Natural Resources Committee on Oct. 30th, 2017

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

Did I hear you correctly? You said you currently do business with the United States by exporting your power. Is that correct?

[Mike Marsh]

No, we don't. We have had small contracts with North Dakota over the years, but our connection into the U.S. is very small. It's 150 megawatts into the United States, so it's not big enough.

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

Okay, so it's not very much.

If you had something like nuclear power, could you see yourself doing more business? Would that help the business case potentially?

[Mike Marsh]

It's very premature for me to say. It would depend on the economics, and that's a really big question. I couldn't answer that today.

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

Do you see more of a role in some of the remote communities for maybe an opportunity for wind, solar, SMRs, or something like that, rather than spending dollars—a lot of them—on interties? The reason I'm saying that is that as we go through this process, I'm trying to get my head around the business case for moving this forward and why the federal government should invest in this. I noticed in this document here from the Library of Parliament—and Mr. Bagnell did point it out—about 4% of Yukon power is from diesel.

Now I know, obviously, that you're Saskatchewan and not Yukon. Would it not make more sense to look into helping out the northern remote communities using wind, solar, or maybe an SMR somewhere if it makes sense, rather than to spend billions on putting these interties into effect? Would that not be somewhere we should be looking at instead, considering, as well, that it's so far out it takes a lot to build this?

[Mike Marsh]

I agree. As I said earlier, I think the technology is coming of age to allow wind and solar, together with battery storage, to adequately serve some of these remote communities. It's just a matter of getting the right technologies together and the right control system to allow that grid to be stable in that local microgrid area. SMR technology is just beginning development now, and to my knowledge, they're looking at it, certainly, in the United States. The only units in production are in China today. That's a long-term play, and I think it has to be looked at as a very long-term play beyond the 10- to 15-year time horizon that we can see today for SMRs.

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

Go ahead.

[Tim Eckel]

I'll add one more thing. Renewables are a good possibility. The one issue they deal with in the north is that winter is their heaviest load because they have heating load as well as lighting and everything else. There's not much daylight for things like solar. They have to have more storage, and sometimes on the coldest days, there's very little wind. They need a lot of storage in those areas to make it work, and that's the challenge.

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

With regard to improving interties, we're probably looking at that same time frame, that 10-year window, as you mentioned. You said 10 to 15 years with regard to SMRs. I'm still trying to get my head around whether or not this is something the federal government should be putting dollars into.

I guess that's my time. I've made a comment rather than a question.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Tan, you have about three minutes.

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

Thanks, Chair.

In your testimony, you mentioned lots about the challenges of providing electricity to low-population density areas or very remote areas that are far from interties or from the grid. No matter what, those communities need power, so they have to choose, to make a decision from a whole bunch of technologies: solar, wind, nuclear, other co-generational, or natural gas. I don't think those communities have the capacity to decide which technology is the best for them, or the good side or bad side of each technology.

I wonder if your company is involved in this decision process or if it's the sole responsibility of the local government. Where does the local community get expertise to make the final decision?

[Mike Marsh]

That's a very good question. I had indicated a few minutes ago that we are currently working with the University of Saskatchewan's department of environment and sustainability, which is looking at exactly that issue—how to develop a policy around integrating renewables into northern communities. What's the right business model? What are the right policy options available, both provincially and federally?

We're certainly going to assist our local university as they pursue this and expand their role in this area. They're working with Scandinavian countries and Alaska because they have a head start in this area. Indeed, they held the first symposium on northern and indigenous communities with respect to solar and renewable integration, back in September. It's starting to take hold.

Certainly, we would look at technology options that we would traditionally look at for our community in Saskatchewan. However, if we can learn as well what's working in other parts of the world and find a way to utilize that technology here in our province, and if Manitoba, the Northwest Territories, and Yukon can do the same, we may have the ability to move a lot faster with a lot less cost because we'll learn from others who have gone before. I think that's the work that's being undertaken today. We're not leading that work, but we're certainly helping wherever we can.

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

Okay.

[The Chair, Liberal, James Maloney]

We're going to have to stop there.

Gentlemen, thank you very much for joining us today and being part of this discussion.

We're going to suspend our meeting now for a couple of minutes and then reconvene with our next witnesses.

Thank you again. We're signing off.

[Mike Marsh]

Thank you very much.

[The Chair, Liberal, James Maloney]

We're going to resume, ladies and gentlemen.

We have Ms. Judith Bossé and Alexandre Prieur from the Department of Natural Resources. From Siemens Canada, we have Rocco Delvecchio and Theresa Cooke, joining us from Oakville, Ontario.

The process this afternoon for our witnesses is that each set of witnesses will be given up to 10 minutes to do their presentation. You can do it in English and/or French. You will be asked questions in either or both official languages. Let's hope you have interpretation technology available at your disposal.

I'm speaking quickly because we're a little bit short of time. I'm going to open the floor.

Mr. Delvecchio and Ms. Cooke, why don't you start us off.

[Rocco Delvecchio, Vice-President, Government Affairs, Siemens Canada Limited]

Thank you very much. It's good to be here with you, committee members. You've done the introduction, so I'll start with our opening statement.

Let me say that it's a pleasure to participate in today's hearings. Energy is a very hot topic these days, with tremendous changes taking place, driven largely by technology, customer needs, and climate change. With the democratization of energy systems, particularly in the electricity sector, consumers are becoming more engaged in decision-making, and are increasingly becoming consumers, generators, and active participants in the electricity system.

Climate change and both physical and cybersecurity threats are also impacting the grid, with several notable storms this past winter impacting hundreds of thousands of Canadians. Distributed energy and resilient grid equipment, coupled with smart grid platforms, can radically improve the resiliency of today's grid, improve energy efficiency, reduce emissions, and keep operational costs stable.

A key term in this transition is the concept of “smart grid”, which is a class of technologies that enables all elements of the electricity system to connect, including generation, transmission, distribution, and end-users. Each element can be monitored. They can share information with one another, react in real time, and manage the overall system for optimal performance.

Today, our electricity transmission system is already fairly smart, but it is the extension of these smarts to other elements of the system, including the power lines and transformers near our homes, that will lead this transformation. This will allow us to optimize the performance of the system, facilitate the introduction of electric vehicles, connect community solar projects, add home storage, and connect smart appliances and other smart devices. We believe that these factors will drive the next wave of transformation.

Today, I'd like to focus on four key elements of the energy system, and some of the key developments in each of these areas. The first is electricity generation, the second is the grid, the third is the electricity demand of end-users, and finally, some comments about economic value creation.

Let me start with electricity generation. There are two trends here that are quite notable. The first is the shift to cleaner sources of energy. This is being driven by increased renewable power, primarily wind and solar, which is moving onto the grid. These sources are intermittent. They need to be managed intelligently and backed by some combination of natural gas generation and storage.

The second major trend we see is the decentralization of power generation. In the past, power has been generated mostly by large, central generating facilities, but we are now seeing a major shift toward distributed power generation. On the one hand, this is driven by renewable energy adoption; on the other, it is driven by businesses and individuals who wish to generate their own power. The business case for doing so is becoming more attractive, as a result of the falling costs of storage in solar, low natural gas prices, increased electricity rates, and the desire for reliable backup power.

In an interesting recent example, Siemens is involved in a project in Brooklyn, New York, whereby neighbours are able to trade the electricity generated on their own rooftops using blockchain technology. Both of these trends, but in particular the rise of distributed energy resources, create a much greater need for monitoring, control, and optimization. The distribution grid must become more intelligent, able to control generating assets and move power in many directions.

The second element is the grid. There are two elements to this that I'd like to highlight, the first being transmission. By transmitting and distributing power, the grid connects generators to end-users. On the transmission side, advances in high-voltage direct current transmission, or what is termed HVDC, now enable the transmission of electricity over long distances with virtually no losses. It can also reduce the costs of traditional overhead power lines. HVDC is also the only way to interconnect technically with transmission systems that are incompatible with other power networks. We see several of these in North America.

The implications of this are significant for Canada. For example, by extending the integration of energy-generating assets, one increases the prospect of greater use of hydro, wind, and other renewable resources across the country. This enables us to create a balanced mix of energy sources across regional grids, and export and share renewable power with other jurisdictions, including, of course, the United States.

Siemens has been involved in HVDC projects around the world, some of the longest of which are in China, although we've also recently completed two major projects in Alberta.

The second element of the grid that I'd highlight is distribution. We see that the distribution side of the grid is expected to undergo a massive transformation in the next five to 10 years, as the costs of solar storage drop, smart devices are connected to the grid, and consumers become active participants in generating and trading electricity.

The distribution grid, which currently sends power only in one direction is, for the most part, manually operated and is being digitalized. This offers greater flexibility and control over the generation and distribution of power, offering greater resiliency and the introduction of larger numbers of electric vehicles, including fast electric vehicle charging stations.

Local demand, generation, and storage are becoming more intelligently managed by software and being operated as microgrids. These microgrids in turn support distributed energy by enabling local renewable power generation to connect to the grid. These microgrids also increase resiliency and enable the electricity system to increase sufficiency and reduce emissions. For example, we have worked with Algonquin College in Ottawa to develop a microgrid that increases energy efficiency, reduces emissions, and enables the college to generate its own power while sharing power with a local utility. We've also developed this system in a way that creates a learning environment for students and supports the development of a new class of energy management skill sets.

The third element I'd focus on is the management of power consumption and the participation of end-users, the latter moving from passive consumers to active managers and producers, or “prosumers” as the term has come to be known. From smart thermostats to water heaters, to home solar and storage, consumers are taking an active role in managing their use of electricity. This is true not only for individuals but for businesses and institutions.

For example, we are working with New Brunswick Power to develop and deploy demand management technologies that will allow the shifting of peak power demands, with all the benefits this entails. This technology, for example, will enable the utility, businesses, campuses, and individual consumers to adjust time of use of electricity consumption. This opens up dramatic improvements in our ability to manage peak load and thereby reduce the need to build capacity and the costs of operating the grid. This flexibility will become even more critical with the adoption of electric vehicles, which will place unprecedented demands on the distribution grid.

My final comments relate to economic value creation. The energy system that is being transformed creates a unique opportunity for Canada to take the lead in this global transformation. By investing in smart grid innovation, Canada can develop and commercialize smart grid technology that can be exported worldwide. With the diversity of our provincial energy systems and their corresponding challenges, the blueprints created in Canada can be adopted to a broad spectrum of international jurisdictions.

Canada already has many strong leaders in the smart grid space who are eager to collaborate to make this vision a reality. Developing these technologies will require a strong body of software developers, power systems engineers, highly skilled technicians, and program managers. At Siemens Canada, we are committed to developing this talent pool via our engineering and technology dual education program. This is part of a broader transition in our educational system, which includes work-integrated learning. This allows students to gain direct hands-on experience and training with the advanced technologies that are driving this and other transformations, including defence manufacturing.

In summary and closing, the electricity sector is in transition and getting this transformation right is critical for Canada. Done right, a holistic and proactive approach will lower costs, increase resilience and reliability, reduce emissions, and create significant economic value for our country.

Mr. Chairman and committee members, that concludes my opening remarks.

[The Chair, Liberal, James Maloney]

Thank you very much.

We'll move over to Ms. Bossé and Mr. Prieur.

[Dr. Judith Bossé, Director General, Innovation and Energy Technology Sector, CanmetENERGY-Varennes, Department of Natural Resources]

Mr. Chair, I would first like to thank you for this opportunity to speak. We appreciate your interest in our work, as it relates to your study.

In our opinion, interties are one of the many tools available that, when used together, could improve the supply and demand of the current electricity grid in Canada.

To illustrate this point, I would like to provide you with some insight into our centre's research in electricity, as well as explain how our work complements or supports the use of interties in Canada.

Our work articulates itself around two main areas: electricity generation and supply, as well as transmission and distribution.

Under the first area, electricity generation and supply, we have examined the solar photovoltaic trends across Canada in terms of both technology adoption and its cost. While increased distributed renewables will contribute to a low-carbon future, they will require a series of tools to ensure Canada's electricity supply remains stable and reliable. Among these tools are increased interconnections between systems, geographically adaptable renewable technology, and smart grid control, which I will discuss further later on.

Costs of PV are dropping, especially for installation, and rooftop installation is becoming increasingly common. The cost of installing PV is decreasing, but residential electricity rates are rising. Therefore, consumers are installing PVs on their own, but utilities must now find solutions to make this new reality technically and financially feasible.

To this end, our centre is participating in international efforts to test smart inverters, which are power conversion units. These can be used to integrate PV, storage and wind energy into the electricity grid. Inverter research therefore aims to understand how generation equipment can supply additional grid services and enable greater use of renewables in the current electrical grid. Inverters represent an additional tool, alongside interties, to enhance electricity services.

Our centre is working with the National Research Council on standards and regulations related to energy storage. Canadian industry will benefit from the identification and mitigation of challenges associated with energy storage, which will constitute another tool to facilitate the integration of renewables in the electricity grid. Much like interties, storage is one of the tools in the tool kit. It does not generate energy but helps bring additional flexibility to the grid.

The second area of work related to electricity transmission and distribution that we focus on [Technical difficulty--Editor].

[The Chair, Liberal, James Maloney]

We have lost the audio, so we'll maybe give it a minute to get it back online.

Can you hear us okay now?

[Dr. Judith Bossé]

I hear you well.

[The Chair, Liberal, James Maloney]

Okay, and that works both ways.

Could you carry on from where we lost you? I think it was from when you said the word “second”.

[Dr. Judith Bossé]

As I was saying, Mr. Chair, the second area of work that we focus on is related to smart grid.

Historically, utilities have had to rely on supply to get the flexibility required to meet demand. The smart control of electricity loads gives utilities an added source of flexibility to enable clean energy solutions. The smart grid gives utilities a better sense of what is going on in their system and where energy is being consumed. In the near future, it will also allow utilities to exercise a certain amount of control on how, when, and how much energy is being consumed. This will make it easier to integrate renewable energy by matching loads with the variable output of renewable technologies. The smart grid is necessary to support Canada's continued electrification.

To this end, we are working on measuring the potential of residential heating devices, such as water and space heaters, to be controlled and to store electricity. This involves working with device manufacturers, utilities, and telecommunications experts to cover the entire supply chain, from start to finish.

We are also working to increase the number of small local renewable technologies, such as wind and PV. The objective is to make it possible to install these technologies close to a load, which helps optimize the use of grid assets.

A concrete example of both the areas is found in our collaboration with the City of Summerside in P.E.I. The city is actively converting from oil to electric heating with renewable energy. Here we are working to better understand and manage the distribution system that uses large quantities of wind power using state-of-the-art smart grid technology. Summerside has interties connected to the New Brunswick power system, which it uses for balancing. However, by maximizing its use of local resources and having a smarter grid, Summerside frees up its intertie, thereby saving that capacity for other uses.

Finally, through the Canadian smart grid action network, a network of Canadian smart grid stakeholders, we are directly engaging provincial and territorial policy-makers, utilities associations, and other smart grid development, demonstration and deployment in Canada and internationally. Efforts around the development of policy, codes, and standards make it possible to increase the adoption of clean energy technology in Canada, thereby broadening the possibilities for enhancing the electricity grid.

In conclusion, we feel that a diversity of tools, including inverters, storage, smart grid, and interties, will be required to help Canada reach its clean energy goals. The most economical option will likely be a well-planned mix of all these tools, adapted to the variety of climates and geographic contexts in Canada.

Thank you again for this opportunity to present our work.

[The Chair, Liberal, James Maloney]

Thank you very much.

We're going to open the floor to questioning now.

Mr. Tan, I believe you're going to start us off.

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

Thank you, Chair.

My first questions go to CanmetENERGY.

People buy additional electricity for their grid from independent power producers. Quite often, those kinds of so-called independent power producers are small in size, and quite often they use renewable energy.

I have a report that was published by NRCan called “Connecting MicroPower to the Grid”. In section 2.4, “Interconnection”, the report says:

Perhaps the number one interconnection barrier for small renewable systems has been the lack of uniformity in interconnection standards from utility to utility. This is a result of the traditional discretion given to utilities to deal with their own generation, transmission, and distribution systems.

To be more accurate, it is a problem of many utilities not having any standards at all for small grid-tied generators.

As a result:

...interconnection is addressed on either a case-by-case basis or through existing standards usually used for larger industrial systems.

Can you comment on that?

Also, in your opinion, how urgent is the need to have this kind of standard, and how difficult is it to create this standard?