The Smart Grid Forum released a report on developing Ontario's smart grid. [1] The report defines a smart grid as an electricity system that uses advanced technologies and communication to improve flexibility, reliability, efficiency and safety. [2] It recommends the province support smart grid development through legislation, regulations and incentives. [3] This would help modernize Ontario's electricity system and create jobs while facilitating renewable energy and electric vehicles.

1. February 6, 2009 - Volume 7, Number 2
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In today's global electricity sector, it is recognized that if we are going to be
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able to facilitate the generation, transmission and distribution of power of
tomorrow in a way that fosters economic growth and environmental
Editorial Staff responsibility, our way of operating and interacting with the pieces of the
Executive Editor power system must change dramatically. It is necessary change; change
from a one-way "dumb" grid to an interactive, intelligent smart grid.
Paul Harricks (Toronto)
Editorial Board
To foster this change, Ontario's Independent Electricity System Operator
Myron Dzulynsky
(Toronto) (IESO) created a 10 member Smart Grid Forum. Members of the Smart Grid
Paul Edwards (Calgary) Forum are:
Henry Ellis (Vancouver)
Gary Graham
Paul Murphy - President and CEO, Independent Electricity System
(Hamilton)
David Kierans Operator - Chair Ontario Smart Grid Forum;
(Montréal)
Ian Macdonald Michael Angemeer - President and CEO, Veridian Corporation;
(Toronto)
Michael Morrison David Collie - President and CEO, Burlington Hydro;
(Toronto)
Production Staff
Norm Fraser - Chief Operating Officer, Hydro Ottawa Limited;
David Hill
Anthony Haines - President, Toronto Hydro Electric System;
For further information
on any of the items David McFadden - Chair, Ontario Centres of Excellence;
raised in this issue, you
may contact David Keith Major - Senior Vice President - Property Management, Bentall LP;
McFadden, Energy
Industry Group Leader,
or one of the members of Jatin Nathwani - Professor and Ontario Research Chair in Public Policy
the Energy @ Gowlings for Sustainable Energy Management; Executive Director, Waterloo
editorial board. Institute for Sustainable Energy, University of Waterloo;
Paul Shervill - Vice President - Conservation and Sector Development,
Ontario Power Authority; and
Wayne Smith - Vice President - Grid Operations, Hydro One.

2. The Smart Grid Forum released its report entitled, Enabling Tomorrow's
Electricity System on February 5, 2009. While the report focuses on Ontario,
the contents, conclusions and recommendations have universal application
across Canada.
Many area's of the economy will be affected by a smart grid but the research
and development sector will need to take the lead in the early stages. A
member of the Forum, David McFadden, who serves as Chair of the Ontario
Centres of Excellence and Chair of Gowlings Energy and Infrastructure
Industry Group said that, "We have a clear opportunity to leverage
investments in smart grid technology to promote innovation and create green
jobs." McFadden added, "Research and development in smart grid
technologies coupled with a commitment to a highly skilled workforce can
provide our province with a competitive edge."
What is a Smart Grid?
For many, a smart grid is still a nebulous concept so the first task of the
Smart Grid Forum was to define what is meant by a smart grid. The following
is their description of a smart grid:
A smart grid is a modern electric system. It uses
communications, sensors, automation and computers to improve
the flexibility, security, reliability, efficiency, and safety of the
electricity system. It offers consumers increased choice by
facilitating 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
facilitates connection and integrated operation. In short, it brings
all elements of the electricity system - production, delivery and
consumption closer together to improve overall system operation
for the benefit of consumers and the environment.
A smart grid is not only information rich, but also has the
analytic infrastructure, processes and trained individuals
necessary to integrate and act on information in the very short
time frames required by the electricity system. It is
characterized by clear standards, security protection and open
architecture that allow for continued innovation through the
development and deployment of new technologies and
applications by multiple suppliers.

3. Why Do We Need a Smart Grid?
For Ontario, the impetus behind the advancement of the smart grid has been
the provincial government's:
Requirement to shut-down Ontario's coal-fired generation;
Work to create a culture of conservation; and
Procurement of renewable generation sources to meet future electricity
needs.
Implementation of these initiatives requires, both transmission and
distribution systems, to accommodate new types of generation, e.g. solar,
wind and biomass, in new locations. Load patterns in the electricity system of
tomorrow will be significantly different than the load patterns that were used
as the basis for creating today's transmission and distribution system.
How Do We Get There?
Ontario has already taken the first step in creating, and realizing the benefits
of, a smart grid by introducing smart meters. The report notes that research
has shown that providing consumers with transparent commodity pricing
together with time-of-use rates can lead to consumption reductions ranging
from 5 to 15 percent.
The province's move to a conservation culture and its renewable generation
initiatives continues the move toward the electricity grid system of tomorrow.
However, without the advanced technologies that enable a smart grid, the full
potential of these initiatives will not be realized. The province, and all
jurisdictions, face challenges in simultaneously incorporating distributed
generation, addressing growth and replacing aging infrastructure while also
maintaining reliability and quality of service. The report notes that simply
adding wires and equipment without intelligence to address growth and the
replacement of aging assets is not a viable option.
What Will We Need?
While there is a clear definition of what a smart grid is and what a smart grid
should accomplish, many of the technologies to support that vision are in the

4. early stages of development. Some of the technologies will advance to
commercialization and for some, the cost of large scale implementation may
be prohibitive. The technologies of the smart grid must communicate with the
technologies of the current grid system. The report notes that, "the challenge
of interoperability, enabling new and existing technologies to exchange
information and work together is substantial." These challenges can be
overcome through innovation, investment and creativity. However, it will also
take clearly defined roles for all potential market players. These roles can be
defined through legislation, regulation or other available means that clarify
authorities, establish requirements or create incentives.
Research will play a key role in the advance of the smart grid. The Ontario
Centres of Excellence (OCE), an independent not-for-profit corporation
established to encourage, fund and promote commercial innovation in Ontario
and Canada, is well-positioned to develop smart grid technologies and
systems. OCE currently has 14 projects underway or in the pipeline that
relate to the development and commercialization of smart grid appliances.
Stakeholder Input
In developing the report, and the subsequent recommendations, members of
the Forum heard presentations from a wide variety of industry stakeholders
and experts on the following topics:
Smart Grid Vision - The vision of a smart grid and smart grid activities
in the United States and European Union;
Consumers - Change in how consumers, utilities, retailers and other
service providers interact by offering new ways for them to
communicate and expanding the types of services available to
consumers;
Ontario - Ontario distributors', transmitters' and the Independent
Electricity System Operator's (IESO) current smart grid-related
activities and future plans;
Distribution - How the use of advanced sensing, automation and
communications equipment on the distribution system can improve
reliability, equipment performance, restoration times and power
quality;
Distributed Energy Resources - Energy resources on the distribution
grid include generation, storage and demand response. Smart grid
technologies can help maximize the amount of generation that can be
connected to the system while maintaining safety and service quality.
Energy storage offers potential benefits such as:
Delivering energy to meet peak load;
Providing ancillary services, including regulation and voltage
support; and
Allowing for the deferral of distribution investments.
Micro-Grids - A micro-grid is seen as an integrated solution that meets
the electricity needs of a group of consumers, such as a
neighbourhood, a town or a single consumer such as a university;
Electric Vehicles - Plug-in electric vehicles offer the prospect of reduced
emissions and lower costs. However, their widespread use will present
challenges and opportunities for the electricity system. At a local level,

5. the major challenge involves enabling vehicles to be charged safely
and conveniently without adversely impacting local distribution
equipment;
Standards and Security - Both are vital if the smart grid concept is to
develop efficiently. Standards are required to allow devices developed
by different companies for different purposes to interact. Security is
crucial because grid modernization requires installing large numbers of
devices that must communicate with essential computer systems.
Many of these devices will be located in unsecured locations and can
be potentially accessed by those seeking to penetrate critical utility
systems; and
Transmission - The need to incorporate significant quantities of
variable generation and the development of storage facilities will drive
increased application of advanced technologies. Transmission systems
can become more intelligent through the installation of additional
monitoring which allows better assessment of conditions on
interconnected systems.
Key Recommendations
The Forum believes that the "rapid development of a smart grid to benefit
electricity consumers and advance environmental initiatives should be the
policy of the Province of Ontario." The following are the key
recommendations of the report:
The Ministry of Energy and Infrastructure should facilitate the
development of Ontario's smart grid through legislation, regulation or
other available means that clarify authorities, establish requirements
or create incentives for those entities investing in Ontario's electricity
system to accelerate the deployment or enhance the functioning of
smart grid technologies;
Consumers and their designated representatives should have access to
timely information about their consumption and the price they are
being charged from a smart meter with two-way communication
capability;
Consumers should pay prices that reflect the cost of electricity at
different times;
To plan and operate the grid reliably and efficiently, distributors,
transmitters, the Ontario Energy Board (OEB), the Ontario Power
Authority (OPA) and the IESO should work together to:
Develop requirements for and propose sufficient monitoring of
distribution connected generation, storage and responsive load;
Determine the authority necessary to direct the operation of
these facilities, the conditions under which their operation could
be directed and any compensation that would be provided to a
facility;
Propose contractual and pricing arrangements with distribution-
connected generation, storage, and responsive load that support
efficient grid operations and are consistent with the operation of
the wholesale electricity market; and
Coordinate the development and implementation of grid control
and information systems to facilitate the above actions.

6. A task force led by the Ministry of Economic Development, involving
other relevant Ministries and consisting of representatives from the
auto sector, electricity sector and universities should be created to
develop a comprehensive plan for enabling plug-in vehicles. The plan
would address policy, financial and system impacts of substantial
electric vehicle penetration; and
Utilities, the IESO, the OPA, universities and the OCE should conduct
research and development related to smart girds to advance Ontario's
leadership position in this area, promote innovation and develop jobs
in Ontario's green sector. The OCE should facilitate the development of
a task force to produce a framework for smart grid research in Ontario
that would include targeted amounts of funding and proposed funding
mechanisms.
For the development of smart grids to be successful, the Forum believes that
stakeholders must recognize that not all smart grid technologies will deliver
as promised, there will be some false starts and dead ends, and open
standards and integrated approaches are essential to minimizing the risk of
stranded technologies.
Based upon the reams of information available to the Forum, including
presentations from the United States and the European Union, it is clear that
no one jurisdiction is the clear leader in the development of a smart grid
system. Coordination amongst stakeholders, both internal and external to
each jurisdiction, as the idea and concept of a smart grid begin to crystallize
are key to success.
How Much Will This Cost?
The preliminary cost estimate by the Forum is that incremental capital
spending over the initial five years would be $1.6 billion. This cost estimate
covers transmission, distribution and the IESO. The report notes that cost
comparisons to other jurisdictions are not meaningful because each
jurisdiction has a different starting point. For example, the $1.6 billion does
not include smart meters costs since Ontario is already well down the road of
installing smart meters.
Is the Government Supportive of This Initiative?
Within 24 hours of the report being issued, the Premier of Ontario stated that
the province will be introducing new green energy legislation to modernize
the electricity system. He further stated that a smart grid system is essential
to maximizing Ontario's abundant renewable generation. The Premier
estimates that the Green Energy Act will generate 50,000 direct and indirect
jobs over the next three years and will expand Ontario's use of clean and
renewable energy sources such as wind, solar, hydro, biomass and biogas.
The full text of the report may be viewed at the following site:
http://www.ieso.ca/imoweb/marketsandprograms/smart_grid.asp
Michael Morrison
(416) 369-6169
michael.morrison@gowlings.com

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