Smart Grid: A National Perspective Albany Law School

1. Smart Grid: A National Perspective Albany Law School Patricia Hoffman Assistant Secretary Office of Electricity Delivery and Energy Reliability U.S. Department of Energy www.OE.energy.gov

2. Unprecedented Challenges Make Grid Modernization Urgent Growing Asset Stress Increased Variable Generation New Controllable Assets Computational Advances Needed More Dynamic Markets Massive Data • Operating Closer to Edge • Lower System Inertia • Aging Infrastructure • Fewer Power Engineers • DemandResponse • Energy Storage / Electric Vehicles • DynamicT&D Assets • FasterComputation • Cloud Computing • Probabilistic Methods • Pervasive Intelligence • PMU & Over the HorizonMonitoring • New control paradigms • Broader Markets & More Services • GreaterComplexity • Market Clearing at Shorter Intervals • More DynamicBehavior • More Stochastic • Multi-levelCoordination Source: PNNL

3. Modernization Must Support 8 Key Grid Attributes How do we keep rates reasonable while making major new investments? How do we design the grid to accommodate ceaseless change? How do we make the transformed grid safe for workers and consumers? How do we harden the grid against severe events? How do we make the grid accessible to new actors and new technologies? Grid Modernization How do we protect against cyber and physical threats? How do we keep the grid reliable while transforming it? How do we make our electricity supply system dramatically cleaner?

4. Near and Long-term Infrastructure Vulnerabilities Are Growing Climate Change: weather related power outages have increased from 5-20 each year in the mid-1990s to 50-100 per year in the last five years. Cyber-security: 53% of all cyber-attacks from October 2012 to May 2013 were on energy installations. Physical Threats: There were three highly visible attacks on grid infrastructure in 2013. Supply chains for key components of grid infrastructure are not robust. Interdependencies: The interdependencies of the electric and fuel infrastructures seen in Superstorm Sandy greatly complicated the response and recovery. Supply/demand Shifts: The lack of pipeline infrastructures for associated gas in the Bakken has resulted in large-scale flaring of this gas, in amount sufficient to be seen from space. Draft / Pre-Decisional / Not for Distribution

5. Early Results Show Tangible Benefits Customer Systems Oklahoma Gas and Electric (OGE) Time-of-use and variable peak / critical peak pricing with in-home customer device use enabled up to 30% peak demand reduction (which could offset a new peaking plant) and lowered customer bills by up to $150 Distribution Electric Power Board of Chattanooga Advanced automated circuit smart switches and sensor equipment will enable 40% reduction in customer outage minutes – worth $35 million/year to customers AMI Talquin Electric Cooperative (TEC) Smart meter installations are saving hundreds of thousands of dollars in misreporting (from manual reading) and saving an expected $200,000/year from 5,500 avoided truck rolls Transmission Western Electricity Coordinating Council (WECC) 18 transmission owners installing and connecting 393 PMUs and 57 PDCs to modernize transmission in the Western Interconnection

6. Cyber Security Framework Comprised of Capability and Risk Management • Risk Management • Asset Configuration Management • Identity and Access Management • Threat and Vulnerability Management • Situational Awareness • Information Sharing and Communications • Event and Incident Response • Supply Chain and External Dependencies Management • Workforce Management

7. Next-Generation Energy Management System G T&D L - - Fostering tighter integration and coordination between transmission, distribution, and load. Many more Control Options BMS 10s of million of control points. DMS/OMS Today’s EMS Next-Generation EMS 100s of thousand of control points. EMS

8. Transactive Energy Source: GridWise Architecture Council and Office of Electricity Delivery and Energy Reliability

9. Customers: A Path Forward