With the capacity to put computers, meters, and sensors virtually anywhere, there’s no limit technically to the data that can be generated. Some would call this the foundation of a new smart grid.
But that data has to be managed, potentially by third parties who need to be accustomed to working in a space that’s traditionally been reserved for electricity operators and utilities. Turning this data into useful information also requires new or at least upgraded infrastructure, an expense the public may not be willing to bear. Again, it may fall to the commercial sector to fund what’s been called the smart grid revolution—if they see a benefit in it.
How will these new players be regulated to ensure the safety and reliability of the electricity grid?
Edward Chatten is SVP smart grid and strategic support at PowerStream, an electricity distributor jointly owned by the Ontario municipalities of Barrie, Markham, and Vaughan. He compared smart grid advancements to a freight train picking up speed. “It’s a rapidly changing world and regulatory environment. Our ability to keep up with this major transformational change is strained.”
Currently Toronto Hydro is generating data from two sources: smart meters and transformer smart meters. More data could be generated, but the utility is still grappling to process the data it has. The challenge is how to analyze the amount of gigabytes (GB) of data they are generating every day.
But even with real-time communication—which is not yet possible—utilities need to store billing data.
While finding a way to store billing data is top of mind for utilities, Chatten sees the true potential of smart grid technologies relating more to operational data. “The great promise is around how to use that operational data stream and the capacity of communications infrastructure.”
Currently, PowerStream primarily uses operational data to flag outages and to optimize dispatch. It first built an interface between its advanced metering infrastructure (AMI) and its outage management system over two years ago to realize the benefits of this key operational tool. Chatten said, “From this tidal wave of data, what you really want are two pieces of actionable information that you can do something with in the next 20 minutes.”
Mark Decyk, advanced analytics and optimization leader at IBM, used an analogy from another industry that illustrates exactly how much data is about to become available. “The average retailer in 2015 will shed seven to ten terabytes of data per store per day,” he said. “Technologies like radio frequency identification tags can determine when something is passed through a cash register. The data that will form those terabytes will come from proximity sensors sitting on shelves and carts. If I pick up a can, look at it, put it back, put another can in my cart, that might be personal info for me—my preference for mushroom over chicken soup—but at the aggregate level it allows the retailer some insight. In our space, we’re currently only looking at data passing through a smart meter. I would invite you to think about what happens when every appliance in the house can report through its own internet-based data channel what it’s doing with power and the flood of data and the potential impacts for us.”
David Butters, president of the Association of Power Producers of Ontario (APPrO), agreed with Decyk, though he pointed out that electricity is not quite like retail. “It’s fundamental to our health and welfare. We don’t worry so much about cybersecurity at Loblaws or Sobeys, but it is a huge issue for the electricity sector.”
APPrO focuses on risk management—determining the risks to the profitability of its members’ businesses and then looking to see what political or other levers need to be pulled to ensure generators continue to do business profitably in Ontario. Butters feels that smart grid advancements will inevitably take the industry into privacy and security issues. This is especially true when third parties get involved in generating data but, more concerning, accessing data.
Edward Arlitt, business strategy and management analyst at the Independent Electricity System Operator (IESO) for Ontario, said, “Certainly in our industry, we’re on the brink of a major crossroads on that exact point. It’s one of the single biggest issues: third party access to, for example, smart meter data.”
The IESO directs the operations on the transmission grid for the province and runs the backbone infrastructure for the smart metering program in Ontario. Arlitt said companies are beginning to ask for meetings to demonstrate their commercial interest in data that the utilities sector has typically used to manage their systems, such as real-time smart metering data that can be used in conjunction with networks within the home.
“These third parties have real opportunities to influence electrical flows on the grid,” said Arlitt. “We’re just on the threshold of acknowledging that eventually they will have to have access to our data for uses beyond the boundaries of the traditional electricity sector. In the long term, I think the nature of what it means to be in the electricity industry will change. But it’s not going to resolve easily, because we’re a traditional industry that’s used to using the data for our own purposes within the close confines of our own system.”
Arlitt continued, “There are technological barriers to overcome, but there is sometimes a misalignment of various commercial interests—there is the rather awkward meeting point between those commercial interests and interests in the public utilities sector.”
While this interest from third parties could potentially move forward Ontario’s economic development and promote technological advancements, it would require utilities to relinquish some of its monopoly and control.
“Even if you did,” said Ontario Power Authority’s (OPA’s) Amir Shalaby, “the privacy commissioner would have [her] concerns.”
Butters said, “The primary focus of the electrical system is reliability, operability, and security. When you start mingling commercial interests with those, you have a tension that will have to be resolved—but I think we’re a long way from [having to deal with] that.”
SAFETY AND ACCOUNTABILITY
Arlitt said there are potential new control levers below the industry’s radar that could be real game changers: homes and businesses. “Can we potentially use AC load, for example, to offset times when the wind’s not blowing or there are clouds rolling over a solar farm? Load control may very well prove to be one of the more essential areas of control with these new smart grid technologies.”
The problem: while control may be changing hands, accountability is still sitting square in the laps of utilities and operators.
“A lot of things we’re talking about here have the possibility to give us new control levers, but they also have the possibility of diffusing control away from a centralized electricity system,” said Arlitt. “There are benefits and drawbacks to both approaches. I think we could have a potentially challenging transition to this new world of smart grid with bulk electricity system issues running up against new areas of growth and smart grid services.”
The use of third-party control centres for demand control programs is fine for small levels of customers in today’s world, but what happens when hundreds of thousands of air conditioners are under someone else’s purview? Arlitt asked, “What precautions are being taken? What safeguards? Are they held to the same standard of security that we are? Those are all part of the integration issues we’re starting to look at as a company.”
This will, of course, be an issue in many other industries, but the difference, as Shalaby said, is shared consequences. “You can have a plane crash and the rest of the planes are still flying. You have one critical element crash in a stressed part of the electricity system and a wider area, or the whole thing, collapses. So, the desire for control is not a freakish thing, it’s a result of joint connectivity. That’s the piece that creates tension between the desire for independence and distributed decision making and centralized control.”
Bruce Orloff, Canadian smart grid leader at IBM, said that safety, in this context, means greater visibility down into the network. “It’s being able to monitor and control right down to the end consumer—to their distributed generation or renewable generation that might be on their house—from a safety perspective.”
“That’s the big change that’s coming,” said Marc Tremblay, VP communications sector at IBM. “The speed at which it’s coming is going to be challenging.”
Arlitt put into perspective just how many potential changes are coming up and how much thought still needs to be put into these rapidly approaching advances. There are concepts being floated throughout the industry involving using weather forecasting and other types of data to optimize portfolios of ACs and other types of controllable assets. Such concepts involve integrating a thermostat or control gateway into peoples’ homes, and then they have a centralized optimization algorithm. “Do they have any idea the damage that could be caused by providing erroneous forecast or control data, for example?” asked Arlitt. “Whose responsibility is it to be looking into a company like that?”
Al Kostiuk is a director with the capital planning division at Altus, a company that provides service solutions for asset managers. “As an outsider, it seems that early adopters of smart grid technologies use them to manage the billing cycle,” he said. “Now, that technology has opened up a whole new world, the consequences of which were not considered. Until you get standards in terms of what data you’re going to expose to those third parties, it’s going to be a bit of chaos—and there will have to be emerging standards for data, otherwise it’s just going to be messy.”
It’s easy to call for tighter regulation; not as easy to determine who exactly needs to be regulated.
“With regards to the idea of giving everyone access [to data] it behoves us as an industry to have a better understanding of who ‘everyone’ is and what they’re doing,” said Arlitt. “Are they taking power from the grid? Are they feeding it back in either directly or indirectly? Is that data being used to, for example, cycle AC load or hundreds of thousands of EV charging stations?”
Arlitt worries that a third party that isn’t held to the same standards as system operators could negate the standards to which bodies like IESO are held. “How are we going to govern everyone who’s now coming to the table with their new products and services who don’t have that history and experience in dealing with issues within the industry?” he asked.
While operators like IESO struggle with these issues, out west, utilities like SaskPower are just trying to move forward as best as they can. They are self regulating and, for the most part, focussing on upgrading infrastructure where possible.
“Some of our equipment is quite old and has to be replaced, anyway,” said Judy Morgan with SaskPower, who joined the conversation via conference call. “We would like to bring it up to a new standard so it’s smart grid ready.”
In an attempt to adopt industry best practices, SaskPower is following the research from the Electric Power Research Institute and the Canadian Electricity Association. The utility also formed a smart grid task group last year and is close to creating a comprehensive roadmap to map priorities. “We’re proceeding with caution and adopting standards where we can.” said Morgan.
SaskPower is focussed on upgrading its hard infrastructure. But smart grid technologies can also be used to promote efficiency of use. In order to do this, an end user has to be targeted—are utilities making that a priority? First, they need to know who to target.
In Ontario, only a third of all electricity is bought by homes. “Commercial buildings, university campuses, hospitals, shopping centres—that’s where the majority of consumption is,” said Shalaby. “That’s where the growth is, that’s where the peak demand is created by air conditioning—that percentage is different in British Columbia, and it’s different in Quebec, but for Ontario it’s the commercial sector. Water flow, air flow, chillers—if you can understand how chillers work, there’s a lot of value there. On a peak system day, they consume 40 per cent of the electricity. If you can optimize that, you save a lot of money on the supply side.”
“That’s where mining the data becomes the key,” said Kostiuk. “If you can share that hourly consumption data [with the consumer] and benchmark consumption against similar buildings around them, that becomes a consumer issue. Until you can mine that data and deliver those benchmarks, you have no idea where you’re at. The challenge is having the tools to collect the data in a way that can be turned back to the users.”
But do those users want to see that data? Decyk said when IBM asked business leaders about barriers to achieving value with analytics, cost constraints or technology issues were at the bottom of the list. A survey for the Sloan School of Management at MIT showed that business users didn’t know how to derive value from analytics. Decyk said, “As a result, when the analytics were provided, the reaction was, ‘so what?’”
It’s perhaps because if consumers don’t see value in the data, there is no sense in giving it to them. “There has to be value,” said Butters, “and there’s no real value in data alone.”
He referenced Christoph Frei’s comments at a recent Toronto event. The secretary-general of the World Energy Council suggested that energy efficiency may not be the low-hanging fruit we think it is. Frequently, small commercial businesses are renting a facility from a landlord who may not be interested in improvements. If consumers don’t see value in, for instance, time of use (TOU) data, there’s no sense in giving it to them.
In addition to consumer engagement, Butters said the other ingredient needed to make all this data useful is a better price signal for end uses. “We have a price signal, but lowered demand and low natural gas prices mean that it is low. This has been exacerbated by government electricity sector policies and programs that focus primarily on job creation and other economic outcomes (the Feed-in Tariff program, for example), and not energy production and costs. This is a problem we need to resolve.”
Tremblay said the challenge goes well beyond just being able to turn TOU data into billing information. “Breaking down silos within organizations—taking the data that comes in through operations and handing it over to customer operations or grid operations or asset management—that will help make better use of that data by turning it into useful info for the organization and then sharing it outside of the organization.”
Decyk summed it up: “At the end of the day, you can gather the info, but there needs to be a benefit.”
Orloff said there is a desire among consumers to be more sustainable, more responsible, and able to sustain their individual habits.
But much of APPro’s focus groups have shown that people are not necessarily interested in self sufficiency. “All they want to do is to be able to turn the lightswitch on, to have a reliable system, they want the prices to be as low as possible,” said Butters.
Shalaby said, “The system used to benefit from the diversity of loads, weather systems, and time zones. Now we’re going to further unbundling and controlling specific use. This can be positive if it benefits the system, but we should think hard about possible unintended consequences on aggregate demand of self-sufficiency at the home level or cottage level.”
Butters sees smart grid as helping to optimize the investments that electricity providers have already made. “We’ve got a lot of power plants, transmission and distribution lines,” he said—it would cost $150 billion to replace Ontario’s current electricity system alone (based on total installed capacity and what the replacement cost would be today). “Instead of running out and building a bunch of new stuff, I think we should be focussing on how to extract maximum value from the plants that we have already.”
SaskPower is definitely focussed on that.
The utility is implementing advanced metering infrastructure (AMI) but has no plans to implement TOU at this time. “We’re approaching this more from an operational efficiency perspective,” said Morgan. AMI makes sense if operational efficiency is the goal. With Saskatchewan’s expansive geography and sparse population, sending field staff to remote locations was very inefficient.
At the residential level, TOU lets homeowners decide whether they want to run the dishwasher or not. Scaled up to a commercial level, especially if it was self-monitored, that would have great potential. Toronto Hydro submitted a plan to the Ontario Energy Board this April for a pilot project to track commercial, institutional, and small industrial consumption in real time, but the practice has yet to be implemented on a large scale.
“The smart grid will raise all kinds of interesting questions about how to go about paying for the infrastructure itself,” Arlitt said.
“Right now, the smart meter is paid for by the ratepayer,” said Orloff. “When you step behind the meter, who is going to pay for that? What’s the business case? What’s the benefit for a consumer to pay or what’s the benefit for the service provider to offer it for free to get the information? Is that information valuable?”
Arlitt said the first time he heard the term “smart grid” was in The Economist over a decade ago. The article discussed the strain on financing the bulk electricity system when all these microgrids start popping up. “You have pockets of the grid that maybe use the bulk electricity system 90 per cent of the time and others that use it ten per cent of the time—should they be on the same kind of rate structure?” asked Arlitt. “Take electric vehicles (EVs), for example. If two people on your street have EVs, should everyone else have to pay for the supporting infrastructure? We’re just at the threshold of some very interesting regulatory and economic questions about financing the public side of this infrastructure.”
Most roundtable participants agreed that what goes on within a house should be the responsibility of the homeowner, but that public infrastructure is a grey area. What exactly needs to be reinforced to support what the customer is doing at home? “That’s the area where you’re going to get a lot of stress and strain on both the economics and the regulatory framework,” said Arlitt.
Part of the strain stems from misinformation—or lack of communication. “Electricity is not well understood,” said Butters. “If we look at the politics of smart meters in Ontario, it’s not very positive. The issue will be whether or not smart grid helps consumers to manage cost. If it doesn’t, it will be dead on arrival.”
This has already become an election issue, with the Progressive Conservatives timing a press release around a record heatwave in Ontario blaming “Dalton McGuinty’s mandatory smart meter tax machines” which forced Ontario families to choose between “sweating it out or paying skyrocketing energy rates.”
The roundtable agreed that consumers are not being properly educated about TOU pricing.
“To date the provincial smart meter/smart grid initiative has been all about billing,” said Chatten. “The [real] opportunity is the operational data stream—but that story has yet to be told.”
Butters agreed: “The whole story on TOU pricing was ‘we need this to change your behaviour’ but there’s never been any dialogue about what the opportunities are for ratepayers.”
Orloff said, “It’s not about reducing the cost, because electricity costs are going up, it’s about keeping the cost from going even higher. Managing the increase in cost—that’s what this technology is going to help us to do. Consumers need to know that the cost of electricity is going up no matter what you do.”
Typically, only about 50 per cent of charges come from consumption. Fixed charges make up the rest, and those can’t be changed.
TOU billing may not be in question, but it is still unclear whether the TOU rates that have been set are the right ones. Toronto Hydro is currently trying to determine how smart meter billing rates compare to conventional rates and asking consumers to participate in an electrical usage survey.
The fact is that the regulatory system can’t follow the rate of change, said Tremblay. It’s so fast that it’s hard for industry to set the right rates and strategically engage the public.
Beyond the regulatory challenges, Chatten had another concern: “Technological obsolescence has the potential to make our first generation AMI totally obsolete—large amounts of assets that the consumers are on the hook to pay for.”
Arlitt’s advice to utilities? Pay attention to interoperability standards. “That’s an area where we’re getting some good integration. The U.S. National Institute of Standards and Technology and the Canadian National Committee of the International Electrotechnical Commission will be publishing a standards catalogue. You don’t want to get stuck investing in the Betamax version of the smart grid. This is one area that’s actually going fairly well.”
No matter what happens, we’re looking at a vast cultural transformation in an industry that hasn’t changed much in 100 years. Chatten said, “We’re moving from a command and control, very top-down system operator/generator knows best for the end consumer to a two-way network where we’re moving from traditional system optimization to a world of customer optimization with a whole series of partners with different interests, different security levels. It’s really a brave new world and it’s different from anything we’ve ever worked with. It’s one in which you have to establish a balance across priorities and interests.”
“The more data that’s available, people will find uses for it,” said Tremblay. “For this industry, from a cultural standpoint, it’s going to be mindboggling in the next couple of years.