Results from a pilot project in Oklahoma show that having a wider TOU price gap will encourage more peak-period conservation and shifting of electricity use, a finding that contrasts with the experience in Ontario, where the price gap and the market signal it sends is very weak. In the Oklahoma trial, pricing ranged from 4.2 cents (U.S.) for off-peak times and up to 46 cents for critical peaks, compared to a range of 5.1 to 9.9 cents at an Ontario utility such as Toronto Hydro.

Some participants in the Oklahoma pilot achieved a 57 per cent reduction in energy use during peak periods compared to a control group, while the average reduction was 33 per cent during highest-price periods. Widening the TOU price range in Ontario is crucial to realizing the benefits of smart meters and to enabling competitive services from third-party retailers, including storage services.

Just like that, a 200-megawatt offshore wind project proposed by utility Toronto Hydro is — to put it bluntly — dead in the water. Ontario’s Ministry of Environment issued a proposed regulation today that would prohibit the development of offshore wind projects that are 5 kilometres or closer to shore. Toronto Hydro’s project would place up to 60 wind turbines between two and four kilometres from shore, so if the proposed rules get passed then the utility’s offshore plan will be terminated. Toronto Hydro’s isn’t the only project that will be killed. There were several “near shore” projects proposed in Lake Ontario and Lake Erie that will be caught in this new setback rule, and even some projects that straddle the five kilometre barrier. Windstream Energy, for example, which is the first developer in North American to get a power purchase agreement for a 300-MW offshore wind farm (i.e. it got a feed-in-tariff contract with the Ontario Power Authority), may have to readjust the layout of its proposed project and drop a few turbines to fit within the rules. Trillium Power, which has a huge 700-MW project proposed for Lake Ontario, wouldn’t be affected because its turbines will be located 17 to 28 kilometres offshore.

I agree that a setback is necessary. I haven’t decided yet whether I think five kilometres it too far or not. I think three kilometers would have been a better compromise. The proposed rules could still change after public consultation, but for now, there are many angry offshore wind developers out there who face the prospects of seeing their projects killed. Toronto Hydro, for example, just spent $1 million or so to put an anonometer in the lake to measure wind speeds for two years. That now looks like wasted dollars.

Smart meters and time-of-use pricing are always well-read stories because there’s true division within the general public on whether smart meters are consumer-friendly gadgets that encourage conservation or utility-friendly devices that make it easier to gouge consumers. See my story in the Toronto Star from Friday. My take is that electricity prices are going up whether we get smart meters or not, and that smart meters — and the applications they enable — offer households a way to shift and even lower their electricity use to buffer the impact of rising prices. The mistake — and again, just my view — is that smart meters have been improperly marketed to consumers as some kind of sexy wonder tool that will help them lower their bills. Instead, utilities should have downplayed the introduction and simply moved ahead with their installation as part of a less exciting grid modernization play — equivalent to a telecom company upgrading from analog to digital networks so that, down the road, new services can be offered to customers. Customers don’t care about the bandwidth, they just care about the handsets and what they can do.

By positioning smart meters as more of an infrastructure play the cost of deployment can be simply incorporated into annual capital budgets and households are more resigned to the fact that getting the new device is mandatory. Let’s face it, initially smart meters are about helping utilities manage their networks better — i.e. they can pinpoint problems and do more detailed analysis of individual household, neighbourhood, and community power consumption, improving system planning and maintenance operations and preparing utilities for increased distributed generation in their service territories.

By making this seem like some gift to consumers, as has been done, utilities open themselves up to consumers expecting certain results and wanting the option of getting or not getting the smart meter. (more…)

Ontario Ministry of Natural Resources says it has received more than 100 applications representing more than 500 wind-energy projects on the Ontario side of the Great Lakes. Overwhelmed, the ministry has temporarily stopped taking applications until it can review what it has and make sure proper processes are in place for granting approvals. Minister Donna Cansfield gave the update at an offshore wind energy conference in Toronto, where developers and investors across Europe, the U.S. and Canada gathered to talk about the North American opportunity. For more detail on what was discussed at the conference, click here.

Of interest, Vestas has just opened a North American offshore turbine sales office in Toronto. From what I understand the location could have been either Boston or Toronto. It’s easy to read into the choice of Toronto as an early indication that the company is considering a greater presence in Ontario, but it’s too early to tell. Also, this morning Toronto Hydro got approval to put an anemometer in Lake Ontario off the Scarborough Bluffs, where the utility has interest in building a 100 MW offshore wind project. Expect an uproar from anti-wind folks in the area who have consistently and forcefully protested, not only the proposal, but just the idea of putting an anemometer on the lake.

My Clean Break column yesterday takes a look at an overlooked issue on the smart-grid file: privacy and security. Last week Toronto Hydro disclosed that 179,000 customer online accounts had been illegally accessed, along with some personal information. Now, this could have happened to any Web site that gives online access to billing — retailers, banks, your phone or cable company — so this isn’t directly a “smart grid” issue. What it highlights, however, is that utilities are a target like anyone else, and could increasingly be a target as they deploy smart meters and begin to offer energy-management services through the Web. How much energy we use at various times of the day can, surprisingly, say a lot about you and your home. For one, it can tell someone you’re not home. And it can allow someone to track your activities throughout the day. As I point out in the column, the Black Hat conference in Las Vegas last week showed just how easy it can be to remotely infiltrate a network of smart meters and seize control. Of course, we also have to worry about the upstream as well, keeping security issues top of mind  as we modernize our transmission systems. This is critical infrastructure, and with more and more points of access being created to enable the “smart grid,” this infrastructure will be increasingly vulnerable to attack.