Aggregator-based Implementation of Demand Response Programs

1. Aggregator-based Implementation of Demand Response Programs Kenneth D. Schisler, Senior Director, Regulatory Affairs Bradley J. Davids, Senior Director, Utility Solutions October 16, 2007

2. 2 Agenda

3. 3 Founded in 2001, EnerNOC is the premier demand response provider focused on the commercial, institutional, and industrial market in North America.

4. 4 Energy Network Operations Center The NOC automatically initiates customized demand response protocols at customer sites, so that load reductions can occur within seconds after an event is called. EnerNOC captures and reports customer meter data in 1-, 5-, 15-, or 60-minute intervals to utilities and grid operators, providing real-time and direct visibility into demand response performance. The NOC’s automated capabilities make it easy for end-use customers to respond to market signals. UTILITY SALESUTILITY SALES

5. 5 Recent EnerNOC utility contracts Southern California Edison 160 MW, 5 year contract* Public Service Company of New Mexico 30 MW, 10 year contract Pacific Gas & Electric Company 40 MW, 5 year contract Tampa Electric Company 25 MW, 4 year contract Tennessee Valley Authority Pilot program (summer 2007)

6. 6 Agenda

7. 7 Commercial & industrial demand response strategies

8. 8 Examples of “resource providers”

9. 9

10. 10 Typical site installation Non-proprietary, open architecture Customer assets are already in place – no siting, no permitting At each end-user site: an EnerNOC site server (ESS) An open, integrated system comprised of a central hardware device residing inside a standard electrical box Communicates voltage, current, and power to the NOC Close monitoring of energy usage allows EnerNOC to adjust its forecasts of load reduction capability Non-proprietary, open architecture Customer assets are already in place – no siting, no permitting At each end-user site: an EnerNOC site server (ESS) An open, integrated system comprised of a central hardware device residing inside a standard electrical box Communicates voltage, current, and power to the NOC Close monitoring of energy usage allows EnerNOC to adjust its forecasts of load reduction capability

11. 11 Demand response results from grid perspective

12. 12 “Firm” demand response can have a material impact on system peak demand

13. 13 Aggregator-based demand response programs: the “functional equivalent” of a peaking power plant Like a peaking plant . . . Output can be measured and verified in near real-time Capacity can be dispatched by utility control room and brought on-line in 10 to 15 minutes (or less) – qualifies as “synchronized reserves” in PJM Can be used to balance intermittent resources, such as wind Assets can perform for several hours, if needed One supply contract from utility – can include penalties for non-performance

14. 14 Advantages of demand response programs vs. traditional peaking power resources DR capacity can be “built” very quickly(6 – 12 months); 100+ MW in 60 daysfor ISO-NE in 2005 Capacity can be precisely targeted at areas of highest system need (for example, to defer distribution system upgrades) Almost always less costly than building anew peaking plant – and doesn’t require addedT&D infrastructure Load curtailment resources are emissions-free No “NIMBY” siting issues Reliable (no “forced outage” risk) Long-term contracts are not required – can be expanded incrementally and locationally if needed Performance tends to increase (as well as rated capacity) in conjunction with system peaks Reduces costs for customers; improves customer satisfaction excellent for balancing wind’s intermittent natureexcellent for balancing wind’s intermittent nature

15. 15 A few caveats . . . Annual availability has limits – typical program design targets most critical 50 to 100 hours per year Depending on portfolio mix, performance may be limited during shoulder months and off-peak hours Output can vary within a range of “rated output” – typically +/-15%, due to variability of loads controlled and baseline calculation methodology Total capacity is limited to approximately 10% of overall system peak

16. 16 Agenda

17. 17 Why demand response?Demand response is a cost-effective and reliable way to meet the electric demand peak, which occurs for very few hours per year. The alternative is to build generation and transmission capacity that is unused 99% of the time. one bubbleone bubble

18. 18 Typical load duration curve

19. 19 The challenge: bridging utility resource needs with end-user realities For the C/I market segment specifically (large industrial and residential are somewhat simpler to address) customers have zero tolerance for hassle . . . we make it easy – reduce the cost of taking action we provide assets that are scalable and flexibleFor the C/I market segment specifically (large industrial and residential are somewhat simpler to address) customers have zero tolerance for hassle . . . we make it easy – reduce the cost of taking action we provide assets that are scalable and flexible

20. 20 Load aggregation provides risk management to utilities and end-use customers

21. 21 Typical time of day distribution of top 100 hours

22. 22 Typical seasonal distribution of top 100 hours

23. DR program design . . . a balancing act

24. 24 Questions?