A Smarter Grid: Building GRID 3.0

1. A Smarter Grid: Building GRID 3.0 Colorado PUC April 29, 2010 Steve Hauser Vice President Grid Integration

2. Electricity System In the News Today L.A. gets $60-million stimulus grant for ‘smart grid’ electric power system…Los Angeles Times China gets smart on power supply…Shanghai Daily State looks to future with 'smart grid' technology…Rutland Herald Miami's Smart Grid: A Blueprint for the Power Future…Time Magazine Silicon Valley makes big push into solar and smart grid technologies…Miami Herald We’re plugging into the smart grid…Cincinnati Enquirer

3. Today’s Electricity System • Production follows demand • Largely electromechanical • High carbon/low storage • Blind to distribution/demand • Very little information and control • Central planning, design and operation

4. 21st Century Electricity System • Information rich • Distributed design and operation • Clean tech priority • Ubiquitous storage • Automated operations • Highly differentiated energy services

5. The Grid is Smart when… … your teenage daughter, who snuck out last night with the PHEV, plugged it in to recharge this morning and pressed “override” on your “smart charger” – paying $1.00 per kWh for daytime electricity. …luckily, your rooftop PV is providing most of the energy to recharge, and the extra battery in your garage is working overtime to provide regulation services to the utility at a premium rate…resulting in an overall net-zero cost to you. ...providing value to the local utility …providing value to the consumer …providing value to the local economy …providing value to the environment

6. Electricity System Framework 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

7. Conceptual Paradigm Shift • More innovation • More information, more real time (visibility) • More connectivity • More consumer participation (control) • More automation (control) • More indigenous solutions • More customization/differentiation

8. National Renewable Energy Laboratory Innovation for Our Energy Future

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

10. Capacity • Responsive demand • Defer and/or reduce production investments • Demand follows supply • High asset utilization • Reserve capacity • Must run plants • Microgrids/Consumer owned resources

11. Capacity Challenges/Opportunities 15 % RERSERVE MARGIN 1,277,072 MW AVERAGE SYSTEM CAPACITY 602,585 MW

12. Capacity Challenges/Opportunities HOURS

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

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

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

16. Reliability and Power Quality • Ubiquitous, universal, reliable HQ power • Modern digital loads demand greater Q • Local solutions not always optimal • Drive to higher differentiation in service • Identify and serve “critical” loads

17. Heterogeneous Reliability Source: Microgrids and Heterogeneous Power Quality and Reliability by Chris Marnay

18. Critical Loads

19. Energy Efficiency • Computers and servers • Power supply and management • Information and telecom infrastructure • Motors and motor systems • Lighting and lighting systems • Sensors/Controllers • Alternative energy resources • Smart Grid • Transportation systems • General infrastructure

20. ACEEE Study on EE Potential Scenarios of US Electricity Growth Source: Semi-Conductor Technologies: The Potential to Revolutionize U.S. Energy Productivity – Rpt E094

21. Operational Efficiency • Automating processes and systems • Demand supplied ancillary services • Reducing energy losses • Reducing theft • Enhanced decision tools • Reduced outages • Workforce productivity

22. Aging Assets Source: GE Energy Lunch and Learn Series

23. Grid Inefficiency

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

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

26. Clean Technology • Possibly greatest change (speed & scale) • RPS/carbon tax • Technology Innovation • Solar/Wind/Etc • Storage • PHEV and beyond • Fuel Cells/Advanced Nuclear/Etc.

27. US Carbon Goals • 17% reduction below 2005 levels in 2020 • 30% reduction below 2005 levels in 2025 • 42% reduction below 2005 levels in 2030 • 83% reduction below 2005 levels by 2050

28. Capacity Expansion Source: 2009 Scenario Reliability Assessment

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

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

31. 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.