Smarter electrical grids coming to Canada: Deloitte

Just as telecommunications networks in Canada are no longer dumb pipes, the country's electrical grid could transform itself into a smart grid by leveraging Canadian expertise in networking, says a leading analyst with Deloitte. And Duncan Stewart, director of Canadian research, says utilities are beginning to buy into the benefits. Speaking in Ottawa last week at the last stop in Deloitte's 2009 technology, media and telecommunications predictions road show, Stewart says adding intelligence to the electrical grid could help prevent, or at least minimize, major blackouts such as the one that occurred in 2003. On August 14 that year, upwards of 50 million people were thrust back into the dark ages when a power outage cascaded across much of the northeastern United States and Ontario. This happened, says Stewart, because "we have such an interlinked dumb network. When one circuit breaker blew, all the other fuses blew too. What we need to move to is a more intelligent switch." Networking technologies such as routers and local area networks offer great advantages to power utilities and governments looking to add intelligence to the electrical grid. Stewart highlighted one such company, RuggedCom Inc., which recently reported third quarter 2008 revenue of about $43 million with year-over-year growth of more than 50%. Not only does Canada have broad knowledge of networking, it knows how to move electricity around because it has such a vast system. Combining the two can lead to significant opportunity. "We already know how to do this stuff. We just haven't it done it in this market," Stewart says of putting intelligence into the electrical system. "The electrical industry has lagged because of the very harsh environment. But as that catches up it allows us to transform a dumb grid into a smart grid which is more stable, more efficient, more flexible." In his presentation, Stewart likened Canada's current electrical infrastructure to that of the telephone network 30 years ago. Over the past three decades, technology development has enabled the one-time dumb pipe to offer a wide variety of interesting things such as video and other data services. The electrical network can take advantage of those same capabilities as well. The Deloitte analyst doesn't believe it will take 30 years for the electrical industry to fully adopt networking technologies. He says utilities will first put gear in the core of their network and then at the edges (households and businesses) and then slowly add more intelligence in between. Utilities have been slow to catch on to smart grid technology because it put pressure on their overall revenue. A smart grid is about redistributing the power in low demand periods to deal with peak load demand, so utilities didn't immediately recognize the benefit of implementing so-called smart grid technology. But Stewart says that attitude is changing as utilities and regulators see this is about ensuring grid reliability, sustainability and better load balancing. "You use it smarter and you use it at the right time of day," he tells Network Letter. "So if we could just shave some of the peaks, fill some of the valleys, we don't need to build more natural gas generating plants. We don't need more power, we just need to use what we've already got in a more sensible manner." Chris Henderson, president of clean energy consultancy Lumos Energy and chair of the Delphi Group, says smart grid implementation is still tough sell to utilities. "They're not going to strand an asset," he says, adding that if a utility puts in new technology it has to recoup the costs of that capital outlay through higher power costs. But Henderson says the value proposition for smart grids is at the front end of the electrical system - where the power is generated - to recover waste and inefficiencies. The benefits of an intelligent electrical grid are "fiscally huge" because it takes less capital to satisfy peak loads. "The smart grid is effectively reducing the peak load and smoothing out demand such that you are getting a gain because you have less capital at the front end to generate power and you lose less power on line losses," he says. Asked whether it will take 30 years for the smart grid to become a reality, Henderson is convinced it will. "It's a different fundamental than in the telecom industry. We went from copper cabling to wireless systems and fibre optic broadband because we had expanded use. Energy demand is going down at least in North America," he tells Network Letter. "It will take longer to do because demand is not growing the way telecom demand grew but there's a lot of waste and inefficiency to recover with the technology."

Smarter electrical grids coming to Canada: Deloitte

News | February 17, 2009

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