Frequently asked questions: smart grid demonstration and deployment program

What entities are eligible recipients?

Legal entities validly incorporated or registered in Canada, including: for-profit and not-for-profit organizations such as electricity and gas utilities, electricity system operators, transmission owners and operators (including Provincial Crown Corporations, agencies, co-operatives, Indigenous and municipally-owned) and local distribution companies as Direct or Ultimate Recipients.

Provincial, territorial and municipal governments and their departments and agencies where applicable as Initial Recipients.

Are gas utilities eligible recipients?

Yes.  Gas utilities are eligible recipients provided the proposal is a smart grid project with direct benefits to the electrical grid. 

What is an Eligible Direct, Initial and Ultimate Recipient?

1. Eligible Direct Recipients receive funding directly from NRCan to undertake activities as described in Section 7.3 “Eligible Activities”. Direct Recipients include electrical and gas utilities, system operators, transmission owners or operators, and local distribution companies. Direct recipients will sign a bilateral contribution agreement with NRCan.
2. Eligible Initial Recipients receive funding directly from NRCan to undertake activities as described in Section 7.3 “Eligible Activities” and will further distribute funding to Ultimate Recipients.  Initial Recipients include provincial, territorial and municipal governments or government agencies.  Initial Recipients will sign a bilateral contribution agreement with NRCan.
3. Eligible Ultimate Recipients receive funding via an Initial Recipient to undertake activities permitted by Direct/Ultimate Recipients as described in Section 7.3 “Eligible Activities”.  Ultimate Recipients include electrical and gas utilities, system operators, transmission owners or operators, and local distribution companies.  Ultimate Recipients will lead the project funded through the Initial Recipient. 

What is NRCan’s maximum contribution to a project and stacking limits?

1. For demonstration projects, NRCan agrees to pay up to 50% of total eligible project costs up to a maximum of $5 million.  Stacking limits are set at 100% for legal entities, provincial and territorial crown corporations and other levels of government.
2. For deployment projects, NRCan agrees to pay up to 25% of total eligible project costs up to a maximum of $20 million.  Stacking limits are set at 75% for legal entities and 100% for provincial and territorial crown corporations and other levels of government.

Will Smart Grid projects be subject to a holdback component?

1. For demonstration projects, a holdback of up to 15% will be applied to each payment and released once all conditions of the contribution agreement have been met.  Holdbacks will be based on NRCan’s risk assessment of the intended Recipient and project, and will be set in compliance with NRCan’s Recipient and Project Risk Management Model.
2. For deployment projects, a holdback of up to 25% will be applied to each payment.  The holdback will be released pending an independent third party performance evaluation of at least 6 months of project operation.  The structure and timing of the holdback release will be negotiated with each recipient on a project-by-project basis under the obligations set out in the contribution agreement.

Will my organization receive 100% of the holdback if our deployment project does not meet the performance metrics as indicated in the contribution agreement?

The exact terms of the 25 % deployment holdback will be outlined in the Contribution Agreement with the recipient. The structure and timing of the holdback release will be negotiated with each recipient on a project-by-project basis under the obligations set out in the contribution agreement. Recipients will have a chance to review the originally forecasted targets before the operational performance assessment begins, and make revisions based on any changes to the project since the project launch. (Any changes to a project scope must be approved by NRCan at the point at which they occur.) The holdback is intended to help utilities and their project partners ensure that commercial equipment, and the project as a whole is performing to the standards that it was intended to.

Will there be a standard payment schedule set up for each project? Are advanced payments permitted?

The project payment schedule will be agreed upon during the negotiation of the contribution agreement with each project recipient.  While advanced payments are permitted, they are considered on a recipient-by-recipient basis and will be based on assessment of need, risk level and cash flow requirements. 

Does my project have to achieve GHG emission reductions and other environmental benefits?

GHG emission reductions are a key priority for the Government of Canada and the Green Infrastructure Phase II Funds, it is one of the six metrics that all project proposals are being evaluated against.  For deployment projects, GHG emissions must be listed as one of the top three metrics being evaluated for all project proposals, with GHG reductions as a direct result of the project. For demonstration projects, a pathway to GHG reduction should be outlined if relevant in the proposal, but they are not necessary by project completion.

Can my project reduce GHGs outside of my jurisdiction or service territory?

Yes, but they must be achieved within Canada (i.e. not in the US). They can be realized in a neighbouring province or territory as the result of the project. International GHG reductions can be listed in the proposal if relevant.

How will provinces with a higher renewable energy mix host projects to reduce GHG emissions?

Any GHG reductions in Canada as a direct result of the project will be considered eligible. GHG reductions could be the result of peak-shaving on a grid where peak electricity is supplied by emitting generation. GHG reductions could also be the result of reduced truck rolls for operations and outage management. GHG reductions could also be the result of emitting heating resources (such as heating oil or natural gas) being replaced with smart electric heating devices such as heat pumps or smart electric hot water heaters which can participate in demand response services. Jurisdictions importing electricity from neighbouring jurisdictions with electricity emissions could also demonstrate a net decrease in their emissions intensity from reduced imports due to a smart grid project.

What is the funding envelope and timeframe for the Smart Grid Program?

The Smart Grid Program will invest up to $100 million for utility-led projects to reduce GHG emissions, better utilize existing electricity assets and foster innovation and clean jobs for demonstration of promising near-commercial smart grid technologies (up to $35 million) and the deployment of smart grid integrated systems (up to $65 million). The timeframe for program funding is four years and will be completed by March 31, 2022. The terms and conditions of the program (including 5 years post-project monitoring) will expire on March 31, 2028.

How will projects be evaluated? What is the difference between a process indicator and impact indicator?

1. Projects will be evaluated based on their alignment with the Smart Grid Program, the level of risk associated with the proposal and the impacts with respect to six metrics.  The Smart Grid Program metrics are:
   • GHG emission reductions and other environmental benefits
   • Economic and social benefits
   • Improved asset utilization and increased efficiency
   • Increased reliability and resiliency
   • Increased system flexibility and renewable energy penetration
   • Cyber security
2. A process indicator relates to what is being implemented or built, i.e. energy saved from a GHG emitting supply. An impact indicator relates to the results delivered from what has been implemented or built, i.e. tons of CO2e avoided from a given emitting electricity generator.

Indicators must always state whether they have project level or system level effects.  

What will be encompassed in the due diligence evaluation? Will my organization be notified if our project proposal passes the due diligence assessment? When will due diligence take place?

The due diligence stage will include an evaluation of the project finances, technical risk, proposed outcomes and team risk.  NRCan may request additional information to support the due diligence evaluation.

All applicants undergoing due diligence will be notified about the results of their due diligence assessment.  Successful project proposals will then be invited to begin negotiating a contribution agreement. 

When will the negotiation of contribution agreements take place?

NRCan anticipates that the initial round of contribution agreement negotiations will begin approximately in Summer 2018.  Following this, project announcements are anticipated to begin in late Fall 2018.  

Does the Smart Grid Program have a regional allocation component?

No. The Smart Grid Program is a merit-based program. As such, projects will be evaluated based on the criteria described in the Program Component Eligible Activities.

Does the Smart Grid Program address specific technology components?

The Smart Grid Program is targeting technologies that will improve asset utilization, increase renewable generation penetration and increase the reliability, resiliency, efficiency and flexibility of the power system while maintaining cyber security and reducing GHG emissions.  Projects should stipulate any grid benefits and ancillary services they provide. Examples of smart grid eligible projects include, but are not limited to:

• Grid monitoring and automation
• Data management and grid communication
• Demand management
• EV integration
• Microgrids and virtual power plants
• Energy storage as part of an integrated system
• Distributed Energy Resource Management (DERM)

What are the differences between demonstration and deployment projects? Are hybrid projects eligible for funding?

1. Demonstrations are a combination of technologies or operational procedures typically implemented for the purposes of proving pre-commercial innovative technologies.  Technologies considered as demonstration are expected to be in the Technology Readiness Level range of 5-8.  A deployment would consist of proven technologies with the intent of modernizing grid operations by providing new functionality and addressing market gaps.
2. Yes. Projects can be hybrids. This could occur as: 1) phased approach, where a project moves from a demonstration to a deployment; or, 2) project simultaneously launching demonstration and deployment components that may or may not be related

Are FEED (Front End Engineering and Design) studies, feasibility studies or assessments eligible?

FEED studies or feasibility studies are not eligible on their own as the full project. They are eligible as components of a project which goes on to implement or demonstrate something as a result of the assessment or FEED study within the timeframe of the project.

Are test centres eligible?

A public demonstration with a display centre would be an eligible activity, however projects proposing to create or upgrade research facilities not connected to a specific demonstration within the life of the project are not eligible.

Who owns intellectual property?

For projects that federal laboratory in-kind support the ownership and licensing of all IP will be negotiated on a case-by-case basis and will be documented in the agreement(s).  For all others, the IP shall vest in, or be licensed to, the Direct or Ultimate Recipient or the Direct or Ultimate Recipient’s partners as appropriate.  The Direct or Ultimate Recipient will grant Canada a non-exclusive, irrevocable, world-wide, royalty free license in perpetuity to use the data and information contained in the reports and modify such reports and documents for non-commercial governmental purposes.