Energy Innovation and Future of Local Distribution Companies

This research paper discusses the role of energy innovation in the future of local distribution companies in Ontario, Canada. It covers challenges faced by LDCs, recommended actions for innovation, policy formation, landscape of Canadian electricity utilities, and more.

Running Head: ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 1
Research Paper
ENERGY INNOVATION AND FUTURE OF LOCAL
DISTRIBUTION COMPANIES
Student: Sara Aminaei
Course: LAW 6573 - Energy and
infrastructure Innovation: Law and
Policy (Summer 2017-2018)

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 2
Table of Contents
Abstract.......................................................................................................................................................3
Introduction.............................................................................................................................................8
The essence of innovation.......................................................................................................................8
Recommended Actions for Innovation..................................................................................................10
Policy formation for innovation.............................................................................................................12
Landscape in which the Canadian Electricity Utilities Operate..............................................................13
The Emergence of big data....................................................................................................................13
In-House Research and Development Arms..........................................................................................15
Collaboration Ecosystems......................................................................................................................15
The Concentric Model...........................................................................................................................17
The Green Energy Act............................................................................................................................18
Capacity Markets White Paper..............................................................................................................19
Ontario Center of Excellence.................................................................................................................19
Priorities of Ontario’s Local and Distribution Companies in facilitating Research and Developments. .21
Project Development as a result of innovation done by the Local Distribution Companies..................22
Improvements on the operation of LDCs as a result of innovation.......................................................23
The Plugin Electrical Vehicles................................................................................................................24
Advantages of plug-in electric vehicles......................................................................................................25
Need for Smart Cars communication with Smart Grids.........................................................................25
The impact of Electric Charging of Vehicles on Local Distribution Companies......................................26
Electricity and Public Transportation.....................................................................................................27
Conclusion.............................................................................................................................................27
References.................................................................................................................................................29

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 3
Abstract
The role of energy innovation is diminishing in a generation of technology, financial,
policy changes in the industry. These changes will find the future of local distribution company
in Ontario (Canada). According to an institutional theory of organization innovation of
technology can break through the cultural resistance to change and historically. The electricity
distributors association discovered public campaign; this campaign promotes the role of electric
energy and importance, and role of local distribution companies to transfer energy to consumers
(EDA, 2015). Ontario is the largest electricity distributor in Canada that produces electric energy
and transfer to millions of homes, and industries. Ontario takes high voltage power supply from
wires and delivers low voltage power supply to homes, and industries. It is also accountable for
billing users and implementing energy conversion program. Local distribution companies
(LDCs) provide a contact between millions of users and rest of the system (EDA, 2015). There
are many benefits of latest energy distributor technologies such as reduced transmission losses,
more efficient, low distribution losses, low power consumption, new methods of electricity
storage, use renewable sources to produce electricity
Local Distributor Companies provide around 65% of electricity to millions of homes in
Canada. The Hartley Bay is the first micro grid in Canada which provides up to 2 GWh of
electric energy per year at cost of $0.67 per kWh (Natural resources Canada, 2016). The Cayuga
GRS is the largest solar farm in Canada that produces around 100 MWh energy and almost
17000 homes in Canada uses this electricity (The spectator, 2015).
There are many challenges faced by LDCs such as customers expecting more from
utilities: more innovation, more flexible, more efficient, more reliability, and more value.

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 4
Sustainability issues are also rising in the customers; users want socially and environmentally
responsible options (Post carbon, 2015). The cost of energy distributors is also varying due to
many factors. GDP increased by around 41% but electricity consumption increased by 19%
between 1996 and 2007. According to 2013 data, the cost of energy has decreased while global
adjustment has increased. Innovation is good for future because it is correlated with both
financial and competitive. There are many benefits of innovation such as improving revenues,
decreasing cost, increasing efficiency and reducing financial risk. The scope of this idea is
limited to a thematic conversation of the many technologies, stakeholders, and trends at the LDC
world.
These new technologies are changing the structure of our grid from a centralized,
monopolistic, one-way system with large generators towards distributed generation (DG) and a
two-way paradigm, supported by advanced communications infrastructure.
Modernization of the grid serves as one of the solutions of offering electricity solutions to
individuals in the society. The changing events in the nation pushing for sustainability are some
of the factors pushing for innovation. Achieving such targets calls for having the guiding drivers.
One of the primary drivers is the elimination of greenhouse gases. Several strategies have been
set to accomplish such objectives in the society. The aligning of the goals is one of the factors set
that will influence such excellent levels of operation. The policy paper will guide in the aligning
of the goals and the targets of the company through the innovation process. Despite the policies,
there is still pressure being experienced for example as a result of the macroeconomic landscape.
There was too pressure from collection, storage and proper usage of data. However, support from
the various economic sectors have made it easy for the management of the data to be achieved.
The innovators are also to be recognized through their innovation as a result of the proposals

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 5
they did make to the utilities. High levels of collaborations were experienced at such levels that
significantly heightened the research process. The gold standard models contained in the
concentric model offered proper guidance through the collaborative systems. One of the products
of collaboration was the start of sufficient energy storage. Information regarding all these
activities was attained from diverse centers for example the Ontario Center of Excellence that
guided through the process of implementation of the different roles. Most of the Local
Distribution Companies have made use of the company in coming up with various projects
related to innovation. The companies were to improve in their operation citing the recommended
actions from the various centers. Need for such improvements will be as a result of the
significant challenges that are to be handled.
Much of our existing distribution system requires refurbishment within the next decades;
by incorporating these new technologies, Ontario's electricity system will transform from a
centralized model to a mixed model with a smart, clean, localized, and reliable configuration for
the 21st century. Ontario's LDCs will be at the forefront of this change.
Ontario's supply mix will increasingly incorporate renewable generation: solar
photovoltaics (PV), wind, and biomass. These technologies will become cheaper and more
efficient in the coming years, increasing their appeal to provide customers both clean energy and
a profit opportunity. Advances in energy storage (ES) can support the intermittency and power
quality issues inherent with weather dependent generation. Batteries, flywheels, and thermal
storage will encourage increased reliability and allow for price arbitrage. Finally, the electric
vehicle (EV) will affect both demand and supply.
Changing demand patterns and technology will alter the relationship between customers
and LDCs. Increased reliance on electric devices means that consumers require greater

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 6
reliability. New structures in the future will draw net-zero energy by way of amended building
codes, PV generation, conservation and demand management (COM) programs, and ES
solutions. The transition to the smart grid and the smart home will result in a more robust,
reliable, automatic, yet more complex distribution network. It will consist of comprehensive
control systems to increase efficiency and innovations is an important consideration for their
future business.
LDCs also play a role in developing new technology in the supply, monitoring, metering
and use of electricity. LDCs need to be an innovative in their business practices in order to add
value to their services. Governments are encouraging LDCs to take the risk of innovation for
their future business. The LDCs need to be part of innovation for several reasons:
1- OEB regime encourage LDCS to do saving through continuous improvement
2- Recover the prudent investments in smart grid development and CDM
3- To reach conservation targets as conditions of License
4- Influence the expertise of the private sector and pilot program
5- Government mandate for smart Grid
LDCs need to invest in asset renewal, while concurrently building the smart grid. They
do so with uncertainty about when net-zero homes and micro-grids will become popular. Even
their customer base might change: some will be more reliant on LDCs, while others will need
distributors solely for backup supply or might even choose to disconnect altogether.
Understanding how new technology will change customer demand must inform the investments
we are making today.

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This research determined the current challenges facing by Ontario’s LDCs tied to the
social, environmental, health, and overall economy of Ontario. Ontario is also providing contact
between millions of users, and all other institutional users. The historical development of LDCs
also created a barrier that limits LDCs to their changing environment. A new innovation is an
important way to avoid these barriers. New energy innovation and technologies have potential to
change the industry in each aspect. In terms of users, the biggest challenge faced by LDCs is that
attitudes and expectation toward the energy innovation and distribution. Users want more
efficient services from their providers that display high levels of flexibility. In some of the
occasions the customers do need low power from the providers, hence such kind of variations
will call for the modernization of the grid to facilitate such functioning
In summary the major factors driving the revolution of energy systems are -
decentralization that is distributed energy like Micro grid and Energy autonomy.
Decarbonization that is generating and increasing power from renewable energy by over 300%
from 2010 to 2030. Share of renewable goes to 40 % in 2030. Digitalization which is matter of
connectivity by grid edge and end to end connectivity. New installations of global smart meters
increasing by 200 % between 2015 and 2025 that will reach to 100 Million p.a. in 2025. Some
case study from existing European cities is presented in this paper.

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 8
Introduction
Being at the critical infection point is one of the most dangerous positions that a country
should think of occupying at one particular time. However, the case is seen in Canada. Most of
the electricity infrastructure in Canada is tending towards the life expectancy hence prompting its
moving close to the infection point (Mann, 2012). There is a need for coming up with a proper
solution that will help in dealing with the whole challenge. The grid has to undergo a certain
degree of renewal in addition to modernizing it. The result will be a smart grid which is primarily
a modern electric system. The network makes use of sensors, monitors, communicators, and
computers to facilitate the improvement of flexibility, security efficiency, safety and reliable
electricity system. Such activity will be of much importance in pushing for reliability, low costs
and promoting a sustainable power supply in the near future (Li et al, 2010). Carrying out the
activity within the next 20 years will cost the government approximately $350billion. However,
it is essential to understand that such a cost will not be in vain as it plays a significant role in
offering a lasting solution to the deterioration facing the utility assets in the country. Failure to
take up the challenge will cause a substantial increase in the electricity rates that is to be
experienced. The prices will be approximately 20% higher in the year 2035 compared to the year
2013. There is a need for a systematic approach that will guide in embracing the new technology,
and that will be in a position to cater to the rapidly increasing demand.
The essence of innovation
The changing events in the society are gradually influencing the expectations the
customers have towards the utility providers regarding the socially, economically and

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 9
environmentally related sustainability (Watson, Boudreau & Chen, 2010). As a result, they tend
to push for innovation that will be experienced through the modernizations of the grids. The
response from the utilities has to be positive, and they are already setting strategies that will
ensure the whole modernization process becomes a success.
The key drivers that serves as their guidance include the desire to cause a decrease in the
greenhouse production in the atmosphere (Brown & Zhou, 2013). Apart from that, the utilities
are up to ensure that there is resiliency by the system despite the changing climate conditions and
the weather gradually rising to extreme levels. The empowering of customers to ensure that they
play a more primary role in providing that the electricity system is appropriately shaped also
serves as one of the significant drivers to ensuring that innovation is achieved at the end of the
day (Schwab, 2017). The cost is a significant factor that has to be considered in any industry.
There is a need to ensure that the cost remains to be low for the continued optimum production
of the company (McCarthy et al, 2012). The utilities are motivated by such a factor and are
working to see that there is maximum containing of the costs and the production rates remains to
go high every other day.
Strategy is one of the most certain ways of ensuring that excellence is achieved at the end
of the day. The grid modernization also called for being strategic to be in a position to influence
most lives in the society in addition to shaping the functionality of the electricity system to being
in operation. The Canadian Electricity Association played a significant role in influencing the
method that was embraced in carrying out the innovation process. The society will at most times
demand change that has to be embraced for their better living. The Local Distribution Companies
have to work to ensure that their response to such demands are excellent and build satisfaction
among the customers. The distributed generation has also to be properly facilitated apart from

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 10
ensuring that electric vehicles are appropriately distributed all over the nation. The working of
the Local Distribution Companies makes use of different assets. The assets occupy a significant
section of the budget to be catered for through the year. Hence, there is a need for optimizing on
their use. The innovation will ensure that methods are devised and that they will provide
effective use of such assets at any time that they will be needed. Apart from making use of the
assets, there is always a possibility of faults occurring in the instruments being used. Failure to
recognize such errors at an early stage will significantly influence the proper operation of the
company and might lead to significant losses being incurred at the end of the day (Reason,
2016). The innovation process by the utility providers has paid a considerable focus on ensuring
that the detection of such faults is done excellently and mitigation that comes after that to
embrace high levels of professionalism.
Recommended Actions for Innovation
The factors that will influence excellent grid modernization and the better strategies have
been proposed. Recommendations have to be made to the government that should be
implemented to ensure that the Local Distribution Companies find it easy to work on innovation
and offering of better services progressively. There is a need for adequately aligning the goals
and priorities that are to be achieved by the different companies all over the nation (Nelson,
2013). The national organizations can play a significant role in pushing for such alignment to be
completed. They have to facilitate the organization strategic forums where the companies will
speak out their goals and agree on what is to be prioritized in the first place and what step will
form the peak of the innovation process. Regulations have to be set regarding the working
methods. Policies are of much importance in ensuring that proper management is achieved

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 11
(Wheelen & Hunger, 2011). The policymakers have to, therefore, set the right plans that are in
line with the agreed facts and that will provide the set visions and mission is achieved.
Motivation is of much importance in ensuring that one directs full efforts in achieving a
particular purpose in the society (Anantatmula, 2010). Benefits of the grid modernization can
significantly motivate the different companies to direct extra resources. United working can be
achieved by setting a national approach that will focus on setting the right implementation
benefits to realize the benefits in addition to methods that will help proper watching of such
benefits (Posavac, 2015). Apart from Canada, several other companies have also been out to
achieve the electricity innovation. Some countries did employ the right strategies and managed to
reach the set targets. There is too the need to note that some companies did make minor errors
and later applied the right solution to go around the error caused. Canada has sufficient
opportunity in attaining such benefits from partner countries during events such as the
International Energy Agency’s International Smart Grid Action Network in addition to several
other multinational forums. The innovations do also call for making use of finances (Drucker,
2014). Some of the projects call for spending lots of funds not in a position to be attained by
growing Local Distribution Companies. The utilities have to, therefore, come up with a method
that they will set a broad portfolio of the innovation projects that are to be achieved in the nation.
The broad projects brought together should fully support provincially or nationally related policy
objectives. After that, there will be the partially or fully matching of such goals with the public
funds being provided by the government. One of the possible ways that can ensure such
matching is through the organizations such as Sustainable Development Technology Canada.
Different stakeholders are involved in grid modernization. They both play different roles
that will ensure the idea set is achieved smoothly. Some of the common stakeholders include the

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 12
regulators, utilities, policymakers, and customers. The stakeholders work on different
demonstrations before the setting of the innovation nationally. There is a high possibility of
occurrence of errors during such demonstrations and lessons learned. The embracing of such
teachings plays a significant role in pushing for excellence in working (Fabrice, 2010). There is a
need to, therefore, share such experiences among the different stakeholders to allow for fastening
of the innovation activities. As the technologies develop every other day and individuals attain
carrying lessons, distilling of such teachings and techniques is of much importance in ensuring
that they are applied for future generations (Bowonder et al, 2010). For example, formalization
of the same should be done into chords and standards that will offer guidance during the utility
technical planning and operating practices. The customers are a critical section of the innovation
process as they form the beneficiaries of the set methods by the different utilities (Brodie et al,
2011). The various techniques that will protect and improve the electricity service should be
communicated to the customers at an early stage and should often be done as a way of ensuring
that they are well informed regarding the same. Innovative approaches have also to be set that
will allow for proper engagement of the public.
Policy formation for innovation
Diverse help has to be provided from all sections of the government to ensure that the
different innovation companies achieve innovation. Apart from the recommended actions, the
policy formation is also of much importance in offering help to the utilities through the
innovation process. It will facilitate the offering of information to policymakers and other key
stakeholders the essential information that will support the electricity innovation agenda. The
paper carries a proper investigation of the current drivers of the innovation process ensuring to
offer the primary reasons that leads to the sector being at a weakness point. Apart from that, it

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carries a review of the significant technology areas that are playing a significant role in the
shaping of the functionality of the electricity system in the future generation. Through the paper,
several other recommendations are offered approximating to seven that will motivate the pushing
of the innovation agenda forward. Apart from the information and inspiration stated out in the
paper, there is too the building up on other two particular documents. They include The Future of
Canada’s Electricity System and the paper regarding Stimulating Innovation on Behalf of
Canadas Electricity and Natural Gas Consumers that saw its publication in August the year 2014.
Landscape in which the Canadian Electricity Utilities Operate
There are different sources of pressure facing the electricity utilities (Verbong,
Beemsterboer & Sengers, 2013). One of the areas that have significantly contributed to such a
burden is due to the macroeconomic landscape. There is a need to note that significant changes
have occurred since the last primary infrastructure investment campaign. The campaign was held
approximately 40 years ago. The GDP at that particular time was roughly five percent per
annum. The adoption of new electric-powered appliances played a significant role in influencing
the change in utility sales that caused its increase from 5% to 11% every year, a growth that was
experienced between the year 1965 and 1974 (Axsen, Bailey & Castro, 2015). The result was a
cumulative increase of 10% within ten years. There is a predictable growth of 2% over a year till
the year 2035. However, the need to cut down the energy intensity of the Canadian economy, the
growth rate will be maintained at 1% per year.
The Emergence of big data
As the innovation is moving forth, data forms one of the essential sections in the industry
(Marcuse, 2013). The future of the Local Distribution Companies will depend on how well the
day was stored and the privacy that was put to ensure that the progressive working of the

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 14
company is achieved every other day. Different sectors of the Canadian economy have
experienced different challenges in dealing with data; as a result, they devised methods that will
ensure that there is a high level of efficiency in the collection, storing and the sharing of data.
The cost associated with Big Data Software, hardware, and the related services as there has been
an increasing trend from the year 2011 to the year 2016. However, there is a need to ensure that
there is a reduction in such data cists. The minor innovations that have been made have caused a
decrease in the costs spend on data (Kline & Rosenberg, 2010). Grid modernization will
experience a significant milestone through the cutting down of the cost of storing data. The smart
meters have brought about tremendous benefits to the Local Distribution Companies, and their
influence can be openly realized (Anderson & Fuloria, 2010, June). The meters are needed to
properly store the metering information for a particular billing period, after which the meter will
cease to be used. This is part of the regulations as stated by the Canadian Electricity and Gas
Inspection Regulations. The meters do have an estimated lifespan of approximately 30 years;
hence the space that they are to occupy is highly cut increasing on energy efficiency. Such a fall
in the storage cost of data has made the transition to real-time data collection economically
feasible. Despite the feasibility experienced, there is a need to note that there is also much to be
considered apart from feasibility. There is a gradual evolving of information technology; the old
data should not be lost but pulled along with it ensuring that there are high levels of accuracy
protecting the security and privacy of the data (Kimball & Ross, 2011). The companies are faced
with a mandate to provide that they continuously offer attention to the integrity of the data in
addition to innovation. Outages bring about significant losses to customers, especially when
engaging in income related activities. The Local Distribution Companies personnel experienced
a hard time dealing with the customer who did call in complaining about the outages that have

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 15
taken an extended period without being attended to, a situation that has been properly covered
with the ongoing innovation. The companies will be in a position to detect any form of outages
experienced and attend to it on time cutting down on the inconveniences that are to be
experienced in the society. The whole process should not stop at that level, the cheap data that
will be attained has to be used for the benefit of the company rather than being stored (Cukier &
Mayer-Schoenberger, 2013). The data should be properly converted to valuable information that
will allow the grid operators and customers to make use of it in making better decisions, a
measure that will call for ongoing innovation to be embraced in the society.
In-House Research and Development Arms
The equipment vendors have a better understanding of the working of their instruments
and can always work to ensure that they offer better equipment in the society that can provide
high levels of efficiency (Storey, 2016). The vendors, therefore, work to develop new
technologies in the community that will be later recommended to the utilities to check out for it
and allow it to be incorporated in the utility operators and asset managers. The utilities have,
therefore, taken up the responsibility of looking out for early-stage technological innovation.
They will after that, work to ensure that there is controlled providence of grid access to the
vendors allowing for the testing of their applications in the real-world environment. The
relationship is of much importance to the utilities by ensuring that the utilities get to meet the
particular needs of the societal members excellently by applying a single innovation.
Collaboration Ecosystems
Innovation should have taken a different route, and the society should be complaining
of more complex challenges instead of the common difficulties being communicated every other
day. Barriers to innovation have significantly reduced the innovation rate that is being

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 16
experienced in the society (Rosenbusch, Brinckmann & Bausch, 2011). However, the restrictions
will not cease the challenges from their progressive growth and becoming worse. There was a
need for collaboration to take place to ensure that different problems are adequately dealt with in
the society, and the research on various issues is done smoothly (Sanford, 2017). The equipment
manufacturers have the technology that has to be implemented. However, they face the challenge
of having the appropriate laboratories that can prove the workability of such an idea. The utilities
do have the grid systems and they significantly influence the situation by providing the space and
the tools that can be used in setting the idea moving to the public and making it known in the
entire nation and globe. However, despite carrying out more research regarding a particular
purpose, making the idea known and rampant to the society calls for the use of advertisement an
achievement that will call for spending lots of finances (Davidson, 2013). The government is
excellent in the providence of funds that will be of much importance in the building of a
consortium industry in addition to directing the experts in carrying out the implementation
process of the diverse proposed ideas. Embracing such a method of working, involves the
gathering experts that are broadly based the primary target being the project to attain success at
the end of everything.
The lack of in-house research and development is appropriately addressed by making use
of the collaborative approach (Mertens, 2014). In addition to that, the access to grids has been a
previous challenge facing the innovation process, a problem that has appropriately being
addressed by the collaborative approach. Single-handed working on projects has significant risks
associated with it that may threaten the smooth functioning. Finances are one section that faces
substantial risks the main reason being that some equipment, that sound to be costly, might be
purchased and the result achieved is that the idea isn’t feasible. Several such setbacks will lead

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 17
financial deterioration. Apart from that, the knowledge resource is also a significant risk that may
a face a small growing company (Schwienbacher & Larralde, 2010). The company might have to
spend much cash on catering for the information being provided. The money spent will not be
refunded in the case of the project failing at the end of the day. Such risks scare away most
vendors from implementing specific technologies. Hence, through the collaboration approach,
the challenge has been adequately dealt with, and collected efforts cut down the individual risks
in addition to increasing the courage in them to attempt several innovative ideas.
The Concentric Model
It is primarily a paper that saw its publication in August of the year 2014 (Spudich et al,
2014). The Concentric Energy Advisors are responsible for such a step that was embraced in the
society done at the behest of Canada Electricity Association and Canada Gas Association. In the
paper lays the gold standards model that will push for innovation being so collaborative. Some of
the characteristics contained in the model that will push for innovation include Funding.
According to the model each customer has to be responsible for initial funding of approximately
$3 - $5 before an innovation process kicks off. It should be noted that the amount will be fully
rated payer funded, the funding taking place within approximately three years. A dedicated
reconciling mechanism, for example, the variance account will play a significant role in pushing
for the recovery of the cost. The model also addresses the oversight of regulations in addition to
the proper management of programs in the society. According to the model, the funds that will
be collected should only be used in catering for the collaborative projects being initiated in the
community rather than spending the amount on internal and utility-specific efforts. Every year
has the capability of having several innovation plans to be championed for across the globe
(Ostrom et al, 2010). Such year investment plans have to be subject to regulatory approval in

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 18
addition to being reviewed formally by the stakeholders in charge of the utility. The regulation
should too not be done randomly however, there is a need for a proper guidance that should be
provided that relates to the criteria used in building the business facilitating the justification of
the innovation activities.
Green Energy Act
The act was brought to place with the primary target of pushing for renewable generation
being a reality, a factor that will help stabilize the proper functioning of the Local distribution
companies of the future (Liou, 2010). The act does offer a guideline to the distribution
companies on how they will function to ensure that such a vision is achieved. For example, the
wire companies have been directed to give a priority access to grid connection as a way of
facilitating the renewable energy generation projects. The Minister of energy and infrastructure
are also of much influence in pushing for the use of renewable energy in the society (Ahlborg &
Hammar, 2014). The act makes use of the minister by authorizing them to direct the OPA in
launching new electricity supply RFPs. The RFPs should mainly be used for the renewables
(Neubauer, Pesaran & Howell, 2010). Apart from authorizing the minister, the act also offers
room for the minister to direct the OPA to facilitate the development and implementation of a
Feed-In Tariff fee structure set aside specifically for the renewables. The act gives a direction to
the Local Distribution Companies to facilitate the connection of any new renewable generations
that do meet all the technical requirements needs for better functioning. The act does not stop at
that but moves forth allowing the Local Distribution Companies and municipalities to take over
the ownership in addition to facilitating the operation of renewable generation assets of
approximately 10 megawatts or less. The act has also set right various measures that will

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 19
facilitate the empowering of a new class of Energy Cooperatives as a business model. The class
will be responsible for accelerating the development of distributed renewable energy sources.
Capacity Markets development for Innovation
In the present day, despite the current power plants emitting greenhouse gases in the
atmosphere, the use of energy storage in the providence of niche services in electric power
systems has been of great benefit to the society that many have realized (Hesse et al, 2017).
Hence, as the innovation progresses on, there is a need for including a systematic approach that
will see to it that energy storage products and services are included in the capacity markets. The
Independent Electricity System Operator has played a significant role in making it possible for
the capacity market to be realized (Shen et al, 2014). It will facilitate the production of details
regarding the capacity market auction that has a designation to ensure proper consideration of the
energy storage. Actual Ontario Energy Production did facilitate the testing of the model and the
expected energy storage systems, a factor that qualifies them for effecting the innovation in
Canada in addition to making the Local Distribution Companies of the future more efficient in
their operation. Moreover, the energy storage model being presented offers a competitive
environment with the conventional and intermittent generation capacity offer, the main reason
being the fair prices associated with the Capacity Market White Paper. The model can also be
used in facilitating the selection of the future generation capacity requirements. Thus, the Future
of the Local Distribution Companies will be extensively bright.
Organizations facilitating innovation
Ontario Center of Excellence

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 20
The organization saw its establishment more than 20 years ago and served as a separate
non-profit agency separate from the Ontario government (Duhamel, 2010). The
commercialization process was the primary activity taking place at such a time. The center was
the driver to leading research to the commercialization process. The accomplishment of the role
called for high levels of excellence hence need to be strategic. The center focused on improving
Ontario’s competitiveness by making use of innovation (Bramwell, Hepburn & Wolfe, 2012). As
a result, the levels of change went to a different level higher than the previous performance.
Innovation calls for identifying a challenge that has to be worked on and working to get the
appropriate solutions. The center did partner with industries and hospitals to be in a position to
be specific when addressing the problem areas facing the company (Visser & Tolhurst, 2017).
Apart from industries, it did create partnerships with colleges and universities that formed as a
significant source of knowledge in the case of a challenge encountered through the studies.
Investors and governments also developed a substantial part of the partnerships with the industry.
They did play a significant role in the offering of finances needed to carry out diverse projects in
the society (Ahmed, 2010). The operation of the company to achieve high levels of excellence
called for enough resources that would offer support in the case of a challenge developing
through the operation process. The center did harbor approximately 2000 Ph.D. holders in
addition to other highly qualified individuals in the society (Campbell, Jardine, & McGlynn, 2016).
Apart from that, there were too approximately 20 universities and 24 colleges. The laboratories
and expertise needed in such laboratories were also provided in the diverse industrial fields. The
consultants who did facilitate guidance in the case of complications developing were also in
abundance and the future employees to implement the recommended measures in the society.
The result is that they were very extensive in their functioning, a factor that did create a greater

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 21
hope on better Local Distribution Company of the Future and the continuous innovation taking
place globally.
There is a need to understand that despite the excellent measures set to ensure that
innovation is achieved by having the right working principles will play a significant role in
pushing for such excellency to be achieved (Herzberg, 2010). The Ontario Center of Excellency
embraced the use of single network. Apart from that, the team was tri-lingual and tri-cultural.
The working of the center was highly independent; hence when offering advice to the
government, their decision could not be modified by a different external group. The result was
that most of their proposals were implemented allowing for the results of a better future to be
realized at an early stage of operation. Complex challenges develop every other day in the
society, being proactive regarding innovation will significantly influence the performance being
realized (Zhang & Duan, 2010). Apart from that, the center was too outcome driven a factor that
did push for them to be recognized by the various bodies of the government citing the influence
they had in the society.
Mars
Priorities of Ontario’s Local and Distribution Companies in facilitating
Research and Developments
The companies are currently ensuring sustainability by making use of solar, wind and
biomass in the generation of power (Shafie et al, 2011). The company is, therefore, working
progressively on cost and efficiency improvement to ensure that a comfort operation is attained
at the end of the day. The companies have also directed extra efforts towards the smart grid

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 22
products being used in the society. The products can openly be seen in devices in addition to the
CIT development and deployment. The supply of energy might experience some challenges
interfering with the continuous supply of energy in the society. There is a need for coming up
with storage solutions that will primarily host technologies that will facilitate off-peak harvesting
of energy. There is too a need for a surplus base load that will cater to the needs of individuals in
the case of power shortage. Intermittent renewable electricity also has a major role in performing
such a function in the society. It will primarily be used for re-dispatch to the areas experiencing
such power challenges. Fossil fuels have been used for production of electricity in the previous
days, a factor that has greatly increased the rate of pollution experienced in the atmosphere
(Wood & Wollenberg, 2012). Apart from that, the fossil fuels have proved to be very expensive as
some of them are being over exploited causing their reduction in the earth surface. The
companies have, therefore, invested in the making use of hydrogen in addition to methanol and
diverse other biofuels that can be categorized as opportunistic feedstocks. Such sources of
electricity have low emission in the atmosphere leading to high levels of efficiency being
experienced by many. Transportation has been one of the sectors that have experienced high
levels of emission in the nation (Martin & Shaheen, 2011). The emissions have significantly
affected the living of individuals in the society. Electricity can help substantially in the reduction
of such emission as they have displayed high levels of efficiency in their working. Through
innovation, such a function will be achieved, and there will be the gradual betterment of the lives
and health status of many.
Project Development as a result of innovation done by the Local
Distribution Companies

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 23
There is the centralized Thermal Co-Generation, a change that is making use of pelletized
Forest Wastes. Apart from that, there is too the production of Hydrogen that has been done from
Unconventional Energy Sources. In carrying out commercial applications, the Micro-Storage
flywheel has proved to be of much importance. It has too been used in peak shifting and offering
support to the grids. The North has been not being a significant beneficiary of the sustainable
energy; the innovation has played a significant role in advancing the sustainable energy in such
areas, an activity that has been seen through the Wind – Hydrogen Micro-grid. The smart
charging systems have had a significant contribution in enhancing sustainability in the
environment. Innovation has made it possible for such systems to be embraced to be made
compatible with the smart meters in addition to the Smart Plug-in vehicles. The Lithium Ion
Battery has been used in some activities before; innovation has pushed for its massive production
(Scrosati & Garche, 2010). The controlling of the urban storage systems is of much importance in
ensuring that improvements are easily made and challenges addressed with much easy as the
coordination will be made much more manageable. Innovation has contributed significantly in
actualizing such a central location in the urban areas.
Improvements on the operation of LDCs as a result of
innovation
Innovation to the present day has made it possible for power consumption to be closely
monitored by the retail power consumers (Collier, 2010). The power consumers do run off internet
platforms. However, more innovation should make it possible for the power consumption to be
easily viewed through the google. One should be in a position to attain the hourly consumption
in addition to the price points. The viewing should also be done on TV. The setting will sound
better when the AC settings can easily be changed by making use of your blackberry. The plugin
electrical vehicles have been actualized and are being used in the present day. However, the

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 24
charges used to cater to the service is highly distributed from one place to another depending on
the place that did offer the charging service. Innovation should, however, make thing easy. The
variation in areas where one does plug in to charge their car batteries should not result in a
variation in the places where payment has to be done. All the charges, regardless of the charging
location, will be directed to the electricity bill in addition to the other key attributes. The micro-
generation has been making use of the plug and play grid connection (Zamora & Srivastava, 2010).
A great innovation has been done regarding the connection. Currently, the expected change is
that there should be a possibility of one successfully installing a rooftop solar panel or rather a
wind turbine by making use of a smart connecting inverter. The inverter will facilitate the
plugging into the grid allowing for automatic controlling of the connection in tandem together
with the LDC advanced control system.
The Plugin Electrical Vehicles
The vehicles are highly preferred citing the significant effects that they do have in the
society regarding sustainability (Egbue & Long, 2012). Most companies have previously used
petroleum fuel in facilitating the operation of cars. However, its cost experiences significant
variation making it less reliable for a better society. Use of petroleum also has related emissions
that interfere with the standard of living in the community, a characteristic that is seen with the
release of carbon (iv) oxide. The government has devised diverse methods that can help in
dealing with such emissions. Use of taxes has been one of the significant ways to assist in
dealing with such a challenge (Porter & Kramer, 2011). Apart from that, there has been the
incentives and regulations set regarding the use of certain substances known for contributing to
the release of harmful gases in the atmosphere. The original electrical manufacturers dealing
with automotive are also burdened in dealing with such a challenge and help in controlling the
emission being experienced. The manufacturers are developing electromotive platforms that can

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 25
be classified as hybrids or the pure electric in ensuring to achieve their renewal vision and come
up with a green car as their market brand (Madureira, 2014). The idea can be graded as being
excellent and electricity on itself has the capability of being a green fuel. Proper plans and
strategies have to be set to achieve the desired targets. For example, there is a need for
coordinated policy and plans regarding energy. The participants working to come up with such
plan and policies must also be guided by a shared vision, united working being the result.
Need for Smart Cars communication with Smart Grids
The grids have to work to put in efforts to being smart as it will be realized with the smart
cars that have the capability of carrying out a proper communication with the drivers. Apart from
that, there will be the email maintenance schedules that will offer guidance to the car owner on
when to carry out a general check on the condition of the car. The cars will be in a position to
access the internet very easily in addition to being linked with satellites. Hence, monitoring them
will be very easy, and car losses can easily be handled. The smart grids have to embrace such
levels of efficiency in their operation as a way of ensuring that the cars also attain better
operating environment in addition to motivating a spirited working among the innovators in
achieving better features associated with the vehicles (Farhangi, 2010). The smart grid is also in
the process of mobilizing the significant population on the need for modernization of the grid
system. The reduction of emission in the atmosphere is one of the significant reasons attached to
the need for such a kind of modernization to be actualized. The smart cars are a significant
resource that can significantly help in making the society aware of the rates at which emission
are being cut down. Hence, the carbon (iv) oxide attribution of a kilowatt fuel will be significant
to every customer. The continuous tracking every other day will make it possible for the
influence of the smart cars be easily noticed. The communication between the smart cars and
smart grids will make a process be easily achieved. Customers do have a variety of reasons as to

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 26
why they will choose to make use of a particular fuel. There is a need for giving the right
strategies that will help motivate the customers to use fuel that is entirely a non-emitter. In
addition to that, the pricing has to be fair so that many can realize various other benefits apart
from the common one of cutting down on emissions. United working will push for a comfortable
setting of the strategies and implementing them excellently. The unity will be achieved by
enhancing communication between smart cars and smart grids.
The impact of Electric Charging of Vehicles on Local Distribution
Companies
In some situation, the demand has always been high leading to the inefficient working of
the system. As a result, the LDCs did receive complains regarding various inefficiencies being
experienced. The coming of the electric charging of vehicles will significantly cut down on such
impacts leading to better services being offered. Achieving such will call for being keen on the
conditions set and working to exercise them excellently. For example, any form of charging
should be done off-peak or rather there should be no any form of interruption caused during the
charging time. Such a practice will significantly cut down on the impacts being experienced
(Fernandez et al, 2011). Each participant dealing with any activity regarding the innovation,
success should be the utmost capacity in all the jurisdictions. In the past days, the Local
Distribution Companies have had systems experiencing local capacity constraints. Such systems
have been most affected through the operation. The electric charging of vehicles will help in
enhancing the capacity of such systems apart from restricting the use of the system. Moreover,
the large off-peak loads have been significantly reduced by the engagement into the electric
charging of vehicles. Such loads are known to accelerate the rate at which the aging of the
distribution equipment will be taking place.

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 27
Electricity in transportation
Public Transportation
Electricity does not only apply to the use of cars and trucks. Several other transportation
features do make use of power in different companies. The United States of America is one
major country that has made use of electricity in various other areas apart from cars and trucks.
For example, there is a plan to bring forth electric trolleys and Local rail systems in
approximately 60 cities. The rail and marine transport system are also targeted for electrification.
There has been significant funding directed for carrying out Research and Development in
addition to any demonstrative project. There is a likelihood of exporting such a trend to Canada,
and the nation will experience significant stabilization of the activities. Embracing such a trend
will lead to new loads for the Local Distribution Companies (Weiller, 2011). Hence, leading to
another opportunity where innovative solutions have to be sought that is too cost effective for the
existing transit problems that do also manage new electricity loads.
Advantages of plug-in electric vehicles
The advantages can also be only realized when the vehicles are operated in the required
manner following the set measures for better functioning. Emission-free electricity should be
used in facilitating the charging of such cars, an activity that can be done overnight (Al-Awami &
Sortomme, 2012). The result will be that there will be a considerable reduction in the emissions of
carbon (iv) oxide. The quality of air in the urban areas will experience significant improvements
the result being, comfortable living environments being embraced. Off-peak generation has
experienced some degree of insufficiency. However, the introduction of the plug-in electric
vehicles will result in sufficient off-peak generation capacity being realized in the system

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 28
(Hajimiragha et al, 2010). Over time, the fueling infrastructure has been increasing gradually, and
approximately 80 -90 % is in place. At the moment there is a need for smart charging that has a
linkage to the smart meter customers making it possible for the fueling to be done away from
home. Such a feature can easily be attained by making use of the plugin electrical vehicles.
Conclusion
Modernization of the grid serves as one of the solutions of offering electricity solutions to
individuals in the society. The changing events in the nation pushing for sustainability are some
of the factors pushing for innovation. Achieving such targets calls for having the guiding drivers.
One of the primary drivers is the elimination of greenhouse gases. Several strategies have been
set to accomplish such objectives in the society. The aligning of the goals is one of the factors set
that will influence such excellent levels of operation. The policy paper will guide in the aligning
of the goals and the targets of the company through the innovation process. Despite the policies,
there is still pressure being experienced for example as a result of the macroeconomic landscape.
There was too pressure from collection, storage and proper usage of data. However, support from
the various economic sectors have made it easy for the management of the data to be achieved.
The vendors are also to be recognized through their innovation as a result of the proposals they
did make to the utilities. High levels of collaborations were experienced at such levels that
significantly heightened the research process. The gold standard models contained in the
concentric model offered proper guidance through the collaborative systems. One of the products
of collaboration was the start of sufficient energy storage. Information regarding all these
activities was attained from diverse centers for example the Ontario Center of Excellence that
guided through the process of implementation of the different roles. Most of the Local

ENERGY INNOVATION AND FUTURE OF LOCAL DISTRIBUTION COMPANY 29
Distribution Companies have made use of the company in coming up with various projects
related to innovation. The companies were to improve in their operation citing the recommended
actions from the various centers. Need for such improvements will be as a result of the
significant challenges that are to be handled for example the support of the Plugin Electrical
Vehicles. Apart from that, there will too be the introduction of different transportation features
that call for the Local Distribution to properly distribute power to such companies.
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