1. A Smarter Grid: Building GRID 3.0 Marine Energy and Smart Grid Technology Workshop May 10-11, 2010 Steve Hauser VP, Grid Integration [President Emeritus, The GridWise Alliance]

2. 2 Electricity System In the News Today "this is the future of the utility." "For the first time in the grid's 100-year history, consumers can understand exactly how much energy they are using and can participate in cost-saving programs," “You’re going to have more devices hooked up to the grid,” “You have to make sure with these additional connecting points that they’re secure.”

4. Largely electromechanical

5. High carbon/low storage

6. Blind to distribution/demand

7. Very little information and control

9. Distributed design and operation

10. Clean tech priority

11. Ubiquitous storage

12. Automated operations

14. Electricity System Framework for Change GRID 3.0 Highly Differentiated Reliability Grid Self- Optimization End-to-EndAutomation Clean ResourceOptimization AutomatedEfficiency Demand Management visibility DistributionAutomation Electric VehicleManagement Online Energy Efficiency &Management Local Power Parks control Advanced Metering DistributedRenewables Load Curtailment EmergencyPower EE Programs Capacity Power Quality & Reliability Energy Efficiency Operational Efficiency Clean Technology Foundation / Infrastructure

15. System of Systems Approach 7 Integrating Generation, Transmission, Distribution, and End-Use Applications

17. More information, more real time (visibility)

18. More connectivity

19. More consumer participation (control)

20. More automation (control)

21. More indigenous solutions

23. Evolution of Smart Grid More innovation More information, more real time (visibility) More connectivity More automation (control) More indigenous solutions More customization/differentiation

24. Optimizing the Cost of Smarter Grids 21stCentury Power Quality & Reliability Operational Efficiency Clean Technology Energy Efficiency Capacity Foundation / Infrastructure

26. Defer and/or reduce production investments

27. Demand follows supply

28. High asset utilization

29. Reserve capacity

30. Must run plants

32. 14 Capacity Challenges/Opportunities HOURS

33. Grid Capacity Factors Source: U.S. Department of Energy Smart Grid System Report – July 2009

34. Transmission Capacity Added 16 Source: 2009 NERC Long Term Reliability Assessment

35. Source: 06-09 A National Assessment of Demand Response Potential Potential for Demand Response U.S. Summer Peak Demand Forecast by Scenario

37. Modern digital loads demand greater Q

38. Local solutions not always optimal

39. Drive to higher differentiation in service

41. Critical Loads

43. Power supply and management

44. Information and telecom infrastructure

45. Motors and motor systems

46. Lighting and lighting systems

47. Sensors/Controllers

48. Alternative energy resources

49. Smart Grid

50. Transportation systems

53. Demand supplied ancillary services

54. Reducing energy losses

55. Reducing theft

56. Enhanced decision tools

57. Reduced outages

59. Grid Inefficiency 25

60. Projected Spinning Reserve Requirements 26 Source: NREL Eastern Wind Integration and Transmission Study, January 2010

61. Increasing Ramp Requirements 27 Source: 2009 NERC Long Term Reliability Assessment

63. RPS/carbon tax

64. Technology Innovation

65. Solar/Wind/Etc

66. Storage

67. PHEV and beyond

69. 30% reduction below 2005 levels in 2025

70. 42% reduction below 2005 levels in 2030

72. High RE Penetration Impacts on Operation Western Wind and Solar Integration Study

73. Accommodating RE Variability 8MW connected to substation High Variability due to clouds Xcel Energy – Alamosa System

74. Our Vision of a 21st Century Grid A 21st Century Grid must substantially increase the use of existing production assets Over 1,000 GW of production assets serve our national power needs, but many of these expensive assets are used only a few times each year. Some are almost never used. We must plan, design, build and operate a system that is much more effective at using these assets. A 21st Century Grid must readily accommodate new generation, transmission, distribution and consumer technologies Our ever evolving digital society is already placing unique and difficult demands on our grid. Growing environmental concerns will drive a diversity of cleaner sources of power. These and unanticipated future needs demand that we plan, design, build and operate a “plug and play” grid that maximizes flexibility, extensibility and adaptability. A 21st Century Grid must actively identify and extract energy efficiency throughout the system Maximizing energy efficiency from generation to load is critical in meeting our carbon reduction goals. We must plan, design, build and operate a grid that will proactively “mine” carbon throughout, targeting both static and dynamic changes to the system. A 21st Century Grid must be operated in a highly efficient and highly automated manner. As the grid rapidly increases in complexity, we must plan, design, build and operate a system that is much more automated; sensing changes, responding and adjusting in near real time—eventually becoming an adaptive self-healing system. A 21st Century Grid must be able to highly differentiate the reliability requirements of consumers Our future, increasingly digital, economy will require higher levels of reliability and power quality. The cost of providing this service will be prohibitive if applied universally. We must plan, design, build and operate a grid that provides for variation in the quality of power while creating a grid that is absolute in providing for critical loads.

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