Energy Innovation and Future of Local Distribution Companies

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

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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.
Sustainability issues are also rising in the customers; users want socially and environmentally

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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
they did make to the utilities. High levels of collaborations were experienced at such levels that

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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
reliability. New structures in the future will draw net-zero energy by way of amended building

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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.
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

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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.

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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