smart grid forum-report

8/4/2019 Smart Grid Forum-Report

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Enbng TooowsEectct SsteReport o the Ontario Smart Grid Forum


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The Forum grateully acknowledges the contribution o Joel Singer,

o Singer & Watts, Forum Facilitator and Principal Author.

CONTENTS

Executive Summary 1

Members o the Smart Grid Forum 8

Introduction 9

Smart Grid Vision 11

Consumer Technologies 16

Distribution 19

Distributed Energy Resources 25

Transmission 31

Communications 34

Electric Vehicles 38

Innovation and the Economy 41

Conclusions and Next Steps 43

Appendix A Presentations with Links and Additional Inormation Resources 44

Appendix B Inormation Exchange or Coordinating Smart Grid Operation 47


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Executive Summary

ThE SmarT Grid

The use and production o electricity are changing. Consumers are becoming more aware o the environ-

mental impacts o the electricity system and are seeking greater ability to manage their electricity use to

control costs and help improve the environment. New dispersed energy resources such as solar, wind and

storage hold the promise o not only lowering greenhouse gases, but also allowing consumers to produce

their own electricity and sell the excess. Widespread use o plug-in electric vehicles will bring even greater

change as consumers look to conveniently charge their cars at home or on the road.

These changes will require a paradigm shit in the electricity system. Today, the grid is primarily a

vehicle or moving electricity rom generators to consumers. Tomorrow, the grid will enable two-way ows

o electricity and inormation as new technologies make possible new orms o electricity production,

delivery and use. The smart grid is the name given to the new electricity system that will emerge rom

this paradigm shit.

A smart grid is a modern electric system. It uses sensors, monitoring, communications, automation

and computers to improve the exibility, security, reliability, efciency, and saety o the electricity system.

It increases consumer choice by allowing consumers to better control their electricity use in response

to prices or other parameters. A smart grid includes diverse and distributed energy resources and

accommodates electric vehicle charging. In short, it brings all elements o the electricity system

production, delivery and consumption closer together to improve overall system operation or the

beneft o consumers and the environment.

Soce: Eopen Tecnoog Pto StGs

1Enbng Tooows Eectct Sste: Report o the Ontario Smart Grid Forum


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Over the past ew years, Ontario has undertaken bold initiatives that both underscore the need or a

smart grid and help move us toward it. To reduce the environmental ootprint o the electricity sector,

the Province has:

Required the shut-down of Ontarios coal-red generation;

Worked to create a culture of conservation; and

Procured renewable generation sources to meet future electricity needs.

These initiatives require the electricity system to accommodate new types o generation in new locations

including variable generation sources whose output depends on the wind and sun. The system must also

promote increased consumer involvement in electricity consumption decisions and incorporate two-way

power ows on lines that have historically been used or delivery alone.

Ontarios leadership in smart meters represents an essential rst step in realizing the benets of a

smart grid or consumers. By measuring hourly electricity consumption, these meters allow the provision

o prices that vary with time-o-use. Research has shown that providing transparent electricity prices to

consumers together with time-o-use rates can lead to consumption reductions that range rom fve to

fteen per cent. The completion o smart meter installation and implementation o time-o-use rates,along with the inormation necessary to educate consumers about these changes, will let consumers

beneft rom in-home energy displays, home energy management systems and related services. These

devices and services will help households and small businesses to better manage their electricity use

in response to prices or other parameters.

Provincial initiatives on conservation, renewable generation and smart meters begin the move towards a

new electricity system, but their full promise will not be realized without the advanced technologies that

make the smart grid possible. The challenges that Ontario aces in simultaneously incorporating distribut-

ed generation, addressing growth, and replacing aging inrastructure while maintaining reliability and qual-

ity o service are daunting. While new grid inrastructure will be necessary to connect generation resources,

replace aging assets and address growth, simply adding wires and equipment without intelligence is nota viable option.

While promising, smart grid technologies are not risk ree. Many o these technologies are in the early

stages of development. Not all of them will advance to commercialization and for some, the cost of

implementation on a commercial scale may prove prohibitive. Finally, the challenge o interoperability,

enabling new and existing technologies to exchange inormation and work together is substantial.

Overcoming these challenges will require innovation, investment, creativity and hard work, but i Ontario

is to realize a sustainable future and continue to grow and prosper, the transformation of its electricity

inrastructure is essential. Clearly defning the roles and opportunities or all the potential market players

will create an environment that encourages the investment necessary to support this transormation.



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Ontario is well positioned to develop smart grid technologies and systems. The Ontario Centres o

Excellence (OCE) currently has 14 projects underway or in the pipeline that relate to smart grids.

All are collaboratively supported by industrial partners, academic institutions and OCE. The total

investment in these projects is currently close to $12 million with almost hal o this amount coming rom

OCE. Sustained funding for research and development is essential if Ontario is to realize the potential

benets from developing and commercializing smart grid applications.

The potential of smart grid technologies will only be realized if they are operated by skilled employees

and eed into processes designed to take ull advantage o the new technologies. Ontario must continue

to educate and train employees who are capable o designing, developing and operating the smart grid.

Together, technology, people and processes will permit the realization of a modern electricity system

that benefts all Ontarians.

Summary Of ThE fOrumS WOrk

This report presents the work o the Ontario Smart Grid Forum (Forum), a group o industry leaders who

came together over a seven-month period to learn more about the smart grid, its benefts or consumers,

and to develop recommendations for advancing it in Ontario. The Forum did not undertake to analyze in

detail the cost o moving to a smart grid or to speciy technology requirements as these matters will

depend on the investment decisions o individuals and companies, and should be considered in the

context o those decisions.

The Forum heard rom invited experts on various aspects o the smart grid and then discussed the

implications o their presentations or Ontario. The presentations covered the ollowing topics.

St G Vson: The Forum heard overview presentations describing the vision o a smart grid and

smart grid activities in the United States and the European Union. In both jurisdictions, ongoing eorts

are underway to establish the technical, legal and institutional rameworks necessary or smart grids to

develop. This inormation helped Forum members to better understand the components and beneftso a smart grid and to develop a vision or an Ontario smart grid.

Conses: Smart grid technologies, particularly home energy management systems, will change how

consumers use electricity by increasing their ability to control household appliances and equipment and

thereby manage their electricity cost and contribute to a better environment. Some o these devices can

also integrate production rom renewable technologies like rootop solar photovoltaics. A smart grid can

change how consumers, utilities, retailers and other service providers interact by oering new ways or

them to communicate and expanding the types o service available to consumers. Smart grid technolo-

gies will also enable many dierent types o companies outside the utility sphere to enter the market or

home energy management systems and services to help spur innovation.

Onto Stts: Ontario distributors, transmitters and the Independent Electricity System Operator (IESO)are currently undertaking smart grid-related activities, mostly involving the ongoing implementation

o smart meters and associated technology. These companies are also developing or exploring smart

grid activities beyond smart metering. Examples o these activities include ongoing eorts to increase

available communications options and promote the creation o a communications spectrum or use

by electric utilities; projects to install distribution transformer monitors and related communications

equipment; and increased installation of automated distribution equipment.



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The Forums working group surveyed 12 of Ontarios largest distribution utilities, serving about

78 per cent of the provinces customers about their current investments and future investment plans

related to a smart grid. This research confrmed that in addition to smart meter deployment and

advanced metering inrastructure, distributors are incorporating other smart grid technologies into both

current and uture investment plans, but not on a comprehensive basis. The research concluded that

over the next fve years, currently planned investments by the distributors surveyed are insufcient to

allow or ull smart grid deployment.1

dstbton: The use o advanced sensing, automation and communications equipment on the

distribution system can improve reliability, equipment perormance, restoration times and power

quality. This technology also can be used to improve distribution system maintenance and operations,

and enhance system planning. The Electricity Distributors Association presented its vision or electricity

distributors, which sees them using advanced technology to optimize the operation of their distribution

systems and enhance their ability to provide a variety o energy services, including conservation and

demand management, and distributed generation, in support o provincial energy policy and community

energy plans.

dstbte Eneg resoces: Energy resources on the distribution system include generation, storage

and demand response. Ontario is in the process o incorporating substantial amounts o renewable

generation. Connecting this generation to distribution lines that were designed and built to deliver

electricity to consumers poses substantial challenges. Smart grid technology can help maximize the

amount o generation that can be connected to the distribution system while maintaining saety and

service quality to consumers.

Energy storage oers many potential benefts such as:

delivering energy to meet peak load;

providing ancillary services, including regulation and voltage support;

allowing for the deferral of distribution investments; and

helping to integrate variable generation such as solar and wind, and maximize the value of the energy

produced by these technologies.

While storage can produce many benefts, storage projects can be difcult to und because the benefts

produced typically ow to multiple parties. The returns to the entity investing in the storage acility may

be insufcient to justiy the investment.

Demand response is the ability o customers to change their consumption in response to price or other

signals. While demand response is currently ocused on reducing consumption during peak periods,

it is easy to envision uture circumstances where demand response also will be used to help balance the

variable production o wind and solar generation. Smart grid technologies acilitate demand response by

giving customers the ability to see prices and the tools to react to them.

1 Current Status and Investments Plans: David Curtis, Hydro One; John Mulrooney, PowerStream; Joshua Wong, Toronto Hydro: http://www.ieso.ca/imoweb/

pubs/smart_grid/Current_Status_and_Investment_Plans.pd



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mco-Gs: A micro-grid is envisioned as an integrated solution that meets the energy needs o a group

o consumers, such as a neighbourhood or a town, or a single consumer, such as a university. Research is

required to address questions regarding the costs and benefts o micro-grids and the appropriate role or

them in Ontario.

Eectc Veces: Plug-in electric vehicles oer the prospect o reduced emissions and lower cost. Their

widespread adoption, however, will present challenges and opportunities or the electricity system. At alocal level, the major challenge involves enabling vehicles to be charged saely and conveniently without

adversely impacting local distribution equipment. For the electricity system as a whole, the challenges

involve fnding ways to move vehicle charging into o-peak periods so as to avoid increasing peak load

and the resulting need or additional peaking resources. The opportunity involves using the energy stored

in vehicle batteries to provide peak period energy. A smart grid is essential i Ontario is to address the

challenges and embrace the opportunities presented by plug-in electric vehicles.

Stns n Sect: Standards and security are vital i the smart grid is to develop efciently over

time. Standards are required to allow devices developed by dierent companies or dierent purposes

to interact. The notion o interoperability takes the concept urther to cover the ability o various devices

to actually work together to perorm the unctions or which they were designed.

Security is crucial because grid modernization requires installing large numbers of devices that must

communicate back into essential computer systems covering core utility unctions such as operations,

outage management and billing. Many smart grid devices are deployed in physically unsecured locations

and thus can be accessed by those seeking to penetrate critical utility systems. Beyond the challenges it

poses or cyber security, the smart grid may enhance physical security at substations and other acilities

by acilitating remote monitoring via cameras and sensors.

Tnssson: Historically the large volume o electricity carried by transmission lines and their

relatively small number have justifed more extensive monitoring and more automated control o the

transmission system in serving large generators and consumers, including distributors. The need to

incorporate substantial quantities o variable generation and the development o storage will driveincreased application o advanced technologies. Transmission can become smarter through the

installation o additional monitoring to allow better assessment o conditions on interconnected systems

and through the use o technologies that enhance control o electricity ows over transmission lines.



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kEy rECOmmENdaTiONS

Presented below are some of the key recommendations that follow in the Forums Report. They

reect the central belie that Ontario should develop a smart grid to improve the prosperity o its

citizens, the performance of its electricity system and the environment. The rapid development of

a smart grid to beneft electricity consumers and advance environmental initiatives should be thepolicy o the Province o Ontario.

The Ministry of Energy and Infrastructure should facilitate the development of Ontarios smart

grid through legislation, regulation or other available means that clariy authorities, establish

requirements or create incentives for those entities investing in Ontarios electricity system to

accelerate the deployment or enhance the unctioning o smart grid technologies.

Consumers and their designated representatives should have access to timely information

on their consumption and the price they are being charged rom a smart meter with two-way

communication capability or via the internet. Consumers should pay prices that reect the

cost o energy at dierent times.

In order to plan and operate the grid reliably and efciently, distributors, transmitters, the Ontario

Energy Board (OEB), Ontario Power Authority (OPA) and the IESO should work together to:

develop requirements or and propose sufcient monitoring o distribution connected generation,

energy storage, and responsive load;

determine the authority necessary to direct the operation o these acilities, the conditions

under which their operation could be directed and any compensation that would be provided

to the facility;

propose contractual and pricing arrangements with distribution connected generation, energy

storage, and responsive load that support efcient grid operations and are consistent with the

operation of the wholesale electricity market;

coordinate the development and implementation o grid control and inormation systems to

acilitate the actions listed above.

A Task Force led by the Ministry of Economic Development and involving other relevant Ministries

should be created consisting o representatives rom the auto sector (vehicle manuacturers and

suppliers) electricity sector (OEB, IESO, OPA, distributors and generators) and universities to

develop a comprehensive plan or enabling plug-in electric vehicles in Ontario. The plan would

address policy, fnancial, and electricity system impacts o substantial electric vehicle penetra-

tion and identiy what is required to ensure that vehicles can be charged as they develop. The

Task Force should link to the ongoing collaborative work by the Electric Power Research Institute

(EPRI), the Society of Automotive Engineers (SAE) and standards development organizations to

develop electric vehicles standards.

Utilities, the IESO, the OPA, universities and OCE should conduct research and development

related to smart grids to advance Ontarios leadership position in this area, promote innovation and

develop green jobs in the province. The OCE should acilitate the development o a task orce to

produce a ramework or smart grid research in Ontario that would include targeted amounts

o unding and proposed unding mechanisms.



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CONCluSiONS aNd NExT STEPS

From this diverse body o materials a ew common themes emerged. There is tremendous excitement about

the potential o the smart grid to provide economic benefts and an improved environment. Balancing this

excitement is a recognition that not all smart grid technologies will deliver as promised. Inevitably, there

will be false starts and dead ends. Open standards and integrated approaches are the key to minimizing

the risk o stranded technologies.

Coordination on several dierent levels will be a key actor in the successul development o a smart grid.

On the technological level, there is the need or standards and interoperatibility to allow devices developed

by multiple suppliers to communicate and work together. Coordinated development across the divisions

o the electricity system (i.e. customers, distribution, retail service providers, transmission and genera-

tion) also will be essential or the smart grid to unction as an integrated whole. To deliver on its promise,

the smart grid must enable the transparent exchange o operating and price inormation to efciently link

customer choices with the dispatch o resources and the operation o the electricity grid.

Better coordination will also be required between the electricity industry and other industries. Electric

vehicles are a particularly good example o this type o linkage. Vehicle manuactures and the electricity

industry must work together to ensure that electric cars can be charged conveniently in multiple locations

and that vehicle charging can be accommodated without adversely impacting electric service.

Presentations that described smart grid eorts in Europe and the United States showed that both these

jurisdictions are aggressively pursuing smart grid development. While one jurisdiction may be more

advanced in adopting certain technologies, overall there is no clear leader in smart grid development.

Instead, there is a universal sense of tremendous energy and enthusiasm for modernizing the electricity

system to beneft consumers and the environment through improved grid operations and the incorporation

o renewable generation. In terms o how to marshal this energy to transorm the electricity system,

however, the presentations contained more questions than answers. Ontario, like the other jurisdictions,

has the opportunity to both lead and learn rom the eorts o others as it works to create a smart grid.

The Forum sees value in continuing to champion smart grid progress, monitor ongoing developments and

advocate common approaches where they make sense. To this end, the Forum believes that an enduring

organization to promote smart grid development with a broader base of representation may be appropri-

ate in the uture. The Forum will consider this urther based on insights gathered rom discussions with

Government and industry ollowing the release o this Report.

aN OPPOrTuNiTy fOr iNNOVaTiON

Ongoing initiatives, growing consumer interest, new technologies, articulated policy direction and

economic pressures to increase efciency and perormance are all converging to create an unprecedented

opportunity for bold initiatives in Ontario to realize the potential offered by a smart grid. Ontario shouldseize the chance to become a leader in developing and deploying smart grid technologies to benet its

citizens and enhance its economy. In the pages that follow, Ontarios Smart Grid Forum discusses in detail

the opportunities that a smart grid presents and recommends actions to realize them.



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Members o the Smart Grid Forum

P mpPresident and CEO,

Independent Electricity System Operator

Chair, Ontario Smart Grid Forum

mce angeee

President and CEO, Veridian Corporation

dv Coe

President and CEO, Burlington Hydro

No fse

Chie Operating Ofcer, Hydro Ottawa Limited

anton hnes

President, Toronto Hydro Electric System

In addition to the members signing above, the Ontario Smart Grid Forum included representation

rom the Ministry o Energy and Inrastructure and the Ontario Energy Board. These representatives

participated in Forum discussions, but they were not participants in the consensus and are not responsible

or the recommendations o the Forum. The Forum wishes to acknowledge and thank the ollowing

representatives or their contributions:

aec dson

Chie Operating Ofcer, Ontario Energy Board

ann Coss

Senior Manager, Ofce o Consumer and

Regulatory Aairs

Ministry o Energy and Inrastructure

dv mcfenChair, Ontario Centres o Excellence

ket mjo

Senior Vice President Property Management,

Bentall LP

Jtn Ntwn, P.d, PEng.Proessor and Ontario Research Chair in Public

Policy for Sustainable Energy Management;

Executive Director, Waterloo Institute or

Sustainable Energy, University o Waterloo

P Sev

Vice President Conservation and Sector

Development, Ontario Power Authority

Wne St

Vice President Grid Operations, Hydro One

rosn lwence*

Assistant Deputy Minister, Consumer and

Regulatory Aairs Division

Ministry o Energy and Inrastructure

Pete Wce*

Deputy Minister Ministry o Energy

and Inrastructure

* Titles listed were appropriate prior to the fnal release o the report



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Introduction

This document presents the work o the Ontario Smart Grid Forum. The report begins by describing the

Forum, what it set out to accomplish, and how it operated. A vision o the smart grid ollows which

explains the smart grid and the undamental transormation o the electricity system that it represents.

Subsequent sections discuss various aspects o smart grid development and make recommendations in

each area. The report concludes with a section on advancing the smart grid.

ONTariO SmarT Grid fOrum

The Forum was convened by Ontarios IESO in collaboration with Burlington Hydro, Hydro One, Hydro

Ottawa and Toronto Hydro or the purpose o bringing industry leaders together to learn about the smart

grid, explore its potential benefts or Ontario, and recommend appropriate actions to policymakers and the

industry at large that will promote smart grid development.2 Over the period rom June through December

2008, the Forum heard experts rom Ontario and around the world present on various aspects o the smart

grid and engaged in ar ranging discussions on these topics. A list o the presentations to the Forum and alink to them can be ound in Appendix A.

In the process o developing this report, the Forum reected on what it had heard rom the various

presenters and the implications o this inormation or Ontario. The Forum operated by consensus and

the recommendations presented in this report are endorsed by all o the signatories to this document.

The Forum also ormed the Ontario Smart Grid Working Group (Working Group) to support its work and

undertake research. The Working Group helped the presenters to ocus their presentations, investigated

specic topics, provided more detailed background on the smart grid and contributed to the Forums

discussions. The Working Group produced a number o research papers, which are reerenced in

Appendix A.

Consumer Positions and Attitudes about Electricity

Value Proposition for a Smart Grid

Distributor Smart Grid Investments Current Status and Investment Plans

Survey of Smart Grid Technologies

2 Ontario Smart Grid Forum Terms o Reerence: http://www.ieso.ca/imoweb/pubs/smart_grid/TOR-SGF.pd



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aCkNOWlEdGEmENTS

The Forum wishes to acknowledge the assistance it received in completing its work. All the individuals who

presented, as listed in Appendix A, gave generously o their time and expertise. The Forum wishes to thank

them sincerely or their help and willingness to share their knowledge.

The support provided by the Working Group contributed signifcantly to the work o the Forum. Their eortsare appreciated. The Working Group consisted o:

re ab

Hydro Ottawa Limited

dv Cts

Hydro One Networks Inc.

ls dgn-Be, P.d

Natural Resources Canada

Jon moone

PowerStream Inc.

Jos Wong

Toronto Hydro Electric System Ltd.

The Forum also could not have completed its work without the eorts o certain key individuals. We wish to

thank the ollowing people or their contributions. Don Tench o the IESO served as the key liaison with the

Forum members, chaired the Working Group and contributed his knowledge, creativity and enthusiasm to

the Forums discussions. Derek Beamer of the IESO located expert presenters, worked with them to shape

their presentations and kept the Forum on track and on schedule. Melinda Rankin o the IESO provided

administrative support to Derek and Don, and the Forum as a whole.



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Smart Grid Vision

Smart grid is the term applied to tomorrows electricity system. It encompasses a variety of changes that

will transorm the way electricity is used, delivered and produced, and result in a cleaner more efcient

and more interactive electricity system. It represents a paradigm shit or electricity much in the way that

cell phones transformed communications. The concept is broad; it stretches beyond modernization of the

transmission and distribution grid to include devices that allow consumers to better manage their electric-

ity use, new ways o creating and storing electricity, and the widespread adoption o electric vehicles.

Ontarios move to a culture of conservation and its substantial commitment to renewable energy will

also be supported by the smart grid. Smart meters, a major smart grid component, can give consumers

timely inormation on price and consumption. Emerging devices will empower consumers to act on

this inormation automatically while at the same time improving their energy efciency, comort and

convenience. New sensing, monitoring, protection and control technologies will enhance the ability o

the grid to incorporate renewable generation.

The institutional structure o the electricity industry makes it easy to look at how the smart grid will impact

each piece o the system in isolation, but the most proound impact o a smart grid may be its ability

to link these pieces more closely together. In Ontario we have numerous distribution utilities, one large

transmission company and a few smaller ones; one large generating company and many smaller ones.

The province has a system/market operator and a corporation responsible or longer-term system planning,

and procuring electricity supply and demand resources. While the smart grid will aect each o these

segments in dierent ways, it will aect all o them by increasing their ability to work together to better

serve consumers.



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SmarT Grid dEfiNiTiON

A smart grid is a modern electric system. It uses communications, sensors, automation and computers

to improve the exibility, security, reliability, efciency, and saety o the electricity system. It oers

consumers increased choice by acilitating opportunities to control their electricity use and respond to

electricity price changes by adjusting their consumption. A smart grid includes diverse and dispersed

energy resources and accommodates electric vehicle charging. It acilitates connection and integrated

operation. In short, it brings all elements o the electricity system production, delivery and consumption

closer together to improve overall system operation or the beneft o consumers and the environment.

A smart grid is not only inormation rich, but also has the analytic inrastructure, processes and trained

individuals necessary to integrate and act on inormation in the very short time rames required by

the electricity system. It is characterized by clear standards, security protection and open architecture

that allow or continued innovation through the development and deployment o new technologies and

applications by multiple suppliers.

Soce: Eectc Powe resec insttte



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driVErS fOr a SmarT Grid

The Provinces commitment to establishing a culture of conservation and the desire to reduce the

environmental ootprint o the electricity sector are major drivers or creating a modern grid. The culture

o conservation requires the continual search or new ways to encourage all Ontarians to use energy more

efciently and lower consumption during peak periods. The comprehensive provision o smart meters

creates the opportunity or all Ontarians to better understand and manage their electricity usage and,

or those who wish, to become active providers o demand response.

The prominence of renewable energy in Ontarios resource portfolio requires an increased ability to

accommodate variable generation rom wind and solar. Where today the grid serves primarily as a vehicle

to move electricity generated in large central acilities to consumers, in the very near uture, the grid

will need to do much more. As the number and distribution o smaller generators grows, the operational

challenge o incorporating these energy resources, while maintaining saety and reliability, will also grow.

Meeting this challenge will require a smart grid.

Other eatures o Ontario also drive development o a smart grid. Like most jurisdictions in North America

that saw substantial growth ater World War II, Ontario is acing the need to replace a signifcant amount

o its electricity inrastructure. This need creates an opportunity to use smart grid technology both to

maximize the use of existing equipment and to improve the efciency of the grid as it is replaced. Growth

and redevelopment also present opportunities to introduce smart grid technologies in newly developed

and reconstructed areas. Demands by industry and consumers or increased reliability and power quality

technology are also pushing toward a smarter grid.

PrOmiSE, COST aNd TimiNG Of a SmarT Grid

The Forums research has uncovered many potential benets from a smart grid in the areas of economics,

environment and operating perormance. The ability o consumers to increasingly participate in the

electricity market by adjusting their demand in response to price or other signals will help to deer theneed or peaking resources and incorporate additional generation rom variable sources. Improved system

economics will come rom reduced losses during electricity delivery (line losses) and better use o station

equipment. Potential reductions in congestion will also allow greater use o the most cost eective

generation and improve the capacity to move generation throughout the province. Greater ability to

integrate generation and load can also reduce the cost o operating reserve and some ancillary services.

Finally, improved analytics and the ability or the grid to automatically restore itsel rom aults can

reduce the scope and duration o outages, lower operations and maintenance costs, and improve service

to customers.

Many o the identifed economic benefts also have associated environmental benefts. Reduced losses

not only reduce cost, they allow more o the electricity generated to reach consumers thereby lowering

the environmental impacts rom generation. Increased ability to incorporate distributed energy resources,

including both renewable generation and demand response, will allow Ontario to move more quickly

to a cleaner resource mix. Using existing assets more efciently can deer the need to expand the grid

to accommodate growth.

The smart grid oers enhanced operational perormance. Greater awareness o system conditions can

help anticipate and address problems before they lead to outages, minimize the scope of outages that do

occur, and enable more rapid restoration o power. With a smart grid, these fxes may increasingly occur



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automatically so that the grid becomes sel healing.3 The ability to remotely monitor equipment condition

and perormance can also enhance security, help better target maintenance and improve the accuracy o

replacement decisions. The inormation provided by a smart grid also can be used to improve power quality,

which is increasingly important in operating todays sophisticated equipment controlled by digital electronics.

By automating unctions that are controlled manually today, the smart grid will increase productivity,

which will be essential in managing the more complex grid o tomorrow and helpul in addressing thedemographic issues acing the electric system as the baby boomers retire and new workers need to be

hired and trained. Finally, the smart grid can provide signifcant operational advantages through its ability

to improve both public and worker saety by increasing the amount o system inormation available or

protection and control and by enabling remote operation and automation o equipment.

The costs o the smart grid are difcult to quantiy. They will depend on investment decisions and the

pace o implementation by numerous companies and individuals undertaking smart grid expenditures.

It is through the analysis underlying these decisions that the benefts and costs o specifc smart grid

investments will be evaluated. Certain cost elements that support the smart grid have already been

incurred. Ontarios investment in smart meters and advanced metering infrastructure provide an important

connection with customers and the beginning o the communications inrastructure necessary or a smart

grid. Additional communications, with greater bandwidth, speed and reliability will be needed, or ull

smart grid implementation. Moreover, much o the distribution inrastructure replaced over the last ew

years is already smart grid compatible.

Preliminary cost projections prepared by Forum members and extrapolated to cover Ontarios entire grid

sector (distribution, transmission and the IESO) estimate that incremental annual capital spending on a

smart grid would average about $320 million over the initial fve years.4

This investment, which is in addition to the spending currently planned on smart meters, grid expansion

to incorporate generation and grid reurbishment, would only occur based on a clear Provincial commitment

to smart grid implementation with supporting legislation and regulations. Customer support also would

be a key actor in evaluating smart grid investment and customer education would be necessary to inormconsumers on this issue. Investment at this level would require increased availability o demonstrated

smart grid technology and the human resources to install and integrate it. Finally, the costs and benefts o

proposed incremental smart grid investments would be evaluated through appropriate regulatory processes.

The timing o smart grid development also will depend on individual investment decisions, which in

turn will be inuenced by external policy drivers. The investment plans by grid owners, operators and

consumers that will largely determine the pace o adoption or smart grid technologies will be based on

their individual needs and circumstances, and their available capital. Government policy, implemented

through incentives, mandates or regulatory initiatives will be a major actor in inuencing the timing

o investments.

In short, because the smart grid is not a single project, but rather a series o actions by a variety oentities to modernize the electricity system, it is difcult to produce a denitive timeline for smart grid

development. Instead, the paragraphs below set out some likely eatures o smart grid development in

3 Characteristics o a Modern Grid: U.S. National Energy Technology Laboratory: http://www.netl.doe.gov/moderngrid/docs/Sel%20Heals_Final_v2_0.

pd?7982b8d0

4 Comparisons between this estimate and the smart grid spending estimates or other jurisdictions are not meaningul because o the dierent spending

categories included in various fgures and the dierent starting point or each jurisdiction. For example, the above cost estimate does not include the cost o

renewable energy resources or any smart meter costs.



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dierent time periods based on current issues and anticipated developments. They are predicated on

Provincial support or smart grid development, continued advances in technology, and the workorce

training and process development necessary to use this technology eectively.

By 2011, the most visible elements o smart grid deployment will be the completion o smart meter

installation and the introduction o residential time-o-use rates with the customer communications

necessary to support them. Time-o-use rates should lead consumers to begin installing simple in-homeenergy displays showing prices and consumption. Utilities will be demonstrating smart grid technologies

in operations and planning. Additional work to demonstrate the use o smart grid technologies to help

integrate distributed energy resources will be underway. Work should also be ongoing regarding the

incorporation o plug-in electric vehicles into the grid.

By 2015, consumers will have had several years o experience with time-o-use rates and the penetration

o home energy management systems and smart appliances to control energy use is expected to

increase substantially, particularly i there are programs that promote their installation. Results rom utility

demonstration projects should be widely available, leading to decisions on greater deployment o eeder

and substation automation technologies. This deployment is likely to ocus initially on new construction,

areas undergoing signifcant reurbishment, and locations with load growth or reliability issues that

are amenable to smart grid solutions. Utilities should also be engaged in the process o enterprise

integration so that the inormation produced by the smart grid can be used eectively in operations,

planning and customer service. Ontario will be well on its way to incorporating the substantial amounts

o renewable generation currently anticipated in its supply mix. Projects involving the use o storage and

demand response to address variability in renewable production should also be underway. Coordination

among the various divisions o the electricity system should be enhanced to take ull advantage o

available inormation across the entire system. The penetration o plug-in electric vehicles should be

accelerating and the inrastructure necessary to incorporate sae and convenient charging and reliable

billing should be largely in place.

By 2020, smart appliances and other equipment, and home energy management systems should be

standard in new installations and or replacement purchases. For utilities, build-out o the smart grid

should be accelerating as signicant retrot of existing equipment will allow them to maximize value

o the investments they will have already made in communications, computers systems and enterprise

integration. Micro-grids may begin to emerge in niche applications. Coordination across the sector

should be ully addressed. Plug-in electric vehicle sales should be substantial with convenient charging

and billing readily available. New technologies and approaches, as yet undeveloped, are likely to be

the ocus o smart grid activities.

OVErall rECOmmENdaTiON

This recommendation reects the Forums central belief that Ontario should develop a smart

grid to improve the prosperity of its citizens, the performance of its electricity system and the

environment. The rapid development o a smart grid to beneft electricity consumers and urther

environmental initiatives should be the policy o the Province o Ontario.

The Ministry of Energy and Infrastructure should facilitate the development of Ontarios smart

grid through legislation, regulation or other available means that clariy authorities, establish

requirements or create incentives for those entities investing in Ontarios electricity system to

accelerate the deployment or enhance the unctioning o smart grid technologies.



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Consumer Technologies

iNTrOduCTiON

While all aspects o smart grid development will ultimately impact consumers, this section discusses smart

grid technologies that directly touch residential and small business consumers. The Forum believes that asmart grid must enable devices that will allow these consumers to gain greater control over their electric-

ity usage to lower costs, improve convenience and support growing environmental awareness. A smart grid

must also acilitate consumer installation o small-scale sel-generation through renewable technologies

and help them sell any excess generation back to the grid.

OPPOrTuNiTiES aNd BarriErS

The Forum received several presentations showing various conceptions o how residential consumers

will manage their electric equipment and thus their electricity use in the near uture using home

energy management systems.5 These in-home devices already exist, but are not yet widely deployed.

The presentations also envision new ways or utilities and consumers to work together on matters such

as service connections, billing inquiries, and service restoration ater an outage.

Using home energy management systems, or smart appliances that are capable o receiving communica-

tions directly, consumers can automatically control the timing and amount o their electricity consumption

to manage their energy bills. With home energy management systems, they can see the cost o running

equipment and how changes in electricity use impact their electricity bills and environmental ootprint,

and track consumption over time. Some home energy management systems will also be able to control

5 Smart meters team with home automation networks to spare grid: Bob Gohn: http://www.digitalhomedesignline.com/howto/212200388



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and integrate customer-owned resources such as photovoltaic generation or storage. Finally, these systems

and smart appliances can enable automatic demand response when they are programmed to react directly

to prices or other signals to reduce load provided by utilities, retailers or other service providers.

These devices support Ontarios goals for conservation and demand response. In addition, by allowing

consumers to more easily respond to time-dierentiated prices, home energy management systems may

also help make the implementation o time-o-use pricing, including critical peak period pricing, moreacceptable to consumers.

Home energy management systems also can beneft consumers in other ways. Consumers can set them to

match their schedules, embody environmental or conservation values, maximize convenience and enhance

security through linkages with intrusion, smoke and heat detectors and emergency notifcation devices.

They can be linked to messaging systems whereby utilities can inorm customers or individuals that they

designate o impending system emergencies, planned activation o demand response programs, and

restoration eorts during power outages.

Numerous companies are developing these systems using dierent equipment and approaches. Some

systems envision direct communication o price and other signals to smart appliances while others rely

on a home energy management device as a central controller. Some o the controllers are internet basedand work o home computers, while others use a dedicated unit (like a multi-unction remote control).

All the systems embody communications that allow them to access inormation delivered through the

smart meter or via the internet.

Taken together, technologies that exist today can create an automatic house that a ew short years

ago would have been seen as something rom a uturistic movie. These systems oer consumers choice.

They can actively monitor their energy use or set it and orget it. They also oer the prospect o more

efcient homes leading to signifcant reductions in residential energy use and peak demand.

The keys to consumers fully realizing the opportunities offered by home energy management systems are:

universal availability of timely information on consumption and prices through a smart meter withtwo-way communications capability or via the internet

prices that reect the cost of energy at different times

widespread availability of in-home devices that allow consumers to manage their energy use

recognition that these devices are easier and cheaper to install as part of new construction and

that increased interaction with the home building community is necessary to acilitate installation

in new residences

widespread availability of smart appliances and equipment that can be controlled directly or by

home energy management systems

education about what these devices do and how their use can benet both consumers and

the environment

The Forum identifed several barriers to wide spread implementation o home energy management systems

and smart appliances and equipment. As with many smart grid technologies, home energy management

systems can produce benefts that are only captured in part by the consumer that invests in these systems.



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These benefts include:

lower peak demand on distribution and transmission systems

reduced generation investment and cost from controlling peak energy use

improved environmental performance from peak reduction and overall energy conservation

However, despite the act that consumers may not capture the ull value o the benefts that their

investment creates, research presented to the Forum supports the view that consumers do consider

how their actions contribute to a better environment when making energy choices.6

With respect to the development o home energy management systems, there is uncertainty regarding

how these devices will be provided to utility consumers and under what conditions. Specifcally, will

these devices be provided by distribution utilities, by competitive third party suppliers, or by both?

I distributors provide them, how will the costs be recovered and what conditions are necessary to avoid

unair competition? I third parties provide them, how can consumers be assured that the device they

purchase can work with their meter or receive price and consumption inormation through some alternative

means? Irrespective o who provides these systems, how can the confdentiality o consumer inormation

continue to be protected?

The Forum believes that consumers are best served when they have the maximum opportunity to procure

innovative products. In this way, consumers can decide or themselves which devices and service

oerings best meet their needs. To that end, the OEB should clariy the terms and conditions under

which consumers can obtain these systems rom their local utilities. One potential approach is to allow

distribution utilities to provide these devices as part o their conservation eorts in the same way they

currently provide direct load control devices on air conditioners, water heaters and swimming pool pumps.

rECOmmENdaTiONS

Consumer recommendations are intended to assist consumers in making inormed choices onelectricity consumption and enabling them to manage their consumption in response to prices

or to reect other values.

Consumers and their designated representatives should have access to timely information on

their consumption and the price they are being charged rom a smart meter with two-way

communication capability or via the internet. Consumers should pay prices that reect the cost

o energy at dierent times.

Consumers should have the ability to obtain in-home energy management devices and services

rom their distribution utility, retailers or other providers o their choosing.

The impact of home energy management systems should be tested through research and

demonstration undertaken by those providing these systems. The non-proprietary results o

these eorts should be widely shared.

The Ministry of Energy and Infrastructure in consultation with distributors, retailers and other

providers o in-home devices and services should develop consumer education materials designed

to explain how such devices and services can help manage electricity costs, improve comort, help

the environment and promote the reliability o the electricity system.

6 Plugging in the Consumer Innovating Utility Business Models or the Future: Michael Valocchi, IBM Global Services: http://www.ieso.ca/imoweb/pubs/

smart_grid/Plugging_in_the_Consumer-IBM.pd



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Distribution

Ontarios distribution system brings electricity to the vast majority of homes and businesses in the

province. Historically, the principal job o distributors has been to deliver electricity to consumers reliably

and aordably. Today, this job is rapidly expanding to include the provision o smart meters, the integration

o distributed generation and assisting communities and consumers in meeting their energy needs on

a sustainable basis. Distributors are being challenged to perorm these new unctions and continue

perorming existing unctions, all while managing costs. Smart grid development is essential i the

distribution system is to meet this challenge.



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St metes

Ontario has made an impressive start toward empowering consumers through its decision to mandate

that all utilities equip their residential and small business customers with a smart meter by 2010.By creating a potential two-way communication path between consumers and utilities, this decision

provides a cornerstone or uture smart grid development.

To leverage the potential o smart meters, additional steps are needed. The current approach o setting

the minimum unctionality o meters through regulation is cumbersome in light o the rapid evolution

o smart meter technology. I this approach is retained, however, the minimum unctionality should be

expanded to include two-way communications, and the ability to detect outages and transmit this

inormation back to distributors (known as last gasp unctionality).7 Two-way communications will

allow utilities and other service providers to easily provide price inormation and, i critical peak pricing

is implemented, to notiy consumers o critical peak pricing events. Last gasp unctionality will allow

smart meters to help pinpoint outage locations and improve service restoration by ensuring that no

consumers are missed because o a secondary outage condition when service is restored to an area.

Utilities should continue to be able to seek cost recovery or additional unctionality that benefts

customers in applications beore the OEB.

The consumption and price data or other signals provided through smart meters can provide important

information for home energy management networks. Customers or their authorized service providers

should be able to access this information from the consumers smart meter for use by home energy

management systems.

More work should be done to extend the benefts o smart meters to those customers who live in multi-unit

buildings that are bulk metered. In this arrangement, building residents do not pay or their own usage

directly, but instead the electricity costs or the building as a whole are paid by all occupants through

rental rates or common area charges. Under current regulations, smart sub-meters may be voluntarily

installed in condominiums at the discretion o the individual condominium board or the condominium

developer or new buildings. Smart sub-metering activities in condominiums are overseen by the OEB,

who in consultation with stakeholders, has developed a Smart Sub-Metering Code to ensure the protection

o these consumers. The regulations dealing with condominium corporations are an important frst step

in the rollout o smart sub-meters in the multi-unit residential sector and urther regulations should be

considered or multi-unit rental buildings.

While smart sub-meters may not be appropriate for some multi-unit buildings because of centralized

provision o heating and cooling or wiring arrangements, additional work is necessary to promote

installation o smart meters whereever they can provide residents with meaningul ability to control

their electricity use. Smart sub-metering will help empower Ontarians with the tools to control theirenergy use so that they are able to become ull participants in the culture o conservation.

7 Two way communications capability is already present in virtually all the smart meters being installed in Ontario and last gasp is available on some o

the smart meters being installed.



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dstbton atoton

The smart grid will impact virtually every aspect o the distribution system by making system conditions

more visible right down to the customer level. This visibility will promote reliability, aster service restora-

tion, enhanced maintenance practices and improved planning. When system visibility is combined with

computer analytics and intelligent controls, the result will be to increasingly automate operation o the

distribution system. In the uture, the smart grid will enable distribution systems that can use sensors and

computer analysis to predict system disturbances, take action to avoid their occurrence, and automatically

recongure the grid to minimize the impacts of faults that do occur.8

Starting with the customer, smart meters will let system operators know whether a home or business is

without power even i it is unoccupied. With additional sensing capability installed, smart meters could

also indicate the voltage and power quality at the customers meter. This will allow utilities to better

understand conditions throughout their distribution networks. Ultimately, consumers with unique needs

or power quality, such as manuacturers with sensitive electronic equipment, will be able to be served by

equipment that is designed to provide the power quality that they are willing to purchase. Functionality

available or smart meters can also permit automatic initiation and disconnection o service.

Moving up into the distribution system, sensors can communicate the operating state o distribution

transformers and lines. This information will improve utilities ability to operate the distribution system as

it grows increasingly complex. Advanced transormer energy monitoring combined with inormation rom

smart meters at customer locations also will provide inormation on the loss or thet o energy throughout

the system. Flexible AC transmission systems (FACTS), a technology that is being used more widely on

the transmission system to control power ows is also being introduced or distribution lines. Fault detec-

tors and grid automation in some circumstances will allow electrical aults to be automatically located,

isolated and the grid restored without operator intervention and within minutes o the ault occurring.

At distribution substations, sensors will provide inormation on loading and operating conditions, station

security and physical condition. Communicating this inormation back to the utility and applying computer

analytics to it will allow distribution operators to better understand and control these components, includ-ing determining their maintenance needs and risk o ailure. This inormation can also eed into systems

that automatically control voltage and reactive power to help maintain delivery voltage and reduce line

losses. In summary, this information will assist in optimizing the use of the distribution system and

scheduling maintenance work.

8 Smart Grid to Provide Capacity Relie to Distribution Utilities: Jim Blackman and M.L. Chan, Quanta Technology: http://www.ieso.ca/imoweb/pubs/

smart_grid/Quanta_Technology.pdand CURRENT Smart Grid Overview: Daniel Ripchensky, Current Group LLC: http://www.ieso.ca/imoweb/pubs/smart_grid/

CURRENT_Group_Presentation.pd



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Sensing and communications equipment will be particularly helpul in managing outages and restoring

power. Sensors can communicate outage information directly into a utilitys Outage Management System.

This system can begin automatically notiying consumers through cell phones or text messages that

the utility is aware o the outage and is working on restoration. Subsequent communications can provide

consumers with estimated restoration times. Linking service crews directly into the Outage Management

System through mobile communications and equipping crew vehicles with Global Positioning System

(GPS) capability and access to the utilitys Geographic Information System will allow crews to better

understand the nature o outages, see the equipment involved, and go directly to the outage location.

An issue or distributors implementing smart grid technologies is the need to collect, cull, manage,

store, retrieve and integrate the large amount o data that smart devices will produce. The presentations

highlighted the challenge inherent in managing this vast amount o data securely and efciently and

turning it into actionable information. There is a risk of collecting data for datas sake and by so doing

overwhelming the ability o people and processes to use the data collected eectively.

Data produced will need to be accessible to and usable by a variety o distribution utility computer

systems including those that control the system, map and locate system equipment, manage outages,

handle meter data and billing, and maintain customer inormation. Enterprise integration, which allows these

systems to access the data they need rom a common source, using a common ormat and integrating them

through a common service architecture, will be necessary or distributors to achieve the ull unctionality

o a smart grid.9

The challenge o moving to a smart gird is signifcant rom both a technological and human resources per-

spective. Many of the technologies that will be used to collect, manage and analyze smart grid information

are currently being developed. As with all leading edge technologies, there is a substantial risk o alse

starts and dead ends, and a virtual certainty that integration with existing technologies and systems will

prove to be more difcult than advertised. From a human resource perspective, learning to understand and

9 Implementing the Smart Grid: Enterprise Inormation Integration: Ali Ipakchi, Pages 4-6: http://www.gridwiseac.org/pds/orum_papers/121_122_

paper_fnal.pd



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use the ull capabilities o smart grid technologies will require a substantial training eort and opportuni-

ties to practice using the new tools in a simulated environment. Current business processes will also need

to be modifed in light o the new inormation available and the capabilities o smart grid technologies.

In addition to impacting operations, the smart grid will also enable much more detailed planning as

utilities gain more precise inormation on the loading o their equipment down to the individual customer

level. By deploying sensors on eeders, lines and substations, utilities will be able to more accuratelydetermine the need for additional infrastructure and to better analyze which capital additions will provide

the greatest system beneft.10 Better analysis o the timing and confguration o needed capital additions

will promote efcient capital spending.

As discussed below in the Distributed Resources section, a smart grid is essential i the province is to

maximize the generation, storage and demand response resources connected to distribution lines. The

distribution grid was originally developed to deliver power to consumers. The sensing and communications

that the smart grid will bring are necessary, but not sufcient, to meet the distribution systems expanded

role o incorporating substantial amounts o generation saely and efciently.

mco-Gs

A micro-grid is an integrated energy solution that serves a group o consumers, such as a neighbourhood

or a town, or a single large consumer, such as a university. Micro-grids use a variety o energy, communica-

tions and computer technologies to allow the consumers served by them to meet all, or a large portion,

o their total energy needs (electric and thermal) with devices that orm part o the micro-grid. While a

micro grid can be designed to allow those it serves to achieve energy sel-sufciency, it is generally not

independent o the larger electricity system.11 Instead, it buys and sells electricity rom the grid to take

advantage o price dierentials and when necessary to address surpluses or defcits in micro-grid

production. For participants, micro-grids can deliver local control o energy production, more efcient

use o combined heat and power, greater reliability and improved power quality, and the ability to better

tailor their energy supply to their energy needs and environmental values.

Substantial technical, legal, regulatory and institutional issues arise in developing and operating

micro-grids, particularly those created by a third party aggregating multiple consumers currently served by

an existing distributor. In this context, interconnection o micro-grids to the existing distribution system

will raise technical issues related to worker and public saety, equipment protection, and impacts on

service to other consumers.

Legal and regulatory questions involve the status o the micro-grid operator as a regulated distributor, the

ability o the micro-grid to use existing distribution acilities and at what cost, the ability to construct new

distribution facilities that duplicate existing ones, and the nature of an existing distributors continuing

responsibility to serve consumers on the micro-grid. Even i the micro-grid were to be created and operated

by the incumbent utility, issues would arise with respect to allocation and recovery o costs associated withthe micro-grids development, operation and maintenance. To the extent that a micro-grid served a single

large customer rather than multiple consumers, these issues are likely to be less complex.

10 Smart Grid to Provide Capacity Relie to Distribution Utilities: Jim Blackman and M.L. Chan, Quanta Technology: http://www.ieso.ca/imoweb/pubs/smart_grid/

Quanta_Technology.pd

11 Micro-grids can also be developed in remote areas where connection to the larger grid is uneconomic. Introduction to Distributed Generation: European

Commission: http://ec.europa.eu/research/energy/nn/nn_rt/nn_rt_dg/article_1158_en.htm



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rECOmmENdaTiONS

Distribution recommendations are intended to encourage actions in the distribution sector that will

accelerate development o a smart grid.

St metes

Utilities should continue to propose smart meter functionality consistent with the best interests of

their customers and apply or OEB approval to recover the costs o this unctionality in rates.

If smart meter minimum functionality continues to be prescribed by regulation, then the minimum

should be revised to include two-way communications and last gasp capability.

The Ministry of Energy and Infrastructure should undertake further consultation with the goal of

ensuring that smart meters or smart sub-meters are installed in all multi-unit residential buildings

where it makes sense to do so.

dstbton atoton

Utilities should develop their proposed smart grid investments as part of their capital plans.

Utilities that wish to investigate and test smart grid technologies on their systems should be

encouraged to propose demonstration projects that will assist them in testing the perormance o

available smart grid technologies and quantiying their costs and benefts. The non-proprietary

results o these projects should be made widely available.

mco-Gs

The Ministry of Energy and Infrastructure in consultation with industry and consumers shouldundertake research to detail and clariy the technical, legal, regulatory and institutional issues

associated with micro-grids to better assess their uture applicability in Ontario.



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Distributed Energy Resources

Distributed energy resources are generation, storage and demand response connected to the distribution

system. These resources may be located at customer premises or a dedicated site. Distributed energy

resources oer many potential advantages to the electricity system. They are small scale, can be located

close to load, and many use renewable technologies. They can be used by distributors to support grid

operations and can be considered as a resource in integrated distribution grid planning. They can also

support transmission operations and planning. The challenge lies in using these resources eectively

and in connecting them to a distribution grid that historically has been designed and operated to deliver

electricity to consumers.12


dstbte Geneton

Distributed generation is small scale generation that eeds into the distribution grid. Much o thisgeneration uses renewable technologies, which are a cornerstone of Ontarios future energy supply.

Through the work o the OPA, Ontario has been very successul in contracting or renewable generation.

The OPA estimates that there are almost 5,000 megawatts (MW) o renewable distributed generation

projects that either have a Renewable Energy Standard Oer Program (RESOP) contract or are in the

connection process.13

12 For inormation on work underway in Canada: http://canmetenergy.nrcan.gc.ca/eng/renewables/integration_der.html

13 Distributed Energy: Paul Shervill and Kevin Devitt, Ontario Power Authority: http://www.ieso.ca/imoweb/pubs/smart_grid/OPA-Distributed_Generation.pd



28/50

Most o these projects are seeking to connect to the distribution system in rural areas served by Hydro

One. The electricity being injected into the distribution system by distributed generation may impact

on upstream transmission reliability, the operation and maintenance o distribution equipment, and the

quality and availability o service to consumers served by that equipment. Because distributors currently

have little ability to monitor the output o distributed generators and no means o controlling this produc-

tion, they must fnd ways to ensure that the presence o generation does not endanger worker or public

saety, interere with the operation o protective equipment or impair service to consumers. Currently these

solutions can signifcantly increase the cost o connecting renewable generation, making some smaller

projects uneconomic. Smart grid technology can help address the technical issues by allowing distribution

lines to accommodate more generation without compromising service to consumers on those lines, overall

grid reliability (including upstream impacts on the transmission system) and saety.14

Distributors are investigating cost-eective technical solutions that will increase the amount o distributed

generation that they can saely connect to distribution lines. Some o these solutions will involve

increased monitoring o generation and equipment condition, and may involve the ability to control

the output o certain generators on occasion to ensure that overall, the maximum amount o generation

can be connected. Others will use innovative new approaches to meet utility saety requirements, avoid

islanding and maintain voltage and requency. These technical issues are not insoluble, but urtherresearch is necessary to develop and test cost-eective solutions.

As more distributed generation comes on-line, the need to control its output will grow. Controlling this

output will require clear rules concerning the responsibilities o the generator, the authority o the

controller, the purposes or which control can be exercised, and any compensation provisions.

The current connection process can adversely impact the installation o distributed generation by allow-

ing developers to retain priority in the connection queue without demonstrating continued progress toward

completing their projects or the projects continued viability. As a result, in many parts of Ontario, projects

that are sized at, or just below the 10 MW RESOP cut-off have occupied all the available connection

capacity at distribution substations simply by applying or Connection Impact Assessments and paying

the ee, typically $5,000. The OEB, OPA and Hydro One are currently investigating approaches to address

the economic and regulatory issues associated with connecting the existing list o proposed distributed

generation projects by considering ways to develop a mechanism to link continued maintenance o queue

priority to obtaining a contract and meeting contract milestones.

Connection limits have had the eect o holding up some projects that are ready to proceed, particularly

very small arm biogas projects (less than 500 kilowatts (kW)). Under current rules, connection priority

is established based on the impact assessment application and there is little requirement to actually

move the project orward to completion in advance o the three-year in-service window or RESOP. The OEB

has issued drat rules generally allowing or the connection o very small generation projects outside the

connection queue.15

14 DG Integration Key to Smart Grid: Ravi Seethapathy, Hydro One: http://www.ieso.ca/imoweb/pubs/smart_grid/HydroOne-DG.pd

15 Notice o Proposed Revised Amendments to the Distribution System Code: Ontario Energy Board: http://www.oeb.gov.on.ca/OEB/_Documents/EB-2008-

0102/Notice_ProposedRevisedAmendments_DSC_20081209.pd



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Stoge

Electricity storage oers a number o potential benefts to the electricity system. For variable renewable

generation (wind and solar) and at times o surplus baseload generation (rom nuclear and hydroelectric

generation), storage can be used to capture energy that would otherwise go unused and make it available

to meet peak demand. Storage can also be used to frm up the capacity o intermittent generation so that a

greater percentage o this capacity can be counted toward meeting peak load or planning purposes. Finally,

storage can be used to moderate price dierentials by storing o-peak energy and providing it on-peak.

Beyond providing peak period energy, storage can provide ancillary services such as load ollowing,

area regulation and black start capability, and may also be used for grid stabilization and grid operations

support. On the distribution system, storage can be used to deer investment in substations by shaving

peak load and can also be used to improve local area reliability. The Forum was shown how American

Electric Power (AEP) is using storage or these purposes and how, by confguring storage equipment in

transportable units, AEP can reuse this equipment at dierent locations as local needs change. Storage

sited at customer acilities can be used or load shiting and backup power.

Several technologies have the potential to provide storage including: conventional lead acid batteries,

advanced batteries (e.g. sodium/sulphur, zinc/bromide and metal/air), ow batteries, ywheels, pumped

generation storage (PGS), compressed air storage and superconducting magnetic energy storage (SMES).

These technologies all have advantages and limitations. Some technologies, such as PGS and, to a large

extent, compressed air, depend on the availability o sites with particular geological characteristics.16

Soce: Pnet Engneeng Gop Et

16 Discussion Paper 4: Supply Resources (IPSP Application, Exhibit C, Tab 8, Schedule 1, pages 93-100), OPA: http://www.powerauthority.on.ca/

Storage/50/4552_C-8-1.pd



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Storage is subject to the same issue o diuse benefts that impacts many other smart grid technologies.

While storage can oer demonstrable benefts in terms o both the electricity system and the environment,

it is difcult or a single entity to capture all o the electric system benefts, and the environmental

benets may not be monetized. As a result, storage typically has been conned to niche applications

and sites with very avourable characteristics.

Regulatory uncertainty is an impediment to the implementation o storage. While a storage acility is nevera net generator o electricity, it does discharge electricity when being drawn down. At the same time it can

also unction like a capacitor bank or a back-up power supply. These multiple unctions create uncertainty

as to the categorization of storage under the OEB Act and, consequently, uncertainty about how it can be

deployed and by whom. For example, can a distributor install a storage device where it is a cost-eective

means o providing voltage support or deerring a substation upgrade by helping to reduce peak load?

The lack o dierentiation between peak and o-peak in the pricing oered to intermittent renewable

generators undercuts the value to those generators o incorporating storage into their projects to increase

on-peak availability. Similarly, because the cost o addressing the variable nature o wind and solar is

currently borne by the electricity system as whole, there is little, i any, incentive or developers o these

projects to consider storage.

den response

Demand Response (DR) is a change in consumption in reaction to prices or other signals. DR can

provide signifcant benefts to the electricity system by avoiding the need or additional acilities to meet

extreme peak demand that occurs a ew hours each year, reducing the use o expensive peak generation

and making better use o variable generation sources when they are available. With the growing penetration

of variable resources, DR can increase the systems ability to use load to address supply variations. DR can

be achieved through behavioural changes, changes in processes or equipment, the use o customer-owned

generation or through direct control o appliances and equipment.



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The OPA oers several DR programs or large commercial and industrial consumers and has entered

into a DR contracts that pay or demand reductions against a baseline.17 Many distribution utilities oer

residential/small business direct load control programs under contract with the OPA that reduce demand

by controlling the consumption o devices such as central air conditioners, electric water heaters and

swimming pool pumps during peak periods in exchange or a one-time payment to participants.

While the reasons that individuals and companies participate in DR are varied and complex, theundamental intent o DR is simple, reduce the cost o producing and delivering electricity by making

consumption more responsive to production cost. To the extent that this cost is visible to consumers

through prices, DR will be acilitated. DR will also be acilitated as smaller volume consumers come to

understand the dierence between peak and o-peak consumption and prices through education about

smart meters and time-o-use rates.

rECOmmENdaTiONS

The Distributed Energy Resources recommendations are intended to further Ontarios ability to

incorporate renewable generation, expand opportunities or consumers to produce their own power,

and increase the use o storage and demand response.

dstbte Geneton

Distributors should be required to offer to connect renewable generation just as they are currently

required to oer to connect consumers.

Distributors and the OPA should develop and propose mechanisms whereby dispatchable renewable

generation projects and storage can be operated to maximize the total amount of generation that

can connect to the distribution system.

In order to plan and operate the grid reliably and efciently, distributors, transmitters, the OEB,

OPA and the IESO should work together to:

develop requirements or and propose sufcient monitoring o distribution connected

generation, energy storage, and responsive load;

determine the authority necessary to direct the operation o these acilities, the conditions

under which their operation could be directed and any compensation that would be provided

to the facility;

propose contractual and pricing arrangements with distribution connected generation, energy

storage, and responsive load that support efcient grid operations and are consistent with the

operation of the wholesale electricity market;

coordinate the development and implementation o grid control and inormation systems to

acilitate the actions listed above.

The OEB, the OPA, Hydro One and all other affected distributors should continue working

together to unblock the distribution connection queue and assure that projects can retain their

queue positions only i they demonstrate progress toward completion in a timely manner against

established milestones.

17 Demand Response Programs, OPA: http://www.powerauthority.on.ca/Page.asp?PageID=1212&SiteNodeID=147



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Stoge

To encourage the cost-effective use of storage, the OPA should investigate structuring payments

to variable generators that reect the value o production in dierent time periods.

Through legislation, regulation, or other appropriate means, the Ministry of Energy and

Inrastructure should clariy that distributors are permitted to own, provide and operate storage

devices where such devices can promote the cost-eective provision o distribution services.

Distributors should develop storage demonstration projects aimed at gaining a better

understanding o how various storage technologies can be used and the technical and institutional

barriers associated with these technologies. The non-proprietary results o these projects should

be made widely available.

den response

Distributors should continue to develop innovative demand response programs that will facilitate

the cost-eective provision o distribution service or the deerral o distribution system investment.

The OPA, distributors and aggregators should strive to expand the range of demand response

products available to maximize opportunities for all customer types to participate in demand

response.



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Transmission

iNTrOduCTiON

Ontarios transmission lines are the highways of the provinces electricity system, designed to efciently

move large volumes of electricity from generators to load. Ontarios transmission system directly serveslarge generation facilities, large electricity consumers and the distribution system. Historically, Ontarios

transmission system was primarily constructed to link remote generators to the load centres within the

province in a cost eective manner. To achieve this goal, Ontario was at the oreront o developing

technological solutions that maximized the ability to move electricity over distances efciently and while

maintaining system stability. The result is that today, Ontarios transmission grid is relatively sophisticated

in its provision o reliable and aordable service to its customers.

Like all other parts o the electricity system, however, the transmission grid is acing the need or

reurbishment and reinvestment. This renewal will involve the increased incorporation o smart grid

technologies as old equipment is replaced. In addition, the transmission system must continue to evolve

in response to changes in Ontarios resource mix including the development of renewable resources,

integration o storage technologies, increased reliance on demand response, the reurbishment o existing

and the development o new nuclear generators and the shutdown o coal-fred generation. To meet these

challenges, the transmission system must become even more sophisticated, rel