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Has Canada cracked the Smart Grid consumer code?

Canada may have only a fraction of the installed generating capacity of Europe and the US, but the eyes of the technology world are watching and learning how the country has made huge strides with its Smart Grid programme, including keeping consumers onboard rather than out of the loop.

Elisa Wood

The average consumer thinks about energy only about six minutes per year, according to a statistic often quoted in energy efficiency circles. Whether this is true or folklore, the underlying premise is correct: energy bores the masses.

Canadian utilities have so far escaped the controversies triggered by US smart meter rollouts

Energy's lack of glamour never mattered much before, but it does now, as North America and Europe try to build Smart Grids, which require customer interaction to achieve efficiencies through cutting-edge electronic technologies.

Energy companies are vigorously studying, testing and piloting behavioural strategies to identify how to capture our attention. None claim it's easy. Even the promise of reducing electric bills or receiving financial rewards doesn't always work.

Yet with little manoeuvring, the Canadian province of Ontario has been flooded with applications to participate in its micro-fit programme since it was announced in 2009. The province – which has a total installed capacity of 37,000 MW – has received more than 40,000 micro-fit applications, totalling about 400 MW, mostly for small, solar panel installations.

Welcome to Canada, a place which has only about one-sixth the installed generating capacity of Europe and one-eighth that of the United States, but is garnering worldwide attention for its green energy and Smart Grid accomplishments. What makes Canada so smart? "Canada is in a privileged position," said Alex Bettencourt, managing director of SmartGrid Canada, an advocacy organisation. "The vast majority of Canadian utilities are government owned. So the utilities act as instruments of government policy."

While government ownership may have some drawbacks, for Canadian utilities it means they are likely to receive the tools they need to achieve public policy goals. For example, unlike their privately held counterparts in the US, Canadian utilities successfully convinced the government to give them dedicated wireless spectrum for use in Smart Grids. Why is this important? Some analysts question how long US utilities – which lack this privilege – will be able to meet the growing demands of Smart Grid with disparate communications networks.

Major US utilities have warned the Federal Communications Commission about the impending problem and appealed to President Barack Obama. They say their lack of dedicated spectrum may leave them with insufficient capacity, wireless interference, poor reliability and compromised privacy as they roll out the Smart Grid. Canadian utilities face no such problem because they have secured 30 MHz of dedicated spectrum.

A culture of conservation

Industry insiders say Canada is also able to progress quickly towards developing a Smart Grid because it has presented a consistent green energy agenda and clear and repeated messages about the benefits of Smart Grid, whether on bus signs, through web portals or in meetings between utilities and customers.

"The number one thing you should do is over-communicate the value," said Scott Smith, the vice-president of global technical services for eMeter, a California-based Smart Grid software company. "They're doing that."

Thomas Doggett, chief marketing officer for Calico Energy Services, a data management company in Washington state that has worked extensively in Ontario, added: "The utilities realise the importance of articulating value way beyond, 'You are going to save money' – because the customer may not see money savings for some time."

The key, say utility executives, is to get away from the narrow and technical definitions the industry often uses when describing Smart Grids. In its purest sense, Smart Grid represents the digitalisation of the electric grid with two-way communications technologies, usually centred around the Smart Meter. Such a description means little to most consumers, and is unlikely to inspire them to embrace the technology.

But Canadian utilities work to show consumers the bigger picture, the direct link between reducing electric peak load through Smart Grids, cutting back on fossil fuel generation and integrating more renewable energy. The Smart Grid is tied into Canada's national goal to reduce greenhouse gases by 17 per cent below 2005 levels, and phase out conventional coal fired plants beginning in 2015. Canadians also talk about Smart Grids in terms of laying the groundwork to co-ordinate power from many small generators. Others, like Hydro One, tell customers that the Smart Grid is creating a culture of conservation.

In fact, Canadian energy company executives and policymakers tend to describe green energy goals and the Smart Grid in one breath, and do not treat them as discrete endeavours – as some US utilities do.

"The thing that resonates well with customers is that we are moving toward renewable energy, and we are helping with the environment through conservation. We tie that back into how the electricity system works," said Rick Stevens, Hydro One's director of development strategies. "Customers are able to say this really makes sense. I need to get off the peak and you are giving me a price incentive to get off the peak."

Calgary-based ENMAX, a utility that serves the province of Alberta, considers itself engaged in the Smart Grid, although it has not even begun to install Smart Meters – and may not do so for some time. Instead, its Smart Grid effort for consumers largely focuses on distributed generation. "Our definition of Smart Grid is probably slightly different. We are looking beyond the meter into the home, with efforts on the consumer side," said Helen Bremner, ENMAX executive vice-president of residential markets. "Our programme is about enabling and promoting distributed generation, micro solar and wind. We're also looking at micro combined heat and power and enabling energy management solutions and conservation in the home."

Who's the smartest of them all?

Most of Canada's Smart Grid activity is in Ontario, one of North America's most active green energy centres. Home of about one third of Canada's 34 million people, the province is the only jurisdiction in North America that is fully divorcing itself from coal, with plans by 2014 to shut down 6200 MW of coal fired generation. Its abandonment of coal is integral to its Smart Grid effort. It has linked this goal with its plan to install 10,700 MW of non-hydroelectric renewable energy by 2018 and reduce energy use 7100 MW by 2030.

To attract enough solar, wind, and bio-energy, Ontario passed the Green Energy and Green Economy Act in 2009 with a set of generous feed-in-tariffs (FiTs) for renewables. The tariffs, which pay as much 80 Canadian cents/kWh for rooftop solar installations, are driving Ontario's massive number of applications in the microFiT programme. The province had approved contracts for about one-fifth of the 42,905 microFiT applications submitted by the end of October. The programme offers the FiT to consumers or businesses with onsite renewable generators no larger than 10 kW.

Ontario officials were taken aback not just by how many subscribed to the micro-fit programme, but who they were – not the expected tech-sophisticated urban dwellers of Toronto, but farmers in rural outposts who wanted solar panels.

Hydro One's Stevens explained how the rush occurred: "We are entrepreneurial here in Ontario. There are a number of companies that developed 10 kW ground-mounted systems that track the sun. They started selling them door-to-door in rural Ontario."

The massive acceptance of rural solar created an unexpected problem. Solar panels can help alleviate peak demand in cities. But rural areas have less industry and population so less demand. In fact, Hydro One began to worry that the rural solar panels would pump too much generation into the grid, especially during shoulder periods – and they would be doing so through a 100-year-old distribution system that was never designed to flow power in that direction.

Calico's Smart Grid software integrates many players and sources of information Source: Calico Energy Services

The solution? Hydro One decided to make the grid even smarter. The utility has launched a pilot programme to test a system that remotely reaches into a home or business (with permission) and shuts down its energy production – a reversal of the more typical reason utilities reach into a customer's premise, which is to reduce energy consumption as a response to demand.

Through predictive modelling and a Smart Meter switch, the utility is able to pinpoint where and when over-production of electricity might occur, a day in advance of the event. Then the utility can remotely disconnect any onsite generators that are expected to cause a problem.

"It is a surgical approach. We are not taking out all the generators. We can go right down to the feeder level, a country road off of a country road," said Hydro One's Stevens. The consumer may notice the meter is not registering any power production, but otherwise will experience no change, with power flowing in from the grid to keep the home up-and-running.

Fine-tuning such strategies is important in Ontario, given the breadth of its Smart Grid programme. Utilities expect to have Smart Meters installed in most households and small businesses by the end of this year under government edict. (Smart Meters are not being installed for large industrials because most already use a kind of advanced meter and spot market pricing.) The province also has converted the majority of customers to time-of-use pricing, so that they can adjust their usage to price signals.

Ontario's effort may be large, but it is also measured. Hydro One officials say they have been implementing the Smart Grid step by step since 2006 when they began installing meters. Over the years, they gradually built out their telecommunications network, activated the two-way meters so that they could communicate, incorporated the meters into billing and introduced customers to price transparency. The company now has about 1.3 million Smart Meters installed.

Like Silicon Valley, but colder

All of this government and utility effort is not only catching the attention of Ontario's consumers, but also attracting energy entrepreneurs, typically software and hardware operators who want to be part of Ontario's rich Smart Grid market. Some are home-grown. Others are based in other Canadian provinces, California's Silicon Valley, or other locations, but are converging on Ontario.

GE, for example, in March 2011 announced plans to build a $40 million Grid IQ Innovation Centre in Ontario, a 18,600 m2 facility to develop, manufacture and test grid modernisation technologies. The building is expected to open in July 2012.

As far back as 2004, Blue Line Innovations, based in Canada's Newfoundland and Labrador, was participating in small Smart Grid pilot programmes in Ontario. And in 2006 Hydro One awarded Blue Line a contract to pilot 30,000 of its energy displays, marking one of North America's first major test programmes of such technology. For the company, the project was a launching pad. A year later, Blue Line's energy displays were in the United States, being tested by Boston-based NStar. Since then, Blue Line has participated in programmes with 125 utilities. The system works by way of a sensor placed on the home's meter. It reads the electricity usage and transmits it wirelessly to a handheld display inside the house or a cell phone. Blue Line now sells its energy displays – which have grown in sophistication over the years – through several major retail stores in North America.

A Smart Grid professional setting up systems in the field Source: Clevest

Ecobee is another Smart Grid gadget company that began in Ontario and expanded rapidly. The company emerged out of the frustration experienced by chief executive and founder Stuart Lombard when he tried to find an easy-to-use programmable thermostat. The Toronto-based company now produces WiFi-enabled thermostats, sensors and energy management systems, distributed throughout Canada, the US and Mexico.

California-based Emeter, which offers middle-layer software applications to enable utility Smart Grid devices, also has found itself doing a lot of business in Ontario, with clients that include Toronto Hydro and Ontario IESO. The company's relationship with the province goes back to 2004, when it participated in a pricing pilot with Ontario regulators to determine price sensitivity in the marketplace. The company is now working on providing analytics for Toronto to mind the rich data coming back from its Smart Meters and TOU pricing.

Calico Energy Services, based in the US state of Washington, has focused on Ontario because of strong support by regulators for demand-side management. The company offers an energy services, data management, and command and control software platform for Smart Grid. Calico Energy was selected by the Ontario Power Authority a year ago to help test consumer response to demand-side management and in-home energy displays.

Meanwhile, Germany-based Elster is working with Toronto Hydro to drive what Jack Robertson, vice-president and general manager of Elster Metering, Canada, calls the "next generation of Smart Grid device development".

This involves integrating "intelligence and sensing" into previously passive and blind devices. While other utilities work at rolling out Smart Meter networks, "Toronto Hydro has been billing its customer base from hourly interval data for more than a year, and is now leading the industry in understanding the value of this new found grid data", he said.

Clevest, based in British Columbia, is helping utilities avoid mistakes and inefficiencies in Smart Grid installations with its software. Thomas Ligocki, president and chief executive, described an incident in New Zealand, where a person died because the utility cut power as it installed a Smart Meter, not realising someone in the house was on life support. Among other things, Clevest's software prevents a repeat of this tragedy by alerting technicians – utilities keep lists of such customers.

Massachusetts-based FirstFuel Software says it is not in Ontario yet, but would like to be soon. The newly launched company has developed what it describes as a "zero touch" measurement system now in testing in about 50 buildings in the US. The software platform analyses a building's energy use from afar without a human ever setting foot inside. Instead, the company employs geographic information systems (GIS), the internet, one-year's worth of hourly billing information and a proprietary algorithm to remotely analyse a building's energy use and recommend specific improvements.

"Canada, unlike the US is part of the Kyoto Protocol. So the activity there is a little higher. They have Smart Metering and have had TOU [time-of-use pricing] for a little longer than the US. So we see it as a very lucrative market," said Swapnil Shah, co-founder and chief executive.

The road ahead

Of course, Canada's progress toward the Smart Grid hasn't been without its problems. Just after Hydro One went live with its TOU pricing in the middle of 2010, a 'perfect storm' hit the utility and drove up electricity prices. The increases were caused by tax changes, a hot summer and commodity price hikes, not Smart Meter installations. But "the thing customers point to is the shiny new meter on the side of the house", said Dave Watts, Hydro One's communication leader for Smart Grid.

The utility tackled the problem by creating a customised information campaign. "We spent a lot of time educating customers to the point where we were looking at individual bills, in an automated way, and picking out any with anomalies, calling customers up and walking them through what was going on, explaining why they were likely to experience a high bill," he said. As a result, Hydro One was able to deter the rate revolt seen in some other jurisdictions about the cost of Smart Meters.

Ontario's programme also has come under attack because it includes a domestic content requirement that requires companies that receive FiTs to source a percentage of their labour and materials from within the province. Japan has filed a complaint with the World Trade Organization, arguing that the content requirement discriminates against green energy companies located outside of the province. Mesa Power, a Texas-based wind power developer, is challenging the content rule too. Unless Mesa Power reaches an agreement with Ontario, the next step is a full scale international investigation of the domestic content requirement under North American Free Trade Agreement.

On the plus side, Ontario has been able to escape the level of acrimony over Smart Meters found among consumers in some areas of the United States. Utilities in both Maine and California have faced opposition to Smart Meters from consumers who said the meters breach privacy and harm health through radio frequency emissions. The utilities countered that privacy protections are in place and that research indicates no health dangers from the meters. Still, the protests caused regulators to rethink making Smart Meters mandatory for all customers; they structured opt out provisions.

Through white papers and outside experts, Hydro One offered information early on the health and privacy issues, in effect heading off serious protests before they occurred. The result underscored one of the major lessons Hydro One says it learned as a Smart Grid pioneer: Be aware of the risks and plan for them. "You have to keep in mind customer perception," said Hydro One's Watts.

"The real lesson learned is: Given all the potential variables, you want to spend time upfront understanding your risk and developing plans around how you will quantify and mitigate the risk. A lot of people jump into testing [of equipment], but that is mitigating just one potential risk."

One risk difficult to anticipate is political change. In the autumn, Ontario's green energy agenda came under attack by conservative factions trying to unseat the Liberal Party in the provincial election. The conservatives failed to win the election, but the vote was split between three parties, the liberals, the conservatives and a third left-leaning party. As a result the liberals, who created the green programme, now find themselves governing from a weakened position. They no longer hold a majority of the seats in the legislative assembly. Still the liberals expect to proceed with their green agenda in Ontario. The third party, called the New Democrat Party, also stood on a strong green energy platform, so is expected to back the incumbent liberals in retaining the Smart Grid and renewable energy initiatives.

So with Ontario as its showpiece, Canada continues to look 'smart' on the world stage as it presses forward in recreating its electric grid. It may not be a glamorous show, but Ontario consumers appear to be paying attention, a big start for an industry used to playing to audience that is inattentive – at least until their lights go out.

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