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Though it's only seven years old, Toronto-based Enbala Power Networks has already re-invented itself.

Founded in 2003 in Vancouver as Sempa Power Systems, the company initially focused on hybrid heating systems that can switch quickly between electricity and fossil fuels depending on which is more economical at a particular moment. This can both optimize heating costs for a commercial building and reduce greenhouse gas emissions, explains Ron Dizy, the company's president and chief executive.

But in the past couple of years, Mr. Dizy says, natural gas prices dropped and opportunities for hybrid heating were reduced. The approach still makes sense in some cases, such as remote communities where gas is expensive or only costlier propane is available, but Sempa "needed to find a different application" for its technology.

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So now, the rechristened Enbala is connecting a smart grid to businesses and public sector organizations like water utilities that use a lot of electricity. When demand exceeds supply, the electricity grid operator will ask Enbala to trim demand. Enbala will send messages to machines at the utility, suggesting they take a break. At other times, when supply exceeds demand, Enbala will ask those same machines to fire up and use the power while it's plentiful.

Customers will get paid based on how much they respond to Enbala's requests to raise and lower their power usage. Enbala will get money from the utility, which otherwise would pay electricity suppliers to vary supply. All this will happen automatically, thanks to software developed by Enbala that polls the grid operator every six seconds to determine the current supply-demand balance.

Machines won't start and stop every six seconds, though. Greg Ponesse, Enbala's director of business development, says requests will be spread around - and he stresses that Enbala won't take control of anyone's equipment. Usually, he says, Enbala will connect to an existing control system called a Supervisory Control and Data Acquisition (SCADA) system. The SCADA will have ultimate control, and may accept some requests from Enbala and decline others depending on other factors.

"We're asking permission - 'Is now a good time for you to participate?'" he says.

The first electricity user to work with Enbala is the city of Windsor, Ont., which is already testing it on its drinking water system and preparing to implement it for its sewage system as well.

That deal is the first fruit of Enbala's collaboration with the Ontario Clean Water Agency (OCWA), a provincial agency that agreed last April to help promote Enbala's offering to the water and sewage utilities to which it provides services.

Water and sewage systems have the kind of flexibility needed for energy balancing, explains Nick Reid, OCWA's vice-president of business development . "When you're filling a reservoir with water, you can choose to fill that quickly or slowly." Sewage treatment plants use air pumps to feed aerobic processes, but as with filling reservoirs, when and how fast the pumping happens is flexible.

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But the idea will work for many businesses, Mr. Ponesse says. They could be large or small, as long as they use a fair amount of electricity - pulp and paper companies, food processors and manufacturers are all candidates if they draw a megawatt or more of power. "If you have five 150-horsepower motors that we can work with, and they're all essentially controlled through a SCADA system, that still would be of interest to us."

Enbala provides the necessary equipment and the customer's power needs to be interrupted for about 15 minutes to connect its SCADA system to Enbala's network, Mr. Ponesse says.

The company's new direction grew out of conversations with Ontario's Independent Electricity System Operator (IESO), which runs the province's wholesale electricity market. Sempa learned that the IESO was interested in managing electricity demand minute-by-minute through what the power industry calls regulation services.

It turned out the IESO's counterparts in other jurisdictions - notably ISO New England Inc. and PJM, a Norristown, Penn.-based system operator servicing 14 states from the east coast to Illinois - were also looking at the idea.

These companies constantly walk a tightrope keeping the supply of power flowing into their grids in line with the amount customers take out. Today, the main way of doing this is to vary the amount of power going into the grid by buying extra electricity to meet peak loads. This power comes mainly from natural gas and hydroelectric generating stations, because coal and nuclear stations are too hard to throttle up and down as demand varies.

That means gas and hydro stations aren't operating at full capacity, Mr. Ponesse notes. If they were, it could help the Ontario government with its stated goal of shutting down coal stations - with less reliance on new nuclear plants to take up the slack.

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And as wind and solar generation increases, there will be a growing need to manage electricity demand, since those alternate energy sources produce a less constant supply of power.

Enbala already had the technology to communicate with the power grid and regulate electrical devices. Applying it to regulation services was a good fit. So - while it still serves existing hybrid heating customers and will even do some new installations, Mr. Dizy says - the company shifted focus to regulation services, changed its name to Enbala (for "energy balancing") and moved its legal headquarters and its sales and operations staff to Toronto, since the major Canadian market for regulation services today is Ontario.

While regulating demand won't take the place of constant supply-side adjustments, Devin McCarthy, manager of distribution for the Canadian Electricity Association, says the idea is gaining attention.

Electricity rates that vary with the time of day can smooth out the largest peaks and valleys, he says, but for dealing with smaller fluctuations, automated processes are best. "Customers, both at the industrial and the residential and commercial level, prefer a set it and forget it approach to managing their energy consumption," says Mr. McCarthy.

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