Good afternoon, Madam Chair and honourable members of the committee. Thank you for the opportunity to speak with you today.
I have a few opening remarks on what I feel might be important considerations regarding the utility sector and how it may relate to smart communities.
The term “smart community” brings to mind information technology, and the role information technology has in transforming the utility landscape cannot be overstated. It has transformed customer service approaches across many industries, and the electricity sector will be no exception. This technology will not just connect customers everywhere and all the time; increasingly, it will connect their homes, appliances, equipment, and vehicles through the emerging Internet of things. While utilities will continue to manage the grid, smart grid technologies and the Internet of things will “connect the customer to the control room”, giving them a much bigger role in the electrical utility.
The Internet of things has broad implications for the electricity industry and for the future of smart communities. It is likely to result in significant product innovation, game-changing partnerships, and converging markets, as both new and existing market participants seek to enable customers to harness the grid's potential for efficiency, revenue generation, convenience, control, and environmental performance. In essence, it creates a new digital ecosystem for energy, to which utilities will have to adapt. It opens the door for energy market participants that exist purely in the digital space, a scenario that has led to creative disruption in many other industries.
These changes are likely to be driven at the customer level. Customers who have options for localized generation and storage and ready access to smart home technology are unlikely to remain passive consumers. Some will want to be sellers of energy or to sell a reduction in their consumption at times of peak demand, referred to as “demand response”. Technology makes this relevant, because they can participate without even thinking about it. Working through intermediaries called “aggregators”, they can take a set-and-forget approach, since aggregator systems can communicate directly with their appliances. In the same way that smart phones have transformed business models in other industries, smart homes and smart communities are likely to transform the energy industry.
The pace of this change may vary from one customer segment to another. However, it seems likely that smart energy design—including distributed generation, microgrids, electric vehicle infrastructure, and energy efficiency—will increasingly be a focus for new subdivisions and high-rise developments, particularly if government standards emerge that encourage or require it. The impacts of the changes I have described will be felt by the local distribution companies the most, as they are closest to the customer. They will see new opportunities, as well as a need for transformation in the way they do business. Most importantly, a reliable and smart local electricity distribution network that allows power to flow in both directions, coupled with sophisticated back-office functionality capable of handling transactions, will be the key enabler for the smart city.
In essence, there are opportunities to leverage the modernization of electricity infrastructure and services to create not just a smart grid, but smart communities and a smart city.
The challenge, of course, will be how to pay for the modernization that will be required, particularly within the utility sector. Already, in many jurisdictions, the cost of electricity has gone through enormous increases and is approaching critical levels. To ask the ratepayers to completely cover the costs of this change may be untenable; however, the costs of not enabling the benefits of smart communities may have a greater long-term impact. The conversations around this issue are already occurring at the city level, and perhaps it is now time for a national conversation to take place.
Thank you very much. I'd be happy to take questions.