© Copyright IBM Corporation 2008 Smart Grid Overview US Chamber of Commerce Kieran McLoughlin Smart Grid Solution Leader Global Energy & Utility Industry November 5 th 2008

© Copyright IBM Corporation Agenda  What is Smart Grid?  Why is Smart Grid Happening?  Utility Smart Grid Development, a Journey  Investments in Smart Grids…Opportunities  Questions

© Copyright IBM Corporation The most important commodity for a utility to manage, other than electricity, is information.

© Copyright IBM Corporation What is Smart Grid?  At the highest level it is about the transformation, modernization, automation and digitalization of the Electricity Supply Chain  It is the Trojan Horse for change, for achieving a 21 st century intelligent electricity network needed to support and enable a 21 st century growing economy in an ever competitive global market  The term "smart grid" refers to the use of advanced communications technologies and modern computing capabilities..(engineering & materials as well).. to upgrade the electric power grid, effectively making it more intelligent, enabling it to operate more reliably and efficiently, and allowing customers enhanced support, opportunities, and direct involvement in controlling power consumption. In the face of increasing electricity demands and concerns over the environment as well as problems with assuring operational efficiencies, smart grid technologies promise critical solutions for tackling national energy and environmental problems. For business and industry, smart grid solutions could be a boon

© Copyright IBM Corporation Smart Grid from an Information Perspective …Intelligent Utility Network It is the continuous sensing, information network which overlays and connects together a utility’s equipment, devices, systems, customers, partners and employees. It enables ‘on- demand’ access to data & information which is used to better manage, automate & optimize operations and planning processes throughout the utility, throughout the electricity supply chain – for the customer’s benefit

© Copyright IBM Corporation The advancement of network automation, communications and information technologies is leading a transformation in the electricity supply chain Central Distributed Impact: Standards Management Communications Security Transparency Scale Price Performance Networked

© Copyright IBM Corporation Why is Smart Grid happening? Regulatory & Policy Alternate Energy Customer Demand & Expectations Financial Mkts Expectations Aging Infrastructure Energy / Fuel Competition & Cost Security Environment Distributed Generation Changing Workforce

© Copyright IBM Corporation Smart Grid is Global.. China ranks #1 in geographical breakdown of electric power T&D investment forecast Source: International Energy Agency ChinaN. AmericaEuropeS. AsiaE. AsiaAfricaS. America Other Developed Other Frontier Middle EastRussia DistributionTransmission USD TR While Chinese T&D infrastructure investment mainly focuses on new installations for power stations, substations, power grids, etc, European and US expenditure on T&D networks Economies grow on the back of a reliable electricity supply chain

© Copyright IBM Corporation The Development of Smart Grid is a Journey Smart Grid Maturity Level 1 & 2 Smart Grid Maturity Level 3 Smart Grid Maturity Level 4 & 5 As-Is To-Be/Vision Intermediate DOMAIN SILOS INFORMATION SILOS  Vertical Integration  Minimal Transverse Integration DOMAIN TO DOMAIN INTEROPERABILITY  Vertical Integration  Transverse Integration between Domains  Have to overcome adoption of emerging information standards & data access issues ENTERPRISE INTEROPERABILITY  Open data access environment  Interoperability standards  Utility vendors on common standards  Integration middleware is ‘Smart’ & services based The potential value of the Information which Smart Grids can generate is being explored in pieces from the bottom up

© Copyright IBM Corporation Customer Operations Grid Operations Work & Asset Management Field Measure/ Monitor Optimize Estimated Information Measured Analyze Transport data to control Collect Field Measure/ Monitor Optimize Analyze Transport data to control Collect Field Measure/ Monitor Optimize Analyze Transport data to control Collect Manual Processes Automated SGMM L1/L2 Invest in Domain Infrastructure SGMM L3 Domain to Domain Integration. Optimizing Domains SGMM L0 Silos Limited Communications Widespread SGMM L3 And/Or => SGMM L5 Innovating & Optimizing along the Supply Chain The Smart Grid Vision. Interoperability & Information Exchange Animated SGMM L4 Optimizing the Enterprise Utility Information is being designed from the top down SGMM = Smart Grid Maturity Model

© 2008 IBM Corporation 11 Smart Grid Roadmap Maturity Model Component Business Model Smart Grid Development Initiative A Solution Macro Design Smart Grid Roadmap Solution Micro Design Establish PMO Solution Build & Test Solution Acceptance & Pilot Solution Deployment & Rollout Solution Operation & Maintenance Initiative B Initiative X Strategic Roadmap Proof of Concepts DesignBuildDeployRun Initiate Strategize Development Launch Smart Grid Initiatives Establish & Maintain Governance Model Iterative Process Smart Grid Initiatives

© Copyright IBM Corporation Internet Smart meters Data & Process Modelling Modelling Analytics tools Automation Information & Control systems Information & Control systems Integration Equipment Smart sensors ICT networks Materials Utilities are investing in many technologies….process automation, real-time monitoring & control systems etc to achieve greater reliability and efficiency… Automation and Digitalization Distributed Generation Energy Storage EV & Hybrids

© Copyright IBM Corporation Developing the Customer Domain, Market Opportunity Distributed Generation & Storage Hybrid Vehicles

© Copyright IBM Corporation Developing the Grid Operations Domain, Market Opportunity Distributed Generation & Storage

© Copyright IBM Corporation Developing the Work & Asset Domain, Market Opportunity Distributed Generation & Storage

© 2008 IBM Corporation 16 Mobile Data Systems Operations Frontline Systems Operations Support Systems Back Office Systems Field Based Systems Field Based Devices PremiseCustomerAMI Network Demand Side Management Systems IT Networks External Information Systems Financial Management Systems Purchasing Inventory Systems Field Device Management Services Substation Devices Grid Devices Transmission Management Systems Demand Side Management Systems External Information Systems Financial Management Systems Purchasing Inventory Systems Mobile Data Systems Field Device Management Services Mobile Field ForceAssets External Information Services Financial Management Systems Purchasing Inventory Systems Equipment Monitoring Equipment Monitoring Assets Asset Management Systems MRO Management Systems Operations Analysis Tools Planning & Design Applications Communications Networks, Firewall & Security Services Business Intelligence Geographical Information Systems Work Management Systems Communications Networks Services IT Network Services Communications Networks Services IT Network Services Communications Networks Services IT Network Services Communications Networks Services IT Networks Services BI/Analytics Framework Analytics Applications Management Services Utility Data Model Framework Outage Management System Customer Information Systems Meter Data Management Systems HR Management Systems Account /Billing Systems Equip Condition Monitoring Meter Data Collection Engine Customer Portal Call Management Systems Distribution Management Systems Optimizing the Utility, Optimizing the Electricity Supply Chain New Business Models, New Products, New Offerings Common infrastructure: Communications, IT, Security, Standards, BI/Analytics Framework, Network Monitoring, Applications, Data sources, Data models, Services, Tools, timing, portals Account for Geospatial Distribution, Time Scale Distribution, Intelligence Distribution Distributed Generation & Storage

© 2008 IBM Corporation 17 Conclusions  Smart Grid is the Transformation of the Electric Utility Industry and Electricity Supply Chain  Electricity is a precious commodity which has been taken for granted in the US  Alignment of Drivers …Social, Economic, Competitive and Technical  There are opportunities all along Smart Grid development journey  ‘Do nothing’ is not an option

© Copyright IBM Corporation Thank You & Questions Information is Power