Our Energy Future

1. Our Energy Future Warren Lasher Director, System Planning October 4, 2014

2. What Does ERCOT, Inc. Do? The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power on the transmission system. We are responsible for the reliability and adequacy of the transmission grid. ERCOT also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 6.7 million premises in competitive choice areas. Earth, Wind, & Fire Energy Summit

3. The ERCOT Region • The ERCOT Region is one of 3 interconnections in North America. • The ERCOT grid: • -75% of Texas land • -85% of Texas load • -38,000 miles of transmission lines • -550+ generation units • -68,305 MW peak demand (set 8/3/2011) Regional Import Capacity: 1,256 MW of Asynchronous Tie Capacity (820 MW with Eastern Interconnection) Earth, Wind, & Fire Energy Summit

4. Record Peak Day Generation Output Generation on August 3, 2011 times… at all match load Generation must Earth, Wind, & Fire Energy Summit

5. August 2013 Generation Output Earth, Wind, & Fire Energy Summit

6. Typical April Generation Output Earth, Wind, & Fire Energy Summit

7. ERCOT Region Generation Earth, Wind, & Fire Energy Summit

8. Wind Generation Development in ERCOT • Wind Generation • Records • (Instantaneous) • 10,296 MW, March 26, 2014, 8:48 p.m. • Non-Coastal Wind Output = 8,863 MW • Coastal Wind Output = 1,433 MW • Supplying 28.78% of the 35,768 MW Load • Installed Commercial Capacity = 11,055 MW • 39.40% Wind Penetration, March 31, 2014, 2:12 a.m. • Total Wind Output = 9,699 MW • Total Load = 24,618 MW Earth, Wind, & Fire Energy Summit

9. CREZ Transmission Update – January 30, 2014 Project details available at: http://www.texascrezprojects.com/quarterly_reports.aspx • As of January 30, 2014, the CREZ transmission projects were complete. • The transmission plan is designed to serve approximately 18.5 GW: • ~3600 right-of-way miles of 345 kV • $6.9 billion project cost • Lines are open-access; use not limited to wind Earth, Wind, & Fire Energy Summit

10. Generation Development in ERCOT Current ERCOT Interconnection Queue Earth, Wind, & Fire Energy Summit

11. Advantages of Solar Generation • Price is dropping rapidly • Can be installed close to load centers • Can be installed very quickly • Small solar facilities (5 – 10 MW) have economy of scale. So they can be spread throughout the grid, increasing reliability and decreasing congestion. With wind generation, economy of scale is achieved at ~100 MW. Thermal generation facilities typically are 100 – 800 MW per unit. Earth, Wind, & Fire Energy Summit

12. ERCOT Region Generation Earth, Wind, & Fire Energy Summit

13. EPA Clean Power Plan Proposal • The EPA’s proposed state goals are based on four possible strategies for reducing carbon dioxide emissions. • Increase resource efficiency • Switch from coal generation to natural gas • Increase generation from renewable resources and maintain nuclear output • Expand energy efficiency programs • At a high level, a successfulimplementation plan will includea combination of measures thatreduce carbon dioxide emissionsfrom the generating fleet anddecrease the growth of futureenergy demand. Earth, Wind, & Fire Energy Summit

14. View of the Future • Increasingly Electric • Solar Generation (much of it near the customer) • Electric Transportation • Energy Storage (Batteries, Compressed Air, others) • DC Power • Micro-grids • Customer (Load Demand)Participation Earth, Wind, & Fire Energy Summit

15. CREZ Reactive Study Questions? Earth, Wind, & Fire Energy Summit