By Sean Mallen, Principal – Sean Mallen Communications
The story of a frugal Dutchman from southwestern Ontario was a telling case study at the APPrO 2019 conference. With the sessions built around the theme of the “The Inflection Point,” the tale of a fed up businessman who built his own power plant spoke volumes about the direction of our electrical system.
The story was told by Tilo McAlister of T&T Power Group as part of a session called “The DER Ecosystem – Ontario Symposium on Enabling the Future.” He did not name his client, only identifying him as the owner of a long-established manufacturing facility in a rural part of southwestern Ontario, a businessman who was thoroughly fed up with his local power provider. Even minor electricity disruptions lasting a few microseconds could cause serious damage at his facility. Power quality issues happened often enough for his relationship with his LDC to deteriorate beyond repair.
He hired T&T to build him his own generating facility that could provide reliable power at a rate competitive with the grid. “He wanted to go completely off grid,” said McAlister, describing him as a “feisty individual.”
“He had some simple priorities: fix this power problem. He was Dutch so the machines had to be orange.”
He also needed resiliency, redundancy and high quality power. T&T delivered in the form of eight gas powered generators, a configuration that meant one or two could be offline for maintenance while his facility still operated. Just over a year in operation and his personal power plant is delivering electricity at a cost slightly less than he would be getting from his utility.
“It’s an interesting instance that could become more common,” said McAlister.
From a disgruntled manufacturer, to environmentally-conscious homeowners installing solar panels, consumers are increasingly taking command of their electricity futures, with potentially profound consequences. Mix in those forces with the global imperative to deal with climate change, and the growth in electric vehicles and clean energy, and you could argue that we face not one but multiple inflection points.
There are multifaceted challenges for regulators in keeping up, with some experts saying they are not doing so well. In a panel on regulation, Ahmad Faruqui of The Brattle Group suggested that some regulators are “frozen in time,” adding that “we’re witnessing the greatest catchup game in history.”
Gordon Kaiser, CEO of the Alberta Market Surveillance Administrator, said “customers have figured out that if they generate their own energy, it’s a lot cheaper. This is not for the weak of heart. Technology is going to put somebody out of business. So will competition.”
Bob Dodds, Vice-Chair of the Ontario Energy Board, felt that regulators are not going to disappear, not with an essential service such as electricity. He also believes that, even with an ever growing array of options, most people will still want the surety of the grid.
“A lot of customers and I’m one of them, don’t want to be an energy manager,” said Dodds. “Yes, people want choice, but they want energy to live their life. In past times, people spent all day looking for firewood.”
Faruqui agreed, but observed that price is pushing consumers, including him, to look for options. “In December, I’m getting solar on my roof and I expect my bills will go from $200 to $10 a month,” he said.
APPrO President David Butters told delegates that it is not yet known whether distributed energy will actually lead to lower costs. “In Ontario we don’t do cost-benefit analyses. We want more (of them). That would save us a lot of time and money. So far we don’t have a great track record on that,” he said.
In a session focusing on “proactive market participants,” Joshua Wong of Opus One Solutions said the infrastructure should be opened up and utilities should work with empowered consumers.
“There needs to be a platform for utilities and consumers to work together,” he said, noting that all of his peers are making proactive decisions about electricity, and that all of them are buying either hybrid or electric vehicles. Every year, more countries are setting deadlines to ban cars powered by internal combustion engines.
Speaking of EVs, there was also criticism of the failure of local planners and developers to keep up. Wong said he is having trouble convincing management at his condominium to install chargers in the parking lot.
His fellow panelist, Frederick Morency, Vice President Services for Schneider Electric Canada, raved about his recent purchase of an electric car. “It’s pretty cool. It’s the future,” he said, noting that the vehicle displaces 5000L/year of fuel with electricity. “We’re going to need to adapt our cities, our buildings. It’s a huge opportunity for our industry.”
But panelists warned the energy industry that it faces a real challenge in attracting and developing new talent to oversee and exploit the blizzard of change. “Let’s face it, there’s a real talent war out there,” said Morency. “We’re way behind the gaming industry. We need to be more present at universities.”
Managing the pace of change raises not only economic and regulatory issues, but ethical ones. At the DER ecosystem session, a philosophical question from the floor brought long, silent looks from the panel. A delegate asked what happens if DERs become so popular and pervasive that a central grid is no longer economically viable — what happens to the many people who cannot afford solar panels or other forms of local generation? One of the great social advances of the 20th century was the growth of availability of electricity for all. Could it be threatened?
Stephen Costello of the consulting engineering firm CIMA+ predicted that we will adapt, and that publicly-owned utilities will be “dragged along” under the current regulatory framework in Ontario.
“I don’t see a big departure from the grid connecting customers. It’ll be a grid.” But Costello added that when he goes to conferences other markets such as the US, he sees a much faster pace of change and suggested that the lack of a long term energy policy in Ontario may be hindering innovation.
APPrO President David Butters said regulators face a delicate balancing act. “How do they regulate in a way that doesn’t suffocate the future, while also dealing with social equity issues. We’re not at that point yet, but it’s hovering on the horizon. I see it coming, but don’t know if it’s a storm cloud.”
— seanmallencommunications.com