Global brief Leadership Circle
Electricity markets around the world are in the midst of a major transition. The pace of technology advancement, changing customer expectations, emergence of new market entrants and increasing pressures from environmental policies, are leading to a paradigm shift in how future electricity needs are met. This is all set against a backdrop of a multitude of other challenges with which electricity utilities are currently grappling. The current market situation in Canada shows increasing electricity costs, aging infrastructure, constrained operating budgets, increasing security threats and rising incidents of extreme weather events impacting the electricity system.
The Conference Board of Canada estimates that some $350 billion must be invested in infrastructure by 2030, just to maintain the reliability of the Canadian electricity system.1
This ‘perfect storm’ has the potential to affect all areas of the electricity value chain, at a scale and pace not seen in the previous 100+ years of this industry in Canada, posing fundamental questions about the role of the traditional electrical utility. Many utilities are asking themselves what is required in order to become future-ready in this changing energy landscape.
Faced with this new reality, utilities must become more agile and adopt alternative approaches to how they do business. As new technologies become available and customer demands evolve, new business models are needed to operationalize technology innovations and drive value for the utility and the electricity sector as a whole. Technology readiness needs to be married with business and system readiness, in both regulations and policies.
The complexity and scale of the transformation in this sector requires a truly collective effort across the entire electricity system to overcome challenges and find opportunities amid this disruption. Players will need to understand the drivers and perspectives of other stakeholders. Aligning on common goals and forming mutually beneficial partnerships are the most efficient, high-value approaches navigating this changing landscape and creating a future-ready electricity sector.
The path forward is not to independently navigate energy sector transformation, but to collaborate with other players to fulfil common sector interests. The changes happening in the electricity sector are complex, interdependent and occurring at an unprecedented rate. As such, true innovation cannot happen through the siloed actions of each player but will require coordination across the entire system – in policy, regulation, infrastructure, operations, customer relationships and business models. This level of collaboration will push energy players past their comfort zones, yielding different priorities and fresh perspectives.
Forward thinking utilities, NB Power and Nova Scotia Power, have partnered with Siemens Canada to develop the electrical grid of the future. This project is funded through Government of Canada’s Strategic Innovation Fund. The R&D of this project will focus on aspects of energy transition and reducing GHG emissions
Siemens, New Brunswick Power (NB Power) and Nova Scotia Power (NSP) have been awarded $35.66 M CAD in federal funding for a joint pilot project aimed at analyzing challenges and opportunities posed by Canada’s energy transition. The partners will research and test in real-time how the grid of the future can optimize integration of renewables, ensure stability of the grid and manage decentralized distribution in order to better manage the provinces’ electricity, potentially reduce future electricity costs for consumers and reduce greenhouse gas emissions. The pilot, officially called the Smart Grid Atlantic project, is being funded in part by the Government of Canada’s Strategic Innovation Fund.
“Our government is bringing cheaper energy and a more reliable power grid in New Brunswick and Nova Scotia,” said The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development. “Our strategic investment in Siemens’ project will create new middleclass jobs, reduce greenhouse gas emissions and will cement our place as a world leader in clean technologies.”
“This partnership will be truly ground-breaking. Together with NB Power and Nova Scotia Power, we will develop and implement a powerful cloud-based Energy System Platform (ESP), allowing everyone to participate in the energy market,” says Faisal Kazi, President and CEO of Siemens Canada. “The ESP will enable data analytics, ensure connectivity, and provide tools for developers to create customer-focused applications and services. The platform will also optimize the overall electrical grid accelerate transitioning into a greener future not only in Canada but throughout the globe.”
Siemens will research and develop the made-in-Canada ESP software and NB Power and NSP will provide the needed assets and customer engagement to demonstrate and test these platforms in real scenarios and real time. Siemens and its partners have also committed to increased collaboration with post-secondary institutions, driving greater gender diversity in the workforce, developing intellectual property (IP) produced in Canada, and driving more engagement with local indigenous communities in the clean energy sector.
“Our customers count on us for reliable, affordable and clean energy. As we continue to be a Canadian leader in reducing carbon emissions, we need innovative solutions to add new energy sources to our grid. Contingent on approval by our regulator, investing in the Amherst Smartgrid Project will help us learn how to best incorporate new technologies to serve our customers, while showcasing Amherst as a progressive, smart-energy community,” says Karen Hutt, President and CEO, Nova Scotia Power.
“Our goal is to gradually eliminate the remaining 20 to 25 per cent of our generation that is carbon producing while ensuring we protect our customers from the significant rate increases that have resulted from this transition elsewhere. The only way to have a fully renewable future is with smart grid technologies that ease the acceptance of small-scale renewables onto the grid,” says Gaëtan Thomas, President and CEO, NB Power. “With these new federal investments, we’ll be able to accelerate our pilot projects and testing to ensure that customers get a greener New Brunswick grid without the disruptions we’re seeing in other parts of the world."
As the landscape that utilities are operating in evolves, awareness and recognition of each player’s perspective within current structures is critical to better understand how to adopt innovation at an accelerated pace. When dealing with a highly complex challenge, like that currently facing utilities, new perspectives and varied skillsets are essential to problem solving and taking full advantage of the opportunities that this transition presents. Partnerships and collaboration will be key to helping utilities successfully navigate, thrive, and develop robust business models and strategies in this rapidly changing sector.
Footnote:
1 http://www.conferenceboard.ca/e-library/abstract.aspx?did=4673