This is the third in a series of articles about how Canada can take the lead in global business. For more, come to the 10th Annual Canadian Business Leadership Forum on Oct. 23 in Toronto. For details, visit www.canadianbusiness.com/leadershipforum.
Oklahoma City is not typically considered a centre for cutting-edge technology. Yet the U.S. heartland community is a huge smart-grid success story. This year, Oklahoma Gas and Electric is installing up to 40,000 smart thermostats that allow homeowners to program their house’s temperature according to pricing signals the utility sends each day. It bought the devices from a small Ottawa-based firm named Energate.
“There is a change going on globally,” says Niraj Bhargava, co-founder and CEO of Energate, which makes smart thermostats and mobile apps that homeowners can use to monitor and control their home energy use. Canada may be known as an old-guard, fossil-fuel powerhouse, but over the past few years it quietly has been hedging its bets. Despite having no clear national energy strategy, Canada has become a leader in the growing field of smart-grid technology—and it’s poised to make further gains as the world looks for ways to lessen its dependence on oil and gas.
Founded in 2004 when Bhargava, a telecommunications engineer who once worked for General Electric, was teaching at the Queen’s School of Business, Energate now counts over 30 utilities across the continent as customers, most of them American. Power management, Bhargava says, is an expanding side of the energy industry where Canada has room to innovate.
The concept of smart grids has been around for nearly a decade, but it is still more a poorly understood concept than a building block of energy strategy. It is an umbrella term for several tools that precisely measure and control the flow of electricity, allowing for the optimization and reduction of overall energy use. At the intersection of cloud computing and energy conservation, the field excites both tech geeks and climate-change warriors alike, but much of it remains in the theory stage. That needs to change. According to the International Energy Agency, better use of existing heating technology around the world could save up to 25% of peak heating energy demand by 2050.
“If there’s a better way to make use of the resources, we all win,” says Bhargava. “We’re about shaping the demand curve. We help them reduce the peaks and build the valleys.”
Energate’s software and devices upload data on residential energy use—whether from heat, air conditioning or a swimming pool—into the cloud, either through a smart meter or a router. Consumption can then be tweaked by homeowners or, with their consent, by utilities.
Like many Canadian firms, Energate found having an American-bolstered resumé eventually helped it succeed at home. The company is in the first phase of a pilot project to roll out its newest technology, including mobile apps for iPhone, BlackBerry and Android, as well as home energy “dashboards” in up to 1,000 homes across Ontario. It won $2.9 million from Ontario’s Smart Grid Fund for the initiative, which it matched with in-kind dollars.
Energate hopes the pilot project will help bolster the image of its products. To reach full potential, the smart-grid industry must untangle its knottiest problem: winning over consumers. Gaining two-way control over how much energy homes use is an easy sell to utilities, which have an incentive to reduce peak demand and avoid brownouts. Canadians may care in a vague way about reducing carbon emissions, but persuading them to let someone mount a newfangled grey box in their homes—one that is likely to lower a house’s temperature during the winter—has been tougher.
Maggie Koerth-Baker, author of Before the Lights Go Out: Conquering the Energy Crisis Before It Conquers Us, says utilities simply haven’t done a good enough job of explaining the idea. “They tell you it’s good,” she wrote in an online column. “They say something hand-wavey about the Internet. And then they pretty much leave you to fend for yourself.”
That aloof, technocratic attitude—“We’re here to install, not explain”—undervalues the consumer at the industry’s peril. It has already been blamed for the failure of the SmartGridCity project in Boulder, Colo., which set off widespread fears about privacy and sparked a media backlash. At the tail end of the experiment in 2010, fewer than half the city’s residents had installed smart meters.
Someone from Boulder should have given the Ontario Ministry of Energy a call. Through slow, grassroots methods such as community meetings and bill inserts, Ontario’s utilities have largely succeeded in informing the province’s residents about what smart meters are, and how to shift electricity demand to lower their bills. The past four years saw widespread smart-meter installation across the province.
Canada as a whole “did a great job of educating consumers,” says Alex Bettencourt, managing director of SmartGrid Canada. “That skill is transferable to other places around the world.”
Other Canadian firms have been developing completely different, yet just as creative, smart-grid technologies. Consider Awesense Wireless, the B.C. firm that has been helping that province hunt down non-technical losses—the industry’s euphemism for energy theft. They’ve been instrumental in fighting marijuana grow-ops, which are at pains to hide their enormous electricity use. Now, the technology Awesense has developed there is being test-driven in Brazil and India, where poverty, not pot, is behind the theft of power.
Also driving energy innovation is Canada’s sheer size. Scattered across the country are hundreds of communities that are far from any grid. The B.C. government has been helping remote settlements reduce their dependence on diesel, which must be trucked or flown in and burned, by developing run-of-river energy—a kind of hydro power drawn from running water, rather than dams.
The biggest smart-grid projects in the world are almost all still in the pilot or development stages, so Canada has as much a chance as any country to take charge. But with governments in the U.S., Japan and South Korea approaching smart grids as economic opportunities, Canada can’t afford to fall behind. “We’re at the front of the pack, and we have the opportunity to lead,” says Bhargava. “But if we don’t move quickly, we’ll be following.”