July 24, 2010
Telegraph-Journal

New Brunswick 's role in the smart grid revolution

Energy: But can a province this size really compete with the Ontarios and Californias of the world - the two jurisdictions that have taken the lead on smart grid?

Christine Dobby

SAINT JOHN - New Brunswick can be a living lab for research and investment in the so-called smart grid.

Liuchen Chang, professor of electrical and computer engineering at University of New Brunswick in Fredericton, stands among solar panels on the roof of Head Hall. I think there are opportunities, but we do have to be innovative in creating the benefits that attract these enterprises to New Brunswick ,' Chang says.

At least that's what boosters of efforts to develop and market the smart grid - a broad concept loosely centered around the convergence of the power grid with communications and information technologies - here in the province are saying.

The Department of Energy hosted a summit on the issue in March and the resulting report, released last month, suggested the province could be an "innovator and active participant" in the smart grid revolution.

"We have many of the assets here," says David Duplisea, senior advisor for smart grid technology and innovation at the department.

"We're a tremendous place for research and development and innovation," he adds.

But can a province of this size really compete with the Ontarios and Californias of the world - two jurisdictions that have taken the lead on smart grid?

Ontario is in the process of spending about $1 billion outfitting homes and small businesses across the province with smart meters, a project slated to be complete by the end of this year. Smart meters, or advanced metering infrastructure, create the potential for two-way communication between consumers and utilities and real-time use rates based on peak demand for power.

Meanwhile, utilities in California are also pushing forward on smart meters. Pacific Gas and Electric Co. plans to install close to 10 million by the end of 2011, Southern California Edison just installed its one millionth smart meter - part of a project to replace 5 million that will continue on into 2012 - and San Diego Gas and Electric Co. is in the process of upgrading 1.4 million meters.

As part of the stimulus spending program, in October 2009, the U.S. Department of Energy invested US$3.4 billion - to be matched by industry funding - into smart grid, largely for the deployment of new meters as well as automation projects. Another $1 billion went to demonstration projects.

According a recent report from Pike Research, an American clean technology consulting firm, these and similar efforts will boost worldwide smart grid capital spending - on advanced metering and other infrastructure upgrades - from $10.5 billion in 2009 to a high point of 35.8 billion in 2013.

Bob Gohn, a senior analyst with the firm, says North America, led by Ontario , has taken the lead in terms of installing smart grid infrastructure. Broad, continent-wide deployments of advanced meters in Europe will occur in the next few years and will be followed by a large wave in Asia , he says.

But Gohn says meters and upgrades to the grid have a long life - typically 15 to 20 years - and a low replacement rate. So after the peak in 2013, spending will start to slowly taper off. In fact, he says smart grid infrastructure spending in Canada is already on the decline.

"Smart meter shipments have already peaked for the most part in Canada because the replacement cycle that was pushed in Ontario is now basically completed or completing."

But the smart grid is about more than just meters.

Jatin Nathwani is a professor at the University of Waterloo and holds the Ontario research chair in public policy for sustainable energy management. He's also one of the principal authors of a report from the Ontario smart grid forum. He says the concept of a smart grid encompasses many elements, such as updating aging infrastructure, finding ways to reduce energy losses and improve reliability, incorporating renewable energy into the system and empowering consumers to participate in the energy conversation.

"Smart grids really comprise a whole bunch of sensors, monitors, information technology, communication technology - bringing together all these elements to act on the electricity system in ways we've never done before."

Nathwani says Ontario is the leading Canadian jurisdiction, largely because of its commitment to installing meters. And while advanced metering infrastructure projects have grabbed a lot of attention, work on the research and development and testing side remains to be done.

For example, renewable forms of energy, which are becoming more and more common, can be difficult to integrate into the grid because of their intermittent nature, says Nathwani.

And New Brunswick is at the helm of a project that aims to tackle that problem.

NB Power and a research team from the University of New Brunswick are leading a $32-million wind integration pilot project with three other Atlantic utilities - Saint John Energy, Nova Scotia Power and Maritime Electric, from Prince Edward Island - and the New Brunswick System Operator.

NB Power announced in March it would be investing about $3.6 million in the project - now dubbed PowerShift Atlantic - which was one of 19 selected for funding from the federal Clean Energy Fund in January. The province has also contributed $2.4 million and the federal government announced Friday it would offer funding of up to $15.9 million, contingent on the parties involved matching that amount.

Liuchen Chang, a professor at the department of electrical and computer engineering, is leading the UNB team, which began research and development related to the project two years ago.

Wind farms in the three provinces have a capacity of about 500 megawatts, says Chang. New Brunswick itself has the Kent Hills Wind Farm near Moncton - owned by Calgary-based TransAlta Corporation (TSX:TA, NYSE:TAC) - and the Caribou Wind Park in the north - owned by French company GDF Suez S.A. (Euronext:GSZ) - which have a combined capacity of close to 200 megawatts. Both sell their power to NB Power.

The four-year demonstration project - which Chang says will monitor more than 1,000 homes and businesses across the Maritime provinces - aims to balance customer load with variable energy supply from wind turbines. It involves shifting the usage of electricity by water heaters in private homes and commercial air conditioning, ventilation and refrigeration systems to create a controllable load to balance the wind power. This could replace the need for costly - and dirty - generation systems to supplement the wind.

There are some smart meters in the province already - installed as part of earlier pilot projects - and Chang says the demonstration will probably use about 100 homes in the Saint John area already equipped with the devices.

He says this is the first project in the world to use aggregated load for the integration of wind power into the system. And the technology could also be applied to other renewables such as solar power.

"Now the outcome of that project is gradually getting out from the lab, from the researchers' computers, into the field demonstration," Chang says, adding, "Our number one goal is to demonstrate the innovative technology in real life."

If the demonstration project is successful, he says, "The outcome can be used in other jurisdictions - the technologies will be exported into other areas."

What's more, says Chang , New Brunswick has the potential to attract further research and investment in smart grid technologies. And he points to one New Brunswick company with a product that's already for sale.

Recent New Brunswick startup Shift Energy Inc. is positioning itself to corner the Maritime market and then move on to export markets with its signature technology designed to optimize energy use for commercial building owners.

The company was formed in June 2009, the result of research and development done at Mariner Partners Inc., a Saint John information and technology firm. Richard Jones, the president and chief executive of Shift Energy, says its energy management system collects and analyzes operational data for commercial customers and provides them with real-time information on a web-based dashboard. The goal: reducing energy costs.

"Our technology really provides a foundation for clients to get a better handle on managing the way their energy is consumed," he says.

Shift Energy has signed contracts with six clients since starting selling efforts early this year, says Jones, and he expects to sign "significantly more" customers in the fall.

"Our approach is to focus on the Maritime provinces , sell directly to clients here, establish a significant market presence," he says, adding, "And we are definitely interested in exporting outside New Brunswick and outside the Maritimes."

But he says the plan is to create a solid base here before looking to export markets.

He says Shift Energy is the only company offering this technology in the Maritimes, says Jones, although he knows of a handful of companies elsewhere in Canada and the United States that offer something similar. But he's confident in both his technology and business plan.

New Brunswick has been a good place to start his business, says Jones, pointing to the province's 100 per cent broadband connectivity, the small business investor tax credit - which provides a 30 per cent personal income tax credit up to $75,000 - and easy access to ICT talent.

"We've had good success finding resources," he says, noting that the company has grown from just himself last year to a staff of eight from a variety of backgrounds.

But when it comes to encouraging smart grid technologies, Jones says the province lags in terms of its energy regulatory regime, which lacks dynamic pricing.

"NB power doesn't really have a program for commercial customers that you can purchase energy at off-peak hours - in that regard, we're quite behind the curve relative to some other jurisdictions," he says.

Time-of-use rates, says Jones, would help make Shift Energy's technology even more attractive.

Gaëtan Thomas, president and chief executive of NB Power, says time-of-use rates are something the utility will consider. And results from the wind integration load project may be factored into that, he adds.

That project is something Jones hopes Shift Energy can get in on.

"They're releasing RFPs on different phases and we definitely intend to respond to a couple of them - that's a really good sign that in New Brunswick there's going to be some leading edge thinking," he says.

Another opportunity Jones hopes to take advantage of was announced in June, when the Department of Energy committed $100,000 to Propel ICT, a non-profit provincial ICT association.

Propel's executive director, Jeff Roach, says the money will be used to fund small-scale pilot projects, a few of which they plan to announce shortly. He says such research and demonstration projects are part of the smart grid shift, which he sees as a 10 to 15-year process, akin to the changes wrought by the Internet.

"You can install meters everywhere, but if no one wants to use them or if the culture to support them isn't there, who cares?" he says.

Roach anticipates technology will be developed that New Brunswick itself can take advantage of, but first and foremost, he says, "this is an export play."

"This is about building the technologies that the world needs," he says.

Joseph Doucet, professor of energy policy at the University of Alberta , is skeptical of New Brunswick 's ability to attract smart grid research or investment.

"Given the size of the market and the available opportunities, it might be a little optimistic to think that a whole lot of research - whether it's IT or systems management - would go on in New Brunswick ," he says.

But Duplisea insists that New Brunswick 's very size can be its strength.

"One of the challenges is finding beta and testing sites in manageable-sized jurisdictions with manageable-sized populations."

New Brunswick , with its small population, broadband Internet connectivity and rural/urban mix offers an ideal environment for demonstration projects, Duplisea says.

Meanwhile, Nathwani, from his vantage-point in Ontario , says New Brunswick has the necessary academic facilities and technical capacity.

"If they choose to get into this in a serious way, I see no impediments in serving the Ontario market and so on."

For his part, Chang says the potential is there, but the province must seize it.

"I think there are opportunities, but we do have to be innovative in creating the benefits that attract these enterprises to New Brunswick ."