November 2010 GREENER, SAFER, SMARTER Considerations in Building a Smart Grid Communications Network John Eichhorn, CFO

© 2010 Tropos Networks, Inc. | Page 2 Agenda Background on Tropos What’s a Smart Grid? Smart Grid Communications Strategies Smart Grid – A Network of Networks Distribution Area Network Considerations Multi-use Networks Customer Highlights Q & A

© 2010 Tropos Networks, Inc. | Page 3 3© 2010 Tropos Networks, Inc. End-to-End Smart Grid Wireless Mesh Communications Founded in 2000 Headquarters in Sunnyvale, CA Focus Areas: - Security - Reliability - Resiliency - Scalability - Ease of use - Total Cost of Ownership - Partnerships TROPOS

© 2010 Tropos Networks, Inc. | Page 4 4© 2010 Tropos Networks, Inc. 30 patents; additional 30 pending +750 customers 30 countries PROVEN TECHNOLOGY

© 2010 Tropos Networks, Inc. | Page 5 Smart Grid: Enter Your Definition Here AMI Power Quality and Planning Renewable Integration SMART GRID Demand Response Distribution Automation Outage Management Field Data Applications PHEV Management Distributed Intelligence, Automated Controls, Broadband Communications

© 2010 Tropos Networks, Inc. | Page 6 Traditional Approach Network per project –Build/pay as you go SCADA AMI Distribution Automation Field data applications,… Strategic Approach Layered communications architecture Supports for current plus future smart grid apps Selecting a Communications Strategy

© 2010 Tropos Networks, Inc. | Page 7 Source: AEP AMI Initial Capital Outlay Meter functionality Communications infrastructure Head-end & legacy systems modifications Incremental Capital Commitment Expected Value Demand Response Distribution Operations & Automation Extended Utility Roles Strategic Approach = Better Long-Term ROI

© 2010 Tropos Networks, Inc. | Page 8 HAN Neighborhood Area Network Distribution Area Network Core Network Distribution Automation Mobile Applications Utility Core Systems Power Quality Sensors Outage Management AMI Network Demand Response PHEV Station Distribution Area Network SmartGrid = Network of Networks

© 2010 Tropos Networks, Inc. | Page 9 Addt’l high traffic apps: Substation Video PHEV Station Mobile GIS AVL …more in the future SmartGrid Considerations Distribution Area Networks are challenging

© 2010 Tropos Networks, Inc. | Page 10 SmartGrid Considerations (cont.) OwnRent Capital expense Low capital, pay-as-you-go High reliability Less reliable Utility controlled - coverage, capacity, priority, security Limited visibility, no control over coverage, capacity, priority, security Cost effective for multi-use Limited economies of scale

© 2010 Tropos Networks, Inc. | Page 11 Opportunities for Greater Community Value $ RE Timely information for city visitors Mobile data access for city workers Community-wide mobile Internet access Reducing traffic congestion and carbon emissions Building economic development Conserving resources/ reducing carbon footprint Improving public safety Enhancing revenue capture and improving visitor experience Efficient, on-time public transport Enhancing education

© 2010 Tropos Networks, Inc. | Page 12 Funding Options Utility’s own budget Pooling multiple city departmental budgets Grants –Smart Grid, public safety, traffic, … Bonds Performance-based contracts

© 2010 Tropos Networks, Inc. | Page 13 ARRA Smart Grid award - $20M; total project $51M Phase 1: smart meters - 85,000 power and 33,400 water Wireless broadband network aggregates communications for utility applications Additional smart grid applications: distribution automation, thermal energy storage, demand response Other city departments plan to leverage network Glendale Water and Power Tropos Networks Inc. Company Confidential Nation’s First ARRA Smart Grid Grant Recipient

© 2010 Tropos Networks, Inc. | Page 14 Smart meter (power and water) Power conservation through automated demand response program Delaying construction of new power generation Enables direct load management and customer curtailment Mobile access to work orders and real-time data Other city departments plan to leverage network Creating a Smart Grid to Manage Demand and Minimize Capital Spending Burbank Water & Power

© 2010 Tropos Networks, Inc. | Page 15 AMR/AMI network projected payback, 7–8 years Customers can monitor power and water usage encouraging conservation Utility workers have easy access to information in the field, reducing repair times Mobile police and fire access information and file reports improving efficiencies Single Cost-effective Network for Multiple City Services Rock Hill Utilities

© 2010 Tropos Networks, Inc. | Page 16 Wireless mesh network used to read 1.5 million power and water meters in urban, suburban and rural areas Smart grid applications include AMI, real- time SCADA substation control, distribution automation, street light control, broadband connectivity for mobile workers, substation video security Upon completion the network will cover 5,000+ square kilometers United Arab Emirates Efficient Management of Scarce Resources Emirate-wide

© 2010 Tropos Networks, Inc. | Page 17 $42 M Spokane Smart Circuits Project includes $20M DOE grant funding; communications ~15% of budget Project goal - faster pinpointing of faults in distribution feeder lines to reduce outage times Tropos network for 16 substations and distribution automation (~450 DA devices) Opportunity to extend and leverage network for AMI and Mobile Workforce Avista Distribution Automation Project to Reduce Outage Time

© 2010 Tropos Networks, Inc. | Page 18 Multi-Use Networks Improve Efficiencies –Simplifies network management and control, reduces redundant infrastructures –Mobile workers have access to current information – work orders, GIS data, … –Improves workflow efficiency Reduced Operating Costs –Reduces OPEX –Replaces costly recurring communications costs : T-1 lines, cellular, … Deliver Broad Community Benefit –Utility applications - Smart Grid, Water, Gas –Municipal departments – public safety, transportation, ….

November 2010 GREENER, SAFER, SMARTER John Eichhorn, CFO Q & A