Thank you.
I want to thank the committee for the opportunity to speak today.
My name is Alex Bettencourt. I'm the managing director of SmartGrid Canada. We're a national organization made up of the full spectrum of the power industry. Our members include utilities, key industry players, and academic institutions. We're proud to have Hydro-Québec, Hydro One, IBM, and the University of British Columbia, amongst others, as our members.
Many of you are probably asking, “What is a smart grid?” Simply put, a smart grid is bringing 21st-century technology to a 20th-century grid. There's a great anecdote about Alexander Graham Bell and Thomas Edison that we use in our industry in explaining the relative differences in the evolution of our industries. If Alexander Graham Bell were to see the telephone system today, he wouldn't recognize it, with all its computers and fibre optics, but if Thomas Edison were to come back and see the electricity system today, not only would he recognize it, but he would probably be able to fix it.
We find ourselves with an electricity system that has not evolved very much in the last 30 years. It has missed out on some of the opportunities of the new telecommunications and computing technologies. The smart grid will upgrade our electricity system with the latest technology, making it more efficient, resilient, and flexible.
A question that usually gets asked is, “Why do you need this smart grid and what is it going to do?” In Canada, one of the big drivers is reliability. This is a great week to talk about reliability because we've had such a good example recently. For 34 minutes on Sunday, millions of Canadians, more than seven million of them, waited for the power to come back on as they watched the Super Bowl south of the border. While we haven't isolated the cause of that outage, a smart grid could have prevented that outage entirely by rerouting power automatically from another feeder within milliseconds. If it weren't able to do that, it would have at least shortened the restoration time by providing more information more quickly to operators and engineers.
In 2011 Canadians experienced five hours of outages, on average, and these outages cost Canadian business and industry billions of dollars. When an average medium-sized business experiences one hour of outage, it usually costs them about $12,000 on average.
Another key driver of the smart grid is efficiency. About 10% of the power that's generated is lost on its way to the end customers, due to heat and other factors, and a smart grid can reduce these losses in energy that occur along the transmission and distribution systems. It can also help us isolate and identify energy theft so that Canadians are not paying for criminal activities through their hydro bills. Moreover, and specific to the mandate of this committee, it sets the foundation for our future needs in our electricity system.
Many Canadian provinces are blessed with hydroelectricity. However, some parts of Canada still rely on fossil fuel and nuclear power, and provincial governments are looking to reduce our dependency on these sources of power. They're increasingly turning towards renewables. As we cannot control when the wind blows or the sun shines, using these renewables on the grid requires much more intelligence and flexibility than our current one-way distribution system was engineered for.
The other major feature that the electricity system needs to prepare itself for is the electric vehicle. Now, there is a debate as to how quickly electric vehicles will be adopted, but we know that the cost of running an electric vehicle can be as little as one-tenth of the cost of running a gas-powered vehicle, especially in jurisdictions of Canada where electricity is inexpensive.
As technology and batteries get better and cars get cheaper, we will see more electric vehicles on the road, and although we don't represent the electric vehicle industry, we represent the utilities that are going to need to provide the electricity for them. We need to start being prepared for that. Charging an electric vehicle in your home can be equivalent to doubling your electricity demand. We're going to need a smart and flexible system that allows us to absorb all of this extra demand without doubling the size of our distribution system, which would be very costly.
There are also great economic opportunities from the smart grid in Canada, and great job prospects. Recently I had the opportunity to visit Brazil and meet with their utilities. I went to Rio and met with the local utility there, Light. It is a very large utility. Light serves the city and region of Rio de Janeiro, and it's going to be the utility that will serve power to the 2016 Olympics.
They took me to their boardroom, which is called the Sale Canadense, or the Canadian Room. It was Canadians who founded Light more than a hundred years ago. These Brazilians at this utility were very proud of the Canadian heritage they have at their company, and they had pictures there of all the Canadian leaders who were the initial leaders of the utility.
There was a time when Canada was leading in electricity technology in the world. There was a time when Niagara Falls was one of the biggest infrastructure projects. Canada is again being seen as a leader around the world and a model to emulate when it comes to the smart grid. We have delegations from China, Brazil, and Europe coming to Canada to meet with our leading utilities and companies to learn from our experience with smart meters and integrating renewable energy into our distribution systems.
There are many examples of new jobs being created through the smart grid. There's a small start-up company in British Columbia called Awesense Wireless that's making energy theft detection software and selling it into Brazil. There's a medium-sized manufacturing company in Quebec named Vizimax that's selling the new smart grid technologies into China and India. Another one of our members, General Electric, just completed its Grid IQ centre outside Toronto, and it's where they're focusing their smart grid engineering and manufacturing. All these companies are creating jobs in the smart grid sector for Canadians, and it's a great opportunity for Canada.
How can we get a smart grid? The building of the smart grid is primarily driven by utilities, and most utilities in Canada are owned by provincial governments and are regulated. The utilities themselves are facing a bow wave of assets that were built in the 1950s and 1960s, when we went through a round of economic expansion. These assets have reached the end of their lives, and it is now time for us to renew our infrastructure. The renewal of our infrastructure will take decades to accomplish and will cause electricity rates to go up as we invest all these new assets into our system.
We can replace them with the same old equipment, or we can take the opportunity, spend a little more money, and equip them with smart grid technology that will serve us for the next 30 years. Consumers will be provided more choice. Consumers will have more choice in how and when they consume electricity. Consumers and businesses will have the choice to produce some of their own electricity and sell it back to the grid. Consumers will have the choice to buy an electric vehicle and charge it at home or at work. Consumers will benefit from the higher reliability and the more efficient electricity system that comes from a smart grid.
All of these benefits will improve the lives of Canadians and set us as a leader in the world.
Many countries in the world are using smart grids to further their policy goals, be they national energy security, economic growth, or environmental targets. However, the burden of these policy goals is being placed on the ratepayer, when it was traditionally placed on the taxpayer. People are paying for it on their electricity bills. Although they're the same people, the taxpayer and the ratepayer, it makes utility business cases very hard to get past regulators to meet the economic policy goals of the governments.
While electricity is firmly within provincial jurisdiction, there is a role for the federal government to play. In the U.S., Korea, Europe, and around the world, governments are endorsing smart grids with official policies and plans. Korea has set out a plan where they will enable smart grids in all their cities by 2020 and across the whole country by 2030. It's a very ambitious plan. They've marshalled the entire industry and the government agencies around that goal. Now, I don't think we have the same type of economy that Korea does, but it's an example for us to learn from.
The Canadian government can provide leadership by setting a national vision. Many other countries have commissioned studies on the economic, national security, and social benefits of a smart grid, and we would like the support of this committee to coordinate a similar effort in Canada. We would like to bring together NRCan, the CEA, the provincial ministries of energy, utilities, regulators, and industry to create a national vision and bring it back to this committee for your consideration.
To accelerate investments in smart grids, the federal government can also improve the economics of the business case through tax policy, switching some of the burden from the ratepayers to the taxpayers. This can be accomplished in a few ways. One is accelerated depreciation classes for smart grid investments that utilities make, which has proven to be successful in the United States and India. Another is tax incentives for consumers who are looking to install smart grid appliances in their homes, things such as smart thermostats and controls for their air conditioning.
Lastly, we can use the resources of the federal government to promote Canada and its industry abroad, branding Canada not only as an energy leader, but as an energy technology leader for this century.
Thank you for your time. I'm happy to take any questions you have, now or later.