motivation for smart meters
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Motivation for Smart Meters. Allen Stanbury Allen Stanbury & Associates Inc. Why Smart Meters?. The specter of insufficient supply looms Prospect of rolling blackouts Concern for clean air Phase out coal fired generation by 2009 Risk of mounting public debt - PowerPoint PPT PresentationTRANSCRIPT
Motivation for Smart Motivation for Smart MetersMeters
Allen StanburyAllen Stanbury
Allen Stanbury & Associates Allen Stanbury & Associates Inc.Inc.
Why Smart Meters?Why Smart Meters?
The specter of insufficient supply The specter of insufficient supply loomslooms Prospect of rolling blackoutsProspect of rolling blackouts
Concern for clean airConcern for clean air Phase out coal fired generation by 2009Phase out coal fired generation by 2009
Risk of mounting public debtRisk of mounting public debt Due to direct subsidization of retail electricityDue to direct subsidization of retail electricity Retail price cap can be lower than average Retail price cap can be lower than average
market pricemarket price
Current Generation MixCurrent Generation Mix
Source: IESOSource: IESO
Installed Capacity 30,000 MW
Nuclear36.1%
Hydro25.8%
Oil/Gas16.5%
Coal21.4%
Misc0.2%
Capacity vs. EnergyCapacity vs. Energy
Installed Capacity 30,642 MW
Nuclear37.2%
Renewables25.6%
Oil/Gas16.2%
Coal21.0%
Source: IESOSource: IESO
Total Energy 155 TWh
Nuclear51.0%
Renewables23.2%
Oil/Gas7.1%
Coal18.7%
Tight Supply on HorizonTight Supply on Horizon
Confluence of growing demand and aging Confluence of growing demand and aging generationgeneration
Demand: Demand: Grows about 1.2% per yearGrows about 1.2% per year
Year Peak MW Season2005 26,160 Summer2004 24,979 Winter2003 24,753 Summer2002 25,414 Summer
Driven by temperatureDriven by temperature Each degree above 16Each degree above 16°°C adds 380 MWC adds 380 MW
Tight Supply on HorizonTight Supply on Horizon Aging generation:Aging generation:
Nuclear reactors reach end of design life in 7 Nuclear reactors reach end of design life in 7 to 10 yearsto 10 years
Average hydro facility is 60 years oldAverage hydro facility is 60 years old IESO forecasts half of installed capacity will IESO forecasts half of installed capacity will
exceed nominal service life by 2020exceed nominal service life by 2020 Provincial government predicts 24,000 MW of Provincial government predicts 24,000 MW of
new capacity required by 2025new capacity required by 2025 Includes planned phase out of 7500 MW of coal Includes planned phase out of 7500 MW of coal
fired generationfired generation
And these assets are stretched thinAnd these assets are stretched thin
Summer 2005Summer 2005
Provincial demand:Provincial demand: Exceeded 25,000 MW on 53 occasionsExceeded 25,000 MW on 53 occasions
IESO:IESO: Issued public appeals to reduce consumption 12 Issued public appeals to reduce consumption 12
different daysdifferent days Two 5% voltage reductions reduced demand byTwo 5% voltage reductions reduced demand by
500 MW500 MW 4,199 MW of emergency purchases in one month4,199 MW of emergency purchases in one month Price exceeded $150/MW (15Price exceeded $150/MW (15¢/kWh) in 252 hours¢/kWh) in 252 hours
Meeting the Supply ChallengeMeeting the Supply Challenge
Electricity Supply Act 2004Electricity Supply Act 2004 Created the Ontario Power AuthorityCreated the Ontario Power Authority
To establish long term contracts for new To establish long term contracts for new generationgeneration
Created a new conservation bureauCreated a new conservation bureau To reduce demand by 5%, energy by 10%To reduce demand by 5%, energy by 10%
Early TargetsEarly Targets 2235 MW of new gas fired generation2235 MW of new gas fired generation 395 MW of renewable power395 MW of renewable power 650 MW of demand response650 MW of demand response
Influences at the TimeInfluences at the Time
Blackout of August 14, 2003Blackout of August 14, 2003 Key base load (nuclear) generation took as Key base load (nuclear) generation took as
long as 6 days to return to servicelong as 6 days to return to service IESO implemented limited rolling black outs in IESO implemented limited rolling black outs in
limited areas limited areas IESO appeals to conserve resulted in 20% IESO appeals to conserve resulted in 20%
reduction in demand almost all of which came reduction in demand almost all of which came from C&I consumersfrom C&I consumers
Residential consumers failed to respond to Residential consumers failed to respond to repeated IESO appealsrepeated IESO appeals
Influences at the TimeInfluences at the Time
Mounting public debtMounting public debt Wholesale & retail markets open May 1, 2002Wholesale & retail markets open May 1, 2002 Retail rate is capped December 2002Retail rate is capped December 2002
Cap turned out to be less than the average Cap turned out to be less than the average wholesale pricewholesale price
Provincial government undertook to fund the Provincial government undertook to fund the differencedifference
Buy March of 2004 the debt amounted to Buy March of 2004 the debt amounted to $928 million$928 million About the same cost as installing smart meters in About the same cost as installing smart meters in
every homeevery home
Meeting the Supply/Clean Air Meeting the Supply/Clean Air ChallengeChallenge
Build more generationBuild more generation Encourage Encourage
Conservation in both energy and demandConservation in both energy and demand Clean renewable powerClean renewable power Local micro-generationLocal micro-generation
Design more effective rate structuresDesign more effective rate structures Provide better consumption Provide better consumption
information to consumersinformation to consumers What was the government to do?What was the government to do?
IESO 10 Year OutlookIESO 10 Year Outlook
Source: IESO 10-year Outlook HighlightsSource: IESO 10-year Outlook Highlights
OPA ViewOPA View
Source: Ontario Power Authority, Supply Mix Advice and RecommendationsSource: Ontario Power Authority, Supply Mix Advice and Recommendations
Smart MetersSmart Meters
GoalsGoals To provide feedback to consumersTo provide feedback to consumers
Give consumers information needed to they can be Give consumers information needed to they can be in control if they want to bein control if they want to be
Encourage a culture of conservationEncourage a culture of conservation To enable time & seasonal dependent ratesTo enable time & seasonal dependent rates
Shift load away from peak periodsShift load away from peak periods Enable critical peak pricingEnable critical peak pricing
Response to EISO appeals will be rewardedResponse to EISO appeals will be rewarded Provide a key element essential for a future Provide a key element essential for a future
residential demand/price response programresidential demand/price response program
Smart MeteringSmart Metering
Will it work?Will it work? Market clearing price is set by the last 200 MWMarket clearing price is set by the last 200 MW
200 MW of demand responsive load could significantly 200 MW of demand responsive load could significantly reduce price volatility in the wholesale marketreduce price volatility in the wholesale market
Strong response to critical calls could well reduce Strong response to critical calls could well reduce future generation capital costsfuture generation capital costs
Prices in the future will depend on natural gasPrices in the future will depend on natural gas Prices forecast to be volatile and highPrices forecast to be volatile and high
The residential market is a large portion of total The residential market is a large portion of total consumption and an untapped conservation resourceconsumption and an untapped conservation resource
What do you think?What do you think?