Get smart

Get smart
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NB Power and Siemens Canada strike a bold alliance to modernize New Brunswick’s electrical grid

July 25, 2012 will go down as an important day in the history of NB Power, for better or for worse.

On that date, the office of New Brunswick Premier David Alward issued a press release announcing a 10-year agreement between the government-owned utility and Siemens Canada. Their plan? To integrate “smart grid” technology into the province’s electrical system and create a centre of competence based in the provincial capital of Fredericton.

NB Power aims to take advantage of the German-based technology firm’s smart grid expertise to allow the utility and its customers to use power more efficiently and thus save money. Meanwhile, the Smart Grid Centre of Competence in Fredericton (it opened in January 2013) adds 40 new jobs to the province and promises to turn it into a hive of smart grid research and development. “Their [Siemens Canada] presence in our province will be a tremendous catalyst for new opportunities in our communities, particularly the information and communications technology sector,” Alward said in the press release. “This new venture will enable NB Power to place an even greater focus on its customers.”

Those are worthy goals, but NB Power’s execution on past power projects, notably the multi-billion-dollar cost of building, and then refurbishing, the Point Lepreau nuclear power station, leaves New Brunswick residents a bit skeptical about the chance of success for any grand plan the utility endorses. NB Power and Siemens Canada have 10 years to prove to the public their partnership can get the job done.

Smart grid has become an energy industry buzz term. But that doesn’t mean most people know what it means. Generally speaking, it’s the use of digital technology to computerize the electric utility grid – the wires, substations, transformers, and more, that have been allowing electricity to power homes for over a century. This includes adding two-way digital communication technology to devices associated with the grid that gather data from other devices on the electrical network. Smart grids have automation technology that lets a utility adjust and control individual devices, or millions of devices, from a central location.

Why is that a good thing? Well, it can give customers access to data about their own power use, which can be used to change their usage habits so they can be more efficient and save money. But perhaps the greatest advantage smart grid technology provides is that the data it gathers tells utilities how much voltage is being used and where. This can help them provide power more efficiently. Rather than supplying peak loads at certain times to cover for power spikes or dips, voltage usage can be identified and addressed remotely. This can allow a utility to supply the minimum amount of voltage needed for smooth operations, and potentially eliminate the need to oversupply the market, which results in less energy usage and, in theory, savings for customers.

The smart grid initiative is part of NB Power’s Reduce and Shift Demand strategy. Back in July of 2012 when it announced the partnership, the utility played up the ability of smart grid technology to provide customers with “more choices about how and when they use their electricity in the future”, as the press release put it. NB Power says using smart grid technology will result in smart communicating thermostats, energy smart appliances, self-serve options for energy shifting, energy thermal storage devices, and other innovations.

With the Smart Grid Centre of Competence now open, and Siemens Canada and the University of New Brunswick working on two research pilot projects to help reduce electricity consumption or shift it to off -peak times of the day (Siemens has committed to invest $2.5 million into academic research projects in New Brunswick over the next five years), the work seems to be in full swing. So what do NB Power and Siemens Canada hope to accomplish and how will they do it?

Unfortunately, they wouldn’t say. Despite repeated attempts by Natural Resources Magazine to interview key spokespeople from NB Power and Siemens Canada about the smart grid partnership, both companies declined to comment on the matter.

That’s too bad, because some smart grid experts are bullish on the technology and what it could mean for New Brunswick. Benjamin Thibeault, electricity program director for the Pembina Institute, a Calgary-based environmental think tank, says smart grid technologies are “critical to improve efficiencies” in electrical delivery systems. He also thinks it will result in cost savings and more efficient use of energy, and that smart grid technology makes sense to implement in small geographic regions with high population densities like New Brunswick.

Azeddine Kaddouri, a professor of electrical engineering at the University of Moncton, also sees NB Power’s smart grid research partnership as a welcome development. “The Smart Grid Centre of Competency in Fredericton is a good initiative,” Kaddouri says. “NB Power does not have a research and development unit, comparative to other provinces.”

What NB Power does have are some financial concerns. In its corporate performance report for the third quarter of 2013-2014, the utility reported a year-to-date loss of $15 million compared to net earnings of $57 million for the same period in 2012-2013. The long-term financial picture is more troublesome. The utility, which provides power to over 390,000 customers, is $4.7 billion in debt. In an effort to cut costs, it eliminated 300 positions from 2011 to 2013.

With an enormous debt hanging over its head, partnering with a tech-savvy firm like Siemens to implement technology that can modernize its power systems, deliver electricity more efficiently and save customers and NB Power money at minimal expense seems wise.

Of course, dreams are one thing, reality is quite another, and Boston-based lawyer and energy consultant Nancy Brockway is a realist. With over two decades of experience in the energy industry, including serving as commissioner of the New Hampshire Public Utilities Commission from 1998-2003, Brockway knows the electricity business intimately. “I’m anti-hype,”

Brockway says. “As with a lot of new initiatives, there’s quite a lot of (hype) involved in smart grid issues. Sometimes they are right to do that and to get everyone excited about it. Sometimes they haven’t thought things through.” Brockway says some of the benefits touted by smart grid proponents (e.g. that smart meters providing real-time information about cost and energy consumption will lead to reduced energy usage) are not supported by research. In a 2010 report looking at advanced metering infrastructure in North America, she writes that, “estimates of energy consumption changes in evaluations of smart meter pilots in the U.S. and Canada range from modest usage reduction to actual increases.”

And there are other concerns – cybersecurity being one of them. As with any new technology, security may be compromised by equipment or operational glitches, as well as intentional breaches by hackers. Some of the cybersecurity concerns which smart grid skeptics have voiced include eavesdropping on or jamming wireless signals that connect technology like smart meters to data collection points, leading to password compromises and unauthorized data collection.

“Where the problem comes in is on the benefits side, it’s not at all clear that you get very much of anything in return for investing in smart grid and smart metering,” Brockway says. “I think it may be difficult to make an economic case for it in (the New Brunswick) situation.”

Professor Kaddouri disagrees with Brockway. He says that NB Power’s debt situation will make it difficult for the utility to fund any new mega- energy infrastructure investment for quite some time. And with those financial restraints, investments to make the electrical grid more efficient and modern could provide NB Power with more bang for its buck. “Online and real-time control and management of energy become its top strategy,” Kaddouri says. That is where he thinks Siemens Canada can help improve the province’s grid.

While Brockway sounds skeptical about the benefits the NB Power and Siemens Canada smart grid partnership will produce, she adds that it’s often difficult to predict what the outcomes will be from technological innovation. In her 2010 report on advanced smart metering infrastructure, Brockway writes that technological development tends to follow a pattern. First, proponents of a new technology have high expectations for it when it is first developed. But as the industry starts to use it and develop it, those expectations often turn out to be rosier than warranted. That leads to despair that the technology will ever prove itself and be widely adopted. However, if the technology is viable, the bugs and glitches will be worked out and the technology will be adopted and “provides benefits often not imagined when the technology was developed.”

Brockway’s words might not be the overwhelming endorsement that New Brunswick residents want to hear as NB Power and Siemens Canada commit to going down the smart grid rabbit hole. But they will have to do for now.

4 Comments to “Get smart”

  1. Marilyn Brayley // July 15, 2014 at 11:39 pm // Reply

    Hi Brian, Way to go brother! This article is superbly written. The numerous Neah’s and Yeah’s are reminiscent of a past era. Opinions and comments from the rich, famous, educated and others “in the know”, said that T.V.’s, Cars, Planes, Home Computers & Space Craft, would never last. So, its a blast from the past! Smart grid is our future.

    Proud Sister,
    Marilyn Brayley

  2. Bob McLeod // August 7, 2014 at 3:21 pm // Reply

    Brian, great article, you can feel your passion in the words. You have a gift of writing.
    Bob McLeod

  3. An objective and very good article presenting both sides. The dream. And the reality. In theory Point Lepreau Nuclear Generating Station is supposed to be a fixed asset. Yet it is also the most significant liability for all NBers (mainly due to the 25-year deferred debt on the multi-billion-dollar (cost overrun) refurbishment). Consider: NB Power plans to put the majority of NB residential power uses on the central (base) load which will source electricity from Point Lepreau. That strategic maneuver may well present greater risks for rate tariffs (far greater than NB Power’s moderate, annual power rate price increases as stated in its corporate reports). With a crown utility that’s severely cash strapped (and has nada penny extra for any major capital infrastructure projects, and seems to be always digging deeper, down the financial rabbit hole in debt), though the article hopes NBers will see ‘light’ at the end of the 10-year tunnel, I’m inclined to believe the electricity industry ‘in-the-know’ pro-realist, Nancy Brockway (referenced in this article) has sounder foresight on the realism of the risks (hype) surrounding smart grid/smart meters. If it’s not proving successful in the major states in the US (and research shows actual spikes in power usage and a trend for increasing power consumption among users), then why would the Alward government take such an imprudent risk on an unproven electricity initiative? Will this Smart Grid initiative prove to be Alward’s poor financial gamble at the expense of all NBers? Or prove as King Midas an opportunity as Bernard Lord’s orimulsion gamble; but not quite as damaging as David Alward’s predecessor Shawn Graham’s Atcon fiasco? Only time will tell! If I was an NBer, I’d be thinking about this issue walking into the ballot box on September 22.

  4. A concerned NBer @Nicholas Brin…

    Thanks for your comments. Your concerns about dynamic or real-time pricing fluctuations are legitimate. A 2011 Consumers Digest — by William J. Kelly entitled: Why Smart Meters Might Be a Dumb Idea — investigative report into Smart Grid poses great questions like…”What happens… if most people eventually use smart-meter monitoring to reduce their energy use? Electricity use would go down, and electric companies that don’t generate their own power could claim victory for the smart-meter system, because they would spend less to buy electricity from other sources. But electric companies that generate their own power might be forced to raise the rates that they charge consumers to make sure that they cover their fixed costs. In other words, if the smart-meter system works too well, your rates might go up anyway depending on where you live.” (source link: http://www.consumersdigest.com/special-reports/why-smart-meters-might-be-a-dumb-idea/P3 ).

    So you’re not too far off in postulating Point Lepreau could pose risks, especially under NB Power’s goal of producing 75% of all electricity used in NB by 2020 – even a smart grid advocate I spoke with conceded there is logic in that concern. And it all might prove to be a boondoggle in the end. Note: the 660 Megawatt nuclear generating station is a self-sustaining electricity producer. Moreover, this Master Resource article (source link: http://www.masterresource.org/2010/01/smart-grid-wheres-the-beef) presents another contrary perspective about Smart Grid’s – and the “absence of any economic rationale” — benefits not automatically materializing to support the grand assertions of the proponents of Smart Grid/Smart Metering.

    In my research, it became obvious that Maryland as an example is a small, densely populated state. And there the prudent analysis of the Maryland public service commission won out over all the vendor hype in that instance. Also, in a Maryland Smart Grid/Smart Meter implementation pilot program, the rebate incentives for those who used less power during critical peak-time events benefitted some, but ended up with every other electricity consumer paying higher rates to make up for those enormous rebates handed out to some.

    So you are correct. This is a serious unproven gamble for all power rate payers in NB.

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