Speaking at the APPrO 2019 conference in Toronto, five leading energy experts laid out their assessments of what’s expected to change in the sector, and their views on how best to get ready. Panel members included Anouk Kendall from Decentralized Energy Canada, Frederick Morency, Vice President of Services Canada for Schneider Electric, Jack Simpson, the Director of Business Development at OPG, Joshua Wong of Opus One Solutions, and Moderator, Paul Murphy, from the MaRS Energy Board. A key driver is the massive increases in demand for electricity coming from information and communication technology itself.
The APPrO 2019 Technology Panel: Anouk Kendall, Decentralised Energy Canada; Frederick Morency, Schneider Electric Canada; Jack Simpson, OPG; Joshua Wong, Opus One; and Paul Murphy, MaRS Advanced Energy Centre.
Anouk Kendall began by observing that the decentralization of the energy industry is being driven in large part by aging transmission infrastructure, a mismatch between current consumption patterns and the design of the existing infrastructure, and the vulnerability of the infrastructure to natural disasters and extreme weather. Consumers want to own their energy resources, she said, and they want them to be integrated into their community. Electrification is being driven by the transportation, agriculture, and growth in the Information, and Communications Technology (ICT) sectors. In transportation, four countries – South Korea, China, India and Germany – have announced bans on the manufacturing or sales of new internal combustion vehicles. The potential rise of urban agriculture will mean lighting, climate control, and pumping will increase electrical demand. In ICT, one autonomous vehicle produces 4000 GB of data per day – autonomous vehicles increase the electrical demands of ICT.
Moderator Paul Murphy noted that author Jeremy Rifkin has said there are currently 11 billion sensors worldwide, but by 2030 there will be 100 trillion.
Anouk Kendall responded, noting that digitalization represents a $1.3 trillion opportunity for the energy sector. By 2030 it will make up 17% of global energy consumption. Additionally, digitalization through predictive maintenance represents a savings opportunity for the energy sector.
Three challenges facing the energy sector are energy storage, AC/DC issues, and cybersecurity. Energy storage represents a challenge in the sourcing and recycling of its materials. Over 80% of all copper ever mined is still in use because of its recyclability; similarly, a Chinese firm is now sourcing 69% of all lithium consumed for energy storage from recycled materials. This needs to occur at all storage firms – for instance, vanadium could be recycled from the oil sands into flow batteries.
The conversion of DC to AC or vice versa, and the subsequent power losses, will become a more pressing conversation as microgrids become more prevalent. Decentralized autonomous networks are both a challenge and an opportunity for cybersecurity.
Jack Simpson noted that Intermittent renewable assets represent 4900 of the 37,000 MW of transmission-connected and 2750 of the 3400 MW of distribution-connected generation capacity in Ontario. Dispatchable, firm capacity from hydro and gas-fired generation and storage are crucial in this environment. Existing infrastructure and resources are both long-term investments and fixed costs, and Ontario’s lower (by 4-5000 MW) off-peak demand represents an opportunity to spread these costs over a larger volume of kWh, if effective end uses are available. Off-peak load growth through the electrification of transportation and industry is one answer to this. The 2017 Ontario Power Outlook (OPO) found a 30 TWh increase in annual demand by 2035 (Scenario C in the OPO), an increase mainly driven by the electrification of transportation. OPG is supporting electrification in the short-haul, light duty segment by installing 130 fast DC charging stations by 2020. It is also developing high-powered charging with integrated energy storage for fleet and transit operators across Ontario, as well as customer and bulk storage projects.
Clean hydrogen production during off-peak hours is also being explored by OPG. Hydrogen fuel makes sense in the long-haul truck and rail transportation sectors, and increasingly for industrial applications. Current challenges with hydrogen fuel, including production efficiencies, storage, and transportation, need to be addressed in order to improve the economics of the fuel’s use. There is significant pressure on industry – primarily petrochemical companies – to move away from “grey” hydrogen derived from methane through steam reformation. The grey hydrogen market globally is 75 MT in 2018, representing 830 MT of C02e – these emissions are greater than those from the UK or Indonesia. Clean hydrogen via electrolysis from clean electricity will be important in the future but is currently only around 1% of global hydrogen production.
Nuclear is an important part of Ontario’s supply mix, both today and in the future. A 2019 IEA report found that load growth and emission targets cannot be reconciled without investment of $1.6 trillion in nuclear through 2040.
Bruce and Darlington nuclear refurbishment are underway, and this 9500 MW of units will then run through 2064 and 2065 respectively. OPG is exploring Small Modular Reactors (SMRs), both grid-connected 300 MW and off-grid 5-50 MW units. The remote versions would be used at mines and in remote communities for example. SMRs are modular, have some load following capability, and offer greater safety and lower capital costs. Off-grid SMRs can offer both power and heat solutions without refueling for 20 years. In OPG’s view, the economic benefits of nuclear investments are considerable.
Frederick Morency pointed out that Schneider Electric sees a growing worldwide demand for energy within the context of a fourth industrial revolution. “We are the last generation in a position to do something about climate change,” he said. Commercial and industrial buildings represent 60% of all global emissions.
He stressed that energy consumption is poised to double in the next two decades, but at the same time climate change concerns require that emissions drop substantially. Business customers are demanding access to energy capacity, in order to support their growth and investment plans. There is an opportunity to grow Canada’s economy by making it easier for business to access energy. Resiliency, especially against weather events, is a growing concern with economic costs. Sustainability is required by business investors, and in Europe is mandated.
Mr. Morency recommends priorizing the development of autonomous buildings and microgrids for resiliency purposes. AI could help with the management of these systems. The energy sector needs to compete better for talent, and energy literacy should be taught in primary schools.
Joshua Wong pointed out that consumers are becoming more aware of their energy consumption, even if they are not market participants – especially as hybrid and electric vehicles and smart thermostats proliferate. They are more likely to want to participate in purchase decisions, rather than operational decisions. Resiliency is also driving these decisions, especially as issues with power interruptions become more numerous. Better integration is needed between these empowered grid-edge devices and those that manage infrastructure via the regionalization of grid management, increased data on grid operations, etc. There should be integration at the engineering, data, and business model levels. Of these, business model integration and customer engagement are the most difficult.
An Integrated Resource Plan (IRP) only covers energy, capacity, and ancillary services. It often leaves out T&D and other large costs. Only distribution markets can solve these deeper issues. Demand response (DR) programs are not locationally granular and do not maximize the benefits of empowered grid-edge consumers to the grid. Similarly, procurements need to evolve to include open data describing the needs of utilities and the capabilities of grid-edge consumers. In this way, planning can become more granular and collaborative. Transactive energy projects are demonstrating improved locational pricing.
Mr. Wong’s “three P’s” of prosumer engagement are Pricing, Procurement and Programs.
Paul Murphy asked “Why would consumers and utilities want to reveal their data via an open data platform?”
Joshua Wong responded, saying that data should only be revealed if the use-case and business-case require the data to support cross-platform interactions in both top-down and bottom-up directions, and through both wholesale and retail markets. A platform should be open-access and open-source. Grid management would become very inefficient if every consumer were to become its own microgrid.
Paul Murphy posed another question: “How should the energy industry engage with young people?”
Frederick Morency noted that Industry players should align closely with universities – Schneider has invested in the Smart Grid Lab at Ryerson University, for instance. Quebec’s Electrical Engineering Institute – supported by Hydro Quebec, Schneider and others – aims to boost fourth year electrical engineering students’ knowledge to better align with the energy industry’s needs. Schneider Electric has also put together a new grad program with a start-up mentality.
Anouk Kendall commented that in many ways the optimization of a campus or microgrid is like video gaming.
Joshua Wong noted that half of Opus One’s staff are in software development, and most of these are not electrical engineers. There is therefore a need to align those with software development knowledge with those who an electrical engineering background.
The outlook and predispositions of millennial workers generally match well with the needs of the energy industry. That said, the pace of change and duration of the sales cycle in the industry makes retaining these workers difficult. Ms. Kendall noted that the industry needs to be ready to help professors and instructors ensure they are teaching the most up to date curriculum.
On the topic of EV proliferation, OPG sees a role for both battery electric vehicles for light duty uses, and hydrogen powered vehicles for heavy duty. The UK has a rail retrofit program that will move trains to hydrogen power. Mr. Murphy quoted Jeremy Rifkin as saying that by 2024, zero emission vehicles will be price-comparable with internal combustion engines; by 2026, they will be cheaper; and by 2028 we will see the “collapse of the fossil economy.”
A question came from the audience about Bill Gates’ involvement in SMR development. Mr. Simpson noted that OPG is evaluating roughly 10 different SMR vendors, especially with an eye to commonality with OPG’s existing assets.
A question came from the audience about energy accessibility as it relates to industry transformation.
Discussion: Northern communities have been working together to displace diesel generation in creative ways, and the Caribbean has similar examples. The high cost of fuel in these locations will drive the business case for technological conversion. Remote power solutions developed in Canada could be exported around the world.
— With files from Andrew Clare
For further information on the discussion at this event, please see the proceedings of APPrO 2019, available online for subscribers and included with registration for the Canadian Power Conference.