Ontario’s New Green Energy Legislation Enables Clean, Renewable Energy, Conservation, and Development of a Smart Grid


Charlie Macaluso,
President & CEO,
By Charlie Macaluso

Smart Metering Initiative Precursor to Developing Smart Distribution Grids

The Province of Ontario, Canada has gained a reputation as a leader among North American jurisdictions for its commitment to shutting down its coal fired plants, building renewable and clean sources of energy, putting into place aggressive conservation and energy efficiency measures, implementing smart meters, and adopting Time-of-Use tiered pricing – an initial step towards realizing the benefits of employing smart grid technologies.

The evolution of Ontario’s energy policy and its ‘green’ approach to energy sustainability is being driven by the advance of new technologies, societal expectations, and the need to provide a reliable and sustainable electricity system that will support economic growth balanced with managing society’s environmental footprint.

Ontario Passes Green Energy and Green Economy Act

Building on its reputation as a leader in the ‘greening’ and modernization of Ontario’s electricity system the provincial government recently passed the Green Energy and Green Economy Act (Green Energy Act). This market-transforming legislation is historic in its scope. The legislation expedites the growth of clean, renewable sources of energy and strengthens the province’s commitment to energy conservation and the creation of a conservation culture among Ontarians to become more active “energy managers.” It is also aimed at building a stronger, green economy and enabling the development of a smart grid.

For Ontario’s over 80 local electricity distribution companies (LDCs), the new legislation makes fundamental and welcome changes to their roles and responsibilities in the areas of renewable power generation, conservation and demand management delivery, and the development of smart distribution grids.

The Green Energy Act provides local distributors the freedom to own and operate a portfolio of renewable power generation and will permit them to provide district heating services in their communities through co-generation. Distributors will also bear added responsibilities to assist and enable consumers to reduce their peak demand and conserve energy in an effort to meet provincial conservation targets.

The list of new opportunities and responsibilities for LDCs is significant, and it is ambitious. It is a list that specifically and directly responds to key policy changes that the LDC sector has called upon the Province to make. The new legislation provides customer service freedoms for distributors, who are prepared to shoulder and effectively implement the new responsibilities that accompany those freedoms.

Development of a Smart Distribution Grid

LDCs will also gain new responsibilities in transforming their local distribution networks into ‘smart grids’ – harnessing advanced technologies to facilitate the connection of small-scale generators and the two-way flow of information. Smart local grids will be a vital enabler to the expansion and modernization of the province’s electricity delivery system.

The legislation grants powers to the government to issue Directives to the Ontario Energy Board (Ontario’s electricity and gas regulator) as it relates to the development of the smart grid. This is expected to include the delineation of roles and responsibilities and standards for communications and other operational aspects that will be needed in order to create the smart grid.

Ontario’s electricity distributors will play a prominent role in this development. Government legislation is an important step forward and is expected to provide the LDC sector greater freedom to make the strategic investments that will support the ‘intelligent network’. This includes everything from advanced smart meters and load management tools to real-time system monitoring and control. We understand that smart local grids will not only facilitate the most cost-effective and reliable operation of local distribution systems, but will enable Conservation and Demand Management (CDM) and Distributed Generation management, and produce valuable information for use in province-wide energy system planning and future CDM programming.

Many LDCs are already seeing the positive benefits and opportunities that smart distribution grids represent to the future of Ontario’s electricity system. New smart grid digital technology is emerging that will open up whole new opportunities for customers and LDCs. This includes a fully automated power delivery network that monitors and controls every customer and node, ensuring a two-way flow of electricity and information between the power plant and the household appliance, and all points in between.

Distributed intelligence, coupled with broadband communications and automated control systems, will enable real-time market transactions and seamless interfaces among people, buildings, industrial plants, generation facilities, and the electric grid. The smart grid will provide the ability to tailor electricity supplies to suit individual needs for power, including costs, environmental impacts, and levels of reliability and power quality.

Implementation of Smart Metering Initiative is Precursor to Creating Smart Distribution Grids

The development of the smart grid is being driven in many ways by the cutting edge technologies that are being employed to successfully implement Ontario’s smart metering initiative – a province-wide implementation by LDCs that will see the installation of 4.5 million meters and the transition to Time-of-Use (TOU) tiered rates by the end of 2011. Ontario’s rollout of smart meters and TOU pricing is one of the largest in the world.

Smart meters will provide consumers with the tools and information they need to help them reduce their peak demand and more effectively manage their electricity usage and ultimately their energy costs. But just as importantly, smart meters utilize the kind of new technologies (i.e. two-way communications between customer and utility) that will be critical to the foundation of smart distribution grids in going forward.

More than 2.4 million smart meters have already been installed by Ontario’s distributors and that number is expected to increase to approximately 4 million customers by early 2011. As of May 2009, approximately 40,000 customers had made the transition to time-of-use rates, with an estimated 3.6 million customers estimated to make the transition to TOU pricing by June 2011.

Green Energy Act First Step Towards Realizing the Sustainable Communities of the Future

Our sector’s future vision sees Ontario’s electricity utility companies playing a leadership role in the smart use of electricity in creating the sustainable communities of tomorrow.

Among other elements, it is a future of two-way power and information flows that will enable not only the distribution of power from centralized power plants, but the gathering of power from smaller distributed generation sources to re-distribute to local communities, industries and institutions or to re-connect to the transmission system. It will also allow for real-time system monitoring and control, and localized management of peak power demands.

Most importantly, the new intelligent grid will enable greater customer choice. The technology will allow for more precise management of power flows, and real time information on consumption, so LDCs will be able to offer a variety of demand response programs, conservation programs, assurances around power quality and even different price offerings based on better knowledge of customers consumption patterns, power flows, and costs.

Regulations and Ministerial Directives are expected to flow from the new legislation through the summer. Through this process, Ontario’s electricity distributors will continue to provide their input and expertise as we set about successfully implementing this market transforming legislation. One thing is clear in looking forward and that is the opportunities and expanded responsibilities afforded the province’s electricity utilities. There is little doubt that these new roles, including development of smart distribution grids and the implementation of smart meters among others, will go a long way in building the sustainable communities of tomorrow for all Ontarians.