The Rising Cost of Energy

A few weeks ago, Ontario released its 2013 Long Term Energy Plan promising a new set of reforms and policies, among the more important points were:

  • Shut down of all coal-fired generators
  • Implementing conservation programs to offset growing electricity demand in the next 20 years
  • Refurbishing Darlington and Bruce Nuclear Generating Stations beginning in 2016; shutting down Pickering by 2020
  • Expanding renewable energy generation to 50% of total capacity by 2021

Critics of the government, however, were quick to point out that under this new plan, energy rates were almost guaranteed to increase by as much as 43% in the next 3 years, which has businesses and home owners worried. However, is an increase in electricity rates such a horrible thing? It is true that governments can and have mishandled energy issues (e.g. Oakville natural gas cancellation), but in this case, increasing electricity rates is hardly a reason to get angry especially when we have it so well compared to other countries around the world.

The average weekday price of electricity in Ontario is about 9.55 cents/kWh and under the government’s plan, that rate is expected to increase. But according to data gathered by Shrink That Footprint, electricity rates in Western Europe and Asia are typically more than double the Canadian average of 10 US cents/kWh (refer to Figure 1), giving Ontarians very little reason to complain.

How Much Does Energy Cost

Figure 1

The United Kingdom pays twice as much per kWh than we do, in Spain their rate is three times ours, and in Denmark, they pay, on average, a whopping four times what we pay per kWh! Furthermore, this study doesn’t even consider the different economic disparities between countries. For example, $ 1 US can buy considerably more in India than it can in a relatively more expensive country like the United States; therefore adjusting the price per kWh using the purchasing power parity makes electricity rates in Canada the cheapest out of the surveyed countries at a paltry 8 cents/kWh.

Electricity Prices relevant to purchasing power

Figure 2

Our electricity prices here in Ontario are the envy of the rest of the developed world; however, other provinces do have it better than us. Manitoba, British Columbia and Quebec, in particular, have electricity rates that are considerably less than Ontario’s. However, this is because Ontario has the distinction of being the only province that uses nuclear to generate more than half of its demand. Evidently, nuclear energy has proven to be very expensive not just to build, but to maintain and keep.

The actual market price for electricity in Ontario is only about 2.5 cents/kWh; however, this is before the Global Adjustment (GA) fee is added to the price, with it, electricity rates are more than tripled. The GA charge was added to provide electricity producers with added revenue. Unfortunately, the vast majority of it was used to subsidize nuclear, natural gas and coal generation. According to the Ontario Clean Air Alliance, from 2006-2011, 45% of all GA revenue was used to subsidize nuclear power, 6.7% was used to subsidize coal and an additional 34% was given to natural gas generation.

Global Adjustment Payments

Only 6% of all GA revenue was used to subsidize new renewable energy projects and 8% was used for energy efficiency programs. Simply put, nuclear and natural gas subsidies are the reason why Ontario’s electricity rates are higher than other provinces’ and increasing. If Ontario weren’t so dependent on nuclear for its electricity, there wouldn’t be such a great need to subsidize it.

Spending tens of billions of dollars on new nuclear reactors and then several more to refurbish them years later, and have the taxpayers make up the difference is simply not fair nor does it make economic sense. Ontario is bracing for a future where renewable energy will provide the bulk of its demand, and one day it will negate the need for all of those subsidies for nuclear and natural gas generation. In the mean time, electricity rates are going to increase, and so long as renewable energy is continually opposed, there will be no end in sight for the Global Adjustment fee.

If empty promises and well wishes could power our homes, we would have solved our energy issues a long time ago. Unfortunately, reality can be cruel, and pragmatic solutions are necessary in order to ensure that our energy supply is clean, reliable and affordable in the long run even if that means increasing its price in the short term.

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Top 10 Lessons for Aspiring Cleantech Entrepreneurs

top10lessonsChris Reid is president and CEO of Energent, an energy management company based out of Waterloo, Ontario incorporated only in 2007. The company works for a range of customers from industrial to institutional. They take real time data and generate analytical graphs to help provide customers with saving opportunities.

In November, Chris joined us at Ryerson’s Centre for Urban Energy as a guest lecturer. Speaking from firsthand experience, he presented some things budding clean tech entrepreneurs should consider for their businesses:

  1. Cash flow, cash flow, cash flow. How is the business going to make money to sustain itself?
  2. Your people are your most valuable asset. Get the best you can afford, keep them motivated and happy.
  3. Reference sites and clients are essential. Get the most and the best that you can, and keep them happy!
  4. Pay attention to and be ready for the politics to change, for the better or the worse.
  5. If you are selling to utilities, be ready for a long slow process, with pilot after pilot after… you get the point.
  6. Make sure you are sufficiently capitalized for the long haul, not living hand to mouth.
  7. Assemble (and leverage) the very best Board of Directors you can.
  8. Take full advantage of all the government funding, investment vehicles and such.
  9. Is the value proposition clear, distinct and measureable? This is the foundation of any successful business. It is extremely important for the entrepreneur to understand what value their business provides for people and know what success means to them. If it is not clear to the entrepreneurs themselves, then consumers and sponsors will not either.
  10. There are thousands, if not tens of thousands of companies just like you … what makes you unique to stand out from others out there?

Smart Meters: Why should I care?

Picture this, an electrical grid perfectly balancing generation, demand and distribution. A grid that is capable of accommodating abundant wind, solar and other renewable sources of energy into its system without issue or complication. On the rare occasion that problems occur, they are quick to be resolved. Such a technological wonder is not only possible but is already under way and it has started with the mass deployment of smart meters, so why then is there so much opposition towards them?

Smart Meter

Smart meters like this one are being deployed across North America

For those that don’t know, a smart meter is a device that collects a building’s energy use along with the time it was used which is then sent to the utility companies via Wi-Fi network at set intervals per day. Utilities will then use this data to get a more accurate, up-to-date picture of demand and consumption, which will make the grid easier to manage.

Currently, many utility companies across North America are installing smart meters at peoples’ homes and businesses as part of a greater vision to build a smart grid. There has been, however, a significant amount of resistance to them in many areas. In British Columbia, many groups have sprung up vehemently opposing smart meters. In a more extreme example, some families in Texas have been threatening utility workers at gun point to prevent smart meter installations. Such resistance to a seemingly benign piece of hardware has raised concerns over privacy invasion and health risks. However, are these legitimate concerns? Are these groups just buying into their own paranoia? Looking into this subject, it seems like logic and science are being ignored at the expense of innovation and progress.

BC Residents Protest smart meters

British Columbia has become a hot bed of smart meter opposition

Much opposition towards smart meters is that fact that they monitor a building’s energy usage throughout the day. Some are concerned that this is an invasion of privacy and is akin to a form of surveillance. Although smart meters will give utilities a more accurate picture of how much energy you’re consuming throughout the day, utilities will not know how you’re using that energy. This is similar to how we already deal with our internet service providers (ISP). Most ISPs will know how much bandwidth you’ve used, but they won’t know whether your bandwidth was used for downloading, uploading, streaming, etc. Privacy hasn’t been violated; the ISP is merely collecting your bandwidth usage so that they can bill you for the services they provide. Utilities will work in the exact same manner (as they do now), the only real change brought about by smart meters is that utilities will now gather your energy data via Wi-Fi signals, which is the other main area of concern for smart meter opponents.

The radio frequency (RF) radiation emitted by a smart meter’s Wi-Fi component is often cited as a major health risk by smart meter opponents. However, given the common sources of RF radiation, it seems short-sighted to villainize smart meters. Any wireless device will emit RF radiation; this includes cell phones, wireless routers, radios, garage door openers, etc. According to the American Cancer Society, cell phones will emit significantly more RF radiation than a smart meter and at a closer distance as cell phones are often pressed against a person’s ear whereas a smart meter is usually located outside of a building. Furthermore, a smart meter doesn’t emit RF radiation continuously like a cell phone; it will only emit when sending data to the utility. This is all making the assumption that the amount of RF radiation emitted by cell phones even poses a health risk in the first place, which modern science has flatly refuted. Frankly, the Sun is a far more dangerous emitter of radiation (and a proven cause of cancer) than any cell phone or smart meter, but that doesn’t seem to stop smart meter opponents from stepping outside to protest.

Sun

Beware, it could actually kill you… unlike a smart meter

The proven benefits of smart meters outweigh any inconclusive (or downright false) claims surrounding them. As more and more buildings have them installed, the grid will become far more interconnected in terms of its ability to share energy data information with utilities. It will make our grid more efficient, more responsive, and could potentially save us billions of dollars in the long run. But all this could be delayed or even prevented if smart meters continue to be opposed for illogical reasons. Now is not the time to let stupidity impede progress.

Winds of Change

Ontario’s power generation is changing rapidly. By 2014, there will be no more coal generation while renewable energy sources (particularly wind) will make up the difference. This goal has been lauded by a number of environmental groups as it will help lower Ontario’s carbon emissions, reduce air pollution, decrease our reliance on non-renewable sources of energy and at the same time, create jobs in a rapidly growing industry. However, no matter how positive these changes may be, there are certain concerns that need to be addressed about going green.

Wind Farm

Amaranth Wind Farm, the largest of its kind in Ontario

Wind power has made significant strides here in Ontario; the industry has seen an increase in the number of large scale turbines from 10 in 2003 to more than 700 today. You can also expect that number to increase in the coming years as well. According to the Ontario Ministry of Energy’s Long Term Plan, by 2030, wind power will generate 10% of the province’s energy needs (in 2010, it supplied only 2%).

Increasing our reliance on wind turbines, however, has its own set of challenges. Unlike other sources of energy such as nuclear, coal or natural gas, wind turbines can only generate energy if there is a sufficient breeze. As a result of this inherent flaw, wind power is not ideal for baseload capacity as it is not entirely reliable. Of course, when building wind turbines, energy planners look to build turbines in areas that are consistently windy, however, it’s possible that even the most notoriously windy areas can go without a breeze for prolonged periods of time.

With this in mind, the all-too-important balancing act between generation and consumption becomes slightly more complicated. Adding an increasing amount of intermittent wind power might cause generating capacity to fluctuate over shorter periods of time. Currently, whatever wind capacity is generated is used as there is no viable way to store energy in Ontario, and on days where demand is considerably higher and wind cannot make up the difference, more nuclear and natural gas generation fills the void. Although our current grid can adjust load to compensate for wind power, a greater understanding of what is happening to our grid at all times will be needed in the likely event that renewables will play an increasingly larger role. In the worst case scenario, excess wind generation will need to be sent to neighbouring grids that may need extra capacity (e.g. Quebec, New York, Michigan) so as to avoid potentially catastrophic overloads (refer to the August blog post).

Energy Grid Management Facility

Managing our grid will be paramount in future years

Another issue that should likely arise due to increased wind capacity is energy cost. Although several cost analysis have suggested that wind power is competitive with other sources of energy in terms of cost, as a result of massive subsidies given to nuclear power, wind is considerably more expensive per kWh. As such, more wind power will likely increase peoples’ utility bills in the near future.

With the rising cost of energy, a greater emphasis is placed on energy management and conservation. As mentioned in a previous blog post, energy management systems for large industrial and commercial operations can help reduce energy consumption and utility costs. Furthermore, an energy management system can pay for itself through energy savings within months of deployment.

Increasing wind generation capacity in Ontario will benefit the environment greatly. The challenges that come with it on the other hand, are not reasons to prevent more wind generation, but rather they should be seen as a warning that there is no perfect and certainly no free solution to our energy issues. Wind energy can play a very crucial role in our electricity system and although it may cost more and require additional technology and infrastructure to support it, if business and industry move forward intelligently, there should be no reason why we can’t have lower utility bills and an adequate supply of energy.

The Simplicity and Effectiveness of Energy Conservation

As any business owner or head of household will know, the simplest way to save money is to spend less on what you don’t need. In the same vein, the simplest way to save on energy expenditures is to use less. Now it may sound like a simple solution to our vast and complex list of energy problems, but then again, the simplest solutions are often the most effective.

In these hot summer months, power grids across North America will feel the strain of millions upon millions of people turning on their air conditioners while using all the other electronic devices modern lives and employment require. In order to meet demand, power generators need to increase their output significantly, which often means burning more coal and natural gas. Although building new power plants running on clean, renewable energy is good for the grid, good for the environment, and necessary in future years, such projects cost millions, possibly billions depending on size and scale, and may take several years to complete. Energy conservation, on the other hand, may prove to be the cheapest and cleanest energy resource as it requires little to no additional infrastructure, and it is readily available.

According to Jack Gibbons, head of the Ontario Clean Air Alliance, Ontario spends $36 on new generation for every $1 invested in conservation, despite the fact that conservation is much cheaper than building any other type of generation. Such imbalance has likely contributed to a review in Ontario’s energy policy with Minister of Energy, Bob Chiarelli, recently speaking out in favour of conservation in this past Tuesday’s Toronto Star.

hot-summer-energy-eifficiancy

Grids struggle to meet demand during the hot summer months

Ontario isn’t the only jurisdiction looking to conservation to solve their energy issues. Over the past few years, British Columbia has been at the forefront of energy conservation in Canada. In 2007, BC Hydro identified a massive 22,000 GWh of electricity that can be accessed by 2026 simply through conservation. So if all savings are realized as predicted, in a little more than a decade, BC Hydro can “create” 50% of their current generation capacity simply by using what energy they already have more efficiently. Since 2008, BC has saved about 3,400 GWh/year. That’s enough to power more than 300,000 homes.

BCHydro

BC Hydro could potentially increase their demand capacity by 50% through conservation

California has also reaped the benefit of energy conservation. According to the Natural Resources Defense Council, since the 1970s, California’s energy conservation policies have negated the need for 30 power plants, and prevented the same amount of carbon emissions generated by some 5 millions cars annually. In total, these energy policies have saved California residents more than $65 billion dollars and helped lower their energy bills by 25% below the US average.

For business, a significant obstacle to energy conservation strategies is that any ensuing renovations are very expensive, time consuming, and may interfere with operations. However, some companies are only making the simplest of changes, barely affecting operations as a whole. Unilever, for example, has merely encouraged its employees to turn lights off that aren’t in use. This very simple request alone saved the company €99 million (approximately $135 million). Likewise, since 2007, the Fairmont Winnipeg has saved 882,000 kWh per year in electricity by merely replacing all 60-100-watt light bulbs with more energy efficient ones. This resulted in no interruptions to service, and has saved the hotel approximately $44,000 per year.

Energy Savings

The Fairmont Winnipeg saves $44,000 annually because of a change in lighting

Other low cost, high savings options for business include installing an energy management system to track and monitor energy consumption. One example where savings can be easily realized is through shifting high intensity energy activities to later at night or early in the morning (load shifting) to take advantage of cheaper energy prices where time-of-use pricing is in effect. Energy management systems that can identify these areas for savings can be deployed at a fraction of the cost of large scale renovation projects.

Over the long term, power grids across North America will have to upgrade their current generation capacity and accompanying infrastructure, which will likely take decades at the cost of billions. As well, businesses that want to make their operations more efficient will have to take more complicated steps than turning the lights off. At the same time, however, solutions based primarily on conserving energy can and should be taken beforehand because energy conservation requires no additional infrastructure, it can be done immediately, it is simple. Although simple may be easy, and simple may be cheap, simple is also effective.

Exciting announcements at OCE Discovery last week

Energent is very proud to announce the latest investment the Ontario government has made in improving the Smart Grid infrastructure.  On Tuesday, May 15th, Sean Conway, Chairman of the Board of the Ontario Centres of Excellence (OCE) and Brad Duguid, Minister of Economic Development and Innovation, announced support for an innovative partnership between Energent and Wilfrid Laurier University.

Gord Ellis, CTO of Energent Inc., and Wilfrid Laurier University are collaborating on a communications software system that can potentially be installed on all smart grid devices to allow them to communicate with each other to facilitate smarter, more effective, efficient energy use. The platform is now under development with a prototype, and further research and development will be conducted in collaboration with the team from Wilfrid Laurier.

This exciting infrastructure development, designed to design and create a communications middleware system, will be powerful enough to handle the increased amounts of data that are part of the Smart Grid.  “The Grid is going to be all about data management” says Sean Conway, Chair of the OCE Board of Directors, “and therefore the Grid must communicate effectively and reliably, and must be able to handle vast amounts of data.”  This collaboration will enable all three of these communication goals, providing a stable platform for which the Smart Grid to grow from.

These are two videos announcing the project below in this blog post.

 

Energent at Globe2012 – Shifting Focus from “If” to “Now”

Energent just returned from a very successful and enlightening week at the Globe2012 conference in Vancouver, BC.  Aside from attending very compelling presentations by global leaders in sustainability, meeting visionaries from within organizations dedicated to changing the way their business operates, we noticed a decided shift from talk to action.  No longer are the conversations blue sky and what-ifs; they are about concrete actions and achieved results.

In our environment, those that are interested in energy management of commercial, institutional, and industrial building are pushing their current systems to keep up to the demand of an engaged and enthusiastic energy manager.  The are asking questions like:

What if my energy monitoring system could build in best-case scenarios and I could build business cases directly from the reporting tool?

They are pushing their monitoring systems by saying:

I need my energy monitoring system to help me manage energy in every part of my business, and experts to help me use this tool.

Ultimately, we have found that an Energy Management system is very similar to a gym membership.  If you buy an Energy Management system and just look at it, you aren’t going to be very successful at managing energy.  If you buy a gym membership to lose weight and you just keep the card in your wallet, you aren’t going to be very successful at losing weight or getting healthier.

Energy Management is a participation sport.  We are going to focus on that in our next few posts because Energy Managers have been lied to for the past 5+ years.  We want to set the record straight…and based on the presentations at Globe2012, software providers are going to be pushed to provide more than data.  We need to start taking that data and turning into information, and from that information, use people combined with the software tools, to create knowledge.  Knowledge will enable a true revolution in energy management.

Stay tuned as we teach all energy managers about turning mountains of data into usable knowledge that will enable great decisions.

Thanks to the presenters and attendees at Globe2012 for focusing the conversation from “If” to “Now”.  Amazing.

Don’t forget that Energent is hosting its newest webinar or Greenhouse Gas reporting requirments for public builings Thursday, March 22 at 2pm EST  Click here to register.

Energent particpating at Globe 2012

Energent is excited to be part of the premiere global conference on sustainability and the environmental economy.  Globe 2012 brings together a worldwide audience to discuss and debate the pressing issues of the economics of environmental sustainability.  Energent is excited to be part of this world-class conference and tradeshow, and to participate as part of the Ontario Pavillion.

At the tradeshow, Energent will be showcasing two products.  The first product is Energent’s class-leading Energy Management Information System.  Energent’s EMIS platform provides visibility into the real-time energy consumption of operations in industrial, institutional, and commercial buildings.  The comprehensive reporting and alerting that is enabled because of the Energent platform drives companies to lower energy consumption and save money.

Energent will also be presenting it’s leading-edge Home Energy Smart Grid platform.  The Energy Hub Management System (EHMS) is being deployed across Ontario through partnerships with Hydro One, Ontario Power Authority, and the University of Waterloo.  Energent’s EHMS is a web-based, two-way communication and software optimization  engine, providing every home with the opportunity to optimize thier home energy consumption based on goals for the end user and the Utility.  Home owners see value through lower energy costs and improved visibility into their consumption, and Utilities will be able to optimize the distribution of electricity to thousands of homes, lowering peaks, and improving efficiency.

At the conference, Energenet will be presenting an update on the roll out across Ontario and will welcome other Utilities and jurisdictions that are interested in grid optimization to speak to them at Globe.

To arrange a meeting with Energent at the Globe 2012 conference on either the EMIS or the Smart Grid EHMS, please contact Craig Haney at chaney@energent.com, or by phone at 519-725-0906 x2007.  Energent is looking for productive meetings with utilities and municipalities interested in reducing peak demand on their grid through Home Energy Management plans.  Energent is also interested in meeting with commercial building operators, municipalities, and manufacturing organizations looking to lower their energy consumption through real-time reporting and ehanced energy analytics.

Look for Energent at Globe 2012 in booth 1117-13 at the Ontario Pavillion on the Globe Tradeshow Floor.

Thanks for reading

Net-Zero Buildings

It’s cheaper to save a kilowatt than it is to generate a kilowatt

architects and building operators have long said that energy efficiency is the key to lower energy costs.  It’s this reason that Pike Research, a well-known research company sees the market for Building Energy Management Systems (BEMS) growing faster and earlier than Net-Zero Buildings.

Net-Zero Buildings are built to generate at least the same amount of energy as they consume.  For commercial builders, there are certain incentives and benefits to building Net-Zero building but they aren’t free.  The latest numbers from the United States suggest that a Net-Zero Building cost approximately 6% more than a standard building.  Considering the savings opportunities, the payback seems to be reasonable.  Since commercial vacancy rates in the United States are at 16% (reference here), building operators would prefer to reduce their energy consumption instead of building new energy efficient buildings.  As we stated in an earlier post, it is always “greener” to retrofit an existing building than to build a new building, so it makes sense that BEMS are a cost effective and strategic way for building operators to lower energy costs.

Look for BEMS to continue to make an impact in the commercial energy efficiency sector in 2012 and beyond.

Thanks for reading.

Energy Management comes home

This week, the US Government announced the Green Button Initiative with the hopes that millions of home owners will be able to monitor and control their home utility bills through the web and smartphone apps.  The New York Times wrote a strong blog post on it today (you can see it here)This is definitely not another “big brother” initiative by the White House; this is a plan that will encourage and enable the private sector to build tools to support this government program.  Three of California’s largest utilties joined the Initiative to encourage adoption of a standard by which Utilities will home utility bill information can be viewed and downloaded directly from the Utility website.

It’s a very interesting strategy put forth from the White House.  Encourage the big utilties to share information in a consistent manner, then step out of the way and watch the private sector fill in the gaps.  More importantly, will home owners care enough to find this information on their Utility’s website, or will they just think it’s noise that needs to be drowned out?  Our hope is that people will care, but our belief is that they will only care if it makes financial sense to care.

Energent is deploying Home Energy Management Systems across the province with the goal to reduce electricity consumption and increase awareness.  The data isn’t in yet as to the impact on electricity reduction, but our research tells us that will coincide with the level of engagement.  So, what does this mean?  Energent believes that we have to engage the end consumer and make energy relevant to them.  To do this it must be easy to collect the data, interesting to read, and will save them enough money that it matters.

Creating a standardized platform to allow users to easily access and review this information is a great first step.  It is now up to the Utilities and the private sector to create compelling reasons and great products to drive this Home Energy Management business model.  Any business models that are based solely on government subsidies are at best mediocre, and at worst doomed.  Here’s hoping we can all do our part in Canada and the United States to build this market into a meaningful growth opportunity, not one of just speculation and government handouts.

Thanks for reading.