regulation in Network Industries,” held in November 2011. In her report, “Advancing regulation with respect to smart grids,” Müller examines the UK’s new regulatory approach, which takes a long-term view with respect to incentives. She describes it as having shifted from “a regulatory focus on cost efficiency to a holistic innovation and output-oriented approach with a forward-looking, long-term value-formoney perspective.” While lauding this initiative to stimulate investment and dynamic efficiency, Müller warns that the UK framework does set the stage for a “planning-intense regulatory scheme and a high level of regulatory scrutiny.”16 In contrast, Italy’s regulatory approach offers a less holistic solution. There, the regulator has the power to increase the rate of return for specific smart grid investments. However, Müller cautions that this system may present difficulties in terms of demarcation or the possibility that the regulator might favour certain technologies over others. Müller believes that the frameworks established both in the UK and Italy are inspiring examples of more sensitive regulation, and that other jurisdictions would do well to follow them to create the shift in the regulatory paradigm needed to support smart grids. She recommends that new policies entail a gradual, thoughtful “smartening” of regulatory incentives, with one such example being “a promotion of smart grid-related demonstration projects backed by an innovation fund for which network operators may apply.”17 Notably, Ontario has already established such a practice with its Smart Grid Fund. This program is investing $50 million in the advancement of the smart grid, the creation of economic development opportunities and the reduction of risk and uncertainty in electricity-sector investments. At the federal level, the ecoENERGY Innovation Initiative launched in August 2011 will foster energy technologies that produce and use energy in a cleaner and more efficient way. While not smart grid-specific, this program will help advance technologies that impact the smart grid. Müller concludes her analysis of the UK and Italy case studies with a general recommendation to other jurisdictions that investment for electrical infrastructure and intelligence be supported beyond the regulatory sphere. She proposes using indirect incentives such as investment bonuses and R&D allowances, designed to ensure that they do not overlap with existing incentive mechanisms so that end-customers are not paying twice to support the same investment.18 21 Conclusion Globally, China and the US, by prioritizing smart grid development, are building an economic advantage over the long term. To boost its competitiveness, Canada would do well to adopt forward-thinking smart grid objectives in alignment with those of Ontario and British Columbia. In November 2010, Ontario issued its 20-year Long-Term Energy Plan, identifying the smart grid’s value as “an essential element of Ontario’s clean energy future.”19 And British Columbia, recognizing that innovation is the key to entering and building a competitive advantage in the marketplace, has projects underway to build a sustainable smart grid economy. Utilities Two key elements stand out in this report with respect to the implementation of smart grids. First, utilities need to explain and validate their smart grid expenditures. And second, since each utility is currently using a different definition of the smart grid and relying on its own regulators to provide guidance, a common definition of the smart grid would facilitate collaboration. As the results of our interviews show, utilities tend to focus on automating their local distribution company networks and their communication technologies. Electric vehicle (EV) research and its associated infrastructure is also a common point of interest, with most utilities having at least one EV project proposed or underway. Many of the utilities we interviewed expressed an interest in participating in associations and forums to exchange best practices. There is a compelling case for creating a separate organization to oversee projects, especially those undertaken in partnership with academia. As Müller notes, with incentives to foster smart grid development, it is important to ensure end-customers and taxpayers do not pay more than once to support the same research. Regulators We encourage regulators to continue to provide guidance to utilities to maximize smart grid momentum and policy-makers to strive for grid modernization. With this, Ontario will achieve greater grid reliability to manage growing loads on the system, and the province will benefit from the economic opportunities a smart grid affords. With burgeoning possibilities for innovation in this developing market, regulators and policy-makers will need to respond to new demands. Old regulatory frameworks might inhibit or prevent the development or adoption of innovative products or services and limit the scope of market development and, consequently, benefits to customers. If new business models for utilities can be implemented and new entrants allowed into the marketplace, then the smart grid infrastructure will have room to grow and prosper without the constraints of legacy barriers. Entrepreneurs What advice would we offer to Ontario entrepreneurs who want to succeed in the smart grid market? We have some tips: • Understand how the electricity sector works—this includes regulation and policy. • Understand who your competitors are and what types of solutions they offer. • Take advantage of funds and incentives offered provincially and federally. Since utilities have to assess expenditures on innovation, leveraging your funding money will make their job (and yours) easier. • Remember that you will be dealing with a long-term sale process—you may want to consider alternative business models or revenue streams. • Understand the local and global challenges utilities face (e.g., integrating renewable energy sources such as wind or solar power). • Keep a global perspective. 22 Endnotes 1. General Electric Company. (2010, November 9). Top 10 countries for smart grid investment. GE reports. Retrieved December 14, 2011, from http://www.gereports.com/top-10-countries-for-smart-grid-investment/ 2. Innovation Observatory. (n.d.). Ten countries will account for 80% of global smart grid investment by 2030 [Press release]. Retrieved December 14, 2011, from http://www.innovationobservatory.com/sgpress2 3. Ontario Smart Grid Forum. (2011, May). Modernizing Ontario’s Electricity System: Next Steps. Retrieved January 16, 2012, from http://www.ieso.ca/imoweb/pubs/smart_grid/Smart_Grid_Forum-Report-May_2011.pdf. 4. Ontario Energy Board. (2011, March 3). Monitoring Report Smart Meter Investment – September 2010. Retrieved January 16, 2012, from http://www.ontarioenergyboard.ca/OEB/_Documents/SMdeployment/SM_Cost_Report_September2010.pdf. 5. OEB Smart Grid Working Group. (2010, March 1). [Meeting summary]. 6. Feblowitz, J. & Rowland, K. (2010, July/August). 2010 UtiliQ rankings. Intelligent utility. Retrieved December 14, 2011, from http://www.nxtbook.com/nxtbooks/energycentral/iu_20100708/index.php?startid=10#/12 7. Feblowitz, J. & Rowland, K., UtiliQ rankings. 8. International Energy Agency. (2011). Technology roadmap: Smart grids, p. 20. 9. Hydro Ottawa. (2011). Currents (Fall 2011) [newsletter]. Retrieved January 16, 2012 from http://www.hydroottawa.com/pdfs/ HYD%20Fall%20Currents-Eng-lr.pdf. 10. Ontario Ministry of Energy. (2011, April). Smart Grid Fund Guidelines. Retrieved January 19, 2012, from http://www.mei.gov. on.ca/en/energy/html/SGF_guidelines.html. 11. Ontario Executive Council. (2010, November 23). Minister’s directive to Ontario Energy Board. Retrieved December 14, 2011, from http://www.wise.uwaterloo.ca/SmartGrid/Minister_directive_smart_grid_20101123.pdf 12. Ontario Energy Board, Staff discussion paper, p. 12. 13. Ontario Energy Board, Staff discussion paper, pp. 22–23. 14. Jenks, B. (2011, October 20). “Why smart grid advocates should learn about utility regulation.” EnergyPulse. Retrieved December 14, 2011 from http://www.energypulse.net/centers/article/article_display.cfm?a_id=2479 15. Leeds, D.J. (2009, October 5). “The smart grid needs smart regulations.” Bloomberg Businessweek. Retrieved December 14, 2011 from http://www.businessweek.com/technology/content/oct2009/tc2009105_408012.htm 16. Müller, Christine. (2011, November 25). Advancing regulation with respect to smart grids: pioneering examples from the United Kingdom and Italy [Whitepaper]. Retrieved December 14, 2011, from http://www.crninet.com/2011/c10a.pdf 17. Müller, Christine. Advancing regulation with respect to smart grids. 18. Müller, Christine. Advancing regulation with respect to smart grids. 19. Office of the Information & Privacy Commissioner for BC. (2011, December 19). British Columbia Hydro and Power Authority investigation report F11–03, p. 13. Retrieved December 19, 2011, from http://www.ieso.ca/imoweb/pubs/smart_grid/Smart_Grid_ Forum-Report-May_2011.pdf 23