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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