From Smart Grids to the Internet of Energy An Investigation into the Disruptive Capacity of the Smart Grid Scott Weiler A Major Paper submitted to the Faculty of Environmental Studies to fulfill the requirements for the Master in Environmental Studies, York University Ontario, Canada. Student’s Signature Supervisor’s Signature Acknowledgments I would like to thank my wife for her enduring support of my academic endeavors that began over a decade ago. Without her support I would not have been able to return to school. I also need to thank my children who I am really looking forward to spending more time with now that I have completed my studies. Nicholas and Chloe, 6 and 3, only know me as an FES student since they were both born during my time at York. Nicholas is looking forward to my career as an “inventor”. I also need to thank all the grandparents who have provided babysitting and proofreading support on numerous occasions. I would like to thank my Supervisor, Mark Winfield for his guidance and endless patience. His Energy and the Environment undergraduate course inspired me to focus my research on sustainable energy. I would like to thank my Advisor, José Etcheverry. His enthusiasm for renewable energy is contagious. I would also like to thank Peter Love for energizing me about energy conservation. Finally, I would like to thank the Social Sciences and Humanities Research Council of Canada and everyone who helped with my application for this scholarship; Gail Fraser, Arlene Gould, and Mark Winfield. Without the financial support from SSHRC it would not have been possible to pursue my master’s degree. I have really enjoyed my time at York and completing my studies is bittersweet. Completing a Master’s degree, as well as being awarded the SSHRC scholarship is great source of pride, particularly for someone who has struggled with learning challenges in the past. I am truly grateful to all those who have provided family, financial, and academic support for this achievement. ii Abstract Globally, electricity systems are undergoing rapid modernization as they transition into the digital era of the ‘Smart Grid’. By integrating information and communication technology with the electricity grid, the smart grid will become a highly automated network with two-way flows of electricity and information. This research questions whether the smart grid will be an evolutionary technology that enhances grid operations, but maintains the eXisting institutional order, or will the smart grid be a revolutionary technology that disrupts the natural monopoly of electricity utilities. This research also eXplores the potential for the smart grid to cause a broader transformation in energy systems that will bring about a sustainable energy transition. iii Foreword This Major Research Paper satisfies the learning objectives outlined in my Plan of Study and Major Research Proposal. It also encompasses many of my learning interests from both my undergraduate and graduate studies in the Faculty of Environmental Studies. These interests have coalesced around climate change and energy policy. The goal of this research was to understand how to bring about a sustainable energy transition. My research set out to understand the impact that the smart grid may have on energy systems. Intuitively the smart grid appears to have many similarities to the Internet. The Internet is understood to be a highly disruptive technology. This research explores these similarities and questions whether the introduction of Internet technology to the electricity system will have disruptive impact on energy institutions, similar to what occurred in the telecommunications industry. Furthermore, this research questions whether the smart grid could be a catalyst for a sustainable energy transition. My studies have shown that renewable energy technologies have great potential to supply our energy needs. Yet we seem to be locked into using fossil-fuels when it is increasingly clear that they are having a significant impact on our environment. Despite the apparent resistance to change, energy transitions have occurred in the past and will undoubtedly occur in the future. This research eXplores the history of energy transitions to understand the processes that drive disruption and innovation. CompleXity science is used to provide a framework for understanding the process of institutional lock-in and disruptive innovation. iv Table of Contents Acknowledgments ................................................................................................................... ii Abstract ................................................................................................................................. iii Foreword ............................................................................................................................... iv 1. Introduction .................................................................................................................... 1 1.1. Research Objective ................................................................................................................ 2 1.2. Methodology ......................................................................................................................... 3 1.3. Key Findings ........................................................................................................................... 4 2. Background ..................................................................................................................... 5 2.1. Energy .................................................................................................................................... 5 2.2. Electricity ............................................................................................................................... 7 2.3. Sustainable Energy ................................................................................................................. 9 2.4. Energy Transitions .................................................................................................................. 9 2.5. Smart Grid ............................................................................................................................ 11 3. Complexity ..................................................................................................................... 15 3.1. What is Complexity ............................................................................................................... 15 3.2. Socio-Technical Systems ........................................................................................................ 19 3.3. Energy and Complexity ......................................................................................................... 21 4. Institutional Lock-in ........................................................................................................ 23 4.1. Regulatory Lock-in ................................................................................................................ 25 4.2. Technological Lock-in ............................................................................................................ 26 4.3. Scale Lock-ins ........................................................................................................................ 27 4.4. Smart Grid Lock-ins ............................................................................................................... 29 5. Driving Transitions .......................................................................................................... 39 5.1. Techno-Institutional Brittleness ............................................................................................ 41 5.2. Changing Economics .............................................................................................................. 46 5.3. Emerging Technologies ......................................................................................................... 54 5.4. Internet of Energy ................................................................................................................. 61 6. Conclusion ...................................................................................................................... 79 7. Bibliography ................................................................................................................... 82 v 1. Introduction Globally, electricity systems are undergoing rapid modernization as they transition into the digital era of the ‘Smart Grid’. This modernization will see the electricity grid evolve from a servo-mechanical, paper driven system, to a modern, highly automated network that incorporates sensors, monitoring, and communications to improve the flexibility, security, efficiency, and reliability of the grid.1 The smart grid will enhance every facet of the electricity delivery system, including generation, transmission, distribution and consumption; it will energize utility initiatives that encourage consumers to modify patterns of electricity use; it will empower consumers to become active participants in their energy choices; and it will offer two-way visibility and control over the electricity system.2 The smart grid will include central and distributed generation connected through transmission and distribution networks with the eXpectation that there will be many more points of generation such as micro-hydro-electric, bio-energy as well as wind and solar generation. The addition