Ontario looks to consumers in its smart grid efforts
The end of January brought with it two smart grid-focused conferences in the space of a week in downtown Toronto, Ontario. What rang through -- loud and clear -- in what I heard there was Ontario's desire, through legislation, to bring the province to the forefront of today's green economy via renewable energy and its enabler, the smart grid.
This hasn't been an overnight goal - the province has been at it for years, in an effort to reduce its carbon footprint, increase its use of renewable energy, and create new green manufacturing jobs. First, the provincial premier mandated an end to coal-fired electricity (the deadline for this has been pushed back a couple of times, but still remains high on the agenda). Then, the Ontario Energy Board (OEB) consolidated its 1998 Act in December 2007, paving the way for the smart grid in the province. Finally, in May 2009, the province passed Bill 150, the Green Energy and Green Economy Act, 2009.
Briefly, according to the Ontario Ministry of Energy and Infrastructure, this legislation "is part of Ontario's plan to become a leading green economy in North America." It is intended to "spark growth in clean and renewable sources of energy such as wind, solar, hydro, biomass and biogas in Ontario; create the potential for savings and better managed household energy expenditures through a series of conservation measures; (and) create 50,000 jobs for Ontarians in the first three years."
A big part of this plan focuses on electric utilities employing smart meters and time-of-use pricing. In fact, these rates have already been set by the OEB, and can be changed by them every May 1 and November 1.
Eli Turk, vice president of the Canadian Electricity Association, discussed the regulatory drivers for the smart grid within the province, and more generally, the 75-year-old "Edison Model", whereby electricity is simultaneously purchased and consumed, is designed for the worst case (maximum expected load plus reserve margin), and is based on the physics of moving electrons, not information. In this model, the traditional supply and demand influences are generally missing the customer level.
In the new smart grid equation, there are more practical drivers: increased efficiency and reliability; integrating more renewable energy sources; accommodating electrification of the transportation sector; business opportunities for growth and investment (Ontario is clearly focused here, given its loss of manufacturing jobs in the past few years); and enabling consumers to make choices about their consumption.
It is the final point -- focusing on consumer choices -- that I'd like to discuss in further detail here, because it became a rallying point for discussion over and over again.
At the GEA and The Smart Grid Development in Ontario conference, questions centered around customer behavior and provincially mandated time-of-use pricing. Currently, the time-of-use rates set by the OEB are 4.4 cents/kWh for off-peak, 8 cents/kWh for mid-peak, and 9.3 cents/kWh for on peak - not a lot of differentiation in rates between low and high peak. Larry Sollecito, president and CEO of GE Digital Energy, took this hot potato firmly in hand. "On the industrial side," he said, "peak load has always been part of the mantra. But I think we're all walking on broken glass when it comes to the residential side. Until you get that big differentiation, you're not going to change a lot of consumer behavior."
Jan Carr, a member of the board for the Alberta Electric System Operator, brought the consumer, and smart grid, to the table in his remarks at the Smart Energy Canada conference. I mentioned him last week, but part of his comment bears repeating: "In the end, the practicalities are the people that are going to pay for it. Customers must see a very immediate, tangible benefit. If the customers don't see it, it isn't going to happen."
Bringing expertise from the United Kingdom, Howard Porter, managing director of the European Smart Metering Industry Group, and chief operating officer of BEAMA, UK, brought to light what he sees as a future challenge for Ontario. "The dissemination of benefits to consumers before rollout is essential, half of which think they're out to be shafted, by the utility or by the government or both," he said.
Ontario, as elsewhere, is working to bring consumers into the mix, both with interactive utility websites, such as Toronto Hydro's, and by discussing the importance of putting its green energy policy fundamentally on an economic basis. The proof will be in the pudding, once smart meters have been implemented across the province (slated for the end of 2010), and time-of-use pricing has come into play for everyone. Will it need to change, to make a larger differentiation between high and low pricing on- and off-peak? Ontario will be discovering the answer to that thorny question in the coming two years.
I look forward to discussing this and other issues with all the players in the emerging intelligent utility. If you'd like to let me know what you think of this article, I encourage you to use the Comment link below. I welcome your insights - informed dialogue is an important part of the solution. If you have a story idea for me, please contact me by e-mail at email@example.com or by telephone at 720-331-4555.