Ontario Smart Grid Opportunities in the Electrical Utility Sector - MaRS Market Insights


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To become smart grid leaders, Ontario needs to effect a transformation in a risk-averse environment. To do so, the province needs not only to advance its electricity infrastructure but also embrace a long-term and global vision.

This breakfast panel brings together diverse energy-sector stakeholders, including utilities, key industry players, government authorities, regulatory bodies and innovators.

Does an opportunity exist for Ontario utilities that implement intelligent operations to leverage that expertise into other markets? Can synergy between innovation and the electricity sector be created to support these practices? How much are we open to change?


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Ontario Smart Grid Opportunities in the Electrical Utility Sector - MaRS Market Insights

  1. 1. Ontario  Smart  Grid  Opportunities  in  the  Electrical  Utility  Sector:  Getting  out  from  Behind  the  Meter  Brian  Warshay  –  Research  Associate  Lux  Research,  Inc.         January  25,  2012  
  2. 2. Lux  Research  !   We  focus  on  emerging  technologies  in  the  chemical,  material,   and  cleantech  sectors    !   We  interview  and  evaluate  emerging  technology  companies    !   Support  Technology  Monitoring  and  Market  Intelligence   Qatar  Science  !   We  have  12  practices  in:   and  Technology   Park   !   Smart  Grid  &  Grid  Storage   !   Electric  Vehicles  &  Alternative  Fuels   !   Solar  Components  &  Solar  Systems   !   Bio-­‐based  Chemicals  &  Materials   Suntech  solar   factory,  China   !   Green  Buildings   !   Water,  and  others…  !   Offices  in  New  York,  Boston,  Singapore,  Tokyo,  and   Amsterdam  with  ~70  employees:                 !   67%  scientists,  33%  business  analysts   Svalbard  Global   Seed  Vault,  Norway      3  
  3. 3. Lux  Smart  Grid  Intelligence  –  Key  issues  addressed  !   Smart  Grid  &  Grid  Support   •  How  will  utilities  implement  advanced  metering   infrastructure?   •  Is  there  a  viable  business  model  for  demand  response?   •  How  can  network  security  be  maintained  on  the  power  grid?   •  How  will  utilities  deal  with  grid-­‐connected  vehicle  charging?  !   Grid  Storage   •  Which  technologies  fit  which  applications?   •  Where  on  the  grid  will  grid  storage  be  located?   •  How  will  storage  integrate  with  renewable  energy  and  other   grid  applications?  !   Fuel  Cells   •  Which  fuel  cell  technologies  are  most  cost  effective?   •  For  which  applications  are  fuel  cells  most  viable?      4  
  4. 4. Global  Regulatory  and  Investment  Overview  !  What  is  driving  smart  grid  technology  adoption?  !  Why  are  smart  grid  technologies  important  to  utilities?  !  Where  is  the  investment?  !  How  do  regulations  incentivize  or  constrain  the  market    !  How  is  Ontario  doing?      5  
  5. 5. The  Smart  Grid   U"lity  back-­‐office   Distribu"on  network   End-­‐user      6  
  6. 6. Smart  Grid  1.0  giving  way  to  Smart  Grid  2.0   Smart  Grid  Device  Sales   Data  Rates  Source:  Lux  Research      7  
  7. 7. Smart  grid  tools  and  data  benefit  utilities   Smart  Grid  Tool   Data  Quan"ty   Data  Value   Benefit  to  U"li"es  Smart  meters   High   Low   Reduced  monitoring   costs;  point-­‐of-­‐use   monitoring  Demand  management  &  response   High   Medium   Peak  shaving  Voltage  &  VAR  OpKmizaKon   High   Medium   Peak  shaving;  higher   efficiency  Fault  detecKon,  isolaKon,  &  repair   Low   High   Improved  reliability  &   safety  Sensors   High   Low   Improved  monitoring  Grid  storage   Medium   Medium   Dispatchable   renewable  energy;   outage  buffer      8  
  8. 8. Smart  Grid  2.0’s  thirst  for  data  drives  adoption   Global  Utility  Investment     Source:  Lux  Research      9  
  9. 9. Investment  and  acquisitions  in  Smart  Grid   Investments  in  2010  &  2011  by  Technology   M&A  in  2010  &  2011  by  Technology   Source:  Lux  Research   Data  through  June  30,  2011      10  
  10. 10. Policies  directly  and  indirectly  drive  adoption…   Policy   Approach   Region(s)   Incen"ves  &  Mandates  Smart  meter  mandates  and  grants   Direct   European  Union  (EU)  &  USA  IncenKves  for  distributed  generaKon   Direct   Global   Market  Restructuring  Time-­‐of-­‐use  electricity  pricing   Direct   Global  Pay-­‐for-­‐performance   Direct   USA  Feed-­‐in-­‐tariffs  and  net-­‐metering   Direct   Global  Redefining  as  asset  class  for  energy  storage   Direct   USA  (California)  Renewable  energy  credits   Indirect   USA  Renewable  porVolio  standards   Indirect   Global   Carbon  Management  &  Security  Emission  regulaKons   Indirect   Most  developed  naKons  ReKrement  of  fossil/nuclear  power  plants   Indirect   USA,  Europe,  Japan   Source:  Lux  Research      11  
  11. 11. …while  politics  constrain  progress   Policy   Resul"ng  constraint   Region(s)  Regulatory  uncertainty   Direct   USA  Cross-­‐border  interconnecKon  permiYng   Direct   North  America;  EU  and  funding  Short-­‐term  investment  perspecKve   Direct   USA  Disconnect  between  smart  grid   Direct   Deregulated  uKlity  markets  beneficiaries  an  investors  UKliKes  are  highly  regulated   Indirect   Global  Lack  of  standards  for  interconnecKon   Indirect   Global  Status  quo  inerKa   Indirect   Global   Source:  Lux  Research      12  
  12. 12. Grid  Smarts  in  Ontario  !   Regulatory  and  Infrastructure  Support   •  2.6%  of  Ontario’s  electricity  is  from  wind,  a  40%  increase   •  Ontario  has  a  Feed-­‐in-­‐Tariff  for  renewable  energy  projects   •  Ontario  has  time-­‐of-­‐use  rates  and  500  MW  of  demand  response   •  Nearly  100%  of  Ontario’s  meters  are  smart  !   Demonstration  Projects   •  Energate  pilot  allowed  customers  to  control  and  monitor  energy   consumption  along  with  consumer-­‐connected  demand  response   •  Enbala’s  projects  in  North  America  pave  the  way  for  frequency   regulation      13  
  13. 13. Summary  and  outlook  !   What  is  driving  smart  grid  technology  adoption?   •  Though  smart  meters  will  lay  the  smart  grid  foundation,  it  is  the  resulting   influx  of  data  that  will  drive  new  markets  !   Why  are  smart  grid  technologies  important  to  utilities?   •  Smart  grid  technologies  align  with  the  goals  of  utilities  to  improve  reliability,   safety,  and  reduce  costs  !   Where  is  the  investment?   •  Although  later  stage  private  investment  and  M&A  continue  to  streamline  the   market,  government  funding  will  remain  imperative  for  adoption  !   How  do  regulations  incentivize  or  constrain  the  market?   •  While  regulations  indirectly  and  directly  drive  adoption,  antiquated   regulatory  frameworks  are  slow  to  adapt  new  infrastructure  !   How  is  Ontario  doing?   •  Ontario  is  equipped  with  the  technology  and  infrastructure  to  rapidly  expand   its  smart  grid  capabilities,  but  regulatory  guidance  will  need  to  remain  flexible   and  adaptable  to  meet  the  goals  in  the  Long-­‐Term  Energy  Plan      14  
  14. 14. Thank  You   Brian  Warshay   Research  Associate   +1  (917)484-­‐4872  Brian.Warshay@luxresearchinc.com   www.luxresearchinc.com    
  15. 15. Market Potential for Smart Grid in Canada Alex BettencourtMaRS Market Insights Managing Director
  16. 16. Our MissionSmartGrid Canada is a national association of public and privateorganizations including utilities, vendors, technology and serviceproviders, academics and other industry leaders.Together, the members of SmartGrid Canada are united by apassion and dedication to building a more innovative, reliableand cost-effective electricity delivery system for the benefit ofall Canadians.
  17. 17. SmartGrid Canada MembershipSmart Grid Canada is a national association of public and private organizations including utilities,vendors, technology and service providers, academics and other industry leaders. Utilities Technology Services & Academia R&DTogether, the members of Smart Grid Canada are united by a passion and dedication to building a moreinnovative, reliable and cost-effective electricity delivery system for the benefit of all Canadians.
  18. 18. The linked image cannot be displayed. The file may have been moved, renamed, or deleted. Verify that the link points to the correct file and location.
  19. 19. 6 reasons why smart grid is important toCanadians & the economy
  20. 20. A Smart Grid is essential to Canadianeconomic prosperity.Over 60% of our GDP now comes from industries and servicesthat run on electricity; in 1950, the figure was only 20%. Since1980, over 85% of energy growth has been supplied by electricity. Manhattan Institute:The Million-Volt Answer to Oil
  21. 21. Our infrastructure is aging – as weupgrade it we should be lookingforward.
  22. 22. Conservation is the cheapest way toaccommodate load growth.
  23. 23. A clean economy requires renewableenergy, which in turn, requires a smartgrid.
  24. 24. Outages cost money – smart grid canimprove reliability.Power outages and interruptions cost Americans at least $150billion each year - about $500 for every man, woman and child. DOE,The Smart Grid: an Introduction
  25. 25. Smart grid sets the foundation forfuture technology – electric vehicles,etc.
  26. 26. Key Areas of Competitive Advantage1.  Time of Use Rates2.  Sustainable Remote Communities3.  Renewable Integration on Distribution System
  27. 27. Time of Use Rates CALIFORNIA ONTARIOGood Consumer Mass Telecom OverCollaboration & Implementation Rugged TerrainCommunication Time-of-Use Rates
  28. 28. CANADA FACTS Opportunities for Smart & Sustainable Canada has over 300 remote Communities 34 million•  Population communities with a total population of 200,000 – mostly on diesel.•  Population Density Rank 230th Opportunity for Canada to reduce its own cost of powering these communities while solving the problems and selling to the developing world.
  29. 29. Sustainable Remote Power ProjectsHydrogen Assisted Renewable Power Wind-Diesel Storage Community Energy Management Hydrokinetic Turbine
  30. 30. Coming Generation GapSignificant resource gap that will need to befilled over the coming 10 years
  31. 31. Distributed Renewable Generation Voltage Regulation Energy Storage Energy Management Market Innovation Protections & ControlOntario has the some of the highest penetration of renewablegeneration on its distribution system (up to 10MW/connection)
  32. 32. National Technology Road Map
  33. 33. Closing ThoughtsThe First Era: Founded on1850 to 2000 Growth
  34. 34. Closing ThoughtsThe Second Era: Founded on2000 to …. Sustainment
  35. 35. MaRS Market Insights SmartGrid Canada www.sgcanada.orgFor more information, contact:Alex BettencourtManaging DirectorSmartGrid Canadaalex.bettencourt@sgcanada.org
  36. 36. Implemen"ng  Smart  Grid   ………..  U"lity  Best  Prac"ce  Presented to MaRS Insight PanelJanuary 25, 2012By: John Mulrooney
  37. 37. What  is  Best  Prac"ce  ??   A  Best  Prac"ce  is  a  method  or  technique   that  has  consistently  shown  results   superior  to  those  achieved  with  other   means,  and  that  is  used  as  a  benchmark.     Best  Prac"ce  come  from  experience.  
  38. 38. Ontario  LDCs   Years  of  Experience  developing  U"lity  Best  Prac"ce        Planning        Engineering        Capital  and  OM&A  Management        OperaKons  
  39. 39. Best Judge of Utility Best PracticeAt the end of the day, there is only one judge of BestPractice for the LDCOur Regulator …….The OEB Slide 40
  40. 40. Smart  Grid    Overarching   Must  Haves     1.  Smart  Grid  IniKaKves  must  benefit  the  Customer.     2.  Smart  Grid  IniKaKves  get  no   free  ride .       I  will  explain….  
  41. 41. Best  Prac"ce  To  Iden"fy  SG  Ini"a"ves  1.  Best  PracKce    starts  with  Smart  Grid  strategy  and  mulK  year  Smart  Grid   capital  plan  Ked  to  the  corporate  vision  and    approved  by  the  Board  of   Directors.    No  different  to  what  LDCs  having  been  doing  in  the  past.      2.  Each  Smart  Grid  IniKaKve  must  make  business  sense  and  benefit  the   customer  (I.e.  Benefit:Cost    raKo  greater  than  one).  This  is  where  the   prudence  of  the  iniKaKve  is  checked.      ExcepKons:    pilot  or  demonstraKon  projects  where  these  iniKaKves  are   jusKfied  on  their  longer  term  potenKal  benefit  to  the  customer.      3.    Best  PracKce      involves  collaboraKon  with  other  industry  stakeholders   taking  advantage  of  the  experience  of  others  to  determine  technical   feasibility  and  benefits.  
  42. 42. Priori"zing    SG  Ini"a"ves    In  any  capital  budget,  there  is  usually  more  demand  for   capital  funding  than  capital  dollars  available.    Smart  Grid  IniKaKves  should  undergo  the  same  rigor  as   every  other  corporate  iniKaKve  in  compeKng  for  capital   funding.            
  43. 43. Priori"zing    SG  Ini"a"ves  (con"nued)  1.    The  SG  IniKaKve  has  already  passed  the  prudence  test   (part  of  idenKfying  SG  iniKaKves).    2.      SG  IniKaKves  are  evaluated  with  other  capital  iniKaKves   based  on  their  raKng  of  benefit  and  risk  to  the   corporaKons  overall  corporate  objecKves.        
  44. 44. Not  All  Smart  Grid  Technology  Is  Smart   With enough horsepower, even a rock can fly……..but…
  45. 45.  ENERGY  MINISTRY  OF Smart  Grid  in  Ontario   MaRS  Discovery  District   Smart  Grid  Seminar         January  25,  2012  
  46. 46. MINISTRY  OF  ENERGY   A  Smart  Grid  is  a  Modern  Electricity  System   Intelligence/Communications Layer Telecom Network -  Phone -  Internet -  Smart Meter communication infrastructure SMART GRID Diagram source: EPRI Conventional grid Status / Status / Status / interoperates with Control Control Control smart grid intelligence through enhanced Conventional Grid devices: - Smart meters - Auto Switches - Intelligent Transformers Diagram source: EPRI47  
  47. 47. MINISTRY  OF  ENERGY   Smart  Grid  is  Global   •  Grid  modernization  is  being  driven  by  aging  infrastructures,  growing  energy  demands,   and  the  availability  of  new  technologies  that  enable  2-­‐way  communications  and   control.     •  Drivers  change  with  time.    The  smart  grid  is  a   journey  rather  than  a   destination .     smart  grid  technology  …is  the  equivalent  of  the  internet  for  electricity.  It  is  the  thing  that  brings  our   plans  all  together,  that  makes  it  all  possible  and  will  deliver  a  genuinely  low  carbon  world        Prime  Minister  David  Cameron  (UK)         the  energy  Internet  is  what  happens  when…the  information  revolution  meets  the  energy  technology   revolution…the  breakthrough  platform  in  which  innovation  is  going  to  happen  and  will  be  built      Tom  Friedman,  author,   Hot,  Flat,  and  Crowded     …  updating  the  way  we  get  our  electricity  by  starting  to  build  a  new  smart  grid  that  will  save  us   money,  protect  our  power  sources  from  blackout  or  attack,  and  deliver  clean,  alternative  forms  of   energy  to  every  corner  of  our  nation          President  Barack  Obama  48  
  48. 48. MINISTRY  OF  ENERGY   Ontario  as  a  Smart  Grid  Leader   •  Ontario  is  a  leading  jurisdiction  on  smart  grid,  leveraging  IT,  communications   technology,  and  automation  to  move  toward  Grid  2.0   •  Smart  grid  in  Ontario  is  driven  by  a  need  to:   •  Modernize  Old  Infrastructure   –  Move  toward  a  cleaner,  greener  and  more  efficient  grid,  while  ensuring   reliability  and  safety.   •  Maximize  Existing  Assets   –  Use  existing  assets  to  their  full  potential,  by  using  them  smarter   •  Lay  the  Foundation  for  Smart  Homes   –  Enable  conservation  and  active  participation  of  energy  consumers   –  Accommodate  future  innovations  for  energy  generation,  storage  and   management.    49  
  49. 49. MINISTRY  OF  ENERGY   Key  Drivers  for  Smart  Grid   •  Key  Drivers  for  Smart  Grid  in  Ontario:   •  Key  Success  Factors:   1.  Aggressive  integration  of  renewable   •  Feed-­‐in-­‐Tariff   distributed  generation   •  Green  Energy  Act   2.  One  of  North  America s  most  ambitious   conservation  targets   •  Engaged  Customers   3.  One  of  the  largest  smart  meter  (1st  in  North   •  Engaged  Leadership   America)  and  time  of  use  pricing  (1st  in  world   •  Leading  Utilities   to  have  mandatory)  rollouts  globally   4.  Advanced  automotive  sector  and  efforts  to   accelerate  electric  vehicle  adoption   5.  Strength  in  manufacturing,  research,  and   utility  sectors  50  
  50. 50.  ENERGY   MINISTRY  OF Leadership  on  Smart  Meters   • Modernize outdated meter infrastructure What  do  Smart   • Enable time-of-use pricing and conservation Meters  do?   • Provide basis for smart grid / smart homes Benefits to the Electricity System: Benefits to Consumers: Progress: Smart  Meter   Ø  Reduces the number of LDC field visits to read and service meters Ø  Facilitates conservation and demand management programs 4.7 million Benefits   Ø  Reduces tampering and theft of Ø  Accurate meter reads (no more estimates) deployment electricity Ø  Timely information to help manage complete Ø  Significant operational benefits (better consumption outage management and system Ø  Better customer service (e.g. outages visibility) automatically known)TOU   Ø  Environmental benefits as a result of load shifting Ø  Gives customers ability to move discretionary load to cheaper hours. > 3.4 millionBenefits   Ø  Savings in avoided/ deferred capacity Ø  Reduces long-term cost of electricity supply expected to be completed by   investments (new generation and Ø  Increases awareness of consumption Summer 2012 transmission) 51  
  51. 51.  ENERGY   MINISTRY  OF A  Framework  for  Smart  Grid   The  Green  Energy  Act  established  what  a  smart  grid  should  do  for  Ontario.   Focus  Area   Expected  Outcomes   •  Smart meters Customer Control •  Time-of-use rates Enable more conservation through More Conservation •  Home Energy Management a shift to smarter homes •  Load control Power System Flexibility •  Customer based micro-generation •  More distributed generation, Cleaner supply and Enable more renewables and better lower costs used more efficiently efficiency in grid operation (i.e. less transmission investment) Adaptive Infrastructure Encourage more innovation and •  Mobile charging infrastructure to support EVs ensure adaptivness to future •  Storage opportunities More Innovation conditions (e.g. electric vehicles) •  Enabling innovative technologies52  
  52. 52.  ENERGY   MINISTRY  OF Smart  Grid  Initiatives   Smart  Grid  Implementation:       •  Hydro  One  Smart  Zone  (integrating  DG)   •  Toronto  Hydro  Smart  Zone  (reliability  and  control)   •  Burlington  SmartCity,  Powerstream,  Veridian  and  other  pilots/asset  management   •  Industry  pilots,  such  as  Better  Place  EV  charging  infrastructure   •  Industry  ramp-­‐up,  such  as  GE  Grid  IQ  Innovation  Centre,  and  much  more.     Industry  engagement   •  Ontario  Energy  Board  working  group  on  Smart  Grid   •  Outreach  to  Small  and  Medium  size  businesses  (MEDI)   •  Discussions  with  ICT  sector  and  broader  smart  grid  component  industries.     •  Ontario  Economic  Opportunities  in  Energy  (OE2)       Funding   •  Smart  Grid  Fund:  $50  million  supporting  companies  building  the  smart  grid  industry    53  
  53. 53. MINISTRY  OF  ENERGY   Ontario  Economic  Opportunities  in  Energy   •   OE2  Advisory  Group  –  A  look  at  Ontario s  strengths  and  economic  opportunities   Focus   Examples   Global  Drivers  and  Trends   Global  Market  Size;  Top  Global  Players   Ontario s  Private  Sector   Top  Ontario-­‐based  Companies;  Strengths  and  Gaps   Ontario s  Research  Strengths   Universities  and  Colleges;  Partnership  Projects   Role  of  Ontario  Utilities   Investment  opportunities  and  patterns   Programs  and  Funding   Private  and  Public  Sector  funds   Ontario s  Regulatory  Framework   Utility  cost  recovery;  Regulatory  and  other  instruments   Cluster  analysis   Global  comparison;  networks  of  energy  hubs  54  
  54. 54.  ENERGY   MINISTRY  OF The  Opportunity   ♦ Projected  worldwide   smart  grid  investments:   $200  billion  from  2008   to  2015. ♦ By  2014,  the  annual   global  market  potential   for  smart  grid   equipment   manufacturers  and   solutions  providers  will   be  $15  to  $31  billion. (McKinsey,  2010) ♦ The  Smart  Grid  Forum  estimates  that  Ontario  will  invest  $390  million  per  year   over  5  years  on  Smart  Grid  projects.55  
  55. 55.  ENERGY   MINISTRY  OF Thank  you.   Jon  Norman   Director  –  Transmission  and  Distribution  Policy   Ontario  Ministry  of  Energy     Phone:  416-­‐326-­‐1759   Email:  jon.norman@ontario.ca    56  
  56. 56. MINISTRY  OF  ENERGY   Smart  Grid  Principles   EFFICIENCY   CUSTOMER  VALUE   •  Make  the  grid  more  efficient  and  cost-­‐effective   •  Provide  benefits  to  electricity  customers  such  as   through  control  and  automation,  visibility.   access,  participation,  visibility,  and  choice.       COORDINATION   SECURITY   •  Coordinate  activities  of  multiple  LDCs  and   •  Protect  against  unauthorized  or  malicious   encourage  partnerships.   attacks  to  the  grid.       INTEROPERABILITY   PRIVACY   •   Ensure  information  exchange  between  systems       •  Integrate  privacy  requirements  into  smart  grid   through  use  of  standards  and  partnerships.   planning  and  design.  Privacy-­‐by-­‐design.       ECONOMIC  DEVELOPMENT   SAFETY   •  Encourage  economic  growth  and  job  creation   •   Ensure  health  and  safety  and  improve  it   within  the  province  of  Ontario.   wherever  practical.       ENVIRONMENTAL  BENEFITS   RELIABILITY   •  Promote  green  technologies  to  reduce   •  Maintain  reliability  and  improve  it  wherever   environmental  footprint.   practical  through  flexibility,  innovation  and     forward  compatibility.  57  
  57. 57.  ENERGY   MINISTRY  OF Smart  Grid  Objectives         CUSTOMER  CONTROL   POWER  SYSTEM  FLEXIBILITY   ADAPTIVE  INFRASTRUCTURE   Conservation  through   Enable  renewables  and  better   More  innovation  and  adaptive   smarter  buildings   efficiency  in  grid  operation   to  future    conditions   •  Access   •  Distributed  Renewable   •  Flexibility   •  Visibility   Generation   •  Forward  Compatibility   •  Control   •  Visibility   •  Encourage  Innovation   •  Participation  In   •  Control  And  Automation   •  Maintain  Pulse  On   Renewable  Generation   •  Quality   Innovation   •  Customer  Choice   •  Education  58