The Power to Connect Advancing Customer-Driven Solutions for Ontario IESO STAKEHOLDER SUMMIT PRESENTATION June 12, 2017
The Vision This is about preparing Ontario s electricity industry today for tomorrow s consumer. This vision by the Electricity Distributors Association (EDA) and its member local utilities proposes a new way forward for Ontario s electricity system that recognizes consumers as drivers of change and leverages new technologies to deliver high-quality electricity services. The EDA s vision is that the integration of local, small-scale power generation and storage technology, known as distributed energy resources (DERs), will be key to achieving a more resilient system that can alleviate cost pressures. 2
Changing energy landscape Currently, LDCs manage one-way energy flow and have an obligation to connect customers and accommodate for distributed generation. The energy landscape in Ontario is changing and that brings threats and opportunities which will require transformation of the utility business model. Utilities will succeed going forward by adopting stronger customer-centric thinking. Over the next decade innovative LDCs will advance from primarily one-way deliverers of power to twoway, networked generators, distributors, and managers of electricity all in support of customer demands. The leadership of local distribution companies (LDCs) will be needed to manage the integrated power flows and digitally enabled grid. Image courtesy of Navigant Consulting Inc. 3
An Ecosystem of Integrated Power Flows The transformation reflects an accelerated transition towards a cleaner, more distributed and intelligent energy system. The increase of DERs (including energy efficiency, demand response, distributed storage, distributed generation, and electric vehicles) is fueled by an increased customer desire for control over energy usage. Image courtesy of Navigant Consulting Inc. 4
LDCs remain central and uniquely positioned to lead transition 5 Ontario s LDCs continue to expand their ability to provide leading edge technologies and to build their capacity in connecting DERs across their network. Ontario shares common goals with other Canadian and American jurisdictions in addressing climate change and facilitating the penetration of cost-effective DER. Ontario is committed to pursuing conservation, energy efficiency and fuel switching through its Climate Change Action Plan to reduce the use of fossil fuels and boost clean electricity and clean fuels. LDCs are critical to enabling DERs in the province s energy system and to cost effectively satisfy increased demand for clean electricity through the electrification of transportation and fuel switching. 5
DER Enabling Platform 6 The LDC of the future will have a key facilitating and enabling role to orchestrate DERs across the system from distribution-level generation down to individual customer-generated power. As a DER Enabling Platform, LDCs will provide an integrated network where DER third-party providers and customers can plug-n -play. Part of an LDC s role will be to ensure that the distribution network can accommodate DER connections, while maintaining the stability and reliability of the grid. LDCs must be central to providing DER enabling technologies due to operational and planning practicalities. 6
DER Integration 7 The future will see LDCs expand their scope of business beyond possessing traditional poles and wires to broader DER assets ownership. The extent of DER integration will vary for each LDC given the diversity in size, location, and hosting capacity. Strategic use of outside resources by LDCs can also garner increased efficiencies, savings to infrastructure and technology, and free LDCs to focus on the development of new energy solutions, ideas and services. DER Integration does not prevent other market players from owning and operating DERs. 7
DER Control and Operations The ability of the LDC to act as a fully integrated network orchestrator, through its operations and interaction with DERs, makes it valuable to the larger system and to all customers. Among the critical building blocks for DER Control and Operation is a DER Management System ( DERMS ). DERMS capabilities typically include real-time network visibility, asset monitoring and control, scheduling and dispatch, active and reactive power import and export control, voltage control, forecasting, resource valuation and optimal demand response. Another fundamental component is the implementation of DER price signals what are needed so that investments behind-the-meter are economic for consumers and achieve maximum value for the system. 8
Overcoming key barriers 9 Regulatory Customer and Stakeholder Operations 9
Customer & Stakeholder A key challenge for transitioning to a clean, distributed and intelligent energy grid is managing the pace of investments to mitigate rates and support customer needs. LDCs should prioritize opportunities and gain an understanding of what capabilities are vital to maximize customer value. LDCs can also consider which areas of the business would benefit from a shared services model with other LDCs. Operations Introducing new technologies into an organization presents challenges. New policies and procedures will need to be developed. Leadership and support for innovation are necessary to allow for time to make changes, adjust, and gain understanding of the technology. LDCs will need new competencies and skills in data analytics, communications, cyber security, and digital asset management. Regulatory The regulatory structure in Ontario will need to be flexible to allow LDCs to adapt. A regulatory framework should reward LDCs that build their capacity as orchestrators and enablers of DERs. A potential solution - for example - could be to adopt Earnings Impact Mechanisms (EIMs) tied to performance as a platform provider, facilitating the market, and advancing policy goals. 10 10
Looking Ahead to the LTEP & Beyond Establish guidelines and eligibility criteria to authorize an LDC to expand business activities. Consider overall electricity system benefits in evaluating infrastructure projects of LDCs. Consider methods to incentivize grid modernization. Conduct an examination of whether distribution assets are fully optimized and what the potential is for LDCs to lower costs by investing in data analytics instead of physical assets. Give consideration to potential for shared service models between LDCs in an effort to prioritize and balance investments with positioning for new growth. Conduct market segmentation analyses to better examine evolving customer demands. Determine an appropriate cost-benefit analysis framework for evaluation of DERs and DER Enabling Technologies. Ensure a grid-ldc interoperability framework provides the capability for greater interactions between the IESO and LDCs as distributed system operators evolve to coordinate DER control and operations. 11 11
The Path Forward While LDCs are at the forefront of the grid transformation, the path forward requires careful and constructive coordination with government, IESO, OEB and stakeholders. There are a number of intersecting initiatives that will shape the modernization of the grid: OEB: Rate Design for Commercial and Industrial Customers IESO: Market Renewal; Grid-LDC Interoperability MINISTRY OF ENVIRONMENT AND CLIMATE CHANGE: Climate Change Action Plan MINISTRY OF ENERGY: Long-Term Energy Plan The EDA has encouraged the government to use the 2017 Long-Term Energy Plan to outline a path forward for the modernization of the grid and integration of DERs. The EDA looks forward to working with government and stakeholders to turn this vision into reality. For further discussion please contact: Justin Rangooni, Vice President, Policy & Government Affairs (jrangooni@eda-on.ca). 12 12
Thank you Electricity Distributors Association (EDA) 3700 Steeles Ave W, Suite 1100 Vaughan, ON L4L 8K8 Main: 905.265.5300 Fax: 905.265.5301 Read the vision on the EDA Website at: www.eda-on.ca Follow us on Twitter: @EDA_ONT