Summer rewind: Scott Demark, President and CEO of Zibi Community Utility, joins thinkenergy to discuss how our relationship with energy is changing. With two decades of expertise in clean energy and sustainable development, Scott suggests reimagining traditional energy applications for heating and cooling. He shares how strategic energy distribution can transform urban environments, specifically how district energy systems optimize energy flow between buildings for a greener future. Listen in.

Related links

●     Scott Demark on LinkedIn: https://www.linkedin.com/in/scott-demark-83640473/

●     Zibi Community Utility: https://zibi.ca/

●     Markham District Energy Inc: https://www.markhamdistrictenergy.com/

●     One Planet Living: https://www.bioregional.com/one-planet-living

●     Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

●     Hydro Ottawa: https://hydroottawa.com/en

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Transcript:

Trevor Freeman  00:00

Hi everyone. Well, summer is here, and the think energy team is stepping back a bit to recharge and plan out some content for the next season. We hope all of you get some much needed downtime as well, but we aren't planning on leaving you hanging over the next few months, we will be re releasing some of our favorite episodes from the past year that we think really highlight innovation, sustainability and community. These episodes highlight the changing nature of how we use and manage energy, and the investments needed to expand, modernize and strengthen our grid in response to that. All of this driven by people and our changing needs and relationship to energy as we move forward into a cleaner, more electrified future, the energy transition, as we talk about many times on this show. Thanks so much for listening, and we'll be back with all new content in September. Until then, happy listening.

Trevor Freeman  00:55

Welcome to think energy, a podcast that dives into the fast changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at think energy at hydro ottawa.com, Hi everyone. Welcome back one of the overarching aspects of the energy transition that we have talked about several times on this show is the need to change our relationship with energy, to rethink the standard way of doing things when it comes to heating and cooling and transportation, et cetera. This change is being driven by our need to decarbonize and by the ongoing evolution and improvement of technology, more things are becoming available to us as technology improves. On the decarbonization front, we know that electrification, which is switching from fossil fuel combustions to electricity for things like space and water heating, vehicles, et cetera, is one of the most effective strategies. But in order to switch out all the end uses to an electric option, so swapping out furnaces and boilers for heat pumps or electric boilers, switching all gas cars to EVs, et cetera, in order to do that in a way that is affordable and efficient and can be supported by our electricity grid. We need to think about multi strategy approaches, so we can't just continue to have this one way power grid where every home, every business, every warehouse or office tower satisfies all of its energy needs all the time directly from the grid with no adaptability. That isn't the best approach. It's not going to be affordable or efficient. We're not going to be able to do it fast enough. The multi strategy approach takes into account things like distributed energy resources, so solar and storage, et cetera, which we've talked about many times on this show, but it also includes approaches like district energy. So district energy is rethinking how energy flows between adjacent buildings, looking for opportunities to capture excess energy or heat from one source and use that to support another, and that is the focus of today's conversation to help us dive into this topic, I'm really happy to welcome Scott demark to the show. Scott has been a champion of sustainability, clean energy solutions and energy efficiency in the Ottawa real estate and development industry for over 20 years now, he has overseen many high performance development projects, and was one of the driving forces behind the Zibi development in downtown Ottawa, and most applicable for today's conversation the renewable district energy system that provides heating and cooling to the Zibi site. Scott is the president and CEO of the Zibi community utility, as well as a partner at Theia partners. Scott the Mark, welcome to the show. Thanks. Nice to see you. Trevor, so Scott, why don't we start with definitions are always a good place to start. So when we talk about a district energy system, give us a high level overview of what exactly that means.

Scott Demark  04:15

Sure a district energy system is, is simply the connection or interconnection of thermal energy sources, thermal energy sinks. And so really, in practical terms, it means, instead of buildings having their own furnace and cooling system, buildings connect to a hydronic loop. A hydronic loop is just pipes filled with water, and then the heat or the cooling is made somewhere else, and that heat or lack of heat cooling is in a pipe. They push the pipe to the building, and then the pipe extracts the heat, or rejects the heat to that loop. And so it's simply an interconnection of. Uh, as it forces in sinks for federal energy.

Trevor Freeman  05:03

And I guess one of the important concepts here is that buildings often create heat, not just through a furnace or not just through the things that are meant to create heat, but, you know, server racks, computer server racks, generate a lot of heat, and that heat has to go somewhere. So oftentimes we're cooling buildings to remove heat that's being created in those buildings, and then other buildings nearby need to be heated in order to make that space comfortable.

Scott Demark  05:31

Is that fair to say? Yeah, absolutely. Trevor, so, a an office building in the city of Ottawa, big old government office building, you'll see a pretty big plume on the roof in the wintertime. That's not just kind of the flue gas from a boiler, but rather it is actually chillers are running inside to make cooling, and they're just selling that heat to the atmosphere, even on the coldest day of the year. So it's people, you know, people are thermal load. Computers are thermal load, and so is solar gain. You know, January is pretty dark period for us, meaning low angle sun, but by this time in a year, you know, at the end of February, there's a lot of heat in that sun. So a glass building absorbs a lot of sun an office building will lead cooling on the sunny side of that building a lot of the time, even in the dead of

Trevor Freeman  06:18

winter, yeah. So a district system, then, is taking advantage of the fact that heat exists, and we don't necessarily need to either burn fossil fuels, or, even if it's a, you know, a clean system, we don't have to expend energy to create heat, or create as much heat if we could move that heat around from where it's kind of naturally occurring to where we need

Scott Demark  06:41

it. That's right at the very core of a district energy system. You're going to move heat from a place that it's not wanted to a place that it is wanted. And so in our example of the office building, you know, on the February day with the sun shining in and the computers all running, that building's getting rid of heat. But right next door, say, there's a 20 story condo. Well, that 20 story condo needs heating and it also needs domestic hot water. So year round, domestic hot water represents 30, 35% of the heating load of any residential building, so at all times. So a district energy system allows you to take that heat away from the office building and give it to the residential building, instead of making the heat and and dissipating that heat to the atmosphere in the office building. So, yeah, it's, it's really a way to move, you know, from sources to sinks. That's, that's what a district energy system does well.

Trevor Freeman  07:37

So we've kind of touched on this a little bit, but let's dive right into, you know, we talk a lot on the show about the energy transition this, this push to one, move away from fossil fuel combustion to meet our energy needs, and two, shifting from a kind of static, centralized energy system like we have right now, big generators, large transmission lines, et cetera, to more of a two way flow, distributed energy system. What is the role of district energy systems within that transition? How do they help us get closer to that sort of reality that we talk about?

Scott Demark  08:15

I think the biggest way that they help is economies of scale. Okay, so by that, I'll explain that. Imagine there's a lot of technology that's been around a long time that is very scalable to the building level, but most of them are fossil fire. Okay, so the the cheapest way to heat a building in Ottawa is to put a gas fired boiler in. That's the cheapest capital cost, first cost, and it's also the cheapest operating cost, is to put a gas boiler in that industry is well established. There's lots of trades who could do it. There's lots of producers who make the boilers. When you start to try and think about the energy transition and think about what you may do to be different, to be lower carbon, or to be zero carbon, those industries are, are just starting right? Those industries don't exist. They don't have the same depth, and so they don't have the same cost structure, and oftentimes they don't scale well down to the building. And therefore a district energy system aggregates a bunch of load, and so you can provide a thermal energy so at scale that becomes affordable. And that is, you know, a very good example of that would be where, you know, you might want to go and and recover heat from some process. And we'll talk about Zibi as the example. But if you want to go recover heat from some process and bring it in, it doesn't make sense to run a pipeline to a source to heat one building. You can't make financial sense of it, but if you're heating 20 buildings, that pipeline, all of a sudden makes sense to take waste heat from somewhere, to move it somewhere else. The other advantage is that truly, district energy systems are agnostic to their inputs and outputs for heat. So once you. Establish that hydronic loop, that interconnection of water pipes between buildings. What the source and what the source is doesn't matter. So you may have, at one point, built a district energy system, and Markham District Energy System is a great example of this. Markham district energy system was built on the concept of using a co generation facility. So they burned natural gas to make electricity. They sold electricity to the grid, and they captured all the waste heat from that generation, and they fed it into a district energy system. Well here we are, 20 plus years later, and they're going to replace that system, that fossil fired system Augment, not fully replaced, but mostly replace that system with a sewer coupled energy recovery and drive those heat recovery chillers to a sewer system. So they're putting a very green solution in place of a former fossil solution. They don't to rip up the pipes. They don't have to change anything in the buildings. They only have to change that central concept now, again, Markham could never do that at a one building scale. They're only that at the community scale.

Trevor Freeman  11:08

So you mentioned, I want to pick on something you said there. You talked about a sewer heat energy system. They're pulling heat from the sewer. Just help our listeners understand high level kind of, why is there heat there for us to pull like, what's the what's the source there?

Scott Demark  11:26

Yeah, so when we shower, when we flush toilets, all, all of that is introducing heat into a sewer system. So we're collecting heat from everybody's house into the sewer system. The sewer system also sits below the frost line. So call it Earth coupled. You know, it's the earth in Ottawa below the frost line sits around eight, eight and a half c and so at that temperature and the temperature of flushing toilets we we essentially get a sewer temperature in the on the coldest day of the year, but it's around 1010, and a half degrees Celsius. And obviously, for lots of the year, it's much warmer than that. And so I think, you know, a lot of people are kind of familiar with the concept of geo exchange energy, or that. Lot of people call it geothermal. But geo exchange where you might drill down into the earth, and you're taking advantage of that 888, and a half degrees Celsius. So you're exchanging heat. You can reject heat to the earth, or you can absorb heat from the earth. Well, this is the same idea, but you accept or reject from this sewer. But because the sewer is relatively shallow, it is cheaper to access that energy, and because it's warm, and on the coldest day, a couple of degrees make a big difference. Trevor and most of the years so much warmer, you're really in a very good position to extract that heat, and that's all it is. You. You are just accepting or rejecting heat. You don't use the sewage itself. It doesn't come into your building. You have a heat exchanger in between. But that's what you do.

Trevor Freeman  12:58

I agree. And we've talked before on the show about the idea that you know, for an air source, heat pump, for example, you don't need a lot of heat energy to extract energy from the air. It can be cold outside, and there is still heat energy in the air that you can pull and use that to heat a building, heat water, whatever. So same concept, except you've got a much warmer source of energy, I guess. Yeah, exactly. And you know, Trevor, when you look at the efficiency curves of those air source heat pumps, you know, they kind of drop off a cliff at minus 20. Minus 22 In fact, you know, five or six years ago, they that that was dropping off at minus 10. So we've come a long way in air source heat pumps. But imagine on that coldest, coldest day of the year, you're still your source is well above zero, and therefore your efficiency. So the amount of electricity you need to put into the heat pump to get out the heat that you need is much lower, so it's a way more efficient heat exchange. Great. Thanks for that, Scott. I know that's a bit of a tangent here, but always cool to talk about different ways that we're coming up with to heat our buildings. So back to district energy, we've talked through some of the benefits of the system. If I'm a building owner and I'm have the decision to connect to a system that's there, or have my own standalone, you know, traditional boiler, whatever the case may be, or even in a clean energy want to heat pump, whatever. What are the benefits of being on a district system versus having my own standalone system for just my building?

Scott Demark  14:30

Yeah, so when you're wearing the developers hat, you know they're really looking at it financially, if they have other goals around sustainability. Great that will factor into it, but most of them are making decisions around this financially. So it needs to compete with that. That first cost that we talked about the easiest ways, is boilers, gas fired boilers is the cheapest way. And so they're going to look to see it at how. Does this compare to that? And so I think that's the best way to frame it for you. And so the difference here is that you need to install in your building a cooling system and a heating system. In Ottawa, that cooling system is only used for a few months a year, and it's very expensive. It takes up space, whether you're using a chiller and a cooling tower on the roof, or using a dry cooler, it takes up roof space, and it also takes up interior space. If you do have a cooling tower, you have a lot of maintenance for that. You need to turn it on and turn it off in the spring, on and fall, etc, just to make sure all that happens. And you need to carry the life cycle of that boiler plant you need to bring gas infrastructure into your building. You generally need to put that gas boiler plant high in your building, so, so up near the top, and that's for purposes of venting that properly. Now, that's taking real estate, right? And it's taking real estate on the area that's kind of most advantageous, worth the most money. So you might lose a penthouse to have a boiler and chiller room up there. And you also, of course, lose roof space. And today, we really do try to take advantage of those rooftop patios and things. Amenities are pretty important in buildings. And so when I compare that to district energy at the p1 level p2 level in your building, you're going to have a small room, and I really do mean small where the energy transfer takes place, you'll have some heat exchangers. And small you might have a space, you know, 10 or 12 feet by 15 to 18 feet would be big enough for a 30 story tower. So a small room where you do the heat exchange and then Trevor, you don't have anything in your building for plant that you would normally look after. So when you look at the pro forma for owning your building over the lifetime of it, you don't have to maintain boilers. You don't have to have boiler insurance. You don't have to maintain your chillers. You don't have to have lifecycle replacement on any of these products. You don't need anybody operating, those checking in on the pressure vessels. None of that has to happen. All of that happens on the district energy system. So you're really taking something you own and operate and replacing that with a service. So district energy is a service, and what, what we promised to deliver is the heating you need and the cooling you need. 24/7 you second thing you get is more resilience. And I'll explain that a little bit. Is that in a in a normal building, if you if the engineers looked at it and said you need two boilers to keep your building warm, then you're probably going to install three. And that is kind of this n plus one sort of idea, so that if one boilers goes down, you have a spare and you need to maintain those. You need to pay for that. You need to maintain those, etc. But in district energy system, all that redundancy is done in the background. It's done by us, and we have significantly more redundancy than just n plus one in this example. But overall, you know, if you have 10 buildings on your district energy system, each of those would have had n plus one. We don't have n plus 10 in the plant. And so overall, the cost is lower, I would say, if you look at it globally, except the advantages you do have better than N plus one in the plan, so we have higher resiliency at a lower cost.

Trevor Freeman  18:26

So we know there's no such thing as a miracle solution that works in all cases. What are the the best use cases for district energy system? Where does it make a lot of sense.

Scott Demark  18:37

Yeah, in terms some, in some ways the easiest thing, spray work doesn't make sense. So, so it doesn't make sense in sprawling low rise development. So the cost of that hydronic loop, those water pipes, is high. They have to fit in the roadway. It's civil work, etc. And so you do need density. That doesn't mean it has to be high rise density. You know, if you look at Paris, France, six stories, district energy, no problem. There's there's lots and lots of customers for that scale of building. It doesn't have to be all high rise, but it does. District energy does not lend itself well to our sprawling style of development. It's much more suited to a downtown setting. It also kind of thrives where there's mixed use, you know, I think the first example we're talking about is office building shedding heat, residential building needing heat, you know, couple that with an industrial building shedding heat. You know, the these various uses, a variety of uses on a district energy system is the best because its biggest advantage is sharing energy, not making energy. And so a disparity of uses is the best place to use that, I think the other, the other thing to think about, and this is harder in Canada than the rest of the world. Is that, you know, it's harder on a retrofit basis, from a cost perspective, than it is in a in a new community where you can put this in as infrastructure, day one, you're going to make a big difference. And I'll, you know, give a shout out to British Columbia and the Greater Vancouver area. So the district, you know, down in the Lower Mainland, they, they kind of made this observation and understood that if they were going to electrify then District Energy gave economies of scale to electrify that load. And they do a variety of things, but one of the things they do is, is kind of district geo exchange systems, so, so big heat pumps coupled to big fields, and then bring heat a bunch of buildings. But these are Greenfield developments Trevor. So as they expand their suburbs, they do need to build the six stories. They very much have kind of density around parks concepts. So now Park becomes a geo field, density around the geo field, but this infrastructure is going in the same time as the water pipes. It's going in at the same time as the roads, the sidewalks, etc, you can dramatically reduce your cost, your first cost related to that hydro loop, if you're putting it in the same time you're doing the rest of the services.

Trevor Freeman  21:15

So we're not likely to see, you know, residential neighborhoods with single family homes or multi unit homes, whatever, take advantage of this. But that sort of low rise, mid rise, that's going to be more of a good pick for this. And like you said, kind of development is the time to do this. You mentioned other parts of the world. So district energy systems aren't exactly widespread. In Canada, we're starting to see more of them pop up. What about the rest of the world? Are there places in the world where we see a lot more of this, and they've been doing this for a long time?

Scott Demark  21:47

Yeah. So I'd almost say every everywhere in the northern hemisphere, except North America, has done much more of this. And you know, we really look to kind of Scandinavia as the gold standard of this. You look to Sweden, you look to Denmark, you look to Germany. Even there's, there's a lot of great examples of this, and they are typically government owned. So they are often public private partnerships, but they would be various levels of government. So you know, if you, if you went to Copenhagen, you'd see that the municipality is an owner. But then their equivalent of a province or territory is, is actually a big part of it, too. And when they built their infrastructure ages ago, they did not have an easy source of fossil fuels, right? And so they need to think about, how can we do this? How can we share heat? How can we centralize the recovery of heat? How can we make sure we don't waste any and this has just been ingrained in them. So there's massive, massive District Energy loops, interconnecting loops, some owned by municipalities, some of them probably, if you build a factory, part of the concept of your factory, part of the pro forma of your factory is, how much can I sell my waste heat for? And so a factory district might have a sear of industrial partners who own a district energy loop and interfaces with the municipal loop, all sort of sharing energy and dumping it in. And so that's, you know, that's what you would study. That's, that's where we would want to be. And the heart of it is just that, as I said, we've really had, you know, cheap or, you know, really cheap fossil fuels. We've had no price on pollution. And therefore what really hasn't needed to happen here, and we're starting to see the need for that to happen here.

Trevor Freeman  23:46

It's an interesting concept to think of, you know, bringing that factory example in, instead of waste heat or heat as a byproduct of your process being a problem that you need to deal with, something, you have to figure out a way to get rid of it becomes almost an asset. It's a it's a, you know, convenient commodity that's being produced regardless, that you can now look to sell and monetize.

Scott Demark  24:10

Yeha, you go back to the idea of, like, what are the big benefits of district energy? Is that, like, if that loop exists and somebody knows that one of the things the factory produces is heat, well, that's a commodity I produce, and I can, I can sell it if I have a way to sell it right here, you know, we're going to dissipate it to a river. We may dissipate it to the atmosphere. We're going to get rid of it. Like you said, it's, it's, it's waste in their minds, and in Europe, that is absolutely not waste.

Trevor Freeman  24:36

And it coming back to that, you know, question of, where does this make sense? You talked about mixed use, and it's also like the, you know, the temporal mixed use of someone that is producing a lot of heat during the day, when the next door residential building is empty, then when they switch, when the factory closes and the shift is over and everybody comes home from work. So that's when that building needs heat, that's when they want to be then taking that heat two buildings next to each other that both need heat at the same time is not as good a use cases when it's offset like that.

Scott Demark  25:10

Yeah, that's true. And lots of District Energy Systems consider kind of surges and storage. I know our system at CB has, has kind of a small storage system related to the domestic hot water peak load. However, you can also think of the kilometers and kilometers and kilometers of pipes full of water as a thermal battery, right? So, so you actually are able to even out those surges you you let the temperature the district energy system rise when that factory is giving all out all kinds of heat, it's rising even above the temperature you have to deliver it at. And then when that heat comes, you can draw down that temperature and let the whole district energy system normalize to its temperature again. So you do have an innate battery in the in the water volume that sits in the district energy system, very cool.

Trevor Freeman  26:04

So you've mentioned Zibi a couple of times, and I do want to get into that as much as we're talking about other parts of the world. You know having longer term district energy systems. Zibi, community utility is a great example, right here in Ottawa, where you and I are both based of a district energy system. Before we get into that, can you, just for our listeners that are not familiar with Zibi, give us a high level overview of of what that community is, its location, you know, the goals of the community, and then we'll talk about the energy side of things.

Scott Demark  26:34

Sure. So Zibi was formerly Domtar paper mills. It's 34 acres, and it is in downtown Ottawa and downtown Gatineau. About a third of the land masses is islands on the Ontario side, and two thirds of the land mass is on the shore, the north shore of the Ottawa River in Gatineau, both downtown, literally in the shadows of Parliament. It is right downtown. It was industrial for almost 200 years. Those paper mills shut down in the 90s and the early 2000s and my partners and I pursued that to turn it from kind of this industrial wasteland, walled off, fenced off, area that no one could go into. What we're hoping will be kind of the world's most sustainable urban community, and so at build out, it will house, you know, about six, 7000 people. It will be four and a half million square feet, 4.24 point 4, million square feet of development. It is master planned and approved and has built about, I think we're, at 1.1 million square feet. So we're about quarter built out now. 10 buildings are done and connected to the district energy system there. And really, it's, it's an attempt to sort of recover land that was really quite destroyed. You can imagine it was a pretty polluted site. So the giant remediation plan, big infrastructure plan, we modeled this, this overall sustainability concept, over a program called one planet living which has 10 principles of sustainability. So you know, you and I are talking a lot about carbon today, but there's also very important aspects about affordability and social sustainability and lifestyle, and all of those are incorporated into the one planet program, and encourage people to look up one planet living and understand what it is, and look at the commitments that we've made at CV to create a sustainable place. We issue a report every year, kind of our own report card that's reviewed by a third party, that explains where we are on our on our mission to achieve our goal of the world's most sustainable

Trevor Freeman  28:57

community. Yeah. And so I do encourage people to look at one planet living. Also have a look at, you know, the Zibi website, and it's got the Master Plan and the vision of what that community will be. And I've been down there, it's already kind of coming along. It's amazing to see the progress compared to who I think you described it well, like a bit of an industrial wasteland at the heart of one of the most beautiful spots in the city. It was really a shame what it used to be. And it's great to see kind of the vision of what it can become. So that's awesome.

Scott Demark  29:26

Yeah, and Trevor, especially now that the parks are coming along. You know, we worked really closely with the NCC to integrate the shoreline of ZV to the existing, you know, bike path networks and everything. And, you know, two of the three shoreline parks are now completed and open to the public and and they're stunning. And, you know, so many Ottawa people have not been down there because it's not a place you think about, but it's one of the few places in Ottawa and Gatineau where you can touch the water, you know, like it's, it's, it's stunning. Yeah, very, very cool.

Trevor Freeman  29:57

Okay, so the. The the next part of that, of course, is energy. And so there is a district energy system, one of the first kind of, or the most recent big energy. District Energy Systems in Ottawa. Tell us a little bit about how you are moving energy and heating the Zibi site.

Scott Demark  30:17

Yeah. So, first I'll say, you know, we, we, we studied different ways to get to net zero. You know, we had, we had a goal of being a zero carbon community. There are low carbon examples, but a zero carbon community is quite a stretch. And even when you look at the Scandinavian examples, the best examples, they're missing their they're missing their energy goals, largely because some of the inputs that are District Energy System remain fossil, but also because they have trouble getting the performance out of the buildings. And so we looked at this. We also know from our experience that getting to zero carbon at the building scale in Ottawa is very, very difficult. Our climate's tough, super humid, super hot summer, very cold, very dry, winter, long winter. So it's difficult at the building scale. It's funny Trevor, because you'd actually have an easier time getting to zero carbon or a passive house standard in affordable housing than you do at market housing, and that's because affordable housing has a long list of people who want to move in and pay rents. You can get some subsidies for capital, and the people who are willing to pay rent are good with smaller windows, thicker walls, smaller units, and pass trust needs, all those kinds of things. So when down at Zibi, you're really selling views. You're competing with people on the outside of Zibi, you're building almost all glass buildings. And so it's really difficult to find a way to get to zero carbon on the building scale. So that moved us to district energy for all the reasons we've talked about today already. And so when we looked at it for Zibi, you really look at the ingredients you have. One of the great things we have is we're split over the border. It's also a curse. But split over the border is really interesting, because you cannot move electricity over that border, but you can move thermal energy over that border. And so for us, in thinking about electrifying thermal energy, we realized that if we did the work in Quebec, where there is clean and affordable electricity, we could we could turn that into heat, and then we could move heat to Ontario. We could move chilled water to Ontario. So that's kind of ingredient, one that we had going for us there. The second is that there used to be three mills. So originally, don't target three mills. They sold one mill. It changed hands a few times, but It now belongs to Kruger. They make tissue there so absorbent things, Kleenexes and toilet paper, absorbent, anything in that tissue process. That's a going concern. So you can see that on our skyline. You can see, on cold days, big plumes of waste heat coming out of it. And so we really saw that as our source, really identified that as our source. And how could we do that? So going back to the economies of scale, is could we send a pipeline from Kruger, about a kilometer away, to Zibi? And so when we were purchasing the land, we were looking at all the interconnections of how the plants used to be realized. There's some old pipelines, some old easements, servitudes, etc. And so when we bought the land, we actually bought all of those servitudes too, including a pipeline across the bridge. Canadian energy regulator licensed across the bridge into Ontario. And so we mixed all these ingredients up, you know, in a pot and came up with our overall scheme. And so that overall scheme is is relatively simple. We built an energy recovery station at Kruger where, just before their effluent water, like when they're finished in their process, goes back to the river. We have a heat exchanger there. We extract heat. We push that heat in a pipe network over to Zibi. At Zibi, we can upgrade that heat using heat recovery chillers to a useful temperature for us, that's about 40 degrees Celsius, and we push that across the bridge to Ontario, all of our buildings in Ontario then have fan coil units. They use that 40 degree heat to heat buildings. The return side of that comes back to Quebec. And then on the Quebec side, we have a loop. And all of our buildings in the Quebec side then use heat pumps so we extract the last bit of heat. So imagine you you've returned from a fan coil, but you're still slightly warm. That slightly warm water is enough to drive a heat pump inside the buildings. And then finally, that goes back to Kruger again, and Kruger heats it back up with their waste heat and comes back. So that's our that's our heating loop. The cooling side is coupled to the Ottawa River. And so instead of us, we. Rejecting heat to the atmosphere through cooling towers. Our coolers are actually coupled to the river. That's a very tight environmental window that you can operate in. So we worked with the Ministry of the Environment climate change in Quebec to get our permit to do it. We can only be six degrees difference to the river, but our efficiency is on average, like on an annual basis, more than double what it would be to a cooling tower for the same load. So we're river coupled, with respect to cooling for the whole development, and we're coupled to Kruger for heating for the whole development. And what that allows us to do is eliminate fossil fuels. Our input is clean Quebec electricity, and our output is heating and cooling.

Trevor Freeman  35:44

So none of the buildings, you know, just for our listeners, none of the buildings have any sort of fossil fuel combustion heating equipment. You don't have boilers or anything like that. Furnaces in these in these buildings?

Scott Demark  35:54

No boilers, no chillers, no. that's awesome. And

Trevor Freeman  35:58

That's awesome. And just for full transparency, I should have mentioned this up front. So the Zibi community utility is a partnership between Zibi and Hydro Ottawa, who our listeners will know that I work for, and this was really kind of a joint venture to figure out a different approach to energy at the Zibi site.

Scott Demark  36:16

Yeah, that's right. Trevor, I mean the concept, the concept was born a long time ago now, but the concept was born by talking to hydro Ottawa about how we might approach this whole campus differently. You know, one of hydro Ottawa companies makes electricity, of course, Chaudière Falls, and so that was part of the thinking we thought of, you know, micro grids and islanding this and doing a lot of different things. When Ford came in, and we were not all the way there yet, and made changes to Green Energy Act, it made it challenging for us to do the electricity side, but we had already well advanced the thermal side, and hydro, you know, hydro makes a good partner in this sort of thing, when a when a developer tells someone, I'd like you to buy a condo, and by the way, I'm also the district energy provider that might put some alarm bells up, but you put a partnership in there with a trusted, long term utility partner and explain that, you know, it is in the in the public interest. They're not going to jack rates or mess with things, and then obviously just hydro has had such a long operating record operating experience that they really brought sort of an operations and long term utility mindset to our district energy system.

Trevor Freeman  37:35

So looking at a system like the Zippy community utility or other district energy systems. Is this the kind of thing that can scale up over time? And, you know, I bring this up because you hear people talk about, you know, a network of district energy systems across a city or across a big geographic area. Are these things that can be interconnected and linked, or does it make more sense as standalone district energy systems in those conditions that you talked about earlier.

Scott Demark  38:06

Very much the former Trevor like and that's, you know, that's where, you know, places like Copenhagen are today. It's that, you know, there was, there was one district energy system, then there was another, then they got interconnected, then the third got added. And then they use a lot of incineration there in that, in that part of the world, clean incineration for garbage. And so then an incinerator is coming online. And so that incinerators waste heat is going to be fed with a new district energy loop, and some other factory is going to use the primary heat from that, and then the secondary heat is going to come into the dictionary system. Disciplinary system. So these things are absolutely expandable. They're absolutely interconnectable. There are temperature profiles. There's modern, modern thoughts on temperature profiles compared to older systems. Most of the old, old systems were steam, actually, which is not the most efficient thing the world. But that's where they started and so now you can certainly interconnect them. And I think that the example at Zibi is a decent one, because we do have two kinds of systems there. You know, I said we have fan coil units in in the Ontario side, but we have heat pumps on the other side. Well, those two things, they can coexist, right? That's there. Those two systems are operating together. Because the difference, you know, the difference from the customer's perspective in those two markets are different, and the same can be true in different parts of the city or when different sources and sinks are available. So it is not one method of doing district energy systems. What you do is you examine the ingredients you have. I keep saying it, but sources and sinks? How can I look at these sources and sinks in a way that I can interconnect them and make sense? And sometimes that means that a source or a sink might be another district energy system.

Trevor Freeman  39:59

Yeah. Yeah, yeah, systems that maybe work in parallel to each other, in cooperation with each other. Again, it's almost that temporal need where there's load high on at one point in time and low on the other point in time. Sharing is a great opportunity.

Scott Demark  40:14

Yeah, absolutely great.

Trevor Freeman  40:17

Okay, last question for you here, Scott, what is needed, maybe from a regulatory or a policy lens to encourage more implementation of district energy systems. How do we see more of these things happen here in Canada or in

Scott Demark  40:32

North America? The best way to put this, the bureaucracy has been slow to move, is, is what I'll say, and I'll use Zibi as that example. When we, when we pitched the district energy system at Zibi, we had to approach the City of Ottawa, and we had to approach the city of Gatineau, the City of Ottawa basically said to us, No, you can't put those in our streets. Engineering just said, no, no, no, no. And so what we did at Zibi is we actually privatized our streets in order to see our vision through, because, because Ottawa wasn't on board, the city of Gatineau said, Hmm, I'm a little worried. I want you to write protocols of how you will access your pipes, not our pipes. I want to understand where liability ends and starts and all of this kind of stuff. And we worked through that detail slowly, methodically, with the city of Gatineau, and we came to a new policy on how district energy could be in a public street and Zibi streets are public on the Gatineau side today. You know, come forward 10 years here, and the City of Ottawa has a working group on how to incorporate District Energy pipes into streets. We've been able to get the City of Ottawa to come around to the idea that we will reject and accept heat from their sewer. You know, hydro Ottawa, wholly owned company of the City of Ottawa, has an active business in district energy. So Trevor, we've come really far, but it's taken a long time. And so if you ask me, How can we, how can accelerate district energy, I think a lot of it has to do with the bureaucracy at municipalities. And you know, we're we see so much interest from the Federation of Canadian municipalities, who was the debt funder for ZCU. We have multiple visits from people all over Canada, coming to study and look at this as an example. And I'm encouraged by that. But it's also, it's also not rocket science. We need to understand that putting a pipe in a street is kind of a just, just a little engineering problem to solve, whereas putting, you know, burning fossil fuels for these new communities and putting in the atmosphere like the genies out of the bottle, right? Like and unfortunately, I think for a lot of bureaucrats, the challenge at the engineering level is that that pipe in the street is of immediate, complex danger to solving that problem, whereas it's everybody's problem that the carbons in the atmosphere. So if we could accelerate that, if we could focus on the acceleration of standards around District Energy pipes and streets, the rights of a district energy company to exist, and not to rant too much, but give you an example, is that a developer is required to put gas infrastructure into a new community, required, and yet you have to fight to get a district energy pipe in the street. So there needs to be a change of mindset there, and, and we're not there yet, but that's where we need to go.

Trevor Freeman  43:54

Yeah. Well, the interesting, you know, in 10 years, let's talk again and see how far we come. Hopefully not 10 years. Hopefully it's more like five, to see the kind of change that you've seen in the last decade. But I think that the direction is encouraging. The speed needs a little bit of work. But I'm always encouraged to see, yeah, things are changing or going in the right direction, just slowly. Well, Scott, we always end our interviews with a series of questions to our guests, so as long as you're okay with it, I'll jump right into those. So the first question is, what is a book you've read that you think everybody should read?

Scott Demark  44:29

Nexus, which is by Harari. He's the same author that wrote sapiens. Lots of people be familiar with sapiens. And so Nexus is, is really kind of the history of information networks, like, how do we, how do we share and pass information? And kind of a central thesis is that, you know, information is, is neither knowledge nor truth. It is information, and it's talking a lot about in the age of AI. Uh, how are we going to manage to move information into truth or knowledge? And I think it, you know, to be honest, it kind of scared the shit out of me reading it kind of how, how AI is impacting our world and going to impact our world. And what I thought was kind of amazing about it was that he, he really has a pretty strong thesis around the erosion of democracy in this time. And it's, it was, it was really kind of scary because it was published before the 2024 election. And so it's, it's really kind of a, both a fascinating and scary read, and I think really something that everybody should get their head around.

Trevor Freeman  45:47

It's, yeah, there's a few of those books recently that I would clear or classify them as kind of dark and scary, but really important or really enlightening in some way. And it kind of helps you, you know, formalize a thought or a concept in your head and realize, hey, here's what's happening, or gives you that kind of the words to speak about it in this kind of fraught time we're in. So same question, but for a movie or a show, is there anything that you think everybody should watch.

Scott Demark  46:16

That's harder, I think, generally from watching something, it's for my downtime or own entertainment, and pushing my tastes on the rest of the world, maybe not a great idea. I if I, if I'm, if I'm kind of doing that, I tend to watch cooking shows, actually, Trevor so like, that's awesome. I like ugly, delicious. I love Dave Chang. I like, I like mind of a chef creativity partnership. So those kind of things I'd say more so if there was something to like that, I think somebody else should, should watch or listen to, I have, I have a real love for Malcolm Gladwell podcast, revisionist history. And so if I thought, you know, my watching habits are not going to going to expand anybody's brain, but I do think that Malcolm's perspective on life is really a healthy it's really healthy to step sideways and look at things differently. And I would suggest, if you have never listened to that podcast. Go to Episode One, season one, and start there. It's, it's, it's fantastic.

Trevor Freeman  47:26

Yeah, I agree. I'll echo that one. That's one of my favorites. If we were to offer you or not, but if we were to offer you a free round trip flight, anywhere in the world, where would you go?

Scott Demark  47:38

That's hard, so much flight guilt. You know.

Trevor Freeman  47:42

I know it's a hard assume that there's carbon offset to it.

Scott Demark  47:47

It's an electric plane.

Trevor Freeman  47:48

That's right, yeah.s

Scott Demark  47:49

My family, had a trip planned in 2020 to go to France and Italy. My two boys were kind of at the perfect age to do that. It would have been a really ideal trip. And so I've still never been to either those places. And if I had to pick one, probably Italy, I would really like to see Italy. I think it would be a fantastic place to go. So probably, probably Italy.

Trevor Freeman  48:12

My favorite trip that I've ever done with my wife and our six month old at the time was Italy. It was just phenomenal. It was a fantastic trip. Who's someone that you admire?

Scott Demark  48:25

I have a lot of people. Actually have a lot of people in this in this particular space, like, what would I work in that have brought me here to pick to pick one, though I'd probably say Peter Busby. So. Peter Busby is a mentor, a friend, now a business partner, but, but not earlier in my career. Peter Busby is a kind of a one of the four fathers, you know, if you will, of green design in Canada. He's an architect, Governor General's Award winning architect, actually. But I think what I what I really, really appreciate about Peter, and always will, is that he was willing to stand up in his peer group and say, Hey, we're not doing this right. And, you know, he did that. He did that in the early 80s, right? Like we're not talking he did it when it cost his business some clients. He did it when professors would speak out against him, and certainly the Canadian Association of architecture was not going to take any blame for the shitty buildings that have been built, right? And he did it, and I remember being at a conference where Peter was getting a Lifetime Achievement Award from the Canadian architects Association. And so he's standing up, and people are all super proud of him. They're talking about his big life. And he. He, he, he kind of belittled them all and said, You're not doing enough. We're not doing enough like he's still he's still there. He's still taking the blame for where things are, and that things haven't moved fast enough, and that buildings are a massive part of our carbon problem, and probably one of the easier areas to fix. You know, we're talking about electric planes. Well, that's a that's a lot more difficult than it is to recover energy from a factory to heat a community, right? I admire him. I learned things from him all the time. He's got a great book out at the moment, actually, and, yeah, he'd be right up there on my in my top list, awesome.

Trevor Freeman  50:44

What is something about the energy sector or its future that you're particularly excited about?

Scott Demark  50:48

You wished you asked me this before the election. I'm feeling a little dark. Trevor, I think there needs to be a price on pollution in the world needs to be a price on pollution in America, in Canada, and I'm worried about that going away. In light of that, I'm not I'm not super excited about different technologies at the moment. I think there are technologies that are helping us, there are technologies that are pushing us forward, but there's no like silver bullet. So, you know, a really interesting thing that's coming is kind of this idea that a small nuclear reactor, okay, very interesting idea. You could see its context in both localized electricity production, but all the heat also really good for district entry, okay, so that's an interesting tech. It obviously comes with complications around security and disposal, if you like, there's our nuclear industry has been allowed to drink like, it's all complicated. So I don't see one silver bullet in technology that I'm like, That's the answer. But what I do see, I'll go back to what we were talking about before is, you know, we had to turn this giant ship of bureaucracy towards new solutions. Okay, that's, that's what we had to do. And now that it's turned and we've got it towards the right course, I'm encouraged by that. I really am. You know, there are champions. And I'll, I'll talk about our city. You know, there's champions in the City of Ottawa who want to see this happen as younger people have graduated into roles and planning and other engineering roles there. They've grown up and gone to school in an age where they understand how critical this climate crisis is, and they're starting to be in positions of power and being in decision making. You know, a lot of my career, we're trying to educate people that there was a problem. Now, the people sitting in those chairs, it, they understand there's a problem, and what can they do about it? And so I am, I am excited that that the there is a next generation sitting in these seats, making decisions, the bureaucracy, the ship is, is almost on course to making this difference. So, so I do think that's encouraging. We have the technology. We really do. It's not rocket science. We just need to get through, you know, the bureaucracy barriers, and we need to find ways to properly finance it.

Trevor Freeman  53:22

Great. I think that's a good place to wrap it up. Scott, thanks so much for your time. I really appreciate this conversation and shedding a little bit of light, not just on the technical side of district energy systems, but on the broader context, and as you say, the bureaucracy, the what is needed to make these things happen and to keep going in that right direction. So thanks a lot for your time. I really appreciate it.

Scott Demark  53:43

Thank you, Trevor, good to see you.

Trevor Freeman  53:45

All right. Take care.

Trevor Freeman  53:47

Thanks for tuning in to another episode of the think energy podcast. Don't forget to subscribe. Wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback, comments or an idea for a show or a guest, you can always reach us at [email protected].

Summer rewind: What does Canada do with excess energy? How is it stored today and how will it be stored as the energy industry evolves? Justin Rangooni, CEO of Energy Storage Canada, shares how energy storage supports a sustainable future for Canadians—from enhanced flexibility to affordability, large-scale grids to individual consumer needs. Listen to episode 152 of thinkenergy to learn about ongoing projects and challenges facing the energy storage sector in Canada.

Related links

●     Justin Rangooni on LinkedIn: https://www.linkedin.com/in/justin-rangooni-5063b542/

●     Energy Storage Canada: https://www.energystoragecanada.org/

●     TC Energy Pump Storage Project: https://www.tcenergy.com/operations/power/pumped-storage-project/

●     From Small to Mighty report: https://energyontario.ca/Files/OEA_ESC_From_Small_to_Mighty_Dec_2024.pdf

●     Ontario Energy Board: https://www.oeb.ca/

●     Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

●     Hydro Ottawa: https://hydroottawa.com/en 

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Transcript:

Trevor Freeman  00:00

Hi everyone. Well, summer is here, and the think energy team is stepping back a bit to recharge and plan out some content for the next season. We hope all of you get some much needed downtime as well, but we aren't planning on leaving you hanging over the next few months, we will be re-releasing some of our favorite episodes from the past year that we think really highlight innovation, sustainability and community. These episodes highlight the changing nature of how we use and manage energy, and the investments needed to expand, modernize and strengthen our grid in response to that. All of this driven by people and our changing needs and relationship to energy as we move forward into a cleaner, more electrified future, the energy transition, as we talk about many times on this show. Thanks so much for listening, and we'll be back with all new content in September. Until then, happy listening.

Trevor Freeman  00:55

Welcome to think energy, a podcast that dives into the fast changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at think energy at hydroottawa.com, Hi everyone. Welcome back. We tend to take for granted that when we flick that light switch on, or we plug in our coffee maker or EV, electricity is there to do what we want it to do. It will light up the room or make our coffee or charge our car or whatever the case may be. But let's take a minute to reflect on the engineering marvel that makes that a reality. The traditional power grid is set up as a one way on demand system, meaning, when you need those electrons for your morning cup of coffee somewhere else, that same amount of electricity needs to be generated pretty much simultaneously. Multiply that one use case by hundreds of millions or likely even billions of devices needing power at any given time, and you can appreciate the challenge. Traditionally, power grids don't store electricity. They need to make sure they're generating enough power for the load that's required at any given time. And as many generation sources can't be instantaneously turned on or off. This requires forecasting, also known as informed guessing, of what the load might be at any given time to make sure that the generation resources needed are up and running. Some forms of generation require a few minutes to turn on and off. Some require a few days or even weeks. In the case of nuclear generation, for example, and others like solar or wind are dependent on weather conditions. So all of this means that often there is some excess generation that needs to go somewhere, and that somewhere is traditionally a neighboring jurisdiction, who will buy that excess power at a pretty low rate. So all that I've described above, while it is an engineering marvel, is a rather inflexible system. The good news is that this is the power grid of yesterday. Well, today, a little bit as well. The grid of tomorrow is shaping up to be much more flexible in terms of when and where we generate and use electricity, and a major tool that will help us get to that state is energy storage. Energy Storage means things that let us generate electricity at a certain point in time, such as when the sun is shining or the wind is blowing, or when not a lot of people are using grid electricity, like the middle of the night, but save it to be used later, when the conditions are opposite to those I just mentioned. This opens up loads of possibilities and can help with grid flexibility, for sure, but also other things like customer affordability. So imagine being able to pull cheaper off peak electricity from the grid and use it later when rates are higher during peak times, instead of buying that more expensive power. It supports things like resiliency, so using stored electricity during an outage, for example, and it also lets utilities and system operators pull on different resources on the grid at different times, instead of only having generation to pull from. Energy storage can take many forms, which we'll get into in today's conversation, but certainly, batteries are the ones that we are most familiar with. We're seeing more and more applications for this technology, from home battery systems to large scale Grid applications. In fact, here in Ontario, the Independent System Operator or IESO is working through their long term or LT one RFP, which is looking to procure capacity, including battery storage for grid needs. But some of these projects are facing hurdles, such as opposition from community. Members opposed to project developments in their area over concerns about what those projects mean with the need for more energy storage of all sizes on our grid. I thought this would be a good time to dig into this growing sector and understand it a little bit better. And the perfect person to help us do that is actually someone who's been on the show twice before, Justin Rangoon, he the president and CEO of energy storage Canada. So even though Justin's been on before, I think given what's happening in the news and the evolving sector that he represents, it's great to have him back to talk through some of this stuff together. So energy storage Canada, or ESC is the National Trade Association that's dedicated to advancing Canada's energy storage sector. It's a non profit organization that was established in 2016 and has a diverse membership of more than 85 members, from technology providers to project developers, power generators, utilities like Hydro Ottawa, engineering firms, etc, etc. Justin in particular, is the President and CEO of energy storage Canada, and is a lawyer with more than a decade of experience in Canada's energy sector, specializing in policy and government relations. He's been the executive director since 2019 and has facilitated significant growth within ESC membership, staff, conference offerings, et cetera, to kind of match the pace of accelerated growth in the storage sector. So it's really great to have Justin here today to talk through this with us. Justin Rangooni, welcome to the show. Great to be here again. Thanks for having me. Yeah, actually, that's a great correction or clarification. Welcome back to the show. So I think you're actually the first three Pete guests that we've had on the think energy podcast you've been on twice before, both times with my predecessor, Dan. So great for us to chat for the first time, but welcome back to Think energy for the third time.

Justin Rangooni  06:54

Oh, thank you. It's always good to have the Triple Crown, right? I'm happy to wear it

Trevor Freeman  06:59

and the first one too. So why don't we start right off the bat, Justin, if you don't mind, remind our listeners about the important role that energy storage can and will play for both customer needs as well as for grid management.

Justin Rangooni  07:16

Okay, so the best way to think of it is, there's an analogy that one of our members had always said, and we continue to use it when we talk about energy storage. And the great things that can do is that it's like bacon. It makes everything better. I don't eat bacon, but I take I understand the concept, and what that means is, if you look at from a grid management point of view, is that we have all in Ontario, we're lucky to have a pretty clean grid, if it's nuclear power, or it's water power, or it's intermittent generation like wind and solar and even some gas too, which is which is near zero carbon or don't have coal. So it's a clean grid, and energy storage can make that better in the sense that it will optimize those generation assets so we're not wasting it. So those days before we would hear about when energy is needed but the wind's not blowing, or the sun's not shining, or we don't need the energy and we have to spill water, or, you know, we may have to power down a ramp, down a bit of the nuclear ramp or the natural gas units. Now energy storage can make sure we don't waste that now we can collect that power when it's done, when it's when it's being done, when it's being made, and we're holding it for when it's needed. And from a grid management that is the real key. That is the game changer that energy storage provides. And if we break it down, to the customer themselves. You know, you're trying to think of now, not just helping keep the lights on. We're also talking about your rates now in terms of now we can kind of defer those investments in terms of more generation, because now you have energy storage that's getting more out of it. We're also talking from the distribution side about pools and wires. Maybe you don't you can defer those investments a little longer with more distributed, connected energy storage. So now the customer is starting to see the benefits of energy storage in their rates and in their electricity bill. And look, I just got an electric car. They're really excited about it, and I can see the possibilities of that car being a battery for my home, for my use, which, again, now maybe that's still a bit down the road with B to G and using it to power a residential energy storage unit in my house, but the possibilities are really endless. So this is really the exciting thing about energy storage, from a Grid Manager down to the customer,

Trevor Freeman  09:35

yeah, and I think it's important to think about the different contexts that energy storage can play, or the different roles that it can play for our individual customers, a homeowner, there's a role for storage there, and you get some of those benefits that you just mentioned, but then we can scale that all the way up to the grid level. And you know, us in the utility space also have some things that we can do with. Energy Storage, and like you said, we can manage things a little bit better. We don't have to waste that energy. We can generate it when it's cheap and hold on to it and use it when it's maybe a bit more difficult in those peak periods. So lots of different uses. Thanks for laying that out for us. Now we hear a lot about, you know, decentralization and community-based energy systems, kind of more control at the community level when it comes to energy what's the role of energy storage in systems like that?

Justin Rangooni  10:32

Well, I think that's energy storage can really make that a reality. Now, again, I think I'll go back to my example having an electric car. It seems like more getting closer to being more a prosumer than just a consumer now. So I can see the possibilities of using electric vehicle you could and then you start to pair that with other kind of your thermostat or your other smart technologies in your home. So now, when we're talking about decentralizing community based energy systems, the consumer, the utility, the system operator, you're all able to get in the space of playing with the technologies. And that's really again, where it gets kind of exciting that everyone's playing a role. There's different possibilities to use, and we think energy storage is the key to doing that, because it can store that energy when it's not needed, and you can use it when it's needed. And if the technology evolution continues, eventually, the homeowner, the business owner, can start to use that. I can use buy power from the cars. I can use my power that I'm generating myself or from the distribution grid. And now I can start to play with it and use it store overnight when rates are low or when there's excess supply. I could store that energy and use it when it's needed during the day. So really exciting times, and that's why we think energy storage is key to any decentralized or community based energy systems.

Trevor Freeman  11:51

Yeah, it really unlocks that ability to push control into the hands of the end user, whether that's the homeowner or the business owner. The community, kind of pushes it downstream into their hands. So as I mentioned up top, you've been on the show before. I think the last time was 2021 which, I mean, doesn't seem like that long ago, in some sense, and also seems like decades ago. What has changed in the world of energy storage since the last time you were on the show? Oh,

Justin Rangooni  12:20

oh, how much has changed? Geez, like that does seem like a very long time ago. I think the Toronto Raptors were only two years coming out of an NBA championship, and we thought maybe we'll get some more, get some more long playoff runs. And that's right, still living the high on that. That's right, or still living the high back then? Well, since 2021 like, a massive amount has changed in the sector. You know, we're seeing incredible growth across Canada. I think when we first chatted back then, you know, we were talking about the energy storage potential, specifically in Ontario. And since that time, we've seen one of the largest procurements for energy storage technologies, and really globally, take place in Ontario, with over 3000 megawatts of contract contracts awarded in that time, and we're looking at more in subsequent rounds of procurements for the rest of the decade, including one of the first of the kind procurements focused on long lead time or long duration energy storage technologies, which does get very interesting, because now you're looking just beyond batteries, or just beyond lithium batteries. Now you're looking at things that can store power, six, 812, hours, days, weeks, even seasons. If you really think about it, it's really exciting. We've seen the growth in Ontario. And it's not just there. You look across the country, Nova Scotia, since that time, announced 350 megawatt battery energy storage projects. Alberta already has over 100 megawatts providing value and what their market design consultation is going on now we expect to see a lot more. BC is a 600 megawatt target. Saskatchewan installed a 50 megawatt desk system. And you're looking at projects big and small, transmission, connected, dx connected, being announced, implemented, you know, across the country, and just more as we speak.

Trevor Freeman  13:59

Yeah. So those long lead was just maybe for my own curiosity. Everybody's probably pretty familiar with battery technology, and if you're not, it's really the same concept as the batteries you put in, I don't know, your remote control, or in your phone or your car. Now, scaled up, what are some of those technologies as that energy storage technology that provides that long duration storage time that you were just mentioning. So

Justin Rangooni  14:22

you're looking at possibly different battery chemistries, like zinc, vanadium, for instance, like, again, different elements critical minerals that are found that can actually do their technological process, and what it can hold, can hold that energy for even longer. So you're looking at different battery chemistries. You're also looking for different methods of energy storage, like compressed air. Wow, which, again, there's a Canadian company which is one of our members of hydro store, and is doing great work getting ready for that in other parts of the world, where it's basically taking air, compressing it into underground caverns, saving that energy potential, and then releasing it to. Create electricity when it's needed, then you have thermal storage. And again, some Canadian companies are really looking in and on that one in terms of using, you know, heating molten salts or molten rocks for thermal storage, and eating that, that energy potential, and using and keeping it there and then using it for when it's needed. And I go think back to the batteries. There's, there's easing, which is, which is an Ontario company based out of Etobicoke that's looking at zinc based batteries for that long duration, and not to mention even pump storage, which has been around for decades. And we heard a recent announcement of moving the ball forward on TC energy's pump storage project in medieval again, that's a long duration energy storage project, again, doing more, doing it more than the four hour lithium batteries, but you get all those options available for a system operator then, then it gets really interesting that they can see what they need and what time and what storage technology to to rely on.

Trevor Freeman  15:55

Yeah. So for our listeners, I mean, you might be familiar with hydro generation, you take water that's flowing downhill, whether it's a waterfall or just a river, and use that momentum to turn a turbine. Pumped Storage would be taking that that water, actually pumping it uphill and holding it there and then when you want to generate electricity, letting it flow down through the turbine, and just repeating that process over and over again. So thanks. Thanks for sharing that with us. I think it's important to recognize that like any technology, things kind of move forward. They iterate, they improve, and as we see more adoption that technology, it speeds up the process of that iteration, and we see jumps forward in the technology and its efficiency. So we've talked about the importance for grid management, for cost, sort of reliability, but there are folks out there whose main driver is reducing their carbon footprint. So understanding that energy use often has a carbon aspect to it, how can energy storage help, whether that's a business or an industry, help them reduce their carbon

Justin Rangooni  17:01

footprint? That's a great question. And what energy storage can do is, traditionally, before energy storage technologies started to mature and be more economically viable, like we're seeing right now, a lot of companies, a lot of new communities and had a lot of access to electricity, reliable electricity would use diesel generation as backup. So that's dirtier, that's like, it's not good for the environment. But now energy storage can provide that different option. Now you can install an energy storage system, smaller battery, for instance, to provide that backup system, if that's what the reason you need it. But again, because now you have that battery, well, it's not just there for backup. Now you can use it for helping smooth those peaks. A lot of industrial customers, especially Ontario too, are using behind what's called behind the meter energy storage to really help mitigate or manage that electricity use during peak times where they don't necessarily have to rely on the grid. They can use that battery that's installed. Again, low carbon footprint, if at all, you're just using the clean electricity that's on the grid to power that battery, and now you're using that battery and reducing the pressure that's on the grid during those peak periods. So not only decarbonization, you're applying reliability, and it's really good for affordability reasons, and so that's why you're seeing a lot of interest from the CNI type customers.

Trevor Freeman  18:19

Awesome. Are you seeing an increased pace in the adoption of energy storage? Are we kind of hitting that technology adoption curve where it's starting to pick up, or has it been relatively stable the last couple of

Justin Rangooni  18:32

years? Well, I would say we're still in the growth mode. And I always like to say that the sector is growing as us the association energy storage Canada's growing. Our members keep getting bigger. Our conference keeps getting bigger. The amount of submissions and work and like podcasts like this and getting questions about it continue to grow. And it goes with the sector that it's still growing. There are provinces like Ontario that are ahead of the game right now, but there's others that are coming now. Provinces like Saskatchewan is starting to look more at energy storage. So in a few years, they'll might be where Ontario is. So everyone's coming at different angles, and it's because of the technology advancements for energy storage. It's also the economics have started to go down, but it's also that they are seeing, we really need that reliable backup power, or reliable electricity to help keep the lights on while keeping rates low, and they're seeing energy storage, that's the option that they really need to look at. So we are way beyond now science experiments and pilot projects, but we're still not there where it's starting to plateau. I'm not sure when that happens. I hope maybe it never happens. Maybe it just keeps going. The technology will advance, but just keep happening. So it's a really fun kind of we're still riding the wave, I would say,

Trevor Freeman  19:41

Yeah, awesome. So you gave a bit of an outlook on the Canadian landscape. Are there other jurisdictions around the world that are real leaders when it comes to energy storage, you know, policy or adoption, or where they are, compared to Canada? You know

Justin Rangooni  19:55

what? We're starting to see that almost like everywhere. So obviously us, they lead. Their leaders, a lot of the ways, similar to us, their states have different priorities, different reasons for using it, just like we have our provinces. So states like California are have a lot of energy storage to make use of the intermittent solar generation that they have. Texas, also, maybe with solar, too, is using a lot of energy storage. But interesting, like the red state, the Republican state of Texas, is embracing innovative technologies like energy storage. Because, if you recall, during their winter storm they had they ran like their power was really short. So what did they look at going forward, saying, we need to make sure that we have a reliable system. And entered and they started to really embrace energy storage. So if it's decarbonization goals, if it's reliability goals, if it's a priority, goals are really driving a lot of the policy directions in the US, in Europe, in China, in Asia, China, Japan, Korea, they're all looking to install more energy storage. Again, it's not, it's not just like politically neutral. It's almost like country neutral, that you can put this anywhere. It's scalable, it's portable. And that's the beauty of energy storage.

Trevor Freeman  21:08

Yeah. I mean, it's a good reminder that when you get right down to it, when you cut through all the noise, good ideas, you know, kind of transcend politics and transcend political parties or rhetoric. If it's a good idea, it's a good idea and it's and it's going to happen. Okay? So I want to dive into a report that you kind of partnered with the Ontario Energy Association recently on the reports called from small to mighty unlocking ders to meet Ontario's electricity needs. So in this report, you outline a policy and regulatory framework that is aimed at enabling widespread adoption of DERs, which includes energy storage. Can you talk us through the main principles of that framework?

Justin Rangooni  21:52

Sure, and this is a great collaboration between the Ontario Energy Association trying to look at everyone's been talking about distributed energy storage or energy resources as kind of the next phase, the next piece of the energy puzzle in Ontario, and really for Canada. But we're looking Ontario here to meet our capacity needs that are being forecasted by the IEA. So, so what we thought working with the OEA was, can we come out with a paper that kind of looks at a roadmap to how do we really start to implement DERs, and that includes the utilities in Ontario, that includes the private entities and companies who want to install and own and help own and operate these DERs. So what this paper really looks at is, you know, it supports the development of an overarching policy and regulatory framework to enable DERs to play a much larger role in Ontario's electricity resource needs to support economic growth. So we're recommending that for Ontario government to issue policy directions to the Ontario Energy bowl or to the ISO to really enable LDCs like Hydro Ottawa led der procurements, as well as make grid modernization investments necessary to integrate and manage DERs, because we believe enabling an LDC led der procurement stream builds on LDCs existing responsibility and aligns with the development of future local markets for distribution services and really to play In that upcoming ISO wholesale market enhancements to better integrate DERs. So it's kind of bringing DERs into that game. So it's not just relying on centralized generation, which speaks really well to what energy storage kind of does. It's you can play in a wholesale market. It's a tech transmission connector. It could also be distribution connected. So that's why we consider it as a big piece of this der puzzle, distributed energy storage.

Trevor Freeman  23:43

Yeah. So I mean, you've outlined kind of that engagement piece and encouraging the regulatory bodies, our levels of government, to enable more DERs to happen. What does that engagement look like to support the industry's growth? How are you engaging with policymakers?

Justin Rangooni  24:00

Well, this is one of the great things of having a dedicated trade association, like energy stores. You know, we our team is growing. We're about six now. Across the country. We have a great we have fantastic 100, over 100 members, including Hydro Ottawa, who help us develop these policy submissions. And we have various working groups dedicated either Ontario wholesale or distributed energy storage or BC, Alberta, federal, Atlantic, Canada as well, what have you. And this is how we engage policy makers. We are able to tap into the expertise of our members and get their feedback and then bring that common consensus position focus exclusively on energy storage, nothing else. We do this 24 hours, seven days a week, 365, days a year, and we bring this to decision makers, if it's the regulator, the system operator and governments. So when we're talking about DERs, or we're talking about anything else, we're bringing that pure energy storage perspective that no one else can bring, and so they're seeing, i. Us is that trusted voice for the sector, and that's how we're really seeing a lot of momentum, and we are moving the ball down the

Trevor Freeman  25:06

field Great. What is the role that you guys play when it comes to fostering innovation and investment in new storage solutions? It's kind of that, you know, iterative process where technology improves over time. How are you and how is it energy storage Canada sort of helping speed that along. I

Justin Rangooni  25:25

think one of the best examples was with Ontario's procurement. They were really interested in long lead time, or long duration energy storage. So to help ISO get comfortable with the concept, because of our membership continues to grow, we have members who are dedicated to long energy storage. So we were able to facilitate introductions. We were able to group meetings, bring them to talk about their technologies to the ISO. And we'll do this again. We'll replicate this across the country as well. And it gets the ISO comfortable where they can ask all the questions that they could ever have about that into that company's LDS technology. And it gets them comfortable to start to frame the procurement so they'll know what technologies are available now, what technology may be available in, say, five years time, but then they can start applying so this is how we foster innovation and new storage solutions. We bring our members, facilitate those meetings with decision makers, and that really, can really start to get things moving

Trevor Freeman  26:18

when it comes to those new technology. So you mentioned, you know, having line of sight into what's coming five years down the road. I know earlier in the conversation, we were talking about, you know, different battery chemistries, different technologies. Is there anything coming up that isn't viable today or doesn't work today, or we may not be aware of today that you see as the next thing, the next technology that looks promising for deployment in the coming five or 10 years.

Justin Rangooni  26:45

You know what I would think a better way to look at it is, I think there's a knowledgeable a lot of the existing technologies, even if you look at lithium batteries, which is the most prevalent right now, where lithium batteries will be in five years, will probably look a lot different than it is now in terms of its efficiency, of how long, how many hours, it could be considered a long duration asset in five years time. And you can think of any of the other newer technologies that are coming now saying, oh, you know, I'm ready now. Or I need a long lead time. It might take me a year to have built in five years time that that, construction timeline could be shorter. So in this nascent sector, which is really brewing with so many great ideas and innovation, it's going to change year to year. Who knows by the end of the decade, how many different types of energy storage technologies are viable right now? That's what I'm really excited about. Where a system operator somewhere in this country will say, I need some capacity now. And now they could almost do it as the menu. I could pick the location I need it in, I need I need a certain duration, I need a certain size. And they can look at the menu of energy storage technologies that are really available now and start to kind of pick them off and say, Well, maybe, maybe this combination will really

Trevor Freeman  27:57

work. Yeah, having options really addresses multiple needs and different folks that have different drivers can sort of pick and choose what makes the most sense for them. Like any new technology or newer technology, it often starts with, you know, high capital costs. Those with the deep pockets are able to really engage in it first, but then over time, that comes down. So I'm curious, kind of, on the economics of it. Are there any trends that you're seeing when it comes to investment in energy storage projects in Canada that you're seeing over time? Yeah, I

Justin Rangooni  28:31

think there's a couple of buckets you can look at. You can look at, like strategic government support for programs. So when we first started, I think when we first talked, probably in 2021 where I just, kind of, I started in 2019 in this role, and we were talking to the federal government, saying, you grab all these great programs for other generation assets, why not create one for energy storage that can start to really help the project economics? So they created the smart renewable electricity Pathways Program. Then came the investment tax credits. So those are great examples of government support programs to really help this sector as it's growing. Will those be needed in five years plus time? Maybe not, maybe not. Maybe then it try, maybe it pivots to the newer energy storage technologies to help so but strategic government support is a is a great driver of it. You saw that in the US with their investment Reduction Act program, the RR, the IRA, which started to launch a lot of ITCs for different energy technologies, like energy store. And you saw the market boom. It really started making the economics better. And it just made helped on rates, where people were able to start looking at different innovative technologies. So strategic government support is key private sector engagement as well. And you're looking at that on the the AI start of things like the big data centers. They want to power their own clean supply of generation, and they're going to need energy storage to provide that 24/7 power. So they're willing to dole out money for. Are ESG goals as well. There's companies, hopefully still out there who still want to pursue ESG goals. So they're going to be looking at cleaner energy solutions and help and energy storage obviously plays a role in there. There's international collaborations with different governments, where Canada's part of talking about, you know, what can we do to share R and D to really advance different sorts of technologies. So really, it's government, it's the public, it's public together, and it's private altogether, doing this investment trends.

Trevor Freeman  30:30

Yeah, I mean, great answer, and you kind of answered my next question, or my follow up question, which is, what are some of the levers that we can lean on to encourage investment and to sort of speed up that investment. And I think you've hit the nail on the head there of the role that sort of government can play. We've talked on the show before about the role that government can play in sort of jump starting technology and using investments and tax credits to help get nascent technology off the ground until it's market ready. And we're seeing that in the in the storage space, the role of, you know, private entities with strong drivers, like data centers, for example, to come in and say, look, we've got a need here, and we see that energy storage can fulfill part of that need, and we're willing to pay in order to make that happen. And that also helps move the industry along and move the technology forward. So those are great examples. Thanks for highlighting that. Let's dive in a little bit into the technology. Here. One question that often comes up, maybe by by those more resistant to the technology, is, well, what about end of life? What about the environmental impacts when it comes to, you know, battery storage, in particular, the rare earth metals that go into that the mining required. Talk to us a little bit about some of the sustainability considerations regarding batteries, end of life. Can they be recycled? What? What happens? How are we mitigating that, that environmental impact?

Justin Rangooni  32:01

Yeah, I think these are excellent questions to ask, if you look on the recycling end of life, because we're at kind of the starting point of enabling energy storage. We're talking about batteries, specifically with these recent Ontario contracts. So these are 20 years contracts, so these batteries are going to last a while. You know? They might get replaced every 10 years. But what you're seeing is a lot of interesting Canadian companies. So there's a store, there's there BC, for example, is looking to be one of the leaders in not just EV, not just battery energy storage recycling, but electric vehicles and other recycling as well. So companies like tax and moment energy are taking you this opportunity while this window is open right now, see, how is it best to recycle these batteries? So either you're going to break them down to recycle them as much as you can in the most environmentally sensitive way, or can you now repurpose them? So a lot are looking at electric vehicle batteries that may come to life much sooner than battery energy storage system, let's say six to eight years, then repurposing those to say, well, we can get more life out of these. Could be battery, energy, standalone systems for another eight to 10 years. So there are recycling options, there's refurbishing options, and then there's just breaking down the components. And here is the opportunity for Canada to be a leader. You have this window. So there's interest, there's, there's, there's startup companies, and there's a lot of interest. So if Canada could do this, right, you know, we could be a leader in the recycling of EVs and battery energy storage.

Trevor Freeman  33:29

Yeah, it's like, it's the old. I don't know if it's a cliche or an adage, but somebody's problem is another person's opportunity, right? The challenge of a new technology, having a battery that gets to end of life at some point creates opportunity, whether that's in the recycling of it or and I'm glad you brought that up. It's one of my favorite examples or potential use cases of you know, an EV battery gets to the point where it can no longer provide the required power for moving a car down the highway at highway speeds, but it still can provide the kind of power that a house might need for backup power, for peak shaving or for reliability, whatever the case may be. So just because it's end of life in one use case doesn't necessarily mean it's end of life in another use case. I think that's a great example. I really like hearing that one. So one other thing that comes up when we talk about these maybe larger scale battery energy storage installations is safety, public safety. And there's a bit of a question mark, I think, in the public mind of, well, are these safe? Are we going to be at risk if we're near to one of these facilities? I think people are generally familiar with or even maybe even if they aren't familiar with it, they feel like they are when it comes to other types of generation, for example. But battery is a bit of an unknown. Are these battery installations? Are they safe? What are some of the safety considerations, and how is the industry addressing those?

Justin Rangooni  34:58

No and. And the short answer is, these are safe. As you mentioned at the outset, this technology is the same lithium batteries that are in your phone that you might put near your head when you're falling asleep, that you're plugging in overnight you're in your kitchen or your living room, what have you now, because they are bigger scale and the questions there they have to follow the correct procedures and installation. So what we rely on, obviously, our members adhere to the latest safety standards, the latest fire safety measures that have to take in the low risk that this might happen. What we also do, and we'll make a plug for these two members of ours who have been really helpful to us. It's Hillier Safety Group. Hillier and energy safety response group. So these are two members of ours who have especially with esrg. They are there. They are firefighters and ex firefighters who test batteries, energy storage system to and then take learnings and best practices from it. So we've encouraged and esrg goes out with our members. They go with the ISO. They do webinars that we host with them, speaking about how as a firefighter, they say, we test these things if they're installed correctly, if you're using the correct like a reputable company, and you ask about the mitigation measures these things are safe and in the low risk that these things might catch on fire by letting it burn out. It might not look so good sometimes, but that is actually the safest way. And there have been instances which I think were referenced and people talk about like in New York, and there was one in Los Angeles and and it, and they've done studies after this to say, Okay, what was the impact after nothing in the air, nothing in the soil, nothing in the water, it just burned itself out. Now, as the technology in the sector advances, you're going to see a lower risk of that. The numbers in the US actually say be as the number of battery in energy storage systems have increased, the incidence of these risks have gone down dramatically. And the reason is that technology is advancing. The safety measures are advancing, the standards are are advancing. So these things are becoming safer and safer. But if you're a community member and you have questions, ask the developer these questions. Say to them, what battery are you using? Is this a reputable company? How many What measures do you have in place in case something does happen? And these are all great questions to ask, and those who are our members of energy storage Canada, you know they will, they will be able to answer those and provide that comfort.

Trevor Freeman  37:27

Absolutely great, good answer. Okay, final question here, What is the long term vision for energy storage Canada? You know, we're seeing movement in the sector. We're seeing more adoption. Where do you kind of see your organization, your association, going in the coming years. We expect

Justin Rangooni  37:46

it to continue to grow as the sector grows. And really what we want to see is that in every jurisdiction, with every utility, and soon to get down to the residential that they're seeing energy storage technologies as a viable option. So if you're a system operator, or you're a government and you're looking at the supply mix and saying, Well, how are we going to make sure we can keep the lights on while keeping rates low, energy storage is like, if not the first option, it is up there. And that's really the vision. Now this is seen as a mainstream resource, that it is no question that you wouldn't look at energy storage as part of your solution, on the distribution level or at the transmission level. So the very exciting vision, and again, we talked about the residential and becoming a prosumer, and then that really is the opportunities start to become even more endless.

Trevor Freeman  38:34

Yeah, it's one of the things. I mean, our listeners are probably roll their eyes because they hear me say this all the time. But one of the things I like about being in this sector, this kind of energy space, is exactly that you can see the vision for how these various technologies, these strategies, this sort of new way of dealing with energy, seem really exciting and really cool, but they're also not that far down the road, like we're in the midst of this change when it comes to all this technology, I think energy storage is a perfect example of that, where just a couple years ago, maybe four or five years ago, it was hard to even imagine where we are today and where we'll be in the very near future, because things are changing so fast. So I share your excitement for that vision. Thanks for sharing that with us, and no doubt, energy storage Canada will have a big role to play in that today and in the years to come. Justin, thanks very much for this conversation. We do always end our interviews with a series of questions, so I'm going to fire those at you now, and we'll see. We'll see what you come up with. So first question is always, what's a book that you've read that you think everybody should read? Okay,

Justin Rangooni  39:45

that's a great question. This is my favorite part of these podcast interviews, really. Um, we saw a little political jump junkie who likes Pulitzer Prize winning books, so I kind of focus on political history. So if you want. Ever want to read any of those that are the best? I would say the Teddy Roosevelt trilogy by Edwin Morris is a must read. They're fantastic. So that's when I read those. I'm like, Okay, this was, are you gonna top this? So you're always chasing that next book to read like that. That's

Trevor Freeman  40:16

awesome. I just as a complete aside, my kids school does this big used book sale every year, and it was just this past weekend, and you never know what you're going to find when you're like, wandering through the aisles and there's books there that you never heard of, and you pick something up. So I have this new stack of books at home that I can dive through, and I'm the same with you. I like to, yeah, read about some historical figure or some, like, important period when it comes to policy, and just kind of, yeah, try and get myself into that headspace. So, same question, but for a movie or a show, what's a movie or show you watch that you think everybody should

Justin Rangooni  40:52

Oh, well, it's gonna take, like, almost the exact opposite of like, seriousness. But you know, the officer Veep, you know you can go to those anytime, like just long lasting stand up. I think we're gonna be watching those episodes in the next 30 years, even though Veep is getting kind of more real than I think they originally thought.

Trevor Freeman  41:13

And yeah, in a kind of scary way, but I hear you, yeah, it's good to have those classics that you can always go back to if someone offered you a free round trip anywhere in the world, where

Justin Rangooni  41:24

would you go? Well, as we're taping this, and it's winter and it's cold and there's snow, probably somewhere like Fiji or Bora, Bora, where it's warm and there's beaches, so especially the warmth is where we're really emphasizing right now, I hear you in February.

Trevor Freeman  41:39

Yeah, absolutely. That's the joy and the curse of living in Canada. Who is someone that you admire?

Justin Rangooni  41:47

Well, I'd say you for doing these podcasts, but that is pretty cool that you're doing. Nate, so I appreciate it. You're on the list. Otherwise, I would say otherwise, frontline workers, you know, for even talking about even our sector, you know, you got lines men, you got people who are putting their lives on the line, nurses, teachers, doctors, police officers. You know, those who, every day are putting are on that front lines to do something for others. I think that's those are the real heroes out there.

Trevor Freeman  42:15

Awesome, great answer. And finally, what's something about the energy sector or its future that you're really excited about. And I know we kind of just talked about this, but I'll let you, I'll let you elaborate.

Justin Rangooni  42:26

Oh, it's an easy one, that it's continually evolving like nothing is stagnant. The way things are. We've seen today are going to change tomorrow, and energy storage is a fantastic example of that, where we first talked to 2021 Oh, we were just getting started now. Here we are, and the momentum is growing. If you have me again in another couple years, who knows where we're going to be at that time? So it's really exciting to see where, where it's going.

Trevor Freeman  42:50

Absolutely awesome. Great answer. Justin, thanks very much for your time. I appreciate the conversation. I appreciate your passion and excitement for this pretty cool technology that's going to have a big role to play as we kind of navigate this energy transition, and really already is playing a big role. So thanks for coming on. Thanks for your time and appreciate the

Speaker 1  43:08

conversation. Thanks for having me, Trevor talk again, my friend, awesome. Take care.

Trevor Freeman  43:15

Thanks for tuning in to another episode of the think energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback, comments or an idea for a show or a guest. You can always reach us at think energy, at hydro ottawa.com, you.

Hydro Ottawa recently unveiled its  2026-2030  investment plan focused on modernizing and strengthening the grid. The way we’re consuming energy is changing, and this investment plan focuses on four key areas that highlight why Hydro Ottawa is taking action, how they plan on doing it, and what it all means for you. 

Hydro Ottawa’s Chief Operating Officer, Distribution and Generation, Guillaume Paradis, joins thinkenergy to dive a little deeper into those focus areas, and why they matter, with host Trevor Freeman. 

Related links

• Guillaume Paradis on LinkedIn: https://www.linkedin.com/in/guillaume-paradis-30a47721
• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-8b612114
• Hydro Ottawa: https://hydroottawa.com/en  

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Trevor Freeman 00:07 Welcome to ThinkEnergy, a podcast that dives into the fast-changing world of energy through conversations with industry leaders, innovators, and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional, and up-and-coming facets of the energy industry. If you have any thoughts, feedback, or ideas for topics we should cover, please reach out to us at [email protected] everyone, and welcome back. A few episodes back, I talked about some of the important work that happens at the distribution level to maintain and expand our grid, and I tried to connect the dots between that work and the broader societal energy transition that is happening at all levels—how the work we do at the distribution level is really important and tied to some of those larger projects that may get a little bit more news and attention. That energy transition, which, as you're hopefully aware by now, is ongoing right now; it's not something of the future, it's happening today. That energy transition is multifaceted, but from an electricity and electrification perspective, the distribution utility—i.e., the Hydro Ottawa of whatever jurisdiction you're in—is at the very leading edge of many of the changes we need to see within our electricity system to support that transition.So today, I'd like to go a little bit further with that topic and focus on Hydro Ottawa's next five-year investment plan, which covers the 2026 to 2030 period. This will be the largest investment plan in our history as a company, and I wanted to dig into what we have identified as key focus areas for investment in the coming five years. With more than 100 years of operating a large, complex distribution network, Hydro Ottawa is embarking on a pretty significant journey to modernize and strengthen our grid for the challenges and opportunities ahead of us. We have filed our 2026 to 2030 electricity distribution rate application, as it's called, with the Ontario Energy Board. This is a standard practice for all local distribution companies in Ontario; that's what we have to do. As a reminder for our listeners, the Ontario Energy Board, or OEB, as we often call it, is our independent regulator. Their mission in this process is to strike a balance between ensuring the financial health and operational needs of utilities like Hydro Ottawa, while also safeguarding the affordability and reliability of the service for the customer. So they want to make sure that we're spending enough to tackle the right projects on the grid to make sure it stays operational while not spending too much. They meticulously scrutinize every detail of these applications to ensure that the proposed rates are just and reasonable and that all investments are prudent and truly in the public interest.So we have gotten a number of questions about the plan, and specifically around, "Where is the money going to go? What are you going to actually spend these dollars that you're requesting on? And why are these investments necessary? What benefits are they actually going to bring to our community?" And often we get the question of, "Does this mean fewer outages or shorter outages?" So I want to dig into that. I want to talk a little bit about what we've got planned and what the impact will be, and what the impact would be if we don't do those things. And to help me walk through that energy roadmap, that plan that we've put together, I've got Guillaume Paradis joining me today. Guillaume is the Chief Operating Officer of Generation and Distribution here at Hydro Ottawa, and he's going to join me, and we're going to talk through this. Guillaume and his teams are responsible for the planning, design, operation, construction, and maintenance of our electrical power distribution system, and in his role, he leads the teams that are directly accountable for ensuring the safe, efficient, and reliable delivery of electricity to our customers. Today, I'm going to ask Guillaume to really walk us through the details of our investment plan, how it was shaped, how we came up with these specific areas, and what benefits are going to be realized by our community and the broader energy landscape. Guillaume Paradis, welcome to the show.

Guillaume Paradis 04:24 Pleasure to be here, Trevor.

Trevor Freeman 04:26 Okay, so Guillaume, this is Hydro Ottawa's largest investment plan ever, and I'd like you to start by talking us through the primary drivers behind what our five-year investment plan is.

Guillaume Paradis 04:41 Yeah, so as you've heard, as you've seen, we're at a historical, or historically, you know, unique point in the evolution of our industry. Electricity underpins most of our societal aspirations with respect to creating, you know, a more sustainable future, creating the future we want to leave for the next generations. And our distribution system underpins a lot of those aspirations in simple ways and in more complex ways. So, you know, a simple way is that essentially, for, you know, the well-being of our society, for our customers, the residents of Ottawa, and really any area, to live the lives they're hoping to live, to, you know, enjoy the benefits of modern life, electricity is a critical underpinning in any way you can imagine and you know, think about. So our service has always been very important. It's just become even more critical as a foundational block for, you know, the lives that we're hoping to live and we're living today in our modern society. So that, combined with other aspirations related to reducing our carbon footprint and integrating more renewable energy resources within our footprint, it creates a situation where there's a significant need for us to invest, continue to invest, and reinvest in our infrastructure to deliver those outcomes for customers.

Trevor Freeman 06:28 Yeah, I think, I mean, we talk a lot about the energy transition on the show, and if, if you think about, you know, let's say our previous rate application, five years ago, the energy transition was a thing; we knew about it, but it was like a thing of tomorrow where, hey, that's going to come soon. The difference now, I assume, and maybe you can speak to this, is we're seeing that. We're seeing the change now.

Guillaume Paradis 06:52 Yeah, you're exactly correct. Like, we're in it now. So we've been talking about it for some time, both from a, like a general societal aspiration standpoint, but also from a technological standpoint. For a very long time, we talked about electric vehicles having an impact and becoming more commonplace. We talked about leveraging automation to deliver our services. We talked about two-way power flows. So we've been building toward this moment, and now we're essentially in it, if you will, and we're seeing all those things, the confluence of all those longer-term trends sort of manifest themselves in real demand for our system, in real changes in how our customers want to use energy. And we're in the middle of that, and we're, you know, to enable those things happening in our community here in Ottawa.

Trevor Freeman 07:49 Yeah, so it's like the business as usual, a lot of the same things, and we're going to talk about some of the specifics, but a lot of the same things we would normally do, just a lot more of at the same time as, like, also pivoting a little bit to meet some of these new needs, like charging transportation and like heating our spaces more with electricity, like some of these new needs that didn't exist or not to the same extent. So it's like more of the same plus other new stuff. And we're going to talk about that in a minute.

Guillaume Paradis 08:23 Yeah. So, you know, we always would say that the future of the energy sector was very exciting, and things were coming and like, change was upon us, and now, essentially, we're, we're living it, right? So you have to carry on with the responsibilities that you always had, and meanwhile, figure out how to deliver those new outcomes, those new services that previously weren't required or expected.

Trevor Freeman 08:51 Right? So let's, let's kind of get into some of the details here. So there are four key capital investment categories in this plan: growth and electrification, aging infrastructure, grid modernization, and grid resilience. So we're going to dive into the specifics of these in a minute. But to start off with, why? Why these four? How did we land on these four as the main categories?

Guillaume Paradis 09:20 Yeah, so there's, there's various ways you can categorize investments. There's a lot of drivers that will lead us to invest in an area or replace some infrastructure somewhere in our system. These categories capture quite well what is at the core of various investments. So for one specific investment, there will be multiple drivers, but these ones sort of in an elegant way, I would say, capture, you know, why investments are occurring, what the primary driver is for those investments, and they help translate that for, you know, folks who are not involved day-to-day in planning the electricity system, that's our responsibility. What we're trying to communicate is why we're taking action where we're taking action. So those categories, in my mind, capture that really well. They also tie our investments to broad trends that people should be aware of, and they're a way to make sure that we have, you know, a clear baseline for a conversation as we proceed with those plans.

Trevor Freeman 10:30 Yeah, one thing I find, and you know, in my role, I talk to customers a lot, and I find these are fairly easy to explain, or at least, I hope they are. If you're listening and you disagree, let us know. But people can kind of get their heads around why the utility needs to do each of these four things, and some, in some ways, they align with other sectors as well. So I think, and I hope, as we carry on our conversation here, it'll be easy to sort of build out the picture of what we're doing in each of those four areas. So why don't we? Let's dive right in then and look at the specifics. And starting with growth and electrification, what are the specific investments that are planned to support the growing energy needs of our community, you know? And we've already started talking about electric vehicles, other electrified aspects of our lives, like, what? What falls into this category?

Guillaume Paradis 11:23 Yeah, so with respect to growth and electrification, there are a few underlying trends that drive the investment requirements. So as you've suggested, as you mentioned, you know, there's an evolution of how our customers use energy at home, day-to-day. EVs being obviously a primary example that everyone will be very aware of, just, you know, driving around town. Frankly, the difference in how regularly you'll see electric vehicles in our community relative to even five years ago is pretty dramatic, and that is having a long-term, you know, impact over time, likewise for technologies like heat pumps at home and just generally, the growth of our community. So those elements just drive a longer-term trend of more demand being present in our community, within our system, and in addition to that, one big change that we've seen over the last few years is more large-scale demand requests coming into our service territory. Typically that will be large customers wanting to do something different with energy. So it could go or it could be driven by a few different kind of corporate aspirations. What we're seeing a lot of are instances where large corporations decide, or institutions decide to do away with more carbon-intensive energy sources, so they will look to us and electricity to replace what previously would have been another fuel source that maybe is less green. So we're seeing that affecting choices some of those type of customers are making, and then at the same time, we're seeing just large requests related to a different type of energy demand. So companies wanting to, for example, bring back their R&D efforts to a data center that they operate and they control, so that they have more control over cybersecurity, you know, elements, and then likewise, with where their data flows to and how it's being managed. So we're seeing large requests at a rate that we didn't previously, and that those requests are significant enough that they require us to make very major investments, like new substations, like building out new feeders, again at a pace that far outpaces what we've seen historically. So the underlying trend of more small demand creating an impact at the aggregate level, combined with those larger requests, that's creating a significant need for us to invest in responding to that growth in the electrification drivers within our system.

Trevor Freeman 14:42 Yeah, so this is in response to what we're seeing our customers do, and that's it's something that has come up before in conversation here, of, you know, we, we respond to what we see our customers doing and what our customers are asking us. They're asking for more power. We have to respond to provide that more power. So this. So this kind of area of investment is really just building out the grid and all of the assets and infrastructure that are that make up the grid to be able to meet the needs of our customers, which are growing faster than they were previously. Is that fair to say?

Guillaume Paradis 15:17 Yeah, and for us, it's an interesting balancing act. We have to find where we have to anticipate our customers' needs and the demand that's upon us, but we can't get ahead of it, because that would draw investments that potentially would later become stranded or create a cost burden for our customers. So we have to know where the demand is going, and we have to be ready to respond and connect new customers, but we can't get too far ahead of it, because ultimately, you know, if we invest too soon, that's, you know, a burden for all our customers. So sometimes I would say there's that misconception that somehow we're we're creating our own forecasts and believing our own forecasts. And really, it's a bit simpler than that. We take in the requests and we respond to those requests. We have to be able to look out a few years to make sure that we're not missing, you know, anything significant that would have an impact on our system, but we don't get too far ahead from an investment standpoint.

Trevor Freeman 16:31 Okay? So Guillaume, we've been talking about the more traditional aspects of our grid, you know, poles, wires, transformers, et cetera. But I know that we're also looking at how we can deploy what we call non-wire solutions to also help manage capacity on our grid. Can you just explain what some of these solutions are and how we're going to use them in conjunction with our traditional assets to manage grid needs?

Guillaume Paradis 16:56 Yeah, so non-wire alternatives is essentially the concept that without having to install traditional infrastructure—think poles, new transformers, new cables, underground—you may be able to harvest existing resources within your footprint to help you manage operational needs, be it like certain peaks that have a short duration, other scenarios of constraints, where, rather than building net new infrastructure, which is expensive and time-consuming, you might be able to optimize, I'll call it, the use of embedded resources in a manner that actually meets your operational objectives. So the way you would do that is by using a combination of resources. Typically, you would look at small-scale embedded storage. So if it exists in the system, you would actually leverage it. If, if you could, otherwise, you might install some in a very targeted manner that helps you meet those operational needs, and then otherwise you would leverage customer resources. So that's either existing generation that is owned by customers, or which is more typical, their ability to adjust their demand at certain times to meet your operational constraints. So the idea there is that you can do a business case, you can do an evaluation of what it would take to engage all these resources to get the same operational outcome as you would if you build the new infrastructure, and compare the two on a cost basis. And actually, in some instances, see scenarios where those non-wire alternatives actually beat out large-scale infrastructure upgrades from a financial standpoint. So it's, it's an evolving area. We have a few pockets within the city that we're targeting for programs like those ones, and we expect, over time, as more embedded resources proliferate, as more customer devices become controllable, we'll have a greater option, in fact, to leverage those non-wire alternatives or those non-traditional solutions to meet our operational requirements.

Trevor Freeman 19:20 Great. So this is a combination of, you know, Hydro Ottawa is planning to invest in some assets, you know, be they battery or otherwise, on our side of the meter. We call that in front of the meter, to help manage grid needs, while also looking for opportunities to partner with customers, you know, in the aggregate, so, you know, 100 or 1000 customers at once to say, "If we need to call on your devices to either inject into the grid or to ramp back your operations, that will help us manage grid needs while the customer still maintains control." Is that fair to say?

Guillaume Paradis 19:59 Yeah. Fair, and that's that's an emerging capacity we have. So if our ability to control and call upon a very large number of small devices and customer devices has grown and is growing and will be over the next few years, and with that, our capacity to then draw from those resources to respond to operational circumstances is also increasing and will give us options we just wouldn't have had in the past. So it's just a better way of utilizing available energy resources, a more refined way, and one that probably wasn't available to us at scale 10 years ago. Yeah.

Trevor Freeman 20:41 And the driver behind all this is what's the best, most cost-effective way to address that grid need? In some cases, it's going to be the poles and wires and transformers. In some cases, it's going to be these non-wire solutions, and it's it's part of the planning of the grid to identify where does each technology make sense?

Guillaume Paradis 21:02 Absolutely. So again, it's a more refined way of assessing options and ensuring that we identify the most cost-effective strategies possible.

Trevor Freeman 21:14 Perfect, great. Okay, so that's the growth and electrification section. Let's move to aging infrastructure, which is about a third of this investment plan. So this may seem like a softball to start with, but what are some of the challenges posed by aging infrastructure? Maybe talk to us a little bit about what that infrastructure is when it comes to utility grid, and then what are what are we doing with this investment plan to address that aging infrastructure?

Guillaume Paradis 21:43 Yeah, so aging infrastructure is a very clear and appropriate descriptor here. So we invest in assets that are long-lived. Think 50, 60 years plus in some instances. And you know, eventually you use them, you leverage them over many decades, and at some point, those assets deteriorate beyond a point where they're no longer able to provide the service that our customers expect. So that would be failures, which leads to reliability issues in parts of our system. So one at one point or another in the life cycle of those assets, depending on how they're being used, what environment they are operated in, you have to replace them. What we try to do is assess them on a risk basis. And when we say risk, we mean what impact can they have on our customers if they were to fail? Impacts can be things like safety risk. It could be, of course, reliability issues. It could limit our ability to service our customers. And so we assess risk on an ongoing basis, looking at those assets over decades, and eventually we get to a point where the risk has to be addressed, and that typically takes the form of or it can take the form of an outright replacement. Through the life cycle of all those assets, all of our assets, we do maintenance, we inspect them, we try to see if there are other things we can do before we replace them. But you get to a point ultimately, where the only option that's viable is to actually replace, and then you have to go in and take, you know, action physically in the field.Now, what becomes a little complicated is, as you can imagine, it's one thing to put infrastructure up when a field is being converted to a subdivision or the city's growing, and it's all brand new, you know, infrastructure being developed to support the growth, but decades later, when you come back, 60, 70 years plus, in some cases, you're in someone's backyard. You're in the middle of an intersection where multiple utilities have installed their own infrastructure, so you have to coordinate that things have been moved over time. So getting access to the infrastructure is more difficult, and so replacing many decades later is a lot more involved than putting up new infrastructure in the first place.And the type of infrastructure that we're talking about here probably falls into three major categories. So there's the overhead infrastructure you see around town. So really, when you—and you shouldn't do that while you're driving, but if you're walking ideally, and you're looking at the beautiful hydro infrastructure around Ottawa—what you'll see are very old poles that need attention. So that's very visible, right? We have wood poles, you know, in a lot of the areas of our city, and you get to a point where structurally, they're not as strong as they used to be. They've weathered many storms, and they need attention. And then otherwise, it's the transformers you might see on those poles, and that would be the boxes that are hanging from the poles. The ones that look like they, you know, predate the Cold War, are the ones we're going after, and we need to give some attention to today.And then on the underground side, similar infrastructure, it's it's cables in the ground. So in some instances, it's buried directly in someone's backyard. That was an approach people took many decades back. Now you can imagine it's very convenient when you're building it, but not so much when you're trying to get it out of the ground and put new cables into the ground. So there's cables that need replacing. They've been damaged or creating reliability issues. The transformers that go with that as well might need attention. And again, as I mentioned before, decades later, that transformer may be right behind someone's pool in their backyard, and they've done some real nice landscaping, and accessing it for a replacement is a lot more complicated. So underground infrastructure, in fact, is one of the more complicated replacements to execute.And then, you know, if you move up from there, you're looking at substation equipment. So that's the stuff that's fenced in across the city where power is being delivered from to our customers across the city. And so those assets may be a bit less complicated in terms of managing sites and access, but certainly complicated in terms of logistics costs of the equipment. Those are very, very large assets that require a lot of planning to replace because they're critical to our system, and we can't afford to have them be out of service too long.

Trevor Freeman 27:01 Got you and just for our listeners, while Guillaume was talking, I pulled up a few quick stats here. So we have Hydro Ottawa's service territory has over 6,000 kilometers of conductor, so of wires, and just under 50,000 poles out in our service territory. So as you can imagine, a lot of that is in great shape, and some of it isn't, and some of it needs to be addressed, just like, just like you're talking about here.

Guillaume Paradis 27:29 Yeah, and that's helpful. Trevor, the thing that we often forget, especially for electricity distribution, is the sheer number of assets that can create a risk. So it's one thing to manage one large transformer and make sure it doesn't fail, but when you're talking about thousands of assets dispersed around a very large service territory like Ottawa, making sure that we keep an eye on all of them at all times, making sure that we intervene at the exact time prior to a failure, to make sure we deliver the best service possible for our customers. That's really the essence of our challenge, and what makes distribution unique versus other parts of our business, where it's maybe more centralized and you may be looking at a smaller set of assets.

Trevor Freeman 28:16 Yeah, absolutely okay. So obviously it's important to maintain what we've got, in addition to building out that new stuff that we talked about earlier, maintaining and replacing what we have, so that, you know, our existing grid remains reliable. The next section of our investment plan is what we call grid modernization. Now that's something that we've talked about to varying levels of detail on this show before, but I'd like you to talk us through what is in this investment plan over the next five years, when we talk about grid modernization, what are we actually doing? What are some of the specific things that we're going to put some of our investment towards?

Guillaume Paradis 28:57 Yeah, so grid modernization is a category that gets talked about a lot, but maybe is, I would say, a bit misunderstood. I think, because it sounds futuristic, people assume we're doing very different things, and ultimately, in my mind, it's better leveraging technology to get good outcomes for our customers. It's really that simple. So as you can imagine, you know, as I talked about, we're looking at assets that have an expected life of 50, 60, 70 years. When some of our assets were first installed, things like communication technology, things like IT operational technology weren't as advanced as they are today. Our ability to collect data in real time was not what it is today, and so now that we have an opportunity to reinvest and replace the old assets. It's important that we do so in a manner that will allow us to drive or essentially more performance or better performance out of the assets we put in our system so that can take various forms, as I mentioned, getting better real-time information is one of those ways in which we can leverage technology. What that allows us to do is better respond to outages, offer a better service by being more aware of what's happening at any given point in time, getting better information in near real time as to what assets are posing a risk to reliability because they've been utilized heavily, or they've seen a lot of faults, for example, and so building in that technological infrastructure as a layer that enhances the traditional investments that we've always made is sort of the right thing to do in a context where you want to optimize where you spend your dollars, and you don't want to have to go back and reinvest on the same assets or in the same parts of our system multiple times over the coming years, in the coming decades. So the grid modernization portfolio essentially is our opportunity to very strategically identify where we can put in technology that will allow us to get more out of our assets and provide a better service for our customers.So simple things like automated devices, that would be automated switches that we install on our overhead infrastructure, underground infrastructure that gives us a capacity during an outage, to shift demand around and resupply our customers more rapidly than we would have been able to otherwise, and that gives us a capacity to provide a better service under contingency scenarios. So very simple, right? It's telemetry, it's communication to a device, and rather than have someone physically go in the field and, you know, switch customers and try to move demand around, we can do that remotely from our control center. Likewise, in the control center, putting in more telemetry to identify and proactively suggest to our operators how to restore power to customers. Again, is a simple thing by today's standards, right? It's not complicated technology, it's not complicated software, but it's a layer that didn't exist previously, where we can have software, model-based tools suggest how best to optimize the restoration of power, and as we do that, our trained operators get to review and take action in an informed manner. So grid modernization, again, is about making the most of today's available technology, while we reinvest in our distribution system to make sure that the quality of our service and the breadth of the services we can provide align well going forward, with our customers' aspirations and provide a quality service for many decades to come.

Trevor Freeman 33:26 Yeah, and I think it's important to remember. And you know this, this little saying has has been out there in the industry, and I've used it before, of the electricity grid is the world's largest machine. Like the grid itself is a piece of technology, and like any technology, we would not be happy if it stayed stagnant. Like we want it to evolve with with the latest and greatest and operate better and more efficiently. And the grid is no different, and so part of grid modernization is just keeping up with what's out there to make sure we are delivering the service that we deliver in the best way, in the most advanced way, in the most efficient way possible. With that, Guillaume, what about things like, you know, we hear a lot about more distributed energy resources, so more small-scale generation or storage out there on the grid that might be owned by the utility, but it might not be, it might be customer owned. What? What are we doing from a grid modernization perspective, to enable more distributed energy resources to utilize those assets more on our grid?

Guillaume Paradis 34:42 Yeah, so that's core to the evolution and we're proposing and working toward. And and really, if you boil it down to, you know, a simple kind of concept, it's really that traditionally, we've had a static model of how our grid needs to operate, and we planned accordingly. So you know, power flows in one direction to certain size customers. They use electricity, they use our energy, and then we protect, we coordinate, we control accordingly, and we're moving into an environment where customer behavior evolves in a dynamic fashion in near real time, depending on what prices are available in the electricity market, depending on what aspirations various customers have, depending on what technology they want to deploy to manage their energy footprint. A customer may look different, really, from one day to the next, as far as the electricity system is concerned, because their demand might be less significant on a day where their solar panels are better able to generate energy, on a day where they choose to leverage a large battery system that they've installed at their facilities to manage their demand. And so from an electricity system standpoint, we need a much better awareness of what is happening in near real time to be able to control and then respond and ultimately offer the right service for our customers. So that's a big change, again, going back to the how we're going to enable that, it's again, the core elements of communication infrastructure, more telemetry, so that we can see what's happening in real time. Think sensors, think smart meters. Think, you know, a software system within our control room to take all that information in in real time and make sense of it, and then ultimately drive our decision making and support our customers in leveraging energy resources in an optimal way for their needs, by making sure that we're aware of what's happening and not create barriers that are artificial because we're not sure, and when we're not sure, safety is paramount, and when you prioritize safety and you don't have information, you have to be very conservative in the decisions you make, and you may limit customers' choices and behavioral, you know, choices by having to have that safety margin and that safety conscience kind of override everything else. So better telemetry, better real-time information, more dynamic ways of controlling energy allows us to enable customers and and support their aspirations. 

Trevor Freeman 37:50 I mean, it really comes kind of full circle back to our job is to let our customers do what they want to do when it comes to energy, enable that, and that may be just making sure the power is there and available, but it also may be making sure that our grid is set up to allow them to generate and store and sort of interact with energy in the way that they want to. So those two things are quite parallel. Okay, great. Last category here is grid resilience, and this is an important one, and especially in the eyes of our customers, because, you know, we're that unique industry where most of the time people don't think of us when they really do think about us, it's because the lights have gone off, because there's some event that has resulted in an outage, and I just want to ensure our customers, we try very, very hard to make sure that doesn't happen as much as we can't control everything. So we have this category of grid resilience in our investment plan, and we know that we're going to be seeing, and we have already started to see, more frequent extreme weather events. That is increasing. It's not going down. So what are we doing in our investment plan? Or what are we planning to do in order to enhance grid resiliency and withstand those extreme weather events?

Guillaume Paradis 39:14 Yeah, so the need for resilience, in my mind, comes from a couple places. So, you know, there are drivers that are external; so the operating environment is evolving. To your point, we've seen a number of very impactful weather events over the last few years, whether it be historically impactful ice storms, we've seen tornadoes in our service territory in a way that we didn't previously. We saw derecho a couple years ago, which was by some measure the most impactful storm in the history of our company. And so we know. How what we plan to withstand has evolved, and we need to reflect that in the decisions we make when we invest in our infrastructure. That can take a few forms. But for grid resilience, we're targeting specific investments so we can identify and have identified areas of our system that are more vulnerable. Imagine overhead infrastructure that is more exposed to stronger winds, and so we can go in there and then target those areas, target those segments of our system and make them more robust, more resistant to those external factors. And so we have assessed our entire service territory, we've studied, you know, our vulnerability to changing patterns, to changing weather events, and in a very targeted manner, identified areas where we'll take action over the next five years to boost resilience of our electricity system in those scenarios, and really just generally.The other element is, while those external factors are evolving and creating a stress on our system, we're also seeing people's dependence on electricity's availability continue to grow, right? So, you know, we've been through this many times at this point, and I'm sure it's been covered on on this podcast a number of times. But, you know, people's, you know, need for highly and readily available electricity continues to go up. Think, you know, remote work. Think our utilization of, you know, the internet and the technologies that support that. People need access to power, you know, on an ongoing basis for a variety of reasons that support their lifestyles. And so while the external factors have become and are becoming more challenging and creating a stress, we're also seeing customers relying more heavily on our service being available. And so those things combined make it sort of an imperative that we take action and ensure that our system is robust and can withstand those conditions that are upon us.So we change our planning approach. We evolve our choices with respect to investments. It could be simpler things than, you know, targeting areas and replacing specific infrastructure. It could be as simple as changing our standards so that when we install a new pole, we know that it can withstand harsher winds and heavier ice loading parameters, and we do that across all our investments. So that's a key point here, with respect to grid resilience. Yes, we have a targeted, sort of very strategic approach to building resilience, but we also do that across all our investment categories, when we put money in our distribution system to make sure that, similar to the point we made about technology. You know, we invest in assets that will, you know, outlive many of us, and they need to be adequate and appropriate for the environment in which they will operate long-term. So we change, you know, the choices we make, we change the materials we use to build the infrastructure that we put in our system, so that ultimately, the service levels and service quality that our customers get to enjoy, you know, meets their expectations for decades to come.

Trevor Freeman 43:59 I think the idea like it's good that we have called out specifically some activities targeted at group resilience, but some of the other stuff that we've already talked about also support resilience. And you mentioned in the grid modernization part, you know, part of that is restoring power to most customers quicker. In our growth and electrification part, I mean, making sure that our grid can handle the new loads also lends itself to resiliency. So all of this is in service of making sure that power is there for our customers when they need it, how they need it, and done in a sort of safe and affordable way. That's the goal of of all these categories together.

Guillaume Paradis 44:46 Absolutely. The, you know, going back to the earlier point, the categories are helpful in identifying the major drivers. But ultimately, to your point, Trevor, they all support each other, and when our team plans, depends the future of electricity system. They do so in an integrated manner that considers the various benefits that we can achieve by taking action and putting more money in our distribution system.

Trevor Freeman 45:13 Yeah, great. So that that's a nice segue into this next question, which is, of course, there's a cost for this, and this and this is why it is an investment plan. We're out there outlining these are our targets. This is what we want to do, but there's a cost to that, and so if we don't do this, if we said, "Look, we just can't put that extra investment into these areas," what are the implications on the grid, on our service? And let's look at kind of like quality of service, reliability, safety, et cetera, if we don't make these investments that we are identifying right now.

Guillaume Paradis 45:54 Yeah, so it's pretty direct, right? We what we've done for the in preparation for our rate application, in preparation for to develop our plans for 2026 to 2030, is we've considered all the needs. We've looked at how old the assets are, how quickly they're deteriorating, how many might require replacement over the next five years. What would be an appropriate rate of replacement to ensure that we don't let risk build up in our system, we don't cause reliability issues? We've looked at making sure that we can provide service to our customers, that we can connect them in a timely manner, that we can do all those things in a fashion that is safe and ensures the safety of the public, our customers. And so a lot of thought goes into what is required over the next five years. And then on top of those factors and considerations, we also look at what impact will this have financially on our customers? Because we're mindful that our service does affect, you know, our customers' lives, yes, in a positive manner when our service is reliable and power is available, but also financially from a cost standpoint. We add to other pressures that everyone experiences in their lives, and so we want to be very judicious in setting the size of our programs, the level of investments, in managing those various factors, right? So we have a multifaceted responsibility, and we weigh all those factors in our or in setting the plans for the future.So doing so, looking five years out, as you can probably imagine, you know, if we didn't constrain the plans, if we just did everything our planning engineers would like to do, we would have spent probably another 50% more than what is in the current plan. So looking at old assets, looking at the service levels we want to deliver, we could have spent a significantly larger amount of money if it was purely based on, we'll call them planning, you know, drivers. But as I said, we are mindful that we're responsible for the quality of our service on behalf of all our customers, and we took a very deliberate, you know, extensive approach to adjusting the program size to match the various considerations and ultimately manage the impact on our customers from a financial standpoint. And so we landed where we are after some measure of restraint, some measure of adjustments, down to the plans that would otherwise have been put in place.So thinking about what the outcomes would be if we didn't take the actions we're proposing, you know, it's pretty direct, if you think about it, and we've covered most of them, but it ranges from, you know, difficulties in connecting and delivering power to new customers in a timely manner, so that can have impacts with respect to economic development and growth of our community, so fairly direct, and frankly, it's our obligation to connect, so we would do everything we can to provide power, but it might just be more difficult, take more time on the reliability front. Again, what happens when you don't replace old assets is the failure risks continue to build in your system. So an 80-year-old wood pole doesn't get any younger and doesn't get any stronger if you wait five, six more years. And so as I said, we do a risk assessment before we choose to invest, and our risk assessments tell us that we need to take action on those types of assets. And, you know, take action in a timely manner. If we don't, what is likely to happen is that in a storm scenario, those poles that are deteriorated are more likely to fail. Even in normal conditions, it's likely that we would see more failures that could lead to reliability issues, and so just a direct impact on the quality of our service for our customers, with respect to other outcomes like enabling customers and supporting them in integrating more embedded energy resources. That might just become more difficult, as I said earlier, when we don't have good real-time awareness, we have to err on the side of caution and be more conservative in our management of the system, and that might mean restrictions on where and how we can integrate renewable energy resources. And then ultimately, you know, the paramount consideration for us is always safety, and that's an area where we would just have to be even more vigilant if we couldn't reinvest. So old assets, you know, are inherently more likely to create failure risks, and failures can lead to undesirable outcomes from a safety standpoint, so we would have to, and already do, but be very vigilant in monitoring those assets, looking at them, looking at what we can do from a maintenance standpoint to ensure that they don't fail in a manner that would be problematic. So we would be, and are always very active in looking at those riskier assets, those older assets, to make sure they don't cause problems, but reducing investment levels from what is being proposed now, reducing them further relative to, as I said, the planning levels we would have liked to put forward would have real consequences, and of course, we would do everything we can to manage those consequences and ensure that we continue to deliver the best service we can, but that would become more difficult than it is today.

Trevor Freeman 52:27 I appreciate that that context of, you know, you like me, like energy, and we want to do all the cool things, and we want to have the system that is is absolutely able to handle every eventuality. But we have to balance that with what is the right level of investment, what is the right pace to go at? And I think, you know, having seen the process, there's been a lot of work over the last year plus to find that balance. And I think we've, we've hit that balance in terms of being able to move the ball forward while trying to maintain that sort of affordability aspect for customers. Last question here, Guillaume, to kind of wrap it all up, and we've touched on this a few times in some of the other questions. But how does our investment plan align with that broader energy transition that that we talk about, you know, decarbonizing, reducing emissions, increasing sort of customer flexibility when it comes to their own generation and storage. And what role do you see Hydro Ottawa playing moving forward in that? And I know that this has already gotten a little bit of attention, but I'll give you a chance just to kind of tie a nice little bow around it at the end.

Guillaume Paradis 53:51 So to your point, we did cover a few elements, how we enable those, you know, sustainability aspirations. But you know, it ranges from making it possible for large customers to shift a significant portion of their energy demand to a lower carbon source like electricity. So again, think a customer who would use natural gas for their facilities, and, you know, for corporate reasons, decides to use electricity instead. Us connecting that extra demand and delivering power to them allows them to lower their carbon footprint. So that would be on the high end in terms of size and impact, all the way to enabling customers to install different technologies on their homes, within their homes, to reduce their carbon footprint and change how they use energy. So it could be as simple as buying an EV and making sure that power is available within that neighborhood to supply demand from that EV. It could be them installing solar panels on their roof and trying to export power back to us. And so that would tie to the earlier point around visibility and real-time awareness that we need to have to make sure that we can make that possible. So again, you know the energy system. The electricity system is integrated in so many ways and enabling our customers to achieve their sustainability outcomes, their desired outcomes in terms of energy use, comes from planning the energy system, the electricity distribution system, in a manner that supports that and that permits it. So again, going back to some categories, the grid modernization that we spoke about earlier, fits right in there. So being aware allows us to allow and enable customers, and that becomes critical again, in an environment where things are very dynamic, and we want to support that dynamism, and we need to do so in a manner that's safe. So we need information, and we need technology that allows us to go get that information to support the decision making. So as we said, all the investments we're proposing in one way or another will support our supporting those decarbonization and emission reduction objectives that we all have.

Trevor Freeman 56:38 Right? Yeah, it really comes back to the idea of us being—and this is something that I certainly talk to our customers about—a lot of us being partners with our customers when it comes to their energy journeys. And that can be very active partners in the sense of the word, where we are involved in helping make decisions together on technology or strategies, or it can be very passive, and that kind of residential model that you talked about of just making sure the grid can be there in the way that the customer wants it to be there. And that's still a partnership that that we need to lean into, and that we are kind of through this investment.

Guillaume Paradis 57:18 Plan, we're essentially underpinning people's aspirations when it comes to energy, and so we're there to make it possible for them to do what they're hoping to do. And you're absolutely right. We're seeing both ends of those conversations where some go about their own choices and really don't need us involved, and our responsibility there is to make sure that we don't create a roadblock by not being prepared and not being equipped to respond to, you know, how they want to change their behavior, all the way to that partnership, where it's a very involved conversation. You know, we're being brought in to fully explore all the options and work with stakeholders in essentially demystifying, or maybe more specifically, sort of seeing through some of the complexity that exists today in an environment that is much more dynamic again and offers a lot more options than people would have seen a few decades ago.

Trevor Freeman 58:23 Fantastic. Well, Guillaume, I think we'll leave it there. This has been great, and I appreciate you taking the time to help pick apart, you know what? What can be a pretty complex, lengthy plan, but really boils down to building out the grid, continuing to do the great work that that the folks at Hydro Ottawa do, while also preparing for the future. So I appreciate your insight into this. As our listeners know, we always end these interviews with a series of questions, and you're no different. So I'm going to dive, dive right into that. So Guillaume, what is a book that you've read that you think everyone should read?

Guillaume Paradis 59:06 Yeah, so I'm probably going to get his name wrong, or at least the pronunciation, but it's a book called How the World Really Works, by Vaclav Smil. Essentially, you know, he's a very pragmatic thinker with respect to how systems work, how our world is integrated from a supply standpoint, from a geopolitical standpoint, and how that leads to outcomes in the real world. And think things like energy, think, things like food supply. And what I like with his approach is that he breaks things down, sort of from a first-principle standpoint, to try to help explain why certain things may or may not be possible, and in an environment where—and maybe that's my perspective—but I think today there's a lot of big-picture, you know, broad opinions being shared by people who may or may not always be very knowledgeable or have the expertise in certain fields. It's nice to see someone kind of break things down to then try to support, or in some cases dispel certain misconceptions. So really nice approach. He has a number of books that are similar in nature, some cases a bit dense to read through, frankly, but I would say the How the World Really Works book is easier to digest, and it's it's a good entry into kind of his works and and his approach to his studies. The other thing that's a plus, maybe, is that he's based out of Winnipeg and Canadian. So it's great to have a mind like his, you know, contributing to the discourse in Canada.

Trevor Freeman 1:01:11 Awesome. So same question, but for a movie or a show, what's a movie or show that you think everyone should check out?

Guillaume Paradis 1:01:17 Yeah, that's a little harder. I think maybe I'll go to an old classic. For me, I I'm always impressed with extreme creativity. I'll call it in in whatever forms that I think it's neat to see how people can envision a world or create a world. And so an example for me was The Grand Budapest Hotel movie by Wes Anderson. So, you know, I think people are familiar with his work by now. I just like the combination of humor, color, like the creation of a world that doesn't quite exist but resembles one we might know. And just, you know, it's a way of expressing oneself that is so interesting, so different. He does it really, really well. And, you, know, I find it sort of like awe-inspiring to go back to those kind of movies and look at, certainly, there's all sorts of good content these days that's being produced. But I think this one is kind of withstood the test of time so far and and kind of brings you to a different place. So I'll point to that.

Trevor Freeman 1:02:30 Yeah, it's one of those where it's not just about the story. The whole watching that movie is a bit of an experience. And all the ways that you just said, you know, there's like an artificial aspect to it. There's that sort of mental, emotional side of it, and then there's the story itself, with the humor and everything. So, yeah, that's a great one. I really like that.

Guillaume Paradis 1:02:47 Always fascinating to think someone was able to come up with that, right? Like that. Yeah, totally level. Like the attention to details, the way in which the storylines are integrated, the way in which the decors, the images are graphic. It's just remarkable. And, and I think in anything it's really cool to see people who are sort of masters at their art, right? And whatever form, and there's all sorts of other examples, but that one, you know, came to mind. Yeah, very cool.

Trevor Freeman 1:03:21 If you had a free round-trip flight anywhere in the world, where would you go?

Guillaume Paradis 1:03:25 I think for me, it'd be somewhere very far north. I think it's on the list somewhere for the next few years. But just getting access to lands, scenery that you wouldn't otherwise is a really cool concept, maybe even spaces that are a bit less impacted by human, you know, behavior and presence. So I just think a flight to somewhere random that maybe doesn't even have a name, but is in between two small villages that can only be accessed by a plane. I think that would be cool.

Trevor Freeman 1:04:10 Yeah, that does sound very cool. I like that. Who is someone that you admire?

Guillaume Paradis 1:04:15 Yeah, so my wife, for sure. I think that's sort of the foundation of a healthy relationship, you should have some admiration for your partner, and I absolutely do. More generally, I would just point to anyone in our lives, and I think we all know people like that who spend a large amount of their time making other people's lives better. I could pick, you know, a celebrity of some kind, or politician of some kind, or even a historical figure, but, you know, I think in general, it doesn't have to be that complicated. People who just invest a lot of their time, you know, making sure others' lives are better. I think that's that's something we should all admire, aspire to, you know, emulate, if we can, and just recognize as well. Because a lot of the times people do that, the people who do it well, don't do it for recognition. It doesn't mean they don't deserve it. And I think we should kind of try to promote it, you know, recognize it in our lives, and encourage it and emulate it, if we can.

Trevor Freeman 1:05:30 Fantastic. Well said, last question, what is something about the energy sector or its future that you are particularly excited about?

Guillaume Paradis 1:05:37 Yeah, so I've been in the sector for about 20 years now, in fact, longer than that. My father worked for Hydro Quebec for many decades. So think we spent a lot of time talking about the future and getting excited about a future that was to come, and just the fact that we're living it now, that we're actually shaping it, is pretty exciting, maybe even not appreciated to its full extent. And I think having a chance to contribute now is really awesome, and to whatever extent we can as well. I'm trying to encourage as many people as possible to join our sector, bring various backgrounds, you know, expertise, knowledge to helping us make decisions about how energy is going to be used in our society going forward, and how we can make the most, you know, this confluence of factors that, you know, create the window of opportunity to to change things and make them evolve. And so for those of us who are part of it, let's not take it for granted, and let's make sure that we contribute to the full extent of our capabilities.

Trevor Freeman 1:06:58 Awesome, great, great way to wrap this up. I agree completely. Guillaume, thanks so much for your time. I really appreciate it. And sharing your thoughts with us. Really appreciate you coming on the show.

Guillaume Paradis 1:07:07 Thanks, Trevor. Pleasure.

Trevor Freeman 1:07:10 Great, take care. Well, there you have it, everybody. That was our last episode of the season before our summer break. Our regular listeners will know that we typically take a break over the summer to regroup and work on content and plan out the next year. But don't worry, we will be still releasing episodes every two weeks. They will just be rewind episodes, and we'll take a look back at some of our favorite episodes or things that we feel are particularly relevant for what's going on right now. So keep tuning in and listen to those, and we will be back with brand new content in September. Take care and have a safe summer. Thanks for tuning in to another episode of the ThinkEnergy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback, comments, or an idea for a show or a guest, you can always reach us at [email protected].

We've all been there, trying to decode a document filled with acronyms and numbers. In this episode of thinkenergy, host Trevor Freeman pulls back the curtain on the typical Ontario electricity bill. Learn about what makes up your monthly bill and exactly where your money goes. From generation mix to infrastructure and provincial differences, tune in as Trevor sheds light on the diverse factors that influence electricity prices across Canada.

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Transcript:

Trevor Freeman:

Welcome to a ThinkEnergy Short, hosted by me, Trevor Freeman. This is a bite-sized episode designed to be a quick summary of a specific topic or idea related to the world of energy. This is meant to round out our collective understanding of the energy sector and will complement our normal guest interview episodes. Thanks for joining and happy listening.

Hi everyone, and welcome back to another ThinkEnergy Short. I'm your host, Trevor Freeman. Today, I want to pull apart something pretty fundamental to your relationship with your utility, and something that might seem kind of basic on the surface, but there's actually a lot to it. I'm talking about your bill and how you are billed for electricity in this province, in the province of Ontario. A lot of folks may not pay much attention to their bill, other than the total at the bottom, or maybe you also look at the total consumption number. But there are actually several different components to your bill, and understanding them will help you understand a little bit more about the electricity sector and how it works and how it's funded. And we'll also take a minute to look at electricity costs in Ontario compared to other provinces, and why there's a difference.

Now, there's a lot to go through here. I'm going to do my best to get through it quickly while still explaining everything. But this may be more of a "ThinkEnergy Medium" instead of a "Short." There's just a lot of content to get through. So, let's dive right in. Obviously, we're coming to you from Ottawa here, so we're going to be speaking in the context of Hydro Ottawa. But really, what we're talking about is pretty consistent across the province of Ontario. Your bill in Ontario is generally divided into a couple of different sections: your electricity charges, which could include things like Global Adjustment; delivery charges; regulatory charges; and then you'll see HST, some credits or rebates potentially, and maybe a few other sections, depending on what type of customer you are. So, let's take it from the top.

First off, your electricity charge. This is the cost of the actual power you consume. You will see this expressed as cents per kilowatt-hour. This is the commodity cost of the electricity, of those electrons that you're using in your home or your business to do the things you need to do. In Ontario, most residential customers and a lot of small commercial customers as well are on the Regulated Price Plan, or RPP. The Ontario Energy Board, which is Ontario's independent energy regulator—it's the regulatory body in the province—sets the RPP price for the province based on its forecast of the cost to supply households and small businesses over the next 12 months. So, that's stable, predictable electricity pricing for Ontarians, and new rates generally take effect on November 1 of every year. So you have those rates for typically 12 months, and they change each year on November 1.

There are a couple of different options for how you're billed for electricity under the RPP, which you might be familiar with. There's time-of-use pricing, which has a different rate depending on the time of day or the day of the week. So you've got on-peak, mid-peak, or off-peak, and those are aligned to encourage customers to use electricity outside of the peak demand times in the province when everybody is trying to use electricity for things at home or for work, and there's the most stress on the grid. The exact times of those periods do change between summer and winter. The next option is tiered pricing, and so this is a fixed price per kilowatt-hour up to a certain threshold each month. So you can use a certain amount of electricity at one price. If you go past that threshold, the price goes up. And that's kind of a plan for those who like a consistent amount; they don't want to have to worry about what time of day it is, or maybe the way they've structured their lives or their businesses is such that they have to use electricity during peak times, so that may make sense for them.

The other option is Ultra-Low Overnight, or ULO, pricing. This is really a rate that's focused on primarily electric vehicle owners because it has a very, very low overnight rate. And the idea is that you would charge your electric vehicle—it's a big load in your house or in your business—and you would move that load to be overnight. You would charge it overnight and avoid doing that during the day, because in order to make up for that ultra-low overnight rate, there's a much higher on-peak rate kind of in the late afternoon and evening. So you'd really want to avoid using electricity as much as possible. The overall goal of all these programs, as I said, is to really reduce strain on the grid during those peak times, and that will in turn reduce greenhouse gas emissions because our fossil fuel generation in Ontario—that's natural gas generation—is primarily used during peak times. So we call them our peaker plants, and those are turned on when we need to make up that sort of highest demand load that occurs just a few times during each day and indeed during the year.

The reason that we're able to do these different rates is that over a decade ago, Ontario adopted the use of smart meters for electricity, which accurately measures and tracks electricity usage down to at least the hour, sometimes even more granular than that, and that allows for utilities to really tailor pricing plans around timed consumption. It's worth noting here that if you have signed a contract with an electricity retailer, your electricity charge will be based on the price you agreed to in that contract. So there are retailers out there who will come to you and say, "Hey, we can guarantee you this price of electricity, and it's not going to change for the life of the contract, or whatever their terms may be." And maybe that's a better deal for you, or maybe that makes more sense for your situation. So you can sign on to that. You will be charged at that contracted rate rather than the Regulated Price Plan, and you won't be subject to the changes of that Regulated Price Plan; you'll be with your retailer. That said, you will still see other charges like delivery charges and regulatory charges, which we will get to in a minute.

Before we go there, I do want to quickly talk about commercial customers, because that is a slightly different structure to the electricity charge section. So in that electricity charge section, there is a line item that is the market cost of electricity, and that does change month-to-month. And in fact, it also changes from customer to customer. Basically, there's a price every hour, and that customer's usage over that month results in a prorated price. And so on their bill, they will see the price that they're paying, the market cost of electricity that they've used in that month. There is also a line item for Global Adjustment, which is a very unique Ontario charge. To my knowledge, it only exists in Ontario. So let's take a minute to talk about what Global Adjustment is. There is a certain cost to running the electricity grid in Ontario, and that cost factors in maintenance and planning and conservation programs, as well as long-term fixed contracts. So the system operator signs contracts with generators to supply electricity at a certain rate. The market price of electricity isn't always enough to make up that full cost. So what we pay, the market rate, isn't enough; sometimes Global Adjustment is what makes up the difference. Now, every electricity customer in Ontario pays Global Adjustment, whether you see it on your bill or not. For residential and small commercial customers that are on the RPP, Global Adjustment is built into their rates that I just described above. But for commercial customers, you actually see that as a separate line item. And for most commercial customers, that is a rate that's tied to your consumption. So the more you use, the more Global Adjustment you pay. There is an option for the largest consumers to change that equation about how you're paid or how you're charged Global Adjustment, but we're not going to get into that in this episode.

So that is the electricity portion of your bill. Another quick note here: all the money that you pay for this portion of the bill goes upstream, basically to the generators and the system operators and other players in the system. Your distributor, who actually gives you the bill—so Hydro Ottawa, in my case—doesn't actually keep any of this, nor do they set those rates. That is all upstream of us. That is not the distribution company's territory. We just are the ones that provide the bill and collect what you pay.

Next section is delivery charges. So delivery charges cover the cost of getting electricity from the generating stations all the way to your home or business. It's essentially the cost of building, maintaining, and operating the vast network of transmission lines and towers, distribution systems like their lines and poles and substations and transformers, and all the equipment that's necessary to get electricity to you, to your home or to your business, and also to repair outages. So if there's a storm and lines are down, it's the delivery charges that fund the exercise of going out there and repairing that. So if you think of electricity as the product, the delivery charge is the logistics behind that. So it's like the warehouses and the trucks and the route to get that package to your doorstep. The same thing happens with the electricity system. Some of that delivery charge is fixed, and it doesn't change month to month, no matter what consumption you have, so how much you're using. That's why sometimes you'll hear people say, "Oh, you know, my electricity consumption was super low, but my delivery charge didn't change. That's not fair." And the reality is that we still need to maintain that grid. Even if you have a month where you're not using a lot of electricity, you still want those poles and wires and transformers to be there and to be working and ready for you when you are going to use a lot of electricity.

There's also a customer service charge within that delivery charge, so that kind of covers the meter reading, the billing, the customer service; maintaining that infrastructure is included in there. There's a distribution charge, and that's kind of the main portion that Hydro Ottawa keeps, as well as that customer service charge, and that is for us to maintain the distribution system. And then there's a transmission charge that is to do the same thing, except for the high-voltage transmission system that brings electricity across the province. There is also a line loss adjustment. Now, it's normal for a small amount of electricity to be lost as heat when it travels over power lines. That's just the reality of moving electricity over long distances, and you will see a small adjustment on your bill to account for these line losses, to make sure that all the electricity being generated is actually being paid for. And your local distribution utility, again, Hydro Ottawa, in my case, collects this money and keeps the portion that's meant for the distribution company and pays the rest to all the various other stakeholders in the system that make up the electricity sector. It's important to know that these delivery rates are reviewed and approved by the Ontario Energy Board based on the specific needs and the priorities of each utility. So this is the nature of us being a regulated industry. Our regulator, the Ontario Energy Board, has to approve the rates that we charge. We have to show to the Ontario Energy Board, "Here is what all of our costs are to maintain the system. Here is what we want to do to grow and expand in order to meet our customer needs. Here are all the programs that we're running, and therefore, here are the rates that we need to charge." And the Ontario Energy Board will actually make a ruling on that to say, "Yes, those are fair rates," or "No, we think you're charging too much," or "Hey, we actually think you're charging too little." The Ontario Energy Board also wants to make sure that utilities are being responsible and maintaining the grid so that it is safe and reliable and affordable for their customers.

The next section is regulatory charges. And so that is very simply the cost of having a regulated system of the Ontario Energy Board and having a regulator to oversee and administer the provincial electricity system and ensure that it remains affordable and reliable for everybody. So there is a cost, and that is on everyone's electricity bills. So those are the main sections, but there may be other potential charges and rebates on your bill that you'll see. And so these include things like HST. So electricity is subject to HST in Ontario, so you'll see that tax line. Most customers that are on the RPP, the Regulated Price Plan, are eligible for the Ontario Electricity Rebate, and this is a rebate from the provincial government of Ontario to help reduce electricity costs, primarily targeted at residential, farm, and small business customers. And you will see this on your bill as a pre-tax credit.

One last section that you might see if you're a net-metered customer, and a net-metered customer is someone who generates electricity on their home or business and uses some of that electricity, but may also push some back to the grid. So if you're one of those customers, you will sometimes see net-metered generation credits, and so this is a credit that you get that can be used to offset the electricity portion of your bill based on how much you generate and push back to the grid.

So to wrap this all up, let's take a quick look at why electricity prices are different in different areas of Canada. What's the difference? Why are we not charged all the same? As we've said before, energy is a provincial jurisdiction, so there are provincial grids, and they're usually operated at the provincial level. And, you know, some of the pricing and the structure is set at that provincial level. Different provinces have different generation mixes, and so in some of the sort of cheaper provinces to run, one of the things they have is a lot of hydroelectricity. So these are dams that use the movement of water to generate electricity. Quebec has a lot of hydroelectricity. Manitoba and BC both have a lot of hydroelectricity. And the reason that this results in lower electricity prices is that while there's a high upfront cost to build a dam, to build a generating station based on, you know, falling water, the operating cost is actually extremely low compared to other options. There's not a lot of input, you know, the water is going to do its thing, and once you've got that turbine there and the right infrastructure, it's going to generate electricity. And so there are costs, but not as much as, for example, a nuclear plant or a gas or a coal plant that require a lot of input in the form of fuel to make that plant run. So when you look at where some of the cheapest jurisdictions are and most expensive jurisdictions, there's actually a report from Hydro Quebec that looks at Canadian municipalities, Canadian cities that have the highest and lowest electricity costs. And the four cheapest cities are Montreal, Quebec; Winnipeg, Manitoba; Vancouver, BC; and Ottawa, Ontario. The four most expensive cities, and these are 2023-2024 numbers, I believe, the most expensive cities are Edmonton, Alberta; Calgary, Alberta; Halifax, Nova Scotia; and Charlottetown, PEI.

There are other reasons why different jurisdictions will have different prices. You know, there are different sort of regulatory charges and costs and environments. There's infrastructure and maintenance costs. So an older, more aging grid that has to be renewed and upgraded is going to cost more than something that's gone through that already. If you look at density, also, if you have a very dense population where everyone lives kind of close to each other, it's a lot easier to get electricity to those folks compared to a much more sparsely populated, spread-out area where there are lots of long runs to get electricity to different municipalities and towns and villages. So lots of variables go into the cost of electricity, and it definitely differs from province to province.

So that's the bulk of what we wanted to talk about today. I know it's a lot, but it is really important to understand why you're paying what you're paying for electricity, and what your money is going to do, especially at a time when we are looking to grow and expand our grid, to modernize our grid, to invest in making sure that the electricity grid can support us decarbonizing our lives, electrifying our lives, and adding more distributed energy resources like solar and storage and things like that.

Thanks for tuning in to this episode of ThinkEnergy Shorts, or ThinkEnergy Medium. I hope this breakdown gives you some of that information, and I always appreciate you joining us. I'm Trevor Freeman, and this has been another episode of ThinkEnergy. Thanks for tuning in to another episode of the ThinkEnergy Podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback, comments, or an idea for a show or a guest, you can always reach us at [email protected].

What does Ontario’s new 12-year Save on Energy framework mean for homeowners, businesses, and the future of energy in Canada? Learn how the program supports smarter grid planning and energy use, lowers emissions, improves affordability, and helps Ontarians make the switch to cleaner technologies. Tam Wagner from the Independent Electricity System Operator (IESO) joins thinkenergy to explain why conservation is a critical tool in Canada’s transition to clean energy. Listen to episode 158 today.

Related links

●     Tam Wagner: https://www.linkedin.com/in/tam-wagner-p-eng-268828b1/

●     Save on Energy framework and programs: https://saveonenergy.ca/ 

●     Independent Electricity System Operator (IESO) : https://www.ieso.ca/

●     Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

●     Hydro Ottawa: https://hydroottawa.com/en 

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Transcript:

Trevor Freeman  00:00

 Welcome to thinkenergy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at [email protected]. Hi everyone. Welcome back. Energy is finite. Now don't worry. You didn't stumble into a podcast about theoretical physics. And while yes, that concept, that statement, could launch us into a discussion about the ever-expanding universe, about how we're all made up of the remnants of exploding stars, or how ultimately, all of our collective species’ history, including the history of the planet, is but the tiniest fraction of a fraction of a blink of an eye in the grand scale of the cosmos. That's not what we're talking about today. But if you want to talk about that, give me a shout. I'd love to. know today we're talking about much more zoomed in practical look at what that statement means. So, the amount of electricity available to us as consumers who need that electricity to charge our devices, to operate our homes and our businesses, and increasingly, to heat our spaces and to power our vehicles, is limited. In the past, that electricity has been limited by the inputs by the fossil fuels that we need to burn in order to generate that electricity. But increasingly, as we transition to more and more renewable sources who you know, seemingly are infinite, you know, there's a whole lot of sunlight out there. Our limits are more economical and practical. We are expanding the grid. We're adding capacity, adding more generation, transmission, distribution, but those things also come with a cost, so we can't just do it in perpetuity, and we can't do it at the speed maybe necessary for some of the new uses that we're looking for. In light of all that, it does make sense for us to ensure that we are being as efficient as possible with the energy that we do need to use. Enter conservation or demand side management, the intentional effort to reduce wasted energy and to maximize efficiency, while also managing when we use energy so as to spread out the load, to minimize large peaks of demand, which are harder to manage than a more even demand profile. In Ontario, our system operator, the Independent Electricity System Operator, or IESO. Sometimes I'll refer to that as ISO has managed provincial conservation programs for the last two decades. Conservation is and has been a foundational element in grid planning and in our supply mix. That has been the case for a number of years now, and will continue to be the case. Recently, in January of this year, January 2025 the ISO unveiled its ambitious new save on energy framework, a comprehensive 12-year plan designed to empower both residential and commercial customers in Ontario to take control of their energy consumption. This initiative arrives at a really critical juncture, recognizing the pivotal role of energy efficiency and maintaining a reliable and affordable electricity system, something we talk about all the time on the show, amidst a projected surge in demand driven by economic growth and the energy transition towards electrification, something else we talk about all the time on the show. I hope by now you're seeing that all these things come together, and the topics that we talk about are usually related to each other. Backed by significant provincial investment and a strong commitment to collaborate across the sector. And this includes ongoing collaboration with Enbridge and a new role for the local distribution companies like Hydro Ottawa, this new framework really introduces a suite of new and expanded programs aimed at creating this culture of conservation and facilitating the adoption of cleaner energy technologies. It's really meant to complement the energy transition and make sure we do it in a way that is as efficient and affordable as possible. The ISOs new save on energy framework in Ontario holds significant implications for Canada's broader energy future, aligning with a number of key national trends and objectives. So just because this is an Ontario framework, there's a lot of good information here that applies across Canada's energy sector, and indeed, even beyond Canada's borders. Things like supporting our climate goals and emission reduction targets by encouraging a shift away from fossil fuels for heating and transportation, by making it easier to switch to electric options for those two things, things like recognizing energy efficiency as one of the lowest cost resources to address system needs, and in fact, we'll talk about that in our conversation with our guests here in a few moments. Addressing the need for electricity demand. As Canada pursues electrification across various sectors, so in Ontario, our system operator is forecasting a 75% increase in our demand by 2050 you're seeing similar projected increases across the country and indeed around the world, as economies and energy sectors that have been very reliant on fossil fuels look to switch to more electric options, while at the same time managing those other growth items that we've talked about in the past. Ai data centers being one of the big ones. This framework also looks to promote grid modernization and integration of more renewable energy sources across the grids, so in essence, a greater interprovincial electricity system. And finally, looking to foster economic opportunities by stimulating the clean tech sector driving more demand for those energy efficient technologies and services. So, to help us better understand this new program and the role of conservation in Ontario's grid management, I decided to go right to the source, and I'm joined today by Tam Wagner. Tam is the director of demand side management at the ieso and provides thought leadership for the design and delivery of energy efficiency and demand side management programs. Tam has been with the ISO since 2005 in a number of different roles, and so she is well placed to help us dive into all the details about this new conservation framework. And I'm really excited to talk to her today. As I mentioned a couple times in our chat, I come from a conservation background. That's kind of how I got my start in the utility and so it's great to see how it's evolved over the years. And I'm really excited to dive into this with Tam. Tam Wagner, welcome to the show.

Tam Wagner  06:54

Thanks for having me, Trevor.

Trevor Freeman  06:55

okay, so let's dive right in with a little bit of the basics here. Why is energy efficiency a priority for the province? Why are we even talking about energy efficiency?

Tam Wagner  07:05

So, to get into that, I'm going to take a step back first and talk about what electricity demand is doing in the province of Ontario. So, what we're seeing is it's growing according to the ISO latest demand forecast, the provincial electricity demand is anticipated to grow 75% by 2050 and that just further reinforces the need for us to really invest in everything in order to meet those growing electricity demands, including energy efficiency and demand side resources. At the ISO, we've been delivering energy efficiency and demand side management programs for businesses and residences in Ontario for nearly 20 years, and we've done this through different frameworks and business models. And more specifically, since 2011 we've been delivering our programs through our save on energy grant. With that is, is what we've seen is energy efficiency at three cents per kilowatt hour. It's one of our lowest cost resources to meet what Ontario's energy needs, what we've been able to achieve, and it's really building on this success is, since 2006 Ontario has saved 18.5 terawatt hours of electricity as a result of our programs. So, to put that into context, that's the equivalent of powering 2 million homes for one year. And so, with that is when we think about energy efficiency, it's really a key tool in our toolbox to meet some of the reliability needs, yes, in the past, but also those growing needs going forward.

Trevor Freeman  08:27

And what about the so we talk a lot in the show, obviously, about the energy transition in context of climate change and trying to reduce our emissions. How does energy conservation fit into that? What are some of the environmental benefits of focusing on energy efficiency?

Tam Wagner  08:44

When we think about when Ontarians use electricity the most, and usually it's in the summer period with air conditioning load on, in order to meet those electricity peaks, what we run is is a variety of generators within the province, so nuclear, hydroelectric, but also included in that is our natural gas generators. And oftentimes those natural gas generators are on for those peak periods, like I mentioned, in those summer peak periods. So, by leading into energy efficiency and actually reducing what our summer peaks are, we're relying less on those gas generators, and hopefully being able to run them less as well, because we are flattening what that load is, if we're running those gas generators less, we're able to reduce the greenhouse gas emissions that come from those resources.

Trevor Freeman  09:28

Yeah, and just for our listeners, kind of drawing on my background of previously working in energy conservation, all the things that really drive toward wanting to reduce electricity consumption, sort of the highest cost times the highest emission times. They all kind of coincide. So, when you're focusing on that energy efficiency, focusing on reducing your consumption or your demand, it has that added benefit of reducing your cost and reducing your emissions, and all of the above. So really, a lot of things coming together to make. Energy Efficiency makes sense for the customer as well as the utilities and the system operator, of course. Okay, so Tam, you said a couple of things in that answer that I want to dive into a little bit more detail. So the first one is that energy efficiency has been around for a long time. You know, you said, 20 years we've been doing energy conservation in one form or another in the province of Ontario. So, what's different about this latest framework that's just been launched? How has that evolved? What's different moving forward?

Tam Wagner  10:29

Now, you're going to get me really excited to talk about this. If we reflect back on on the past, what we've had is is really time bound frameworks. Our frameworks have been anywhere from two years to five years with this new framework that we were starting in is it's a 12-year framework, so over a decade long. The other piece is the funding commitment, and so it's a 12-year framework with a $10.9 billion commitment. So, it's billion with a B. So, we're talking both from a scope and a scale perspective, significant additional investments and time commitment with the new framework. One of the recommendations that the ISO made in our midterm review report, and so this was published in 2022 and the at the midpoint of our previous framework was our recommendation was to move away from these time bound frameworks and better leverage demand side, manage, management and energy efficiency as a resource to respond to evolving system market and customer needs. So, as you noted, Trevor, there is, is the one of the things I also say too, is, is the superpower of energy efficiency is, is it really operates at that intersection point between the electricity grid needs, but also what customer needs are, being able to respond to customer needs will allow us to provide electricity savings to address those energy system needs, and with this new framework, it does exactly that. So not only is the framework a 12-year commitment, a feature of the framework is that it's enduring. So, what do I mean by it being enduring is that within that 12 year period, there's a commitment that at the six year mark, we'll do a midterm review? We'll reflect on what's working, some of the successes of the program, of the framework, but then also, what are the opportunities to enhance it? How a system needs evolved over that time? How have customer needs evolved over that time? And provide recommendations? Going forward with those recommendations, there's an opportunity for the government to then also recommit to the framework and enhance it or extend it out another six years, so that we have another 12-year framework. So, the key element of this is that the framework actually never hits its end point. It just continues to re up itself or extend itself with the with the support and commitment from government. The other piece that I'd highlight too are from a customer perspective is, is, with this framework, there's a there's something for everyone in it. When we look at the electricity system and past frameworks, it really carved out specific customer classes that our programs could serve. With this it captures businesses, whether it be small business, commercial, institutional or industrial or industrial organizations, but it also has call outs for the residential sector as well as customers that have historically been underserved or vulnerable customer segments, including income qualifier First Nations communities. So really a broad scope in not only timing and funding commitment, but also the customers that we can serve with this framework

Trevor Freeman  13:21

That's fantastic, again, lots of good stuff in there. I really like the idea of creating a more enduring model that has more predictability a longer time frame. And the benefits of that are fantastic. It gives our customers predictability. They know these programs are going to be around, and they can plan their projects ahead of time. Instead of scrambling to Hey, we got to get this done in the next 12 months or two years, or whatever the case may be, it lets you know service providers, or those folks that are out there supporting energy efficiency measures build this into their business plans and really spend the time to educate customers. And then, speaking from the utility perspective, this is also great to have that predictability. We can talk to our customers about it. We can say, look, this is the reality here. This is the program that'll be in place for a long time. So I think that's fantastic that we've got that sort of enduring model. Now.

Tam Wagner  14:19

Trevor, I feel like he's been a fly on the ISO walls that we as we've been talking about, the new framework, because those are exactly all the things that we've highlighted. The other piece I would add, too, is, from a workforce perspective, is being able to build capacity in all of our respective organizations, to be able to support the the increased need and demand for for energy efficiencies, whether it be from a contractor or skilled trade perspective. So giving us the time to invest in people as well?

Trevor Freeman  14:51

Yeah, yeah, that's another great point. And our listeners, you know, who knows what their background is, but everybody probably has some experience in you. A plan is great on paper and a program is great on paper, and when you actually implement it, there's a lot of lessons to be learned and iterations and tweaks, and having the runway to learn those lessons and make those tweaks and adjust as you know time goes on and the context change, I think, is another really great benefit of this program, and having that long timeframe to have that flexibility and have the room to maneuver, which is fantastic. So I agree. Okay, so the next thing that you mentioned a little bit ago, that I want to dive into is just the sheer magnitude of additional demand that is coming, and that's not going to be anything new to listeners. We talk about that a lot of you know all the different drivers that are pushing up demand from electrification as a result of the climate crisis, growing demand in AI data centers, et cetera, et cetera. You mentioned the projection of a 75% increase by 2050, so let's talk about the role that energy efficiency in particular will play in helping address that growth and the growing demand that's coming and making sure that we can meet that demand in an affordable way. What's the role of energy efficiency in that?

Tam Wagner  16:19

I think what I'd say is, is the challenge that that puts out to energy efficiency is our forecast. Our latest forecast indicates that 75% growth by 2050 I say the challenge that's put out to energy efficiency is, how do we make it less than 75% so with energy efficiency, what it helps to do is, is it helps to mitigate the pace of that growth by using electricity more efficiently. It's a tool in the ISOs reliability toolbox, and so it's a resource that we will directly incorporate into our planning assumptions and indicate, and basically from the from the get go, say, if we can get this savings and electricity from energy efficiency, those are megawatts that we don't have to go out and procure traditional resources or or defers the timing in which we may need to procure those additional resources, so whether that those resources be supply side generators or transmission or distribution line infrastructure, so really, being able to avoid or defer some of those infrastructure costs. The other piece too about energy efficiency, and back to that point around that intersection point between system need and customer need is our programs. By participating in our programs, you're directly getting dollars right into your pockets. So through our incentives and our rebates, those are dollars that we will provide straight to the customers and participating in our program. So that's the upfront benefit from an affordability perspective, but then from a longer term perspective is it helps customers be able to better manage their energy and usage, and being able to better manage your energy and use you can also better manage what your energy bills are. So, Trevor, you had mentioned around, okay, what are some of those peaking times, and what are the higher costs often attributed to those peaking times is through demand side management and energy efficiency. You can not only shave that peak by using less electricity. The other piece that we're really leaning into, and I keep referring to, demand side management, is, how can you control how you how you use that electricity? One of the things that we've done recently for residential consumers is through our P perks program and through something as simple as a smart thermostat, is being able to actually provide electricity systems to the system savings to the grid through small adjustments on the smart thermostat that you have at home can make really big impact from a grid. Need perspective, but then also impact what your usage is, and shifting some of your use at home into those lower priced hours, when we think of it, the time of use rates.

Trevor Freeman  18:46

Yeah, really, when it comes down to it, every kilowatt hour saved, or, you know, kilowatt avoided, is something that doesn't have to pass through a transmission line or a distribution line. It doesn't have to go through a transformer, and we don't need to generate that somewhere. And so there's obviously savings there. You mentioned a little bit earlier in a previous answer, that stat around, you know, three cents per kilowatt hour. How does that stack up? Or how does that compare to other generation or transmission assets, like when it comes to cost and reliability? Compare energy efficiency to more traditional assets.

Tam Wagner  19:24

The simple answer is, it's lower. So when one of the principles we take when we when we pursue our energy efficiency programs is we talk about it being cost effective. And what that really means is that when we compare it to other traditional infrastructure, so long as the cost of providing those energy efficiency programs, so cost from an administration perspective and delivering the programs, but also including the incentives, the rebates that we provide to customers, so long as that all in cost is less than the cost of traditional infrastructure, whether it be generation or transmission, we'll pursue it. So that's really. Where I'd say just simply, is the energy efficiency programs that we deliver are all cost effective, and so they're all a lower cost than the traditional resources that we employ.

Trevor Freeman  20:11

That working. I can speak from experience, working at the utility, and like I said previously, being in conservation, I have gotten the question in the past, why is the utility or the utility sector, spending money to get us to not use electricity? Isn't that counterproductive? And you just gave the answer right there. It's so much cheaper to do that than to try and build new generation, build new assets. It's the cheapest way to achieve that capacity, to get that capacity that we need on the grid, which, again, we talk about here all the time. So great answer. Let's get into the numbers a little bit. So you mentioned sort of previous savings that we've achieved here in the province of Ontario. And I think you said, if I'm not mistaken, since 2005 we have saved essentially the equivalent of, you know, taking 2 million homes off the grid. I hope that's the right stat. Then the targets that we've got here for this program are pretty ambitious, and so for our listeners, by the end of 2027 so that's really only two and a bit years from now, two and a half, the target for the program is to achieve 900 megawatts of demand reduction and 4.6 terawatts of energy savings. Now, for those of you who are not kind of nerdy engineers like myself, like Tam, sorry, Tam, to throw you in that bucket, that's about the same as taking a half a million homes off the grid. So we've done 2 million homes already, and the last 20 years. In the next two and a half years, we're trying to hit a quarter of that tell me a little bit about the ambition of this program.

Tam Wagner  21:53

Definitely ambitious, if I think that's really great context, and even if I take the context even more recently, when our last framework was a four-year framework. So, from 2021, to 2025, our targets there were 725, megawatts of peak demand savings and 3.8 terawatt hours of energy savings, which were aggressive then. So, we're continuing to be more aggressive on our savings. And what I'd say with that is, that what we're seeing is, is we're seeing a very engaged customer base. Ontarians are very engaged and want to do their part, and especially if their part actually doesn't require a lot of work on, on the Ontarians behalf. And so, what we're really wanting to do is, is tap into that and say, if you, if you want to do your part here, we'll give you a space for you to do your part, whether it be at home, as a as a homeowner, or in your businesses and looking at it from a larger scale perspective, really, what we want to lean into is that all hands-on deck approach. So, recognizing that this is the lowest cost resource to meet our growing needs is, let's start there first. Let's optimize. Let's get everything we can out of energy efficiency and that lowest cost resource before we go up the stack to say, Okay, if it's not an acknew, we've got to spend on something that's a little bit more expensive. But let's first try to exhaust that lowest cost resource first. And one of the things that we also recognize in doing that is, I feel like I talked a lot about the ISO, but definitely the recognition that the ISO is, is that we can't do it all ourselves, is that these growing needs are going to impact everyone, both from a end user or consumer perspective, but also businesses and organizations and utilities that you touched on before Trevor. So as we are faced with the same challenge when it comes to growing electricity needs, how do we work together to address that? And very much a I'm very much a supporter of the saying we're so much greater than the sum of our parts, and being able to work together to achieve those growing needs will be a key part in meeting those very aggressive targets.

Trevor Freeman  24:05

Yeah, so perfect segue into the next thing I want to talk about, which is the role of the different players in the sector. And so just as a refresher for everybody, the Independent Electricity System Operator is the system operator in Ontario who kind of oversees the electricity grid for the province of Ontario. We have a transmission entity who kind of gets the high voltage electricity around the province to the place it needs to be. And then there are distribution entities, and that's who hydro is, who I work for. So Tam, let's talk about the role of that local distribution company, that kind of last line before the customer when it comes to implementing this new framework.

Tam Wagner  24:50

So, I, what I would say is, is that we very explicitly call out collaboration in this framework. So, we talk about, yes, well, the local distribution companies. So specifically, we also talk about our natural gas distributors as well as the federal government in our potential collaboration efforts. So, we'll focus in on the local distribution company side of it. We recognize that as the province wide needs are growing, from a bottom up perspective, the distribution needs are growing in each of the distribution territories as well, and so especially when some of those needs are coincident with each other, there's opportunities for us to really as opposed to us each doing our own thing in order to address our own relative challenges. Is why not work together to come up with a solution that'll address both of our challenges at the same time, and a big goal of that, yes, meeting those system needs, but having that customer focus in mind and saying, looking at it to say, how can we best enhance the customer experience? And if we've got a really strong customer journey and something that really speaks to customers, more customers will participate in our programs, and we'll address our system needs. I don't want to say it as a as a byproduct or as a result, but it starts first with the customer. For the ISO, we recognize, you noted, we're a system operator. We're operating at that 10,000-foot level when it comes to electricity grid, we've had great success in recognizing the value of energy efficiency and demand side management and addressing our bulk system. Addressing our bulk system needs in working with local distribution companies, we want to also be able to support and be able to really move the conversation around how energy efficiency and demand side management can also help address those distribution system needs as well. And what that is we also recognize the strength that LDCs bring to the table when it comes to your customers and the relationship that you have with customers. So what we've been working in, and we've already been working collaboratively with local distribution companies across the province, we're really taking a an approach in two main areas when it comes to that collaboration. So first off, leading into that customer the customer relationship that local distribution companies have working with the utilities to further support the province wide programs that are delivered under the save on energy brand and enhancing the customer journey, customer experience to those really focusing on marketing and business development activities to increase the participation in our province wide programs. So that's the first area of focus that we have with our collaboration. The second area, and leading into the piece around the distribution system needs those utilities may be faced with, is, how do we work together to support some local programming, where from an as a system operator working at that 10,000-foot level, those look that local programming will also yield benefits to the bulk system. And recognizing that there may be gaps and some of the programs that we deliver today, or there may be needs very unique to a geographical area, is how do we work with the utilities to hone in on those provide those opportunities to implement different programs that complement our province wide programs potentially foster further innovation in that regards, and help address those distribution system needs while still providing benefits to the bulk system or the grid level as well. So really focusing in on those two areas. So first of all, enhancing the province wide programs, but then also zooming down a bit and looking to say, how do we work together to be able to provide funding for local programs to help address distribution system needs that the grid level will also benefit with?

Trevor Freeman  28:37

Yeah, that's great to hear. And you answered my next question already, so that's fantastic, which was around the level of knowledge and understanding that the local utilities bring to the mix of specifically what's happening with our customers on the ground in specific areas, and being able to, like you said, build or design unique aspects of the incentive program that are really targeted at a specific need in an area. So for example, if we have a part of our distribution system that's particularly constrained, we may want to target programming in that area to achieve faster results, bigger results, whatever the case may be, or if there's a particular load type or load profile that we want to tackle in an area we can sort of work with, with the ISO, to design a program that's really going to target that need and benefit the distribution and the bulk system at the same time. So great to see that that's part of the mix.

Tam Wagner  29:39

Absolutely, I think the two other things, if I can add to that, is really focusing in on what the customer needs are. And to your point, Trevor around if there are different load types or different customer uses, and then a local distribution company's territory is this, how do we how do we tap into the. And learn about it, that it might be ahead of where the broader Ontario customer base is at, and so that can really foster that innovation, and then maybe spur on potential province wide programs in the future. The other thing I'd notice is that Ontario right now, we're summer peaking, and as I mentioned, our significant electricity load comes from air conditioning. And I think the stat is about a third of our load in the summer is actually attributed to air conditioning load when we do our planning outlooks. So, our annual planning outlook is 20 years out. Is what we're starting to see, is in the early 2030s Ontario becomes dual peaking. What that means is that we still have that summer peak, but we're starting to see the winter peak increase as well, recognizing that we've got over I think over 55 local distribution companies in the province. Some of those local distribution companies are actually winter peaking today. So are there ways for us to to look at what programs, what winter focused energy efficiency programs may be available. I don't want to say pilot those, but potentially launch some of those in those winter peaking utility areas, and again, for the ISO learnings associated with that, so that when the province more broadly becomes dual peaking is have some experience, have some data to inform what might work at the province flight level, to help us better plan and prepare for that future.

Trevor Freeman  31:26

And so, for our listeners, I think we've talked about this before, but as we electrify, especially space heating, we're going to start seeing that higher load in the winter. And you know, there's a way to do it more efficiently than not. So, making sure that we're looking at technology like heat pump and smart thermostats instead of baseboard heating and, you know, sort of more analog controls for that. So programs designed to address that would make a lot of sense, as you say, Tim and in those areas where we're already seeing a significant increase in the winter. So great to hear. Okay, so this seems like a good time to kind of dive into some of the specifics about the programs. We've been sort of talking high level. Let's, let's get into the details. So for residential customers, for folks out there that you know, own their home or rent a home and have a relationship with a landlord, what are some of the programs that are available to those customers to really address energy efficiency in their homes?

Tam Wagner  32:26

So, we've got two specific programs for broad residential consumers in Ontario, I mentioned our peak perks program, and with that, it's a demand response program that's targeted at that summer peak. So it's actually been a very wildly successful program. It's been in market. We're just approaching two years. It launched June of 2023 and what that program does is, if you have central air conditioning or a heat pump in your home that cools your home in the summer, and you have a smart thermostat, is what is by enrolling in the program, you get on immediate enrollment and acceptance into the program, you get a $75 prepaid MasterCard to participate. And participation in the program involves on those peak summer days. And usually, we see those peak days between the months of June and September, will make small, a small two degree adjustment in the temperature in your home and for no longer than a three hour period. And with that is, is that that does provide relief and flattens that peak in from a province wide level to help address what our system peaks are. So I'd mentioned that program has been really successful, so over just shy of two years, we've got over 230,000 poems enrolled in the program. And what we expect with that is just over 160 megawatts of peak demand reduction as a result. When we call on the program and it's quickly become the largest virtual power plant in Canada and one of the largest in North America. So, if you're a residential consumer, with central air conditioning or heat pump that close your home and a smart thermostat, definitely something to look into. One of the things I would really highlight about that program, because you might say, Okay, two degrees. How does how does that feel? Am I going to be uncomfortable, especially if it's a peak summer, what hot and humid day? We've been really mindful of the customers through the design of that program, so the customer is always in control when it comes to our peak perks program. If you're if you work from home, or are home during a day when we're calling a peak perks event and you're finding your home is getting a little bit warmer than you would like, you can always go to your thermostat and readjust the temperature setting back to your normal setting to for to maximize on, on your comfort at the same time is, is when we know we're calling event. What we'll do is this will pre cool your home in advance of the event. So I mentioned it's a three hour event where we where we increase the temperature in your home by two degrees. Is what we'll do is, is as long as there we're not. In a state of emergency in the provinces is will adjust the temperature in your home so it's actually cooler half an hour before the events will cool your home two degrees. And then when we actually call the peak perks event, raise it. I guess the difference would be four degrees. But again, trying to maintain that coolness in your home to maximize on customer comfort and and and help with that. The other program that we have for residential consumers, and was just launched earlier this year, it's our home renovation savings program. So with that, we deliver it in collaboration with Enbridge gas, and it offers rebates for energy efficient upgrades that you may be looking to do in your home. And some of the equipment that we include in that are heat pumps as well as smart thermostats and solar PV, rooftop solar PV as that, as well as battery, battery energy storage systems. And then also, we know that when it comes to your home, being able to retain or heat or cooling weatherization as well, so attic insulation or doors and windows as well. So rebates available for all of those if you're a homeowner in Ontario, great.

Trevor Freeman  36:07

You mentioned earlier that there are sort of income qualified programs or programs for folks living in social housing and First Nations. Can you shed a little bit of light on those specific aspects?

Tam Wagner  36:18

Yes, absolutely. So we've got, again, this the this programs in collaboration with Enbridge gas as well. So we've got the ISOs, the save on energy's energy affordability program, which is offered alongside with Enbridge gasses, winter proofing program, home winter proofing program, and that offers, again, the energy efficient upgrades to customers that are income qualified. So there are income qualifications, whether you're low or moderate income household in Ontario, and it provides you with energy efficient upgrades at no cost to you. So I would highly recommend going to the save on energy.ca website to see what those income qualifications are. It's all dependent on the number of people that live in the home, what the income thresholds are, and again, the all of these upgrades would be available to you at no cost to you at all. From a First Nations programming perspective, we've got two programs offered to First Nations community. We've got the First Nations community building retrofit program as well as the remote First Nations programs, and both of them help both businesses and residences of on reserve First Nations communities make energy efficiency upgrades, again, at no cost to the community or the community members.

Trevor Freeman  37:30

Great, so, really, anybody living in a residential home, there's something out there for you. So rebates to address energy efficient equipment or support from the Ieso to or your local distribution company. Okay, so let's shift over to commercial, industrial, institutional, kind of agriculture, all the other types of customers out there. What are the programs that are being offered, and how do they differ if they do differ from previous programs?

Tam Wagner  38:01

Maybe I'll start with the last part of their question. First, what I'd say specifically with the these businesses is we're even with a new framework. We're not with the old and in with the new. So everything that's been offered in the past is basically available to customers today when it comes to those business programs, and what we're really committed to is, how do we continue to improve the offerings that we have as new technologies or available or organizations are looking to improve some of the processes that might to help result in more efficient energy and usage. So we offer a range of business programs that provide different opportunities. And really our focus is, how do we meet the businesses where they're at based on the type of business that they are, but also where they are along their energy efficiency journey. So a couple of programs that I'll highlight is, is we've got our retrofit program, and that's really been our flagship program, and under the save on energy brand, and what that does, it provides an a la carte list of prescribed technologies with Dean savings that businesses can pick from. So if you're looking at making what upgrades to your heating, ventilation and air conditioning systems and stuff, you can go to our retrofit program, and what it provides you is a list of equipment that it provide indicates what the energy savings that the ISO can expect from it, but and then also provides you with what the incentives levels are for that. So really, that's, I'd say that's kind of the simple, simplest path. From a customer journey perspective, we also recognize that there's a different range of customers when we think about our business customers, and it's not a one size fits all. We also have a small business program that recognizes the unique nature of small businesses in Ontario, and that program offers energy efficient upgrades at no cost to those businesses, and it also provides additional support to install the equipment as well. And we know that it's not all about technologies as well. I've mentioned around sometimes with processes that you. May have within your organization, they can also yield energy savings. So our strategic energy management program is designed to help organizations improve their energy performance by implementing an integrated system of organizational practices, policies and processes to achieve some of these persistent energy savings so really, what I'd say to the businesses is reflecting on what, what the nature of your organization is, how your energy and usage is, is that there's a variety of different programs that hopefully can cater to your needs and check out the save on energy.ca website to find out more.

Trevor Freeman  40:34

Yeah, I think in my kind of review of it, there's, there's support for equipment and sort of technical solutions to address energy efficiency, and you put it very, very well, you know the process, the people side of things, if you need support, if you need guidance, expertise, there's also methods of support to help you access that, whether in your organization or through other means, so lots of different avenues to address energy efficiency in all types of buildings. So those are all existing buildings, which we know are certainly a major part of energy consumption today and emissions today. But we're also building new buildings constantly and constantly adding to our building stock. So what programs are out there to address new building construction and making sure that we're constructing energy efficient buildings that go beyond existing codes and standards?

Tam Wagner  41:33

So, what I'm saying, I'll say there is, we're working on it. So as part of our 2025 to 2027 plan, we have identified the need for a new construction program. We heard this through stakeholder feedback as well. When we did our midterm review back in 2022 we we heard from stakeholders that that's a gap in our programming, and so we're looking, we were looking to address that. That gap has, that has been identified. So right now my team is we're doing some market research, and in order to help inform what the design of a new construction program may look like, our commitment is, is, is, as we've got some of those that early thinking is, we will go out and stakeholder it and invite feedback and into how best to design that program. We know the we know the things we know. We know there are things that others have expertise in, and that that expertise would really be helpful to the ISO as we, as we design the program. So I'd say, stay tuned for that and continue to look at on our stakeholder engagement website for upcoming engagements, where we will seek some feedback and insights into that design of that program.

Trevor Freeman  42:36

Perfect, one last item is beneficial electrification. So we know that the government has kind of directed the ISO to look at how to support beneficial electrification. So maybe kind of two questions here, what is beneficial electrification, if you could kind of help define that for our listeners, and what, how are you looking to support beneficial electrification for customers.

Tam Wagner  43:01

Sure, so how we look at beneficial electrification is, is really around changing your the fuel source of your end use. And that's I could probably plain language that a little bit more and maybe, well, it's easiest to use an example and an example charter that you've actually highlighted is, is for a lot of Ontarians, is, is the way you heat your home isn't actually typically with electricity, and that with fuel switching or switching the source that you heat your home with is that you can yield and really electrifying that is as you can yield greenhouse gas emissions reductions as a result of that of electrification, when We think about it from a beneficial electrification perspective, is electrification perspective, is, is with as we, as we talked about the demand in Ontario increasing is, how can we leverage the way that customers may be electrifying their end uses to ensure that we're doing it in the most efficient manner that will not only yield benefits to the Customers, from a GHG emissions perspective and from an overall energy bills perspective, but also provide benefits to the electricity grid as well. And trying to, instead of hitting that 75% is, how do we actually electrify and and electrify at a rate that's actually less than that 75% would be the goal that we're looking at here with regards to how we're actually applying that is just earlier this month. So in earlier in May, we launched our first offering through the home renovation savings program for a beneficial electrification. And what that entails is for those customers in Ontario that are currently heated through oil, propane or wood heated customers, is we do have a heat pump offering to to support electrifying those end uses that will enable the those customers to be to reduce the GHG emissions in their home, and with that is also save money on their energy bills as well recognizing. A different cost in the electricity side, versus the oil or propane fuels costs.

Trevor Freeman  45:06

Yeah, I think it's, I mean, I'm someone who, obviously, folks that are listening know, I'm pretty passionate about climate change. And if, if your only lens is GHGs or greenhouse gas reduction, you know, you may jump at electrifying in any possible way, but that could be taking out your furnace and putting in electric resistance baseboard heating, which is not a very efficient way to heat your home, or not as efficient as you could be doing with, for example, a heat pump which is much more efficient, you get a lot more energy out than you put in. And I've preached a lot about heat pumps on this program before, but that's the concept behind beneficial electrification. Is doing that fuel switching, but doing it in a way that one doesn't overly stress the grid. Two, doesn't overly stress your own energy bills, because we don't want to push people into unaffordable energy. So making sure that there's support to do the right move in the right way. Tam, just to wrap up here, you've said it a couple of times, but I'll give you a chance to say one more time, where do folks go to find out more information about these programs, what they can access? How to get that support? Where should they go and look?

Tam Wagner  46:18

So our website is the best place to get that information. So it's saveonenergy.ca. Whether you're a residential, consumer or business, all the information is there. And we also have energy savings tips on our website. So again, that's Saveonenergy.ca.

Trevor Freeman  46:34

Perfect. And I'm going to selfishly add a little plug in there of you can also reach out to your local distribution company, especially if you're here in hydro Auto's territory, we would be happy to help you access these programs and point you in the right direction and make sure that you're getting the support that you need through these programs. Tam, thanks so much for walking through this new framework. It's super exciting. I mean, it's a little bit close to my heart. Again, I've been working in conservation for a while before I moved into my current role, I spent a lot of time in conservation, so it's great to hear about the evolution of the program and where it's going. I'm really excited that it's such an important piece of the planning mix that it's getting the sort of recognition and focus that it's due and really exciting to see how it goes in the next couple of years. So to wrap up, we always end our interviews with a series of questions. So as long as you're ready, Tim, I'm going to jump right in with the first question being, what is a movie or a show that you have watched or are currently watching that you think everybody should take a look at?

Tam Wagner  47:40

This takes away from the seriousness of the conversation that we've been having.

Trevor Freeman  47:44

That's the goal we're trying to focus here.

Tam Wagner  47:47

So for those who don't know me, is I've got, I do have two kids in a series that we're watching right now. Is the rookie. Have you watched that before? Trevor? I

Trevor Freeman  47:56

I haven't, no, but it's on the list. We've got a long list

Tam Wagner  47:58

That sounds like our household as as as well. And it's a fun time. It's, it's a series that we can we watch as a family. And it's, I feel like sometimes we, you know, we try to solve the crime before the show does. But it also has a really good story, kind of, the initial story around an individual who is, I'd say, later in his career, but had a moment where he explored a career shift. And for me, that message there is around like you're never too old to try something new and be successful in it. So I think that's a really good message for me myself, but also a good message for my kids.

Trevor Freeman  48:38

Yeah, very cool. I like that one. I'll have to bump that up on the list. We'll watch it sooner rather than later. If somebody offered you a free round trip flight anywhere in the world, carbon offset accounted for, of course, where would you go?

Tam Wagner  48:50

So I would go to Vietnam. So I am Vietnamese by background, born there, but I've lived in Canada for, oh, over 40 years, been back there a couple of times, and I've always loved it. It's a So, yes, back to kind of from a cultural roots perspective, there's just so much history there. It's a completely different climate from what we have here in Canada. The people are incredibly friendly, and the food is fantastic.

Trevor Freeman  49:21

I have a tiny, tiny sliver of experience, and can say that Vietnam I visited once, and was definitely on the top of my all time favorite trips for a number of different reasons. All the ones you just mentioned are certainly up there for sure. Who is someone that you admire.

Tam Wagner  49:37

And again, I'm going to cheat on this one a little bit, so because it will be fun, but my parents with them. So I'd mentioned were first generation immigrants, when I think about the things that they've done and to come to Canada, we came to Canada as refugees, so to leave a place that they were very comfortable in. Knew the culture. Knew the language to come to a country where completely different environment, completely different culture, had no family here, and their reason for doing it was so that myself and my brothers could have greater opportunities as a parent. I'd like to think that if I was faced with that, I would make the same decision. But until you're actually in those shoes, you never know whether you whether you would or not, so I am definitely very grateful for the decisions that they've made, because it's landed me where I am today, and are very appreciative of that. So very much admire them.

Trevor Freeman  50:32

Yeah, that's a fantastic story. Thanks for sharing that. Tim. Finally, what is something about the energy sector or its future that you're particularly excited about.

Tam Wagner  50:43

We're at a really unique spot right now in that we are very much building for the future, and not just our future or kids future. When we think about the electricity infrastructure, it's things, it's something that's going to be in place for the next 40 plus years. So being able to face that challenge to build something for the generations to come is very exciting for me. It's not just the what of it, but how we do it. As I touched on before around, we're greater than the sum of our parts. Is being able to do that in a way that we can collaborate with each other, really lean on each other's strengths, learn from each other, and then I think that foundational culture is the way that we'll be really successful and ensuring that we can have that reliable, affordable and sustainable electricity future. So excited about the challenge, but also even more excited about how we're going to face that challenge and work together to to to be successful.

Trevor Freeman  51:40

Yes, I love that, and I think that's a great place to wrap this up. I love that. And I say this often to folks like, I can't think of a better spot to be when I think about climate and energy and the energy transition than kind of in the electricity sector, thinking about how all roads, or at least most roads, to the things that we want to envision run through the electricity grid and all the different nuances of that. And you could go down endless paths of, how do we make sure that this is going to work, and how do we make sure it's going to be affordable and that people are going to have the power they need? So super glad to hear that you're excited about that and passionate about that, super glad that you're putting your efforts towards that. Thanks. For coming on and talking to us today and sort of sharing your expertise and wisdom around this pretty exciting new program that hopefully is going to be a major piece of our energy future here in Ontario, at least moving forward.

Tam Wagner  52:38

Thanks for having me. Really appreciated you taking the time and spending it with me as well Trevor.

Trevor Freeman  52:42

Fantastic Tam Wagner, thanks very much for coming on, and we'll chat again soon. Thanks for tuning in to another episode of The thinkenergy podcast. Don't forget to subscribe. Wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback, comments or an idea for a show or a guest, you can always reach us at [email protected]

Canada’s energy conversation grows louder every day. But before we can address the national goals or even energy independence, we need to look at our local utilities and energy systems to understand their capabilities. Host Trevor Freeman walks through how the energy conversation needs to start locally, how to future-proof energy systems, and what the hardworking crews do to build and maintain these systems. Listen to episode 156 of thinkenergy.

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Transcript:

Transcript: Trevor Freeman  00:07

Welcome to a thinkenergy short hosted by me, Trevor Freeman. This is a bite sized episode designed to be a quick summary of a specific topic or idea related to the world of energy. This is meant to round out our collective understanding of the energy sector, and will compliment our normal guest interview episodes. Thanks for joining and happy listening.  Hi everyone. Welcome back to another thinkenergy short. I'm your host, Trevor Freeman. I'm recording this the day after our federal election here in Canada, and energy, as it so often does, did come up on the campaign trail. There was talk about the transfer of energy from province to province, including a west, east pipeline and a national interconnected electricity grid, which we've talked about a little bit here on the show before, improving the way that we move electricity from province to province, not just sort of north to south, between us and the United States, there was also talk about specific strategies on how to address climate targets, albeit not very much talk about that. Nor was there a lot of talk about how to foster the energy transition, although it did pop up from time to time, especially if you're an energy nerd like me and went looking for it. The point is whether it was front and center in election ads or not. There are some big decisions to be made regarding energy in the coming years, and those big decisions will undoubtedly lead, one way or another, to some big energy projects. But that is not what we're going to talk about today. We're actually going to zoom in a little bit and talk about the work that goes on a little bit closer to home that is critical to making the entire system work for the end user. You the customer, me the customer, including those big energy projects, and that is the work that is done to build and maintain our local distribution grid.  So the poles and the wires and the transformers that you see outside your home or outside your business that's actually bringing the power the final step, so that you can use it before we can talk about national energy independence, or these large goals that we have as a country. When it comes to energy, we need to make sure that the poles and wires and transformers in every city, every town and every neighborhood are ready, and that we're building the necessary infrastructure to meet that growing demand, and that is where your local utility comes in. We don't just maintain the system that we have, we prepare it for the future and make sure that we're laying the foundation that we need for tomorrow. Here in Ottawa, it is finally, finally spring, or at least it feels like it's finally spring outside, and that means that construction and outdoor work is starting to ramp up. So today I'd like to shed a little bit of light into what our crews do and your local utilities crews likely do to maintain and to build our system. When it comes to keeping our grid operating in tip top shape, nothing beats planned maintenance. This is the cornerstone of any electric utility strategy to deliver safe and reliable power, and this includes proactive measures like replacing aging equipment, trimming trees near power lines and performing essential upgrades. Such activities are vital in reducing the frequency and duration of unexpected outages and helping maintain that resilient power system that we all rely on. So let's go step by step. Utility poles, they are assessed regularly and replaced as needed. Utilities critical hydro pull program tests 1000s of pools annually to identify the ones that require maintenance and new pull installations also support great expansion to meet a city or a community's growing need new residential developments or new commercial developments. For example, next would be something like vegetation management. So this is another critical aspect. Regular tree trimming and removal near power lines can help prevent outages and safety hazards, especially during storms and high winds. Utilities like Hydro Ottawa, who I work for, employ satellite imaging technology to scan the grid, you know, at least twice a year, to identify high risk areas and potentially dead or dying trees, to allow for proactive maintenance, and that's in addition to the sort of visual inspection that happens as our crews are moving about our system, so all these different techniques that we use. It's like high tech arboriculture with Mission grid resilience. We are aiming to reduce the amount of tree contact with our system. If we go below our streets, we will see chambers connecting vast duct structures to our substations. So where you don't see overhead lines, that means those lines are buried running through duct work maintenance, hole upgrades and cable replacements are also part of a comprehensive maintenance strategy. These efforts are critical to keep our underground infrastructure safe and ensure that the structural integrity of our entire power system is able to accommodate our city's current and growing a. Electricity demands, we also have equipment like Transformers and switches and circuit breakers that are located both outside, overhead, underground, in substations and transformers, and they undergo routine inspections and replacements to prevent potential service disruptions. But it's not just maintaining what we've got, we also need to continue expanding to meet growing need we talk a lot on this show, as all you listeners know about the fact that our demand for electricity is growing, and it's growing at a pace that we really haven't seen before. So we need to make sure that we are building out our grid to be able to meet that demand. In order to do this Hydro Ottawa, for example, is embarking on one of the largest Grid Investment Programs in our entire history, and it's something that a lot of utilities in Ontario and across the country are looking at as they do their long term planning and forecasting. So as an example of just what the pace of change is here in Ottawa, traditionally, we would build a new substation every kind of five to seven years. And this is a major project. A substation is a big project. And so one every five to seven years has been the pace in our next five year period. So kind of between now and 2030 we are planning to energize a new substation every single year for the next five years, substations play a pivotal role in the power grid stepping down high voltage electricity that we get from transmission lines to lower voltages that are suitable for distribution to homes and businesses to our customers. So as an example, again, here in Ottawa, we have a substation that became fully operational in 2022 in Ottawa's southwest end, and that substation alone can power 32,000 homes annually. So substations are one of the major pieces of work that we are doing to build out our grid and provide for the growing electricity demands. And along with those substations come new distribution lines and more poles and wires and transformers and all of the associated equipment. Now, a lot of this work might sound routine, but it's not. It's strategic and forward looking and absolutely essential if we want to build a clean, flexible, reliable energy future here in Canada. So when utilities replace an old pull today, it's not just maintaining the status quo. It's laying the foundation for a National Clean grid tomorrow, it's supporting some of those large projects that we talked about at the very beginning of this episode. When utilities install a new conduit for easier cable upgrades, that conduit could be helping future generations of Canadians stay connected to renewable power. When utilities trim one branch at a time, they're protecting the integrity of an entire community's power system. Now behind these initiatives are a number of dedicated, capable, really smart folks that are working on these projects. Obviously, we've got our outdoor crew so power line technicians, our overhead and underground crews, our stations technicians, our forestry crews. These are the folks that are really out on the front line, that are maintaining and building our grid. You'll often see them out there by our trucks, or in orange, if you see them, keep your distance because they're working, but give them a thumbs up, or say hi. Wave at them and tell them they're doing a great job, because they always are. But then we also have some, let's call them back of house folks that are working on various aspects of our grids, and that's everything from our powerhouse technicians that are operating and monitoring the generators that are in our generating stations, and for Hydro Ottawa, that includes our Shoji air generating station in downtown Ottawa on the Ottawa River. We've got smart grid engineers that are focused on integrating renewable energy resources and modernizing the grid to make it more resilient and sustainable and to bring more data in from the grid to let us make better decisions. We've got system operators that really serve as a communications hub between the field workers and the control center, ensuring rapid response to outages and maintaining the integrity of our distribution system. If you haven't already listened to an episode I did almost a year ago now about grid modernization with with Jenna from Jenna Gillis from Hydro Ottawa. Have a listen to that, and you'll hear a little bit about what those system operators do. The collective efforts of all these folks and many others are really crucial to supporting both the local needs and our national energy objectives. So these big projects, again, to you know, to say that point again, those large projects don't happen without the day to day small projects happening as well. So there you have it. I hope you found that to be an interesting look into some of the essential work that your local municipal utility is doing, and how that connects to those larger, big energy policy decisions and projects. As always, really appreciate you tuning in and look forward to chatting with you next time. Take care. Thanks for tuning in to another episode of The thinkenergy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or our guests, you can always reach us at [email protected]

Greg Lindsay is an urban tech expert and a Senior Fellow at MIT. He’s also a two-time Jeopardy champion and the only human to go undefeated against IBM’s Watson. Greg joins thinkenergy to talk about how artificial intelligence (AI) is reshaping how we manage, consume, and produce energy—from personal devices to provincial grids. He also explores its rapid growth and the rising energy demand from AI itself. Listen in to learn how AI impacts our energy systems and what it means individually and industry-wide.

Related links

●     Greg Lindsay website: https://greglindsay.org/

●     Greg Lindsay on LinkedIn: https://www.linkedin.com/in/greg-lindsay-8b16952/

●     International Energy Agency (IEA): https://www.iea.org/

●     Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

●     Hydro Ottawa: https://hydroottawa.com/en 

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Scott Demark, President and CEO of Zibi Community Utility, joins thinkenergy to discuss how our relationship with energy is changing. With two decades of expertise in clean energy and sustainable development, Scott suggests reimagining traditional energy applications for heating and cooling. He shares how strategic energy distribution can transform urban environments, specifically how district energy systems optimize energy flow between buildings for a greener future. Listen in.

Related links

• Scott Demark on LinkedIn: https://www.linkedin.com/in/scott-demark-83640473/

• Zibi Community Utility: https://zibi.ca/

• Markham District Energy Inc: https://www.markhamdistrictenergy.com/

• One Planet Living: https://www.bioregional.com/one-planet-living

• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

• Hydro Ottawa: https://hydroottawa.com/en

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Transcript:

Trevor Freeman  00:07

Welcome to thinkenergy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at [email protected]

Speaker 1  00:29

Hi everyone. Welcome back. One of the overarching aspects of the energy transition that we have talked about several times on this show is the need to change our relationship with energy, to rethink the standard way of doing things when it comes to heating and cooling and transportation, etc. This change is being driven by our need to decarbonize and by the ongoing evolution and improvement of technology. More things are becoming available to us as technology improves on the decarbonization front, we know that electrification, which is switching from fossil fuel combustions to electricity for things like space and water heating vehicles, etc, is one of the most effective strategies. But in order to switch out all the end uses to an electric option, so swapping out furnaces and boilers for heat pumps or electric boilers, switching all gas cars to EVs, etc. In order to do that in a way that is affordable and efficient and can be supported by our electricity grid, we need to think about multi strategy approaches, so we can't just continue to have this one way power grid where every home, every business, every warehouse or office tower satisfies all of its energy needs all the time directly from the grid with no adaptability. That isn't the best approach. It's not going to be affordable or efficient. We're not going to be able to do it fast enough. The multi strategy approach takes into account things like distributed energy resources, so solar and storage, etc, which we've talked about many times on this show, but it also includes approaches like district energy. So, district energy is rethinking how energy flows between adjacent buildings, looking for opportunities to capture excess energy or heat from one source and use that to support another. And that is the focus of today's conversation. To help us dive into this topic, I'm really happy to welcome Scott Demark to the show. Scott has been a champion of sustainability, clean energy solutions and energy efficiency in the Ottawa real estate and development industry for over 20 years now, he has overseen many high-performance development projects and was one of the driving forces behind the Zibi development in downtown Ottawa, and most applicable for today's conversation the renewable district energy system that provides heating and cooling to the Zibi site. Scott is the president and CEO of the Zibi community utility, as well as a partner at Thea partners. Scott Demark, welcome to the show.

Scott Demark  03:15

Thanks. Nice to see you. Trevor,

Trevor Freeman  03:17

So, Scott, why don't we start with definitions are always a good place to start. So, when we talk about a district energy system, give us a high-level overview of what exactly that means.

Scott Demark  03:27

Sure, a district energy system is, is simply the connection, or interconnection of thermal energy sources, thermal energy sinks. And so really, in practical terms. It means, instead of buildings having their own furnace and cooling system, buildings connect to a hydronic loop. A hydronic loop is just pipes filled with water, and then the heat or the cooling is made somewhere else, and that heat or lack of heat cooling is in a pipe. They push the pipe to the building, and then the pipe extracts the heat or rejects the heat to that loop. And so it's simply an interconnection of us as sources and sinks for federal energy.

Trevor Freeman  04:14

And I guess one of the important concepts here is that buildings often create heat, not just through a furnace or not just through the things that are meant to create heat, but, you know, server racks, computer server racks, generate a lot of heat, and that heat has to go somewhere. So oftentimes we're cooling buildings to remove heat that's being created in those buildings, and then other buildings nearby need to be heated in order to make that space comfortable. Is that fair to say?

Scott Demark  04:42

Yeah, absolutely. Trevor, so, an office building in the city of Ottawa, big old government office building, you'll see a pretty big plume on the roof in the winter time. That's not just kind of the flue gas from a boiler, but rather it is actually chillers are. running inside to make cooling, and they're just selling that heat to the atmosphere, even on the coldest day of the year. So, it's people, you know, people are thermal load. Computers are thermal load, and so is solar gain. You know, January is pretty dark period for us, meaning low angle sun. But by this time in a year, you know, or at the end of February, there's a lot of heat in that sun. So, a glass building absorbs a lot of sun. An office building will need cooling on the sunny side of that building a lot of the time, even in the dead of winter.

Trevor Freeman  05:31

Yeah. So, a district system, then, is taking advantage of the fact that heat exists, and we don't necessarily need to either burn fossil fuels or even if it's a, you know, a clean system, we don't have to expend energy to create heat, or create as much heat if we could move that heat around from where it's kind of naturally occurring to where we need it.

Scott Demark  05:54

That's right at the very core of a district energy system. You're going to move heat from a place that it's not wanted to a place that it is wanted. And so in our example of the office building, you know, on the February day with the sun shining in and the computers all running, that building's getting rid of heat. But right next door, say there's a 20-story condo. Well, that 20 story condo needs heating and it also needs domestic hot water. So, year-round, domestic hot water represents 30, 35% of the heating load of any residential building, so at all times. So, a district energy system allows you to take that heat away from the office building and give it to the residential building, instead of making the heat and dissipating that heat to the atmosphere in the office building. So, yeah, it's, it's really a way to move, you know, from sources to sinks. That's, that's what a district energy system does well.

Trevor Freeman  06:48

So we've kind of touched on this a little bit, but let's dive right into, you know, we talk a lot on the show about the energy transition. This, this push to, one, move away from fossil fuel combustion to meet our energy needs. And two, shifting from a kind of static, centralized energy system like we have right now, big generators, large transmission lines, etc., to more of a two-way flow, distributed energy system. What is the role of district energy systems within that transition. How do they help us get closer to that sort of reality that we talk about?

Scott Demark  07:27

I think the biggest way that they help is economies of scale. Okay, so by that, I'll explain that. Imagine there's a lot of technology that's been around a long time that is very scalable to the building level, but most of them are fossil fire. Okay, so the cheapest way to heat a building in Ottawa is to put a gas fired boiler in. That's the cheapest capital cost, first cost, and it's also the cheapest operating cost, is to put a gas boiler in. That industry is well established. There's lots of trades who could do it. There's lots of producers who make the boilers. When you start to try and think about the energy transition and think about what you may do to be different, to be lower carbon, or to be zero carbon, those industries are just starting right. Those industries don't exist. They don't have the same depth, and so they don't have the same cost structure, and often times they don't scale well down to the building. And therefore, a district energy system aggregates a bunch of load, and so you can provide a thermal energy so at scale that becomes affordable. And that is, you know, a very good example of that would be where, you know, you might want to go and recover heat from some process, and we'll talk about Zibi as the example. But if he wanted to go recover heat from some process and bring it in, it doesn't make sense to run a pipeline to a source to heat one building. You can't make financial sense of it, but if you're heating 20 buildings, that pipeline, all of a sudden, makes sense to take waste heat from somewhere, to move it somewhere else. The other advantage is that truly district energy systems are agnostic to their inputs and outputs for heat. So, once you've established that hydronic loop, that interconnection of water pipes between buildings, what the source and what the sources, doesn't matter. So, you may have at one point built a district energy system, and Markham District Energy System is a great example of this market District Energy System was built on the concept of using a co-generation facility. So they burned natural gas to make electricity, they sold electricity to the grid, and they captured all the waste heat from that generation, and they fed it into a district energy system. Well, here we are, 20 plus years later, and, they're going to replace that system, that fossil fired system Augment, not fully replaced, but mostly replace that system with a sewer coupled energy recovery and drive those heat recovery chillers to a sewer system. So, they're putting a very green solution in place of a former fossil solution. They don't have to rip up the pipes, they don't have to change anything in the buildings. They only have to change that central concept. Now, again, Markham could never do that at a one building scale. They're only that at the community scale.

Trevor Freeman  10:21

So, you mentioned, I want to pick on something you said there. You talked about a sewer heat energy system. They're pulling heat from the sewer. Just help our listeners understand high level kind of, why is there heat there for us to pull? Like, what's the what's the source there?

Scott Demark  10:38

Yeah. So, when we shower, when we flush toilets, all of that is introducing heat into a sewer system. So, we're collecting heat from everybody's house into the sewer system. The sewer system also sits below the frost line. So, call it Earth coupled. You know it's the earth in Ottawa below the frost line sits around eight, eight and a half c and so at that temperature and the temperature of flushing toilets, we essentially get a sewer temperature in the on the coldest day of the year, that's around 10 10, and a half degree Celsius. And obviously, for lots of the year, it's much warmer than that. And so I think, you know, a lot of people are kind of familiar with the concept of geo exchange energy, or that. Lot of people call it geothermal, but you exchange where you might drill down into the earth, and you're taking advantage of that eight, eight and a half degrees, I'll see. So, you're exchanging heat, you can reject heat to the earth, or you can absorb heat from the earth. Well, this is the same idea, but you accept or reject from the sewer. But because the sewer is relatively shallow, it is cheaper to access that energy, and because it's warm, and on the coldest day, a couple of degrees make a big difference, Trevor, and most of the year so much warmer, you're really in a very good position to extract that heat, and that's all it is. You are just accepting or rejecting heat. You don't use the sewage itself. It doesn't come into your building. You have a heat exchanger in between. But that's, that's what you do.

Trevor Freeman  12:10

Yeah, great. And I, we've talked before on the show about the idea that, you know, for a air source, heat pump, for example, you don't need a lot of heat energy to extract energy from the air. It can be cold outside, and there is still heat energy in the air that you can pull and use that to heat a building, heat water, whatever. So same concept, except you've got a much warmer source of energy, I guess.

Scott Demark  12:34

Yeah, exactly. And you know, Trevor, when you look at the efficiency curves of those air source heat pumps, you know, they kind of drop off a cliff at minus 20. Minus 22 in fact. You know, five or six years ago, they that that was dropping off at minus 10. So, we've come a long way in air source heat pumps. But imagine on that coldest, coldest day of the year, you're still your source is well above zero, and therefore your efficiency. So, the amount of electricity you need to put into the heat pump to get out the heat that you need is much lower, so it's a way more efficient heat exchange.

Trevor Freeman  13:07

Great. Thanks for that, Scott. I know that's a bit of a tangent here, but always cool to talk about different ways that we're coming up with to heat our buildings. So back to district energy. We've talked through some of the benefits of the system. If I'm a building owner and I'm have the decision to connect to a system that's there, or have my own standalone, you know, traditional boiler, whatever the case may be, or even in a clean energy one, a heat pump, whatever. What are the benefits of being on a district system versus having my own standalone system for just my building.

Scott Demark  13:42

Yeah, so when you're wearing the developer’s hat, you know they're really looking at it financially. If they have other goals around sustainability, great, that will factor into it. But most of them are making decisions around this financially. So, it needs to compete with that. That first cost that we talked about the easiest ways, is boilers, gas fired boilers is the cheapest way. And so, they're going to look to see it at how. How does this compare to that? And so, I think that's the best way to frame it for you. And so, the difference here is that you need to install in your building a cooling system and a heating system. In Ottawa, that cooling system is only used for a few months a year, and it's very expensive. It takes up space, whether you're using a chiller and a cooling tower on the roof or using a dry cooler, it takes up roof space, and it also takes up interior space. If you do have a cooling tower, you have a lot of maintenance for that. You need to turn it on and turn it off in the spring, on and fall, etc., just to make sure all that happens and you need to carry the life cycle of that boiler plant. You need to bring gas infrastructure into your building. You generally need to put that gas boiler plant high in your building. So up near the top, and that's for purposes of venting that properly. Now that's taking real estate, right? And it's taking real estate on the area that's kind of most advantageous, worth the most money. So you might lose a penthouse to have a boiler and chiller room up there. And you also, of course, lose roof space. And today, we really do try to take advantage of those rooftop, patios and things, amenities are pretty important in buildings. And so, when I compare that to district energy at the p1 level, p2 level in your building, you're going to have a small room, and I really do mean small where the energy transfer takes place, you'll have some heat exchangers. And small, you might have a space, you know, 10 or 12 feet by 15 to 18 feet would be big enough for a 30-story tower, so a small room where you do the heat exchange and then Trevor, you don't have anything in your building for plants that you would normally look after. So, when you look at the pro forma for owning your building over the lifetime of it. You don't have to maintain boilers. You don't have to have boiler insurance. You don't have to maintain your chillers. You don't have to have life cycle replacement on any of these products. You don't need anybody operating those checking in on the pressure vessels. None of that has to happen. All of that happens on the district energy system. So, you're really taking something you own and operate, and replacing that with a service. So, district energy is a service, and what, what we promised to deliver is the heating you need and the cooling you need. 24/7. The second thing you get is more resilience, and I'll explain that a little bit. Is that in a in a normal building, if you if the engineers looked at it and said, you need two boilers to keep your building warm, then you're probably going to install three. And that is kind of this, and plus one sort of idea, so that if one boiler goes down, you have a spare. And you need to maintain those. You need to pay for that. You need to maintain those, etc. But in district energy system, all that redundancy is done in the background. It's done by us, and we have significantly more redundancy than just n plus one in this example. But overall, you know, if you have 10 buildings on your district energy system, each of those would have had n plus one. We don't have n plus 10 in the plant. And so overall, the cost is lower, I would say, if you look at it globally, except the advantages you do have better than N plus one in the plant. So, we have higher resiliency at a lower cost.

Trevor Freeman  17:39

So, we know there's no such thing as a miracle solution that works in all cases. What are the best use cases for district energy system? Where does it make a lot of sense?

Scott Demark  17:50

Yeah, in terms some, in some ways the easiest things, Pretty work. Doesn't make sense. So, so it doesn't make sense in sprawling low rise development. So, the cost of that hydronic loop those water pipes is high. They have to fit in the roadway. It's civil work, etc. And so, you do need density. That doesn't mean it has to be high rise density.  You know, if you look at Paris, France, six stories district energy, no problem. There's, there's lots and lots of customers for that scale of building. It doesn't have to be all high rise, but it does, District Energy does not lend itself well to our sprawling style of development. It's much more suited to a downtown setting. It also kind of thrives where there's mixed use. You know, I think the first example we were talking about is office building shedding heat, residential building needing heat. You know, couple that with an industrial building shedding heat. You know, these various uses, a variety of uses on a district energy system, is the best, because its biggest advantage is sharing energy, not making energy. And so, a disparity of uses is the best place to use that. I think the other, the other thing to think about, and this is harder in Canada than the rest of the world, is that, you know, it's harder on a retrofit basis, from a cost perspective, than it is in a in a new community where you can put this in as infrastructure. Day one, you're going to make a big difference. And I'll, you know, give a shout out to British Columbia in the Greater Vancouver area. So, the district, you know, down in the Lower Mainland, they, they kind of made this observation and understood that if they were going to electrify, then District Energy gave economies of scale to electrify that load. And they do a variety of things, but one of the things they do is, is kind of district you exchange system so, so big heat pumps coupled to big fields, and then spring heat made a bunch of buildings. But these are green field developments Trevor. So, as they expand their suburbs. They do need to build the six stories. They very much have kind of density around parks concept. So now Park becomes a geo field. Density around the geo field, but this infrastructure is going in the same time as the water pipes. It's going in at the same time as the roads, the sidewalks, etc. You can dramatically reduce your cost, your first cost related to that hydro loop, if you're putting it in the same time you're doing the rest of the services.

Trevor Freeman  20:27

So, we're not likely to see, you know, residential neighborhoods with single family homes or multi-unit homes, whatever, take advantage of this. But that sort of low rise, mid rise, that's going to be more of a good pick for this. And like you said, kind of development is the time to do this. You mentioned other parts of the world. So, district energy systems aren't exactly widespread. In Canada, we're starting to see more of them pop up. What about the rest of the world? Are there places in the world where we see a lot more of this, and they've been doing this for a long time?

Scott Demark  21:00

Yeah. So, I'd almost say every, everywhere in the northern hemisphere, except North America, has done much more of this. And, you know, we really look to kind of Scandinavia as the gold standard of this. You look to Sweden, you look to Denmark, you look to Germany, even. There's, there's a lot of great examples of this, and they are typically government owned. So, they are often public private partnerships, but they would be various levels of government. So, you know, if you, if you went to Copenhagen, you'd see that the municipality is an owner. But then their equivalent of a province or territory is actually a big part of it, too. And when they built their infrastructure ages ago, they did not have an easy source of fossil fuels, right? And so, they need to think about, how can we do this? How can we share heat? How can we centralize the recovery of heat? How can we make sure we don't waste any and this has just been ingrained in them. So there's massive, massive District Energy loops, interconnecting loops, some owned by municipalities. Someone probably, if you build the factory, part of the concept of your factory, part of the pro forma of your factory is, how much can I sell my waste heat for? And so, a factory district might have a sear of industrial partners who own a district energy loop and interfaces with the municipal loop all sort of sharing energy and dumping it in. And so that's, you know, that's what you would study. That's, that's where we would want to be, and the heart of it is, just as I said, we've really had, you know, cheap or, you know, really cheap fossil fuels. We've had no price on pollution. And therefore, it really hasn't needed to happen here. And we're starting to see the need for that to happen here.

Trevor Freeman  22:58

It's an interesting concept to think of, you know, bringing that factory example in, instead of waste heat or heat as a byproduct of your process being a problem that you need to deal with, something you have to figure out a way to get rid of. It becomes almost an asset. It's a it's a, you know, convenient commodity that's being produced regardless, that you can now look to sell and monetize?

Scott Demark  23:21

Yeah, you go back to the idea of, like, what are the big benefits of district energy? Is that, like, if that loop exists and somebody knows that one of the things the factory produces is heat, well, that's a commodity I produce, and I can, I can sell it, if I have a way to sell it right here. You know, we're going to dissipate it to a river. We may dissipate it to the atmosphere. We're going to get rid of it. Like you said, it's, it's, it's waste in their minds and in Europe, that is absolutely not waste.

Trevor Freeman  23:49

And it coming back to that, you know, question of, where does this make sense? You talked about mixed use. And it's also like the, you know, the temporal mix use of someone that is producing a lot of heat during the day when the next-door residential building is empty, then when they switch, when the factory closes and the shift is over and everybody comes home from work, that's when that building needs heat. That's when they want to be then taking that heat to buildings next to each other that both need heat at the same time is not as good a use cases when it's offset like that.

Scott Demark  24:23

Yeah, that's true. And unless lots of District Energy Systems consider kind of surges in storage, I know our system at CB has, has kind of a small storage system related to the domestic hot water peak load. However, you can also think of the kilometers and kilometers and kilometers of pipes full of water as a thermal battery, right? So, so you actually are able to even out those surges. You let the temperature; the district energy system rise. When that factory is giving all out all kinds of heat, it's rising even above the temperature. You have to deliver it at, and then when that peak comes, you can draw down that temperature and let the whole district energy system normalize to its temperature again. So you do have an innate battery in the in the water volume that sits in the district energy system

Trevor Freeman  25:15

Very cool. So you've mentioned Zibi a couple times, and I do want to get into that as much as we're talking about other parts of the world, you know, having longer term district energy systems. Zibi, community utility is a great example, right here in Ottawa, where you and I are both based of a district energy system. Before we get into that, can you, just for our listeners that are not familiar with Zibi, give us a high level overview of what that community is its location, you know, the goals of the community. And then we'll talk about the energy side of things.

Scott Demark  25:46

Sure. So Zibi was formerly Domtar paper mills. It's 34 acres, and it is in downtown Ottawa and downtown Gatineau. About a third of the land mass is islands on the Ontario side, and two thirds the land mass is on the shore, the north shore of the Ottawa River in Gatineau, both downtown, literally in the shadows of Parliament. It is right downtown. It was industrial for almost 200 years. Those paper mills shut down in the 90s and the early 2000s and my partners and I pursued that to turn it from kind of this industrial wasteland, walled off, fenced off, area that no one could go into, what we're hoping will be kind of the world's most Sustainable Urban Community, and so at build out, it will house, you know, about six, 7000 people. It will be four and a half million square feet, 4.24 point 4 million square feet of development. It is master planned and approved, and has built about, I think we're, at 1.1 million square feet, so we're about quarter built out. Now. 10 buildings are done and connected to the district energy system there. And really, it's, it's an attempt to sort of recover land that was really quite destroyed. You can imagine it was a pretty polluted site. So, the giant remediation plan, big infrastructure plan. We modeled this, this overall sustainability concept, over a program called one planet living which has 10 principles of sustainability. So, you know, you and I are talking a lot about carbon today, but there's also very important aspects about affordability and social sustainability and lifestyle, and all of those are incorporated into the one planet program, and encourage people to look up one planet living and understand what it is and look at the commitments that we've made at Zibi to create a sustainable place. We issue a report every year, kind of our own report card that's reviewed by a third party that explains where we are on our on our mission to achieve our goal of the world's most sustainable community.

Speaker 1  28:09

Yeah. And so I do encourage people to look at one planet living also. Have a look at, you know, the Zibi website, and it's got the Master Plan and the vision of what that community will be. And I've been down there, it's already kind of coming along. It's amazing. It's amazing to see the progress compared to who I think you described it well, like a bit of an industrial wasteland at the heart of one of the most beautiful spots in the city. It was really a shame what it used to be. And it's great to see kind of the vision of what it can become. So that's awesome,

Scott Demark  28:38

Yeah, and Trevor, especially now that the parks are coming along. You know, we worked really closely with the NCC to integrate the shoreline of Zibi to the existing, you know, bike path networks and everything. And, you know, two of the three shoreline parks are now completed and open to the public and they're stunning. And you know, so many Ottawa people have not been down there because it's not a place you think about, but it's one of the few places in Ottawa and Gatineau where you can touch the water, you know, like it's, it's, it's stunning,

Trevor Freeman  29:08

yeah, very, very cool. Okay, so the next part of that, of course, is energy. And so there is a district energy system, one of the first kind of, or the most recent big energy, District Energy Systems in Ottawa. Tell us a little bit about how you are moving energy and heating the Zibi site.

Scott Demark  29:29

Yeah. So first, I'll say, you know, we, we, we studied different, uh, ways to get to net zero. You know, we had, we had a goal of being a zero carbon community. There are low carbon examples, but a zero carbon community is quite a stretch. And even when you look at the Scandinavian examples, the best examples, they're missing their energy goals, largely because some of the inputs that are District Energy System remain false so, but also because they have trouble getting them. Performance out of the buildings. And so we looked at this. We also know from our experience that getting to zero carbon at the building scale in Ottawa is very, very difficult. Our climate is tough, super humid, super hot. Summer, very cold, very dry, winter, long winter. So, it's difficult at the building scale. It's funny Trevor, because you'd actually have an easier time getting to zero carbon or a passive house standard in affordable housing than you do at market housing. And that's because affordable housing has a long list of people who want to move in and pay rents. You can get some subsidies for capital and the people who are willing to pay rent are good with smaller windows, thicker walls, smaller units and passthroughs, needs all those kinds of things. So when down at Zibi, you're really selling views, you're competing with people on the outside of Zibi, you're building almost all glass buildings. And so it's really difficult to find a way to get to zero carbon on the building scale. So that moved us to district energy for all the reasons we've talked about today already. And so, when we looked at it for Zibi, you really look at the ingredients you have. One of the great things we have is we're split over the border. It's also a curse, but split over the border is really interesting, because you cannot move electricity over that border, but you can move thermal energy over that border. And so, for us, in thinking about electrifying thermal energy, we realized that if we did the work in Quebec, where there is clean and affordable electricity, we could we could turn that into heat, and then we could move heat to Ontario. We could move chilled water to Ontario. So that's kind of ingredient, one that we had going for us there. The second is that there used to be three mills. So originally Domtar three mills, they sold one mill. It changed hands a few times, but it now belongs to Kruger. They make tissue there so absorbent things, Kleenexes and toilet paper, absorbent, anything in that tissue process that's a going concern. So, you can see that in our skyline. You can see, on cold days, big plumes of waste heat coming out of it. And so, we really saw that as our source, really identified that as our source. And how could we do that? So, going back to the economies of scale, is, could we send a pipeline from Kruger, about a kilometer away, to Zibi? And so, when we were purchasing the land, we were looking at all the interconnections of how the plants used to be realized. There are some old pipelines, some old easements, servitudes, etc. And so, when we bought the land, we actually bought all of those servitudes to including a pipeline across the bridge, Canadian energy regulator licensed across the bridge into Ontario. And so, we mixed all these ingredients up, you know, in a pot, and came up with our overall scheme. And so that overall scheme is relatively simple. We built an energy recovery station at Kruger, where just before their effluent water, like when they're finished in their process, goes back to the river. We have a heat exchanger there. We extract heat. We push that heat in a pipe network over to Zibi. At Zibi, we can upgrade that heat using heat recovery chillers, to a useful temperature for us, that's about 40 degrees Celsius, and we push that across the bridge to Ontario, all of our buildings in Ontario, then have thin coil units. They use that 40-degree heat to heat buildings. The return side of that comes back to Quebec, and then on the Quebec side, we have a loop and all of our buildings in the Quebec side, then use heat pumps so we extract the last bit of heat. So, imagine you you've returned from a fan coil, but you're still slightly warm. That slightly warm water is enough to drive a heat pump inside the buildings. And then finally, that goes back to Kruger again, and Kruger heats it back up with their waste heat comes back. So that's our that's our heating loop. The cooling side is coupled to the Ottawa River. And so instead of us rejecting heat to the atmosphere through cooling towers, our coolers are actually coupled to the river. That's a very tight environmental window that you can operate in. So, we worked with the minister the environment climate change in Quebec to get our permit to do it. We can only be six degrees difference to the river, but our efficiency is, on average, like on an annual basis, more than double what it would be to a cooling tower for the same load. So, we're river coupled with respect to cooling for the whole development, and we're coupled to Kruger for heating for the whole development. And what that allows us to do is eliminate fossil fuels. Our input is clean Quebec electricity, and our output is heating and cooling.

Trevor Freeman  34:56

So, none of the buildings, you know, just for our listeners, none of the buildings have any. sort of fossil fuel combustion heating equipment. You don't have boilers or anything like that, furnaces in these in these buildings,

Scott Demark  35:06

no boilers, no chillers, no

Trevor Freeman  35:09

that's awesome. And just for full transparency, I should have mentioned this up front. So, the zibi community utility is a partnership between Zibi and Hydro Ottawa, who our listeners will know that I work for, and this was really kind of a joint venture to figure out a different approach to energy at the city site.

Scott Demark  35:28

Yeah, that's right, Trevor. I mean the concept, was born a long time ago now, but the concept was born by talking to Hydro Ottawa about how we might approach this whole campus differently. You know, one of hydro Ottawa's companies makes electricity, of course, Chaudiere Falls, and so that was part of the thinking we thought of, you know, micro grids and islanding this and doing a lot of different things. When Ford came in, and we were not all the way there yet and made changes the Green Energy Act. It made it challenging for us to do the electricity side, but we had already well advanced the thermal side, and hydro, you know, hydro makes a good partner in this sort of thing. When a when a developer tells someone, I'd like you to buy a condo, and by the way, I'm also the district energy provider that might put some alarm bells up, but you put a partnership in there with a trusted, long term utility partner, and explain that, you know, it is in the in the public interest, they're not going to jack rates or mess with things. And then obviously, just, you know, hydro had such a long operating record operating experience that they really brought sort of an operations and long-term utility mindset to our district energy system.

Trevor Freeman  36:45

So, looking at a system like the Zibi community utility or other district energy systems, is this the kind of thing that can scale up over time? And, you know, I bring this up because you hear people talk about, you know, a network of district energy systems across a city or across a big geographic area. Are these things that can be interconnected and linked, or does it make more sense as standalone district energy systems in those conditions that you talked about earlier?

Scott Demark  37:17

Very much the former Trevor like, and that's, you know, that's where, you know, places like Copenhagen are today. It's that, you know, there was, there was one district energy system, then there was another, then they got interconnected, then the third got added. And then they use a lot of incineration there, in that, in that part of the world, clean incineration for garbage. And so then an incinerator is coming online, and so that incinerators waste heat is going to be fed with a new district energy loop, and some other factory is going to use the primary heat from that, and then the secondary heat is going to come into the dictionary system. So, these things are absolutely expandable. They're absolutely interconnectable. There are temperature profiles. There's modern, modern thoughts on temperature profiles compared to older systems. Most of the old, old systems were steam, actually, which is not the most efficient thing the world, but that's where they started and so now you can certainly interconnect them. And I think that the example at Zibi is a decent one, because we do have two kinds of systems there. You know, I said we have fan coil units in in the Ontario side, but we have heat pumps on the other side. Well, those two things, they can coexist, right? That's there. Those two systems are, are operating together. Because the difference, you know, the difference, from the customer's perspective, in those two markets are different, and the same can be true in different parts of the city or when different sources and sinks are available. So, it is not one method of doing district energy systems. What you do is you examine the ingredients you have. I keep saying it, but sources and sinks. How can I look at these sources and sinks in a way that I can interconnect them and make sense? And sometimes that means that a source or a sink might be another district energy system,

Trevor Freeman  39:12

Yeah, systems that maybe work in parallel to each other, in cooperation with each other. Again, it's almost that temporal need where there's load high on at one point in time and low on the other point in time. Sharing is a great opportunity.

Scott Demark  39:26

Yeah, absolutely

Trevor Freeman  39:27

great. Okay, last question for you here, Scott, what is needed, maybe from a regulatory or a policy lens to encourage more implementation of district energy systems. How do we see more of these things happen here in Canada or North America?

Scott Demark  39:45

The best way to put this, the bureaucracy has been slow to move is, is what I'll say. And I'll use Zibi as that example. When we when we pitch the district energy system. At Zibi, we had to approach the City of Ottawa, and we had to approach the city at Gatineau, the City of Ottawa basically said to us, no, you can't put those in our streets. Engineering just said, no, no, no, no. And so, what we did at Zibi is we actually privatized our streets in order to see our vision through, because, because Ottawa wasn't on board, the city of Gatineau said, Hmm, I'm a little worried. I want you to write protocols of how you will access your pipes and not our pipes. I want to understand where liability ends and starts and all of this kind of stuff. And we worked through that detail slowly, methodically with the city of Gatineau, and we came to a new policy on how district energy could be in a public street and Zb streets are public on the Gatineau side today, you know, come forward 10 years here, and the City of Ottawa has a working group on how to incorporate District Energy pipes into streets. We've been able to get the City of Ottawa to come around to the idea that we will reject and accept heat from their sewer. You know, Hydro Ottawa, wholly owned company of the City of Ottawa, has an active business in district energy. So Trevor, we've come really far, but it's taken a long time. And so, if you ask me, How can we, how can we accelerate district energy, I think a lot of it has to do with the bureaucracy at municipalities. And you know, we're we see so much interest from the Federation of Canadian municipalities, who was the debt funder for zcu. We have multiple visits from people all over Canada, coming to study and look at this as an example. And I'm encouraged by that. But it's also, it's also not rocket science. We need to understand that putting a pipe in a street is kind of a just, just a little engineering problem to solve, whereas putting, you know, burning fossil fuels for these new communities and putting it in the atmosphere, like the genies out of the bottle, right, like, and unfortunately, I think, for a lot of bureaucrats, the challenge at the engineering level is that that pipe in the street is of immediate, complex danger to solving that problem, whereas it's everybody's problem that the that the carbons in the atmosphere. So, if we could accelerate that, if we could focus on the acceleration of standards around District Energy pipes and streets, the rights of a district energy company to exist, and not to rant too much, but give you an example, is that a developer is required to put gas infrastructure into a new community, required, and yet you have to fight to get a district energy pipe in the street. So there needs to be a change of mindset there, and, and, and we're not there yet, but that's where we need to go.

Trevor Freeman  43:07

Yeah, well, it'll be interesting. You know, in 10 years, let's talk again and see how far we come. Hopefully not 10 years. Hopefully it's more like five, to see the kind of change that you've seen in the last decade. But I think that the direction is encouraging, the speed needs a little bit of work, but I'm always encouraged to see, yeah, things are changing or going in the right direction, just slowly. Well, Scott, we always end our interviews with a series of questions to our guests, so as long as you're okay with it, I'll jump right into those. So, the first question is, what is a book you've read that you think everybody should read?

Scott Demark  43:41

Nexus? Which is by Harare. He's the same author that wrote sapiens. Lots of people be familiar with sapiens. And so, Nexus is, is really kind of the history of information that works like, how do we, how do we share and pass information? And kind of a central thesis is that, you know, information is, is neither knowledge nor truth. It is information, and it's talking a lot about, in the age of AI, how are we going to manage to move information into truth or knowledge? And I think it, you know, to be honest, it kind of scared the shit out of me reading it kind of how, how AI is impacting our world and going to impact our world. And what I thought was kind of amazing about it was that he really has a pretty strong thesis around the erosion of democracy in this time. And it's, it was, it was really kind of scary because it was published before the 2024, election. And so it's, it's really kind of both a fascinating and scary read. And I think really something that everybody should get their head around.

Trevor Freeman  44:59

Yeah, there's a few of those books recently that I I would clear or classify them as kind of dark and scary, but really important or really enlightening in some way. And it kind of helps you, you know, formalize a thought or a concept in your head and realize, hey, here's what's happening, or gives you that kind of the words to speak about it in this kind of fraught time we're in. So same question. But for a movie or a show, is there anything that you think everybody should watch

Scott Demark  45:29

That's harder. I think generally, if I'm watching something, it's for my downtime or own entertainment, and pushing my tastes on the rest of the world, maybe not a great idea. I if I, if I'm, if I'm kind of doing that, I tend to watch cooking shows, actually, Trevor. So, like, that's awesome. I like ugly, delicious. I love David Chang. I like, I like, mind of a chef, creativity behind a chef. So those kinds of things, I'd say more. So, if there was something to like that. I think somebody else should, should watch or listen to I have, I have a real love for Malcolm Gladwell podcast, revisionist history. And so if I thought, you know, my watching habits are not going to going to expand anybody's brain. But I do think that Malcolm's perspective on life is, is really a healthy it's really healthy to step sideways and look at things differently. And I would suggest, if you have never listened to that podcast, go to Episode One, season one, and start there. It's, it's, it's fantastic.

Trevor Freeman  46:39

Yeah, I agree. I'll echo that one. That's one of my favorites. If we were to offer you or not, but if we were to offer you a free round-trip flight, anywhere in the world, where would you go?

Scott Demark  46:50

That's hard. So much flight guilt, you know, I know it's a hard assume that there's carbon offset to it. It's an electric plane.

Trevor Freeman  47:00

That's right, yeah,

Scott Demark  47:01

the we, my family, had a trip planned in 2020 to go to France and Italy. My two boys were kind of at the perfect age to do that. It would have been a really ideal trip. And so, I've still never been to either of those places. And if I had to pick one, probably Italy, I would really like to see Italy, mafuti. I think it would be a fantastic place to go. So probably, probably Italy.

Trevor Freeman  47:25

My favorite trip that I've ever done with my wife and our six-month-old at the time was Italy. It was just phenomenal. It was a fantastic trip. Who's someone that you admire?

Scott Demark  47:36

I have a lot of people, actually, a lot of people in this, in this particular space, like, what would I work in that have brought me here to pick one, though I'd probably say Peter Busby. So, Peter Busby is a mentor, a friend, now a business partner, but, but not earlier in my career. Peter Busby is a kind of a, one of the four fathers, you know, if you will, of green design in Canada. He's an architect, Governor General's Award-winning architect, actually. But I think what I, what I really, appreciate about Peter, and always will, is that he was willing to stand up in his peer group and say, hey, we're not doing this right. And, you know, he did that. He did that in the early 80s, right? Like we're not talking he did it when it cost his business some clients. He did it when professors would speak out against him, and certainly the Canadian Association of architecture was not going to take any blame for the shitty buildings that have been built, right? And he did it. And I remember being at a conference where Peter was getting a Lifetime Achievement Award from the Canadian architects Association, and so he's standing up, and people are all super proud of him. They're talking about his big life. And he kind of belittled them all and said, you’re not doing enough. We're not doing enough like he's still he's still there. He's still taking the blame for where things are, and that things haven't moved fast enough, and that buildings are a massive part of our carbon problem, and probably one of the easier areas to fix. You know, we're talking about electric planes. Well, that's a that's a lot more difficult than it is to recover energy from a factory to heat a community, right? I admire him. I learn things from him all the time. He's got a great book out at the moment, actually, and, yeah, he'd be right up there on my in my top list,

Trevor Freeman  49:54

Awesome. What is something about the energy sector or its future that you're particularly excited about?

Scott Demark  50:00

I wish you asked me this before the election. I I'm feeling a little dark. Trevor, I think there needs to be a price on pollution in the world. Needs to be a price on pollution in America, in Canada, and I'm worried about that going away. in light of that, I'm not, I'm not super excited about different technologies at the moment. I think there are technologies that are helping us, there are technologies that are pushing us forward, but there's no like silver bullet. So, you know, a really interesting thing that's coming is kind of this idea that a small nuclear reactor, okay, very interesting idea. You could see its context in both localized electricity production, but all the heat also really good for district entry, okay, so that's an interesting tech. It obviously comes with complications around security and disposal, if you like. There's our nuclear industry has been allowed to drink like it's all complicated. So, I don't see one silver bullet in technology that I'm like, That's the answer. But what I do see, I'll go back to what we were talking about before, is, you know, we had to turn this giant ship of bureaucracy towards new solutions. Okay, that's, that's what we had to do. And now that it's turned and we've got it towards the right course, I'm encouraged by that. I really am. You know, there are champions, and I'll talk about our city. You know, there's champions in the City of Ottawa who want to see this happen as younger people have graduated into roles and planning and other engineering roles there. They've grown up and gone to school in an age where they understand how critical this climate crisis is, and they're starting to be in positions of power and being in decision making. You know, a lot of my career, we're trying to educate people that there was a problem. Now, the people sitting in those chairs, it they understand there's a problem, and what can they do about it? And so I am, I am excited that that the there is a next generation sitting in these seats, making decisions. The bureaucracy the ship is, is almost on course to making this difference. So I do think that's encouraging. We have the technology. We really do. It's not rocket science. We just need to get through the bureaucracy barriers, and we need to find ways to properly finance it.

Trevor Freeman  52:34

Right? I think that's a good place to wrap it up. Scott, thanks so much for your time. I really appreciate this conversation and shedding a little bit of light, not just on the technical side of district energy systems, but on the broader context, and as you say, the bureaucracy, the the what is needed to make these things happen and to keep going in that right direction. So thanks a lot for your time. I really appreciate it.

Scott Demark  52:56

Thank you, Trevor, good to see you.

Trevor Freeman  52:57

All right. Take care. Thanks for tuning in to another episode of The thinkenergy podcast. Don't forget to subscribe. Wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback, comments or an idea for a show or a guest, you can always reach us at [email protected]

Will U.S. tariffs disrupt Canada’s energy sector? What is the current state of cross-border electricity trade? How can we strengthen interprovincial connections to secure a sustainable energy future in our country? Host Trevor Freeman summarizes the on and offs of Canada’s electricity trade. Tune in to learn about the complexities and challenges of evolving energy policies, infrastructure, and regulatory landscapes governed by both federal and provincial authorities.

Related links

●     Canadian Energy Regulator: https://www.cer-rec.gc.ca/en/index.html

●     The Transition Accelerator: https://transitionaccelerator.ca/ 

●     Electrifying Canada: https://electrifyingcanada.ca/

●     Canada Electricity Advisory Council: https://natural-resources.canada.ca/energy-sources/canada-electricity-advisory-council

●     thinkenergy episode 143 with Quest Canada: https://thinkenergypodcast.com/episodes/electrifying-canadas-remote-communities-with-quest-canada/

●     Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

Hydro Ottawa: https://hydroottawa.com/en 

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Transcript:

Trevor Freeman  00:07

Welcome to a think energy short hosted by me, Trevor Freeman, this is a bite sized episode designed to be a quick summary of a specific topic or idea related to the world of energy. This is meant to round out our collective understanding of the energy sector, and we'll compliment our normal guest interview episodes. Thanks for joining and happy listening.  Hi everyone. Welcome back to another thinkenergy short. I'm your host, Trevor Freeman, today we're going to take a look at Canada's electricity trade. You may recall that in my first episode of 2025 we did a look ahead at the year in energy, and we did briefly touch on potential upcoming tariffs, and I highlighted that there is a fair amount of trade and electricity across the border. So, given that we are still on the potential cusp of these tariffs being implemented, I'm recording this on march 3, and March 4 is the date that new tariffs are set to be implemented by the US on Canada, we thought it was probably a good idea to take a look at trade through the lens of electricity, to give you a sense of how this might impact electricity and what the future might hold. So we'll look at the current landscape, the challenges posed by some of these recent policies, and the potential for strengthening interprovincial connections to ensure a resilient and sustainable energy future.  So, let's start by establishing the current state of Canada's electricity trade. In short, Canada's electricity grids were designed to serve local demand, rather than looking at a large scale, integrated national grid, for all. We'll get more into this shortly, but it's the main reason why you'll see the majority of Canada's electricity grids at the provincial level are kind of oriented north to south when it comes to interconnections, rather than east to west. They are a stronger trade relationship to meet the higher demand of the United States, rather than between provinces and territories. Canada's electricity trade has long been a cornerstone of the North American energy framework that's governed by both federal and provincial authorities. These cross-border interconnections have facilitated a robust exchange with Canada, exporting around $3.2 billion worth of electricity to the United States in 2023 alone. And yes, that was billion with a B. So, let's talk about cross border trade. The Canadian energy regulator, or CER, oversees electricity exports to the United States, ensuring compliance with market regulations, fair access and impact assessment on our domestic supply. It should be noted that the CER does not regulate electricity imports into Canada. That is the role of provincial Crown corporations or private market participants who decide on the volume of electricity being traded here in Ontario, as we've talked about many times on the show, the IESO, or Independent Electricity System Operator decides on the amount of electricity that is needed in coming in terms of infrastructure, the CER regulates 86 different international power lines that connect Canada's provinces to the US electricity grid in different locations. So, to help you visualize this, you know, imagine a map of North America, starting west to east. We've got British Columbia, which is linked to the US Pacific Northwest grid. Manitoba and parts of Ontario are both connected to the US midcontinent grid. The other part of Ontario and Quebec are connected to the US Eastern grids. And finally, New Brunswick is connected to the US New England grid. So, there are a lot of different connection points across the map. So that gives you a picture of our current trade relationship, so, now let's look at how some of the recent policy shifts may affect that.  Canadians will be well aware that the dynamics of international trade are being tested by the recent shift in the US approach to trade policies, and that includes the electricity trade. As I said at the beginning, I'm recording this on march 3, the day before broad, sweeping tariffs are set to be imposed by the United States on Canada, and that will impact electricity potentially, as well. The Trump administration's imposition of tariffs on Canadian imports has introduced a whole layer of uncertainty and tension. In response, Canadian officials have contemplated numerous different measures, including restricting electricity exports to the United States, states like Michigan and in New York or Minnesota who receive a lot of electricity from us. In Ontario, our recently reelected premier Doug Ford has highlighted the significance of these exports and has noted that Canada's electricity has powered 1.5 million American homes just last year, as recently as last month, Premier Ford raised the possibility of charging Americans more for electricity that Ontario sends to the US, and has also announced plans to cut off energy exports to the United States if the Trump administration moves ahead with tariff threats. These developments create a climate of uncertainty, and such trade disputes underscore the vulnerability inherent in our current trade dependent system. That vulnerability has raised calls for Canada to look and invest inward, which brings us to interprovincial connectivity. Let's examine the case for strengthening interprovincial connectivity in Canada, as I said at the top, we don't have a national grid. In fact, Canada's electricity infrastructure, which we've talked about many times, consists of multiple provincial or territorial grids, each governed and regulated by its respective province or territory. They also vary in systems and resources for producing electricity, with some regions having ample access to water resources, hydroelectricity, for example, others relying heavily on nuclear energy, and still, others looking more to fossil fuels, like oil or gas for electricity generation, a more cohesive pan Canadian electricity grid has long been a topic of conversation, even before this current threat of tariffs from the United States. A few years ago, there was renewed interest in the idea of interprovincial connectivity to achieve a 100% net zero electricity system by 2035 and eliminate harmful emissions countrywide by 2050. Basically, utilizing the electricity grid to support decarbonization at the individual customer level. Of course, the federal government has recently relaxed its goal for a net zero electricity system by 2035 mostly due to feasibility concerns, but the goal is still there to achieve Net Zero electricity generation across the entire country, and work has already been done towards that. So, working closely with Natural Resources Canada, the transition accelerator, which is a nonprofit organization dedicated to accelerating the transition to low carbon economy and advancing Canada's 2050 climate target, created an initiative called Electrifying Canada, which was focused on widespread electrification throughout the economy. That initiative brought together a diverse group of stakeholders, including government, indigenous peoples, industry, labor and civil society, to develop a roadmap for the electrification of Canada. This roadmap runs in parallel with the federal government's Electricity Advisory Council, and outlines recommendations to create a pan Canadian electricity grid, including identifying the infrastructure needed, the regulatory and policy changes that are required and the necessary investments needed to make it happen. Given the challenges presented by the United States and the growing discourse around bolstering interprovincial electricity connections, enhancing our domestic grid could offer several different benefits. These could include energy security. So, by reducing reliance on external markets, we can ensure a more stable and self-sufficient energy supply. There's also economic resilience, strengthened interprovincial trade can mitigate the economic impacts of international trade disputes and tariffs. And finally, there are environmental goals, so a cohesive national grid can facilitate the integration of renewable energy sources, aiding in the achievement of our net zero emissions targets. The CERs Canada's energy future 2023 report projects a 27% increase in interprovincial transmission capacity by 2035 under a global net zero scenario. So, we need this interprovincial connectivity in order to meet our net zero targets. It's something that kind of has to happen anyway, or is one of the key strategies in order to make that happen. This expansion would enable more efficient electricity transfers between provinces, allowing us to optimize resource utilization and enhance grid reliability. All the things that we talk about on this show about how to make our grid more efficient and more effective can be enhanced by looking not just at our provincial grids, but at more of a pan Canadian grid. While a National Grid offers many benefits, there are significant challenges to overcome, surprise. Surprise. We talk about this all the time on the show, so let's explore some of these challenges and considerations in order to make interprovincial connections a reality. To start with, the existing infrastructure was primarily designed for localized needs and aligning the diverse regulatory frameworks of each province or territory presents a complex challenge. Additionally, significant investment would be required to develop the necessary transmission lines and related infrastructure. So, it's both a regulatory challenge as well as a physical infrastructure challenge. We just don't have all the transmission lines and interconnections that are required. Here, according to the CER Market Snapshot webpage, electricity transmission lines in the Yukon and Northwest Territories do not actually connect to the larger North American grids or even to each other. And Nunavut doesn't have any transmission lines connecting its communities at all, but rather, each community independently generates and distributes its own electricity. I'll draw your attention back to an episode that I did last October with Gemma Pinchin from Quest Canada. And in that conversation, she highlighted that almost 200,000 Canadians in more than 280 remote communities don't connect to their local electricity grid or natural gas system, and it's not feasible at the moment for them to do so, given how remote they are. So, that presents some challenges as well. At a more macro level, looking at interprovincial framework, in August 2023 Ontario and Quebec announced a 600-megawatt electricity trade agreement, exemplifying the potential for greater interprovincial collaboration. Such initiatives could serve as blueprints for broader efforts to enhance our national grid. Despite these challenges, there is progress being made by investing in our domestic infrastructure and fostering provincial collaborations, Canada can build a resilient, sustainable and self-reliant energy system poised to meet future challenges. The energy transition, as we've talked about before is all encompassing and includes many different strategies. So, while we sometimes talk about the end result that EV or that heat pump that needs to be installed on the show, we also need to look at the more macro level, as how do we actually arrange our energy systems and our provincial grids, and what is the best option for that.  So, that wraps up our look at Canada's electricity trade and how the current trade landscape might impact that moving forward. Hopefully you found that interesting. Thanks for tuning in for another think energy short, as always, we'd love to hear from you, and we'll talk to you next time.  Thanks for tuning in to another episode of The thinkenergy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or a guest. You can always reach us at [email protected]

What does Canada do with excess energy? How is it stored today and how will it be stored as the energy industry evolves? Justin Rangooni, CEO of Energy Storage Canada, shares how energy storage supports a sustainable future for Canadians—from enhanced flexibility to affordability, large-scale grids to individual consumer needs. Listen to episode 152 of thinkenergy to learn about ongoing projects and challenges facing the energy storage sector in Canada.

Related links:

• Justin Rangooni on LinkedIn: https://www.linkedin.com/in/justin-rangooni-5063b542/ 

• Energy Storage Canada: https://www.energystoragecanada.org/ 

• TC Energy Pump Storage Project: https://www.tcenergy.com/operations/power/pumped-storage-project/ 

• From Small to Mighty report: https://energyontario.ca/Files/OEA_ESC_From_Small_to_Mighty_Dec_2024.pdf 

• Ontario Energy Board: https://www.oeb.ca/ 

• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

Hydro Ottawa: https://hydroottawa.com/en 

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