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MINISTRY OF ENERGY

Smart Meters and Smart Grid:

An Ontario Case-Study

Jon NormanOntario Ministry of Energy

The World Bank

March 6, 2012


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MINISTRY OF ENERGY

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What is Smart Grid?

Telecom Network- Phone- Internet- Smart Meter

communicationinfrastructure

Intelligence/Communications Layer

Conventional GridSMARTGRID

Status /Control

Status /Control

Status /Control

Diagram source: EPRI

Diagram source: EPRI

Conventional gridinteroperates withsmart gridintelligencethrough enhanceddevices:- Smart meters

- Auto Switches- IntelligentTransformers


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Why does Ontario need a Smart Grid?

Driven by Aging infrastructure and changing

objectives (e.g. environment) Evolving opportunity to apply

technologies that allow intelligent,two-way communications & control.

Generally, transmission systems arealready equipped with thesecapabilities. Distribution systems aremuch less flexible and efficient.

Smarter grids can enable: more efficient grid operation, connection of diverse and flexible

generation, including renewables, enhanced conservation opportunitiesfor customers

adoption of new and innovativetechnologies, like electric vehicles.


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Ontarios Drivers

Each jurisdiction has its own particular drivers for advancing the smart grid.

These shift with time, highlighting the fact that the smart grid is a journey rather than adestination.

Ontario investment into smart grid

More than $1 billion smart metering infrastructure

Additional $390 million per year over next 5 years (renewable integration, load management)

Ontario has several factors that are leading it toward a smarter grid:

1. Aggressive integration of renewable, distributed generation into the distribution grid

2. One of North Americas most ambitious conservation targets

3. One of the largest smart meter and time of use rollouts globally4. Significant effort to create conditions for accelerated electric vehicle adoption

5. Ability to leverage existing leading edge assets in manufacturing, research, and electricitydistribution systems


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Smart Metering in Ontario

Ontario is the first jurisdiction in North America to roll out smart meters and the first in theworld to introduce mandatory time-of-use pricing.

Commitment to jurisdiction-wide smart metering and time-of-use pricing announced in 2005

Progress to-date:

More than 4.7 million meters are installed (99 percent of households and smallbusinesses).

More than 3.6 million customers on time-of-use rates

Costs

$ 1 billion initiative for smart metering and wireless infrastructure & control systems

$ 90 million centralized data management centre

Costs recovered through electricity customers (about $3 per meter/month)


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Modernize outdated meter infrastructure Enable time-of-use pricing and conservation Provide basis for smart grid / smart homes

Gives customers ability to movediscretionary load to cheaper hours.

Reduces long-term cost of electricity supply

Increases awareness of consumption

What do SmartMeters do?

Benefits to Consumers:

Facilitates conservation and demandmanagement programs

Accurate meter reads (no more estimates)

Timely information to help manageconsumption

Better customer service (e.g. outagesautomatically known)

Benefits to the Electricity System:

Reduces the number of LDC fieldvisits to read and service meters

Reduces tampering and theft ofelectricity

Provides significant operationalbenefits (better outage managementand system control)

Environmental benefits as a result ofload shifting

Savings in avoided/ deferred capacityinvestments (new generation andtransmission)

Smart MeterBenefits

TOUBenefits

Smart Metering Benefits


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MINISTRY OF ENERGY

Time of Use Pricing Structure

Time-of-use rates provide incentives to shift consumption away from peak periods, whenelectricity is costly and/or environmentally damaging to produce.

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Functional Specification for Smart Meters

Meet all applicable laws (health, safety, etc)

Acquire, date and time stamp all meter reads at theend of each hour

Transmit meter reads to the distributors AMCC and

MDM/R by 5 a.m. following the end of each dailyread period

Achieve a prescribed minimum success rate inacquiring and transmitting meter reads (98%) and aprecision measure (at least 0.01 kWh)

Maintain time accuracy within a 1.5-minutevariance, as measured against Official Time

Provide the necessary reporting capabilities toenable distributors to monitor the health of thesmart metering infrastructure

Security requirements

LAN

AMRC

AMCC

Meters+ AMCD

MDM/R

WAN

CIS +Billing System


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MINISTRY OF ENERGY

Benefits

In the ramp up to province-wide TOU rollout, several pilot studies were completed byOntario LDCs which indicated that time-of-use pricing contributed to reduction inconsumption of electricity during peak demand hours.

Early results show load shifting impacts in the range of 3-5%

Smart meters have also:

Helped utilities manage their systems better as increasing amounts of renewableenergy come onto the distribution system.

Provided automatic notification of outages and improved ability to detect source ofoutages

Enabled a comprehensive database for improved services and potential for openenergy data

Provided a platform for smart home energy management systems.

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Objectives for a Smart Grid in Ontario

The Green Energy Act set aframework for the development of asmart grid

Over 80 distinct utilities acrossprovince with different objectives

Ontario government has:

Defined smart grid objectives forthe province

Established responsibilities ofstakeholders

Identified areas for coordination

The Green Energy Actestablished 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


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Customer Control

Installation of a

Smart Meter

Implementation of

Time of Use Rates

Increase visibility ofprice and

commodity usagefor customer

Add load control for

Air Conditioningand Appliances

Customers are

active participantsin Conservation

Complete Now In various stages of piloting

More opportunities for conservation and energy management

Focus Area Expected Outcomes

Customer Control

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

More Conservation


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Enabling Renewables and Power System Flexibility

Feed-in Tariff (FIT) and

Micro FITLimited SystemVisibility/Control

Smart Grid Capacity

Building / DemonstrationProjects

Implement Projects to

give information on real-time supply to gridoperator

Seamless integration of

distributed generation;Better Grid Efficiency;More flexible operation

Now Advanced stages of piloting, e.g. Hydro Ones Smart Zone

Power SystemFlexibility

Distribution Automation Customer based micro-generation More distributed generation,

used more efficiently

Increased visibility and controlover grid operations

Increased efficiency and flexibility managing distribution networks



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Adaptive Infrastructure

Installation of a SmartMeter and

Implementation ofTime of Use Rates

Charging InfrastructureFund

Capacity Building /Demonstration

Projects, particularlycharging infrastructure

Enablement of new products, services, and

marketsMore efficient and flexible grid operation

Near Complete Now Future

MoreRenewables

More innovation and flexible grid infrastructure

AdaptiveInfrastructure

Mobile charging infrastructure to support EVs Storage opportunities Keeping room for innovative technologies

More Innovation



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Need for Caution

.Even so, 2 key facts are likely to meancontinued move to smarter grids:

1. The technology exists and is largelyproven. Increasingly it is being integratedon electricity systems.

2. BAU unlikely to be sustainable

Environmental and securityconsiderations in the west

Reliability and load growth indeveloping world


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Drivers for Smart Grid

Drivers

System efficiency (operational costs)

Aging infrastructure

Environmental benefits (Integrating renewablegeneration)

Improving conservation opportunities

(demand response) Security

Barriers

Mature (and rigid) regulatory system

Benefits are marginal rather than ground-changing

Drivers

Power system challenges

Reliability (several hour interruptionsper day)

Growth (tremendous load growth, notenough supply)

Rural electrification (microgrids) Theft of electricity

Barriers

Cost could be prohibitive, depending on stateof specific technology

Institutional capacity & public education

Primarily asset management strategy Can be integral part of system development

Western Jurisdictions Developing Countries

Lessons are often mutually relevant


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Lessons from Ontario

Lessons from Ontario:

Dont get ahead of population

Need to understand objectives

IT implementations can be more complex than at first appear

Early adoption risk, but.

We tend to overestimate the effect of a

technology in the short run andunderestimate the effect in the long run

Roy Amara