LAW 6573 - Energy and Infrastructure Innovation: LDCs Future

This report explores the diminishing role of traditional energy distribution in light of technological advancements, financial shifts, and policy changes, focusing on the future of local distribution companies (LDCs) in Ontario, Canada. It highlights the importance of innovation in overcoming resistance to change, driven by factors like customer expectations for efficiency, sustainability concerns, and the need for grid modernization. The report examines the challenges faced by LDCs, including fluctuating energy costs and the increasing demand for renewable energy sources. It emphasizes the benefits of innovation, such as improved revenues, reduced costs, and increased efficiency. The analysis considers the impact of distributed generation, the integration of renewable energy sources, advancements in energy storage, and the rise of electric vehicles on the electricity grid. The study also touches on the role of government policies and initiatives like the Green Energy Act and the Ontario Center of Excellence in promoting energy innovation. Ultimately, the report underscores the need for LDCs to embrace innovation to adapt to evolving customer needs, achieve sustainability goals, and maintain a reliable and efficient electricity distribution system.

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

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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