Technology Investment Planning (TIP) Benefit Cost Modelling for Smart Grid and Emerging Technology DNV KEMA Inc. 9/18/2018 PROPRIETARY Proprietary

DNV KEMA is now DNV GL 3000 energy experts help customers throughout the electrical power industry realise efficient, reliable and clean energy for today and the future * DNV GL is the energy powerhouse that draws its strength from a rich legacy of independence and excellence. Our customers benefit from the innovation and experience in testing, inspection, certification and advisory services for which KEMA is known, wind certification from DNV and GL Renewables, and Garrad Hassan’s leadership in renewable energy technology. Through our expertise and services, we aim to support you with integrity and foresight, as we strive for safety and sustainability in the energy industry – that’s our broader vision. In Energy we provide testing, certification and advisory services that are independent from each other. The legacy brands are now DNV GL: We will continue to issue KEMA certificates for high and medium voltage components. Testing, certification and advisory services for the entire energy value chain. (DNV KEMA) Leading advisor in renewable energy technology. We will continue to deliver certain report types under the Garrad Hassan name to maintain industry recognition of these trusted documents. (GL Garrad Hassan) Wind certification from GL RC which is independent from the advisory services. (GL Renewables Certification) Through our expertise and services, we aim to support you with integrity and foresight, as we strive for safety and sustainability in the energy industry – that’s our broader vision.   *Renewables Certification services are offered separate from remaining services to ensure impartiality and to fulfil accreditation requirements of DIN EN ISO IEC 17065:2013

An energy technology powerhouse in high power and high voltage testing 25 Leading certification body with more than 25 standards and guidelines published Largest independent technical advisor on renewable energy 3000 independent energy experts 10 laboratories incl. world’s largest high power and high voltage test lab 90 years experience, including 30 years in energy efficiency and wind energy

Technology Investment Planning (TIP) DNV GL has developed an approach that navigates the changing environments impacting the electrical system and optimizes spend by applying proven, new and emerging technologies to meet performance objectives.

Changing Environments Regulatory Climate Technology Customer Needs Renewables Aging Assets Workforce

Technologies Volt VAR optimization. Automation. Fault Location, Isolation and Restoration. Renewables. System Hardening and Resiliency. Energy Storage. Protection. Electric Vehicles.

Performance Technical Reliability. Loss Reduction. Power Quality. Financial Revenue Generation. Capital Deferral. Return on Investment. Environmental Safety Customer Satisfaction

Introduction Analytical approach to get the most out of technology investments. Benefits: Determine the best technologies, where they should be deployed, and to what degree. Recognize the driving factors and changes that makes these the best solutions. Defendable plan of action (project benefits are based on detailed analytics). Optimized Spend

Model Overview TIP can be updated as the system changes or solution costs change. All input data, algorithms, and assumptions will be provided in a user friendly benefit cost model.

Data Flow

Project Approach Data Collection– Coordinated effort to define technologies, feeder & system characteristics, and financial assumptions. Algorithms Development – DNV GL has tools and previous project experience relating feeder characteristics and solution benefits. TIP Model Customization - Define global and project specific variables, incorporate algorithms. Optimal Plan – Recommended plans based on various levels of spend and focus areas.

Algorithms Development Algorithms relate detailed project drivers to program benefits. Illustrate the amount of equipment deployed and benefit / costs associated with roll-out. This approach results in a robust benefits and costs assessment. Detailed System Models and Benefits Detailed Metrics on a Feeder Basis

Optimal Plan Findings will illustrate optimal solutions under various conditions: Cash Flows. Diminishing returns. Detailed feeder results. Combined projects (projects will interact and provide synergy). Time varying factors (load growth, renewables, electric vehicles etc.).

Features Provides a list of recommended feeders and technologies applied on a benefit cost basis. Optimal spend curve shows the value for a given level of spend. Allows project solutions to be shown individually or combined. Uses utility data to provide a customized solution. Output is easy to understand and use in decision making. Assumptions can be changed to understand the sensitivity to the utility environment. Provides detailed output that is available when needed but summarized if not. Provides a tried and tested approach. Successfully deployed with other utilities. Filtering - Turn technology on and off to see the interactions, investigate solutions, combined benefits and costs.

Tabular and Graphical Results Example Find the top 3% of feeders in terms of benefit to cost for fault current indicators, assuming they are distributed equally along the feeders. Applied Filters Tabular and Graphical Results

Findings Each utilities' financial, operating and regulatory environment is unique; however, there are several common themes. The following are high-level lessons learned from smart grid solutions benefit cost modeling projects with utilities: A majority of the benefits are achieved by applying technology to a subset of the system (i.e. the top 10% of feeders may account for 50% of the possible benefits, similar to the 80/20 rule). Dispersing project solutions is more effective than lumping them (e.g. it is better to place fault current indicators on the top 10% lightly than the top 5% more densely). Combined solutions are more attractive (e.g. there are often synergies between solutions, communications costs are shared between projects). Changes in company priorities and financial parameters have a big impact on results (e.g. changes in future needs alters project outlook, it is important to look forward and understand variability and trends).

For more information, please contact our experts. Clay Tutaj, Senior Consultant Larry Dickerman, VP Asset Management Clay.Tutaj@dnvgl.com Larry.Dickerman@dnvgl.com Tel: +1 919 256 0839 ext. 74118 Tel: +1 919 256 0839 ext. 74102 Mob: +1 919 802 6909 Mob: +1 919 931 9068