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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? http://www.marsdd.com/events/details/ontario-smart-grid-opportunities-electrical-utility-sector/

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Page 1: Ontario Smart Grid Opportunities in the Electrical Utility Sector - MaRS Market Insights
Page 2: Ontario Smart Grid Opportunities in the Electrical Utility Sector - MaRS Market Insights

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  

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Lux  Research  

Svalbard  Global  Seed  Vault,  Norway  

Suntech  solar  factory,  China  

Qatar  Science  and  Technology  

Park  

!   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  

!   We  have  12  practices  in:  

!   Smart  Grid  &  Grid  Storage  

!   Electric  Vehicles  &  Alternative  Fuels  

!   Solar  Components  &  Solar  Systems  

!   Bio-­‐based  Chemicals  &  Materials  

!   Green  Buildings  

!   Water,  and  others…  

!   Offices  in  New  York,  Boston,  Singapore,  Tokyo,  and  Amsterdam  with  ~70  employees:                

!   67%  scientists,  33%  business  analysts  

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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?  

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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?  

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U"lity  back-­‐office   Distribu"on  network   End-­‐user  

The  Smart  Grid  

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Smart  Grid  1.0  giving  way  to  Smart  Grid  2.0  

Smart  Grid  Device  Sales  

Data  Rates  

Source:  Lux  Research  

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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  

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Smart  Grid  2.0’s  thirst  for  data  drives  adoption  

Source:  Lux  Research  

Global  Utility  Investment    

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Investment  and  acquisitions  in  Smart  Grid  

Investments  in  2010  &  2011  by  Technology  

Source:  Lux  Research  Data  through  June  30,  2011  

M&A  in  2010  &  2011  by  Technology  

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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  

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…while  politics  constrain  progress  

Policy   Resul"ng  constraint   Region(s)  

Regulatory  uncertainty   Direct   USA  

Cross-­‐border  interconnecKon  permiYng  and  funding  

Direct   North  America;  EU  

Short-­‐term  investment  perspecKve   Direct   USA  

Disconnect  between  smart  grid  beneficiaries  an  investors  

Direct   Deregulated  uKlity  markets  

UKliKes  are  highly  regulated   Indirect   Global  

Lack  of  standards  for  interconnecKon   Indirect   Global  

Status  quo  inerKa   Indirect   Global  

Source:  Lux  Research  

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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  

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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  

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Thank  You  

Brian  Warshay  Research  Associate  +1  (917)484-­‐4872  

[email protected]  www.luxresearchinc.com    

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Market Potential for Smart Grid in Canada MaRS Market Insights

Alex Bettencourt Managing Director

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Our Mission

SmartGrid Canada is a national association of public and private organizations including utilities, vendors, technology and service providers, academics and other industry leaders.

Together, the members of SmartGrid Canada are united by a passion and dedication to building a more innovative, reliable and cost-effective electricity delivery system for the benefit of all Canadians.

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SmartGrid Canada Membership U

tilit

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Serv

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&

Tech

nolo

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Aca

dem

ia

R&

D

Smart Grid Canada is a national association of public and private organizations including utilities, vendors, technology and service providers, academics and other industry leaders.

Together, the members of Smart Grid Canada are united by a passion and dedication to building a more innovative, reliable and cost-effective electricity delivery system for the benefit of all Canadians.

Page 19: Ontario Smart Grid Opportunities in the Electrical Utility Sector - MaRS Market Insights

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.

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6 reasons why smart grid is important to Canadians & the economy

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A Smart Grid is essential to Canadian economic prosperity.

Over 60% of our GDP now comes from industries and services that run on electricity; in 1950, the figure was only 20%. Since 1980, over 85% of energy growth has been supplied by electricity.

Manhattan Institute: The Million-Volt Answer to Oil

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Our infrastructure is aging – as we upgrade it we should be looking forward.

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Conservation is the cheapest way to accommodate load growth.

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A clean economy requires renewable energy, which in turn, requires a smart grid.

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Outages cost money – smart grid can improve reliability.

Power outages and interruptions cost Americans at least $150 billion each year - about $500 for every man, woman and child.

DOE, The Smart Grid: an Introduction

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Smart grid sets the foundation for future technology – electric vehicles, etc.

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Key Areas of Competitive Advantage 1.  Time of Use Rates

2.  Sustainable Remote Communities

3.  Renewable Integration on Distribution System

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Time of Use Rates

CALIFORNIA

ONTARIO

Good Consumer Collaboration & Communication

Mass Implementation

Time-of-Use Rates

Telecom Over Rugged Terrain

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Opportunities for Smart & Sustainable Communities

CANADA FACTS

•  Population 34 million •  Population Density Rank 230th

Canada has over 300 remote communities with a total population of 200,000 – mostly on diesel.

Opportunity for Canada to reduce its own cost of powering these communities while solving the problems and selling to the developing world.

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Community Energy Management Hydrokinetic Turbine

Sustainable Remote Power Projects

Hydrogen Assisted Renewable Power Wind-Diesel Storage

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Coming Generation Gap

Significant resource gap that will need to be filled over the coming 10 years

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Distributed Renewable Generation

Ontario has the some of the highest penetration of renewable generation on its distribution system (up to 10MW/connection)

Voltage Regulation

Energy Storage

Energy Management

Market Innovation

Protections & Control

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National Technology Road Map

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The First Era: 1850 to 2000

Closing Thoughts

Founded on Growth

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The Second Era: 2000 to ….

Closing Thoughts

Founded on Sustainment

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MaRS Market Insights

For more information, contact:

Alex Bettencourt Managing Director SmartGrid Canada [email protected]

SmartGrid Canada www.sgcanada.org

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“Implemen"ng  Smart  Grid  ………..  U"lity  Best  Prac"ce”  

Presented to MaRS Insight Panel

January 25, 2012

By: John Mulrooney

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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.  

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Ontario  LDCs  

Years  of  Experience  developing  U"lity  Best  Prac"ce        Planning  

     Engineering  

     Capital  and  OM&A  Management  

     OperaKons  

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Best Judge of Utility Best Practice

Slide 40

At the end of the day, there is only one judge of Best Practice for the LDC

Our Regulator …….The OEB

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Smart  Grid    Overarching  “Must  Haves”  

 1.  Smart  Grid  IniKaKves  must  benefit  the  Customer.    2.  Smart  Grid  IniKaKves  get  no  “free  ride”.      I  will  explain….  

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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.  

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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.        

   

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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.        

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Not  All  Smart  Grid  Technology  Is  Smart  

With enough horsepower, even a rock can fly……..but…

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MINISTRY  OF  ENERGY  

Smart  Grid  in  Ontario  

MaRS  Discovery  District  Smart  Grid  Seminar  

     

January  25,  2012  

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MINISTRY  OF  ENERGY  

47  

A  Smart  Grid  is  a  Modern  Electricity  System  

Telecom Network -  Phone -  Internet -  Smart Meter

communication infrastructure

Intelligence/Communications Layer

Conventional Grid SMA

RT

GR

ID

Status / Control

Status / Control

Status / Control

Diagram source: EPRI

Diagram source: EPRI

Conventional grid interoperates with smart grid intelligence through enhanced devices: - Smart meters - Auto Switches - Intelligent Transformers

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MINISTRY  OF  ENERGY  

48  

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  

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MINISTRY  OF  ENERGY  

49  

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.    

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MINISTRY  OF  ENERGY  

50  

Key  Drivers  for  Smart  Grid  

•  Key  Drivers  for  Smart  Grid  in  Ontario:  

1.  Aggressive  integration  of  renewable  distributed  generation  

2.  One  of  North  America’s  most  ambitious  conservation  targets  

3.  One  of  the  largest  smart  meter  (1st  in  North  America)  and  time  of  use  pricing  (1st  in  world  to  have  mandatory)  rollouts  globally  

4.  Advanced  automotive  sector  and  efforts  to  accelerate  electric  vehicle  adoption  

5.  Strength  in  manufacturing,  research,  and  utility  sectors  

•  Key  Success  Factors:  

•  Feed-­‐in-­‐Tariff  

•  Green  Energy  Act  

•  Engaged  Customers  

•  Engaged  Leadership  

•  Leading  Utilities  

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MINISTRY  OF  ENERGY  

51  

• Modernize outdated meter infrastructure

• Enable time-of-use pricing and conservation

• Provide basis for smart grid / smart homes

Ø  Gives customers ability to move discretionary

load to cheaper hours. Ø  Reduces long-term cost of electricity supply Ø  Increases awareness of consumption

What  do  Smart  Meters  do?  

Benefits to Consumers: Ø  Facilitates conservation and demand

management programs Ø  Accurate meter reads (no more estimates) Ø  Timely information to help manage

consumption Ø  Better customer service (e.g. outages

automatically known)

Benefits to the Electricity System: Ø  Reduces the number of LDC field visits

to read and service meters Ø  Reduces tampering and theft of

electricity Ø  Significant operational benefits (better

outage management and system visibility)

Ø  Environmental benefits as a result of

load shifting Ø  Savings in avoided/ deferred capacity

investments (new generation and transmission)

Smart  Meter  Benefits  

TOU  Benefits    

Progress:

4.7 million deployment complete

> 3.4 million

expected to be completed by Summer 2012

Leadership  on  Smart  Meters  

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MINISTRY  OF  ENERGY  

52  

A  Framework  for  Smart  Grid  

The  Green  Energy  Act  established  what  a  smart  grid  should  do  for  Ontario.  

Power System Flexibility Enable more renewables and better

efficiency in grid operation

Adaptive Infrastructure Encourage more innovation and

ensure adaptivness to future conditions (e.g. electric vehicles)

Customer Control Enable more conservation through

a shift to smarter homes

•  Mobile charging infrastructure to support EVs •  Storage opportunities •  Enabling innovative technologies

More Innovation

•  Customer based micro-generation •  More distributed generation, used more efficiently

(i.e. less transmission investment)

Cleaner supply and lower costs

•  Smart meters •  Time-of-use rates •  Home Energy Management •  Load control

More Conservation

Expected  Outcomes  Focus  Area  

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MINISTRY  OF  ENERGY  

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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  

 

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MINISTRY  OF  ENERGY  

54  

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  

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MINISTRY  OF  ENERGY  

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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.

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MINISTRY  OF  ENERGY  

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Thank  you.  

Jon  Norman  Director  –  Transmission  and  Distribution  Policy  

Ontario  Ministry  of  Energy    

Phone:  416-­‐326-­‐1759  Email:  [email protected]  

 

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MINISTRY  OF  ENERGY  

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EFFICIENCY  •  Make  the  grid  more  efficient  and  cost-­‐effective  

through  control  and  automation,  visibility.    

COORDINATION  •  Coordinate  activities  of  multiple  LDCs  and  

encourage  partnerships.    

INTEROPERABILITY  •   Ensure  information  exchange  between  systems      

through  use  of  standards  and  partnerships.    

ECONOMIC  DEVELOPMENT  •  Encourage  economic  growth  and  job  creation  

within  the  province  of  Ontario.    

ENVIRONMENTAL  BENEFITS  •  Promote  green  technologies  to  reduce  

environmental  footprint.    

CUSTOMER  VALUE  •  Provide  benefits  to  electricity  customers  such  as  

access,  participation,  visibility,  and  choice.    

SECURITY  •  Protect  against  unauthorized  or  malicious  

attacks  to  the  grid.    

PRIVACY  •  Integrate  privacy  requirements  into  smart  grid  

planning  and  design.  Privacy-­‐by-­‐design.    

SAFETY  •   Ensure  health  and  safety  and  improve  it  

wherever  practical.    

RELIABILITY  •  Maintain  reliability  and  improve  it  wherever  

practical  through  flexibility,  innovation  and  forward  compatibility.  

Smart  Grid  Principles  

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MINISTRY  OF  ENERGY  

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Smart  Grid  Objectives  

 CUSTOMER  CONTROL  Conservation  through  

smarter  buildings  

 POWER  SYSTEM  FLEXIBILITY  Enable  renewables  and  better  efficiency  in  grid  operation  

 ADAPTIVE  INFRASTRUCTURE  More  innovation  and  adaptive  

to  future    conditions  

•  Access  •  Visibility  •  Control  •  Participation  In  Renewable  Generation  

•  Customer  Choice  •  Education  

•  Distributed  Renewable  Generation  

•  Visibility  •  Control  And  Automation  •  Quality  

•  Flexibility  •  Forward  Compatibility  •  Encourage  Innovation  •  Maintain  Pulse  On  Innovation