abstract: the telecom industry has seen tremendous changes...
TRANSCRIPT
Abstract:Thetelecomindustryhasseentremendouschanges,replacinginjustafewshortyearsthePlainOldTelephoneSystemthattookoveracenturytobuildwiththeInternetandcellularnetworks.Sincetelecomandelectricutilitieshavealotincommon,likelinearassets,largecustomerbaseandterritory,andtechnology-drivenculture,whatcanwelearnfromthetransformationoftelecomtobettermanagetheongoingtechnologicalchangesinelectricutilities?
Thankyou.
TheelectricityindustryhasperhapsnotseenthatmuchchangesincethedaysofThomasEdison.Incredibly,hecouldstillrecognizethemajorcomponentsofadistributionnetwork.However,AlexanderGrahamBellwouldnotrecognizedtoday’sInternetandcellularnetworks.
Inordertoappreciatewhatthefuturemayholdforus,Iwouldliketodaytotakeyouonaverypersonaljourney,lookingatwhathappenedinthetelecomindustryoverthelastdecades.
Hopefully,thiswillshowthatweallhaveagreatfutureaheadofus.
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IwouldlikeyoutomeetMaurice,myfather,workingatHydro-Québecasadistributiondispatcherin1960.
Technologyhaschangedtoo.Justlookattherotaryphonesonhisdesk.Theblack onesareconnectedtoBellCanadaforexternalcalls.Thegreen oneisontheinternalHydro-Québecphonenetwork,notconnectedtoBell becauseBelldidn'twantHydro tobypassitsnetwork.Essentially,Hydro-Québecwasoperatingitsowntelephonemicrogrid.
Sometimes,guysbuildingdamsinNorthernQuébec wouldcallmyfatheronthegreenphoneandaskhimiftheycouldtotalktotheirwives.Hewoulddialthewifeontheblackphoneandholdthe2handsetstogether,bypassingBell’snetwork.(Makeagesturewiththehands,thumbstolittlefingers.)Soundwasbad,theconversationwascertainlynotprivate,butbypassingBellwasfree.
Photo:BenoitMarcoux,familycollection.
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Fastforwardto1997,20yearsago.
IwasinTorontodoingmybesttobypassBell’straditionalphonebusiness.Iwas thenoperatingtheworld’slargestInternettelephonynetwork.Weofferedwholesaleinternationalphoneminutesatafewcentsperminuteinsteadofdollarsperminute.Wecarriedamillionminutesofinternationalphonetrafficperdaybetween16countries,bypassinglocalmonopolies,muchlikemyfatherdid,butonaglobalscale.Weweretinyinaglobaltelephonenetworkthatcarriedbillionsofminutesofcallsperday,butitclearlyannouncedwhatwastocome.
Phonecompanieswereindenial.TraditionaltelephonefolkslookedatusandsaidthatInternettelephonywouldnotworkonalargescale,thatwecouldonlysurvivebybypassinglegal monopolies onafewroutes,thatvoicequalitywasnotgoodenough,thattheIPtelephonytechnologywasnotreliable,blah,blah,blah…Butourservice wasinexpensiveandconvenient,andcustomerslikedit,liketheguysbuildingthedamslikemyfather’sservices.
Eventually,Skype launchedin2003,theiPhone launchedin2007,andtherestishistory.Bythen,mostphonecallsusedtheInternetprotocolatleastpartoftheway.Traditionalcallswerealreadyfacingextinction.
Photo:BenoitMarcoux,familycollection.
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Now,pleasemeetmytwo-year-oldgrandson,Charles.HeloveshisruggedizediPad,especiallytowatchamateurbabyvideosonYouTube.
Lastnight,IdidaFaceTime videoconferencewithhimandthemarginalcostwaszero,entirelybypassingthephonesystem.
Injustafewyears,theInternethasreplacedacentury-oldinfrastructure,andithappenedmuchfasterthanpeopleinthetelephoneindustrythoughtpossible.
Askyourself:Couldithappentoelectricutilities?
Well,within10years,youwillproduceandbuybulksolarorwindforonepennyperkWhandmatching storagefornotmuchmore, balancingandtransiting itallonyournetwork.
Thisis fundamentallychangingtheeconomicsoftheelectricutility industry.
Neweconomicswillredefineourrelationshipwithcustomersandcauseustooperateoursystemsinnewways.
Photo:BenoitMarcoux,familycollection.
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Lookatthefacts.Bloomberg hasbeentrackingthecostofall-insystempriceforutility-scalesolararrays.Ithasbeendroppingby17%peryear*since2010.Wearenowseeingnewsystemsbeingbuiltforlessthan$1perwatt,or1milliondollarsperMW.ThatisthepricetobuildaNaturalGasplant,butthesunisfreeandoperatingcostsareessentiallylimitedtowindowwashing.
Rightnow,solaristhecheapestformofenergyin60countries.**
Rightnow,bulkpowerpurchaseagreementsforsolarcomeinatlessthan3¢perkWhinsunnyareas.Largewindfarmsaredownto2¢.Ŧ
Rightnow,thereisabillinfrontoftheWyoming StateLegislaturetotaxrenewablesinordertofavorlocalcoalproducers.Youknowthatyouareontosomethingwhenitisbeingtaxed.***
Trendthisoutperhaps5yearsandyouwillbeat1¢ perkWhforbulkrenewablepower.Thereisnoreasonforthisnottohappen.Solarpanelsandpowerconversionelectronicsarebeingmanufacturedatanincreasinglylargescale.Experienceandstandardizationarereducingthecostofintegration.Andthisdoesnotdependonanytechnologybreakthrough.Andthen,addafewpenniesforenergystorage,andyou’llhavedispatchablepower,notintermittentpower.
Ifyouthinkthatcostswillleveloff,thinkagain:solarpenetrationiswellaheadofthepastforecast,aswehavebeenconsistentlyunderestimatingit.****ThisisverymuchlikeMoore’sLawincomputing,butforsolar,windandenergystorage.
WhattheInternetandwirelessdidtotelephonecompanies,solar,windandstoragewilldotoelectricutilities.So,let'sseewhatthefutureofelectricutilitiesmaylooklike.Iwouldsaythereare3keypoints.*https://www.bloomberg.com/news/articles/2016-12-15/world-energy-hits-a-turning-point-solar-that-s-cheaper-than-wind,retrieved20170127.**http://www.sciencealert.com/solar-power-is-now-the-cheapest-energy-in-the-world,retrieved20170127.Ŧhttps://blogs.scientificamerican.com/plugged-in/wind-energy-is-one-of-the-cheapest-sources-of-electricity-and-its-getting-cheaper/?wt.mc=SA_Twitter-Share,retrieved20170906.***http://www.forbes.com/sites/williampentland/2017/01/18/wyoming-considers-de-facto-prohibition-on-solar-and-wind-energy/,retrieved20170211.****Theunderestimatedpotentialofsolarenergytomitigateclimatechange,FelixCreutzig etal.,NatureEnergy,25August2017.Photo:BenoitMarcoux.
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First,withlow-costrenewables, customerswillbecomepowerproducers,whetheryouwantitornot,anditwilltransformourrelationshipwiththem.
Inmediaandtelecom,ordinarypeoplealsobecameproducers.Charles lovestowatchamateurbabyvideoonYouTube.Thisonehasbeenviewed178milliontimes.Everytime,thereisanadandthedaddyormommywhoproducedthevideogetsabitofmoney.Overall,videosthatpeopleputonYouTubegenerate$15billionayearinadvertisingrevenue.
Inourindustry,lowcost solarmeansthatmanycustomerswillgeneratepower,withorwithoutincentivesornetmetering.Itwilljustmakesense.Theymayjusttakethefreeelectronswhentheycan,andwastingthemiftheycan’tneitherusenorsellthem.
Andbytheway,wehavecutdownonourcableTVsubscription.Customer-ownedgenerationwillhaveasimilareffectonutilities.Manywillhavesolarpanelsandtheywillbuylessfromyou.
Inessence,forthefirsttime,utilitieswillseecompetitionfromtheirowncustomers.
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Second,peoplewillhavemorechoiceinhowtheybuy,useorsellenergyproductandservices.
Theelectricityindustrywillbeawholeecologyofvendorshelpingcustomersbuildingandmanagingmicrogridsorbringingpowertomarket, basicallymonetizingofthedifferencebetweenapennyperkWhandadimeperkWh.JustlikeconsumerscancalllovedoneswithBell, FaceTimeorSkype,electricitycustomerswillhavemorechoicesthanever.
ThisisarealbusinessopportunityforelectricutilitiestodiversifyandtobecomeEnergyServiceProviders,justliketelephoneandcablecompanieswentintomedia,contentandinfrastructuremanagement.Customerswillbelookinguptoutilities,withtheirbrandname,tohelpthemoutmakingsenseofallthis.
Thisisthechanceforutilitiestohavederegulatedmicrogridofferings,andmanyaredoingjustthat.
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Thirdly,thedistributiongridwillbecomeanenergyinterchangenetwork.
Themainbusinessofthedistributiongridwillnotbetodistributeenergy, buttobeacommoncarrierforenergybrokeredthroughitsnetwork,possiblywithBlockchaintechnologyfacilitatingeconomictransactions.
• Justlikewewentfrom one-waycablehookupandrotaryphonestobroadbandInternetaccessandsmartTVs,distributedintelligencewillbepushedtotheedgeoftheelectricitygridorbehindthemeter.
• Justliketelecomsystems reroutearoundfailedlinesandcontrolset-topboxes,theelectricitynetworkwillusedistributedintelligencefortwo-waypowerflows,advancedprotection,self-healinganddemandmanagement.
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TraditionalutilitywisdominCanadaisthatcustomersareOKwithoutagesandthatimprovingreliabilitywouldonlyincreasecostsandpushratesup.
Thenewrealityofelectricutilitiesupendsthistraditionalwisdom.
First,customersareredefiningwhatismeantbyquality.Traditionally,CanadianUtilitiesuseddurationofinterruptions,orSAIDI,astheirmainmeasureofreliability.TooptimizeSAIDI,CanadianUtilitiesadoptedafusesavingprotectionstrategy,whichunfortunatelymeansalotofshortinterruptionsformanycustomers.However,customersarefarmoresensitivetothenumberofoutages becauseevenashortone,resetselectronics,stopsmanufacturingprocessesandthrowsdistributedgenerationoff-lineforasustainedperiod.InterruptionfrequencymetricslikeSAIFIandMAIFI,orsimplythenumberofserviceinterruptions,willreplaceSAIDIasourmainqualitymetrics.
Bytheway,thetelecomindustrywentthroughasimilarredefinitionofquality.Itusedtobethatthemainqualitymeasurewassoundqualityduringacall.Nowadays,customersatisfactionisdrivenmorebytheconvenienceofmobilityandthepossibilityofeasilydoingvideoconferencingormultiplepartiescalls.
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Second,thenumberofinterruptionsiswhatisdrivingoperatingcosts,nottheduration.Replacingablownfusecoststhesamewhetheroneor100customersareaffected,andwhethercustomers havebeenoutofpowerfor10minutesor10hours.
Wearethenseeingthattheservice qualityperceivedbycustomersandtheoperatingcostdriversofutilitiesaregettingmoreandmorealigned.
Wheredoesitleadusto?
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Throughtheinternetandwirelessrevolution,telecomcompanieshavepushedintelligencedeepinthenetwork.Thecentralofficeandthecableheadendhaveeffectivelymovedcurbsideorhalfwayupwoodpoles.Otherexamplesareedgecomputingandsmartset-topboxes.
Inordertoimproved perceivedservicequalityandtokeepoperatingcostsdown,utilitiesarestartingtodothesame.Weallknowaboutsmartappliancesandsmartmeters.Butweseeintelligencebeingpushedforwardintothedistributiongridwith:• Customerandutilitymicrogrids tointegraterenewablesources;• Communityenergystorage(CES)toshavepeakandtokeepthelighton;• Lateralreclosing toclearfaultsnearwherethey occurandtoavoidtruckrolls;• Advanced2-wayprotection toaccountfordistributedgeneration;• Aswellassmartswitchestoautomaterestoration onfeeders;
Usingmodernprotectionandcontrolstrategyalongwithenergystoragedeepintothegrid,wecanreducethenumberofserviceinterruptions,whichimprovescustomersatisfactionandoperatingcosts,allatonce.Itiswin-win-win.
However,toachieve thoseobjectives,utilitiesneedsystem-widefocusandintegration,justliketelecomcompanieshave.Itcannotbepiecemealandhastobesystemwide. This systemapproachistheonlywaytominimizethenumberofcustomersaffected byafault,withprotectionmovedtolateralsandsublaterals andmicrogridsanddistributedstorage thatmaintainelectricalservicethroughdisruptions.
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Low-costrenewableswillcontinuetogetlessexpensive,atperhaps20%ayear,aswillbatteries.They arethetriggersofamajortransformationoftheelectricityindustry,justliketheInternetandcellularcausedthetransformationofthetelephoneindustry.Theelectricitynetworkwillbecomea“gridofmicrogrids”withintelligencemovedtotheedgeofthenetwork.
Winningutilitieswillbetheoneswho,likeWayneGretzkysaid,willskatetowherethepuckisgoing– theedgeof theicering,inthiscase.
AtS&C,ourresponsibilitytowardyouistobetherewithyouwiththeenergystorage,microgrid,advancedprotectionandself-healingsystemsthatyouneedinaworldoflow-costrenewableenergy.We’vehelpeddevelop3000MWofrenewableenergy.We’veintegrated200MWhofenergystorage,fromfourdifferentbatterychemistriesonfivecontinents,overthelast12years.Wehelpedimplementmanymicrogrids.Wehavetrainedengineerstohelpyou.
Thankyou,
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