Sustainability Leadership Forum - Dallas Energy Efficiency and Demand Management Ed Reyes ereyes@comverge.com 08.29.2012 ©2012 Comverge – Confidential and Proprietary

Agenda Comverge Overview and Introduction Energy Efficiency & Energy Demand Management Energy Efficiency – The Minimum Energy Demand Management Demand Response (DR) How Does Demand-side efforts Advance Sustainability? Discussion Questions © 2012, Inc. Confidential and proprietary.

Comverge Overview © 2012 Comverge, Inc. Confidential and proprietary.

Comverge – Intelligent Energy Management

Comverge is the leading provider of Intelligent Energy Management solutions Key highlights Revenue breakdown (2011) Headquartered in Atlanta, GA 520+ employees 30+ year history of innovation Privately held by HIG Capital 2011 sales of $136 million 5+ million devices installed 4,560+ MW under management C&I 43% Residential 57% Segments Megawatt breakdown (2011) Contracts 2011 = 4,564 MW Comverge is uniquely positioned to capitalize on energy growth trends in both the residential and C&I DR markets Note: 2010E excludes impact from Energy Efficiency contracts © 2012 Comverge, Inc. Confidential and proprietary.

Comverge is consistently the energy management provider of choice Established incumbency PPS CHART #3 USE RIDER A (next page) Multi-year, VPC & turn-key contracts Strong business serving strategic customers © 2012 Comverge, Inc. Confidential and proprietary.

Demand Response is our Business © 2012 Comverge, Inc. Confidential and proprietary.

Typical Comverge Utility Project Components Operational Excellence Close coordination between Marketing, Call Center and Installation team Make constant adjustments to ensure program adoption and that the Client’s goals are met All systems managed through IntelliSOURCE Marketing Hardware Installation & Service Calls Call Center Program Management IntelliSOURCE Communications Infrastructure Measurement & Verification Our Customers take advantage of Comverge’s deep understanding of end to end DR solutions But the Texas Market IS Different © 2012 Comverge, Inc. Confidential and proprietary.

Texas Electricity Market Deregulated in 2002 Functionally Disaggregated Generation – Coal, Nuclear, Nat Gas, Wind & Solar Transmission and Distribution – Wires Companies Retail Electric Provider – Owns the customer relationship Energy Only Market – Designed to incentivize New Entry through Scarcity Pricing Mechanism–Currently $4500/MWh Challenging value propositions for Capital Investment perspective “3rd Party” participants value chain is distributed across the disaggregated functions

Energy Efficiency and Energy Demand Management © 2012 Comverge, Inc. Confidential and proprietary.

What is the difference between Energy Efficiency and Energy Demand Management and Demand Response? Energy Efficiency is the goal or objective of a collection of activities and efforts to Reduce the amount of energy required to produce, deliver and operate products and services. Energy Demand Management is a change in behaviors or operations that Reduce the demand for energy at a given time. Demand Response is a change in electric usage by demand-side resources…Customers…from their normal energy usage patterns in response to electricity price changes, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized. Common Thread – Reduction of Energy Use What’s Different?............................the Money

What does Energy Efficiency look like? There are a wide variety of processes and equipment to save energy. Energy efficiency can generate results around the clock.

What does Energy Demand Management look like? Energy Demand Management looks to processes and equipment can be scheduled differently Those activities that may be performed at times other than when everything else is running full out It attempts to smooth the curve and increase the Load Factor Generates cost savings by lowering the effect of the peak

What does Demand Response look like? Demand Response is an externally driven activity that is performed only during specific times “events” It can involve one or a collection of energy reduction activities Generates Cost savings through Incentives The activities can occur through manual processes or though a fully automated response The primary difference is “Response” to an outside stimulus/notification

What if you employed all these efforts? Just because you’re performing one doesn’t mean you can’t do the others

Energy Efficiency © 2012 Comverge, Inc. Confidential and proprietary.

Energy Efficiency Energy Efficiency is the goal or objective of a collection of activities and efforts to Reduce the amount of energy required to produce, deliver and operate products and services.

Energy Efficiency – The Minimum Lighting Controls Lighting LED’s Incandescent Compact Fluorescent T-5 LED’s In Fluorescent Tubes T-12 or T-8 **How much do you factor for Maintenance?

Energy Efficiency – Advanced Systems High SEER HVAC Equipment (14-16) High Efficiency Motors VFD’s

Energy Demand Management © 2012 Comverge, Inc. Confidential and proprietary.

Energy Demand Management Energy Demand Management is a change in behaviors or operations that Reduce the demand for energy at a given time.

Energy Demand Management First Step is Disaggregating the Load Requires Metering/Monitoring Equipment Understanding of the Facilities, Processes and Operations Define Control Strategies What is or needs to be ON and when? Demand Meter Monitoring and Automated Control Systems working in Concert

Demand Response © 2012 Comverge, Inc. Confidential and proprietary.

Demand Response Demand Response is a change in electric usage by demand-side resources…Customers…from their normal energy usage patterns in response to electricity price changes, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.

Demand Response First Step is Understanding the Programs Available Emergency Response Service TDSP Standard Offer Programs (Load Management) Understanding of the Facilities, Processes and Operations Determine Individual Load Reduction Measures What is or needs to be ON and when? What loads can we eliminate or delay for a set period of time? Develop a detailed Demand Response Strategy and Implementation Plan Must have Resources assigned and accountable for execution Or the process can be automated through a combination of Hardware and Software notification and controls systems

Typical Demand Response Systems and Programs for Residential & Small Commercial Customers Smart Switches Air Conditioning Pool Pumps Strip Heaters Hot Water Heaters Programmable Communicating Thermostats Internet Accessible/Programmable Behavioral Modification Programs Biggest Energy Saver Corporate/Neighborhood Based Competitions Enhanced Customer Experiences through Education Bottom-line….your Company can be a Catalyst

How Do Demand-side Efforts Advance Sustainability? ©2010 Comverge – Confidential and Proprietary

Some Context General Resource Adequacy issues in Texas Demand Response is used to relieve constraints on the grid Constraints on the grid produce High Energy Prices High Energy Prices will attract investment in new Capacity But….Highly efficient new Capacity is more desirable than less efficient new capacity So let’s build new highly efficient generation capacity

The Peak Load Drives the Prices Seven days with prices > $2500 in Aug 2011 Reserve Margin nearing 7% Only one new Power Plant announced in 2012

Why is that Important? Few hours exist each year from which to generate Margins necessary to create earnings streams for investors What gets built for those few hundred hours per year?

The Generation Options There are external factors that make the Peaker necessary Operating Reserves, Load Following, Intermittent Renewable Resources But flatten the curve (more hours at higher prices) and the market will become more attractive for the more efficient unit. Existing Peakers will continue to serve those 100-400 hours

Demand Response – A Manageable Opportunity About 100 hours per year that Scarcity Pricing events occur ≈ 1.1% of the time Demand Response can help keep the System Peaks lower longer – Making better use of intermediate resources Guard against price Rewards those who are willing/able to relieve their contribution to the system peaks and charges those who won’t/can’t In the Long Term will provide price signals that customers can make decisions on…in near real-time Participation in Demand Response programs is low risk and provides an excellent opportunity to reduce your energy impacts……and costs

Discussion Questions Are you participating? How? How might you support and encourage employees to participate in Demand-Side Programs? What is available for the Mass Markets? How do we market & monetize our participation and results?

Thank You © 2012 Comverge, Inc. Confidential and proprietary.