The Problem: Energy Costs
Electricity prices in Ontario have doubled over the last decade.[i] To ensure that the lights always stay on, Ontario has invested heavily in upgrading our aging infrastructure and new generation projects. The cost of these upgrades is passed onto most consumers in the form of time-of-use electricity pricing.
Why is energy priced differently at different times?
Like any market, energy prices vary throughout the day and season based on supply and demand. The higher the demand relative to available supply, the more expensive it is, and vice versa. During times of higher demand, the grid gets strained to match it with supply, and often must turn on natural gas generation plants in order to meet the demand, which is both very expensive and polluting. Time-of-use pricing is a pricing mechanism to motivate users to change their energy consumption behaviour to avoid placing strain on the grid. In short, the high price is meant to encourage people to consume energy at night, when demand is low. [ii]
Bigger Bills for Bigger Buildings
For large industrial and commercial users (referred to as Class A customers), it gets even more complicated. Put simply, their bills are highly dependent on how much energy they use when the Ontario grid is at its annual peak demand, usually on very hot summer days. In fact, the level of energy they use during the top 5, 1-hour peaks of the Ontario grid can drive over 50% of their annual electricity bill! One of the main goals of this pricing strategy is to motivate Class A customers to reduce their strain on the grid during the highest demand periods in the year. They achieve this through energy conservation, onsite generation such as rooftop solar and energy storage. [iii]
What is V2B Technology?
Instead of purchasing large batteries to store energy, Vehicle-to-Building (V2B) technology enables buildings to draw power from multiple electric vehicles.[iv] Most cars driven to work are unused 96% of the day.[v] Rather than sitting idle, V2B could help buildings lower their power consumption from the grid by drawing power from EV batteries. Drivers would receive a share of the building’s cost savings in exchange for the use of their battery (in this Project, our EV customers get the value up-front in the form of a reduced-price lease and free parking). On a building scale, the individual building saves on their energy bill, but only if the vehicles discharge and recharge at the right times. That is where our software comes in!
Why does it matter?
As electric vehicles really take off over the next few years, they have the potential to create an incredibly important new asset that can help the grid reduce reliance on natural gas plants, enable more renewable generation to come online, and generally lower the per unit cost of electricity for the whole system, but only if managed well. This relies on predictive optimization of the assets with a keen understanding of what EV owners actually need, which the software technology we are developing with this Project.
[i] Morrow, A., Cardoso, T., “Why does Ontario's electricity cost so much? A reality check”, The Globe and Mail, https://www.theglobeandmail.com/news/national/why-does-electricity-cost-so-much-in-ontario/article33453270/
[ii] Ontario Energy Board, Managing Costs with time-of-use rates, https://www.oeb.ca/rates-and-your-bill/electricity-rates/managing-costs-time-use-rates
[v] Plug'n Drive, EV Batteries Value Proposition for Ontario’s Electricity Grid and EV Owners: A Preliminary Cost and Benefit Assessment, July 2020