Natural Resources Committee on Oct. 25th, 2017

[François Vitez]

There are some studies about that available with some empirical data gathered in the States. We could share that with you.

It is theoretically possible for those battery cars, or vehicles, to be used to store energy and then release that energy when it's needed. The question is whether it's what the customer will end up wanting. That's what the studies have been saying. When car users come in, some of them would prefer to have their cars plugged in right away and charged fully for security reasons, which in actual fact increases the demand at the wrong time. Others will say, “I can make money out of this. I'll do it.”

It really becomes more social, and it depends on how you roll out the program. Theoretically, technically, it's definitely possible—the incentives and the culture.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Right.

[Benoit Marcoux]

I concur with that. One thing that is quite interesting is the amount of storage in vehicles. Say we convert most vehicles in Canada to electricity. The amount of storage there is going to be very large even in comparison to what's needed in the grid itself. That may create a natural synergy. At a minimum, we'll need to control charging—that is, control that load, control that demand to charge vehicles—so that it doesn't otherwise coincide with peak demand.

There will probably be synergy. I see this more as an opportunity than a problem, especially in a situation where utilities right now see a decrease in demand for electricity, so that having electric vehicles, and that new load, will actually be positive for those utilities. It's a new market for them.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Just to finish off, Mr. Marcoux, I have a question about the storage facility in Leighton Buzzard that you have a picture of. How is that economical with these storage costs, and how would that relate to what we're facing here in Canada?

[Benoit Marcoux]

It depends on where you are. In places like the U.K, where the cost of energy is higher than it is in Canada, it is already cost-effective in some instances. In Canada, where the cost of energy is lower, it's going to take a few more years, at 20% or 25% a year, remember. In three years, if that's not enough, make it five. That's what we're talking about. We're talking about a delay before the same thing happens here, but it's very real. The utilities here, in the United States, in the U.K., and elsewhere are learning to use those systems on a smaller scale and are ready to scale up as the break-even point is reached.

Mr. Chair, if you and some of the members are interested, we can take you to see some of these existing systems. You'll see it for yourselves.

[The Chair, Liberal, James Maloney]

That's time.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Chair, Liberal, James Maloney]

Mr. Tan.

[Geng Tan, Liberal, Don Valley North, ON]

My first question is a quick question to Mr. Marcoux.

According to your company's description, S&C has a broad product line focused on high-voltage switches and protection. I know that Hydro One in Ontario has been asking for upgrades and innovations for their system of transmission lines probably for decades.

I'm very curious. Do you ever work in co-operation with Hydro One to upgrade or replace their aged power transmission, distribution lines, old switches, or outdated transformers?

[Benoit Marcoux]

I must say that virtually all utilities in Canada are customers of S&C for one thing or another, including Hydro One. Hydro One is a very good customer of S&C. I know Hydro One has programs to improve the reliability of its systems. Hydro One is also one of the utilities that has the most distributed generation on its system. Although it's a rural system, it's a difficult system to have DG, digital generation, on it. They have a lot. They have maybe 20,000 rooftop solars on their system. It's a huge number. We are working with them as we are working with other utilities across Canada to help them modernize a grid.

[Geng Tan, Liberal, Don Valley North, ON]

Thank you.

Now I turn my questioning to Mr. Vitez.

Energy Storage Canada is a subgroup under the smart grid forum. How might this smart grid forum work with the government? Also, how can your organization, Energy Storage Canada, contribute or support our interties? What exact role or contribution can you make to our interties?

[François Vitez]

Energy Storage Canada is an independent association. It was created by its members that are all part of the energy storage industry. In that sense, we are not officially linked with the smart grid cities, the Smart Cities Association, but energy storage intrinsically is definitely a very important ingredient of smart cities and smart grid.

I cannot share with you today exactly all the interfaces we have as an organization with those because I'm not aware of them myself, but I know that we have a lot. From a technical standpoint, from the solutions that we can bring, I could not imagine how we could implement the smart grid system without considering storage at different levels, be they right behind the meter, which are small-scale battery types, or at the distribution level, where we're near the switchyard. At the very minimum are these two levels.

[Geng Tan, Liberal, Don Valley North, ON]

Some provinces, like B.C., Quebec, and Ontario, have an electricity surplus. With new or enhanced interties, we can expect that there might be even more energy surplus from those provinces or even from other provinces.

From what I heard from your words, the capacity of the energy storage industry in Canada is not big enough to digest all the electricity surplus, so those provinces probably still have to sell their electricity to other provinces or to the U.S.

I wonder which way...? Is it more economical to sell the electricity to other provinces or the U.S. rather than just to store the energy in your own province? Which is more economical, to store it or just to simply sell it?

[François Vitez]

I'll take that one, Mr. Marcoux.

The issue of having surplus is more of an accounting exercise at the end of the year, seeing that we had too much so we sold so much outside, but there are moments in the year when each of those jurisdictions that you mentioned are in need of power and need to build additional infrastructure.

That need for capacity is what is needed, and it's much easier to build that capacity through storage. That means taking some of that excess energy when it's not needed and releasing it when it's needed. It's much easier and much cheaper to do that today than it is to try to build additional capacity or to connect to somewhere much farther away where they might have the capacity available, and it's not to say that they will have that capacity available at the moment you need it as a jurisdiction, either.

[Geng Tan, Liberal, Don Valley North, ON]

I have one minute, so this will be a quick one.

I have a simple description of your organization, Energy Storage Canada. In the first sentence, it says that your association is the only energy storage industry association in Canada, but the last sentence says that your association works closely with other energy storage alliances and associations.

I am quite curious. When you say “other”, does that mean those alliances or associations are outside of Canada, and how do you work with them? When you say you work closely, what do you mean? Do you share a study or research with other alliances or associations, or just simply purchase some products from them?

[François Vitez]

The association is constantly looking at what's happening in other jurisdictions to better educate and be able to look into a crystal ball with more clarity. We do have good interties with Energy Storage Association, ESA, out of the United States, and others as well, for that matter. That's what is meant mostly here.

[The Chair, Liberal, James Maloney]

Thank you.

We'll go over to Mr. Schmale for five minutes.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you, Chair.

To both of you, I appreciate your being here, and I want to pick up where Mr. Cannings left off. We've heard from a variety of witnesses over the past few weeks about the necessity of interties. The general consensus seems to be that they are one piece of the puzzle but not necessarily the most important, just a piece. What I'm hearing about today is the opportunity for storage, and we've heard from other witnesses over the last couple of days about localized power generation.

In your presentation today, you talked about the length of time to build transmission lines after you go through the planning and you name it. Going back to what Mr. Cannings was pursuing, should we really be focusing on the necessity of interties right now, because from what I'm hearing from you two today, maybe we're looking in the wrong direction.

Both of you can answer, please, if you would.

[Benoit Marcoux]

The industry is evolving very quickly, which, obviously, is an issue when you're talking about infrastructure that takes two decades to build. I think there are three things that need to change. First, we need markets so that a large number of players—consumers, businesses, utilities, independent power producers, distributed generators—can actually trade energy in those markets-to-be, and that includes energy storage obviously, time arbitrage, or offering other services to grid.

In order to have this distributed grid, digitized grid, we need to modernize it to allow for two-way power flows, to allow for protection that will work to have higher reliability so that we don't turn off our generation assets when there's a glitch. For those two things to happen, a third one needs to happen. We need to update regulations.

The regulatory environment in Canada is not designed for that modernized grid. We need to look at new ways of doing things, like incentives for a more reliable grid, incentives to reduce the cost, incentives to invest and innovate in the grid, as is happening in other jurisdictions across the world, the U.K. being one. Those things need to happen. I think that as far as urgency, that's probably far more urgent than building a lot of new transmission lines.

[François Vitez]

I would add that this is probably where most other jurisdictions are heading. It's not to discard the option of building transmission line infrastructure, but it's to look at it from a big picture perspective and to see the coming trend of decentralized generation.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

When you say incentives, you're mostly talking about government subsidies. Is that...?

[Benoit Marcoux]

No.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

You're also talking about private sector investment?

[Benoit Marcoux]

An incentive could be “if you do well, you get money; if you don't do well, money is taken away from you”. Utilities in Canada right now are all regulated on the basis of what's called the rate-base rate of return. When you put incentive into that regulatory regime, it means that if a utility, for example, is more reliable, it gets money. If it is successful in reducing its own internal cost, it can keep part of that money. That's the kind of incentive that is in place in the U.K. and in some places in the United States. You have a little bit of that in Alberta—just a little.

It's a fundamental trend in the industry. One of the reasons is that such a regulatory regime helps modernize the grid. It is also required if you want to have a healthy market for participants to exchange energy in.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Do you want to add to that before I go on to the next question?