2015 World Forum on Energy Regulation May 25, 2015 The Integrated Grid: Realizing the Full Value of Central and Distributed Energy Resources Session 1a: Encouraging Innovations in the Energy Markets – The Role of R&D and Innovation in Maintaining Dynamism in Markets and Regulations Hank Courtright EPRI, Senior Vice President, Electric Power Research Institute 2015 World Forum on Energy Regulation May 25, 2015

Electric Power Research Institute Founded in 1972 by the electricity industry and regulatory community to provide collaborative R&D to serve the public. EPRI members generate approximately 90% of the electricity in the United States. 450+ members from more than 30 countries. International members from Europe, Asia and the Americas contribute to the research and development knowledge base. 2

The Power System – Looking Forward Generation Becomes More Flexible Consumers Become Energy Producers T & D Becomes More Controllable and Resilient Loads Become More Interactive and Dynamic A More Dynamic End-to-End Power System

Transforming the Power System Communication & Standards Grid Modernization Objective: what is an integrated grid (not how to get there) and the benefits of an integrated grid An integrated grid is a power system where central and distributed energy resources are working seamlessly together to ensure ALL customers continue to receive safe, reliable and environmentally responsible electricity at an affordable rate. The planning and operation of the power system takes into account both central and distributed resources and a smarter and more distributed energy management systems allows us to optimize the resource mix in the most cost effective way. How does this integrated grid benefit all customers: Transition: So how do we transform the power system to an intergraded grid? While technology is essential but technology alone is not sufficient and we need all of us together to shape the future of this integrated grid Integrated Planning & Ops Informed Policy & Regulation

Research & Development – 5 Near-Term Challenges #3 – Information and Communications PROTOCOLS Develop an Integrated Grid platform #4 – FLEXIBLE OPERATIONS Enable cost-effective, flexible operation of central station generation #2 – SENSORS Accelerate adoption of intelligent sensor system technologies for improved power system operations, maintenance, and outage restoration #1 – CUSTOMER RESOURCES Enable integration of customer resources into the integrated power system #5 – MODELING Develop an integrated power system and environmental modeling framework

Challenge #1 – Customer Resource Integration Energy Efficiency Demand Response Electrification Alternate Rate Structures Theme of customer behaviors and technology evolving Energy Controls and Applications Electric Transportation Local Energy Storage Local Generation

PV Smart Inverter Technology Key DER Technology for Integrated Deployment Traditional Inverter Functionality Smart Inverter Functionality Match PV output with grid voltage and frequency Provide safety by protecting from unintentional islanding Disconnect from grid based on over/under voltage/frequency Voltage support Frequency support Fault Ride-Through (FRT) Communication with grid DC Power AC Power

Energy Storage Technology Li-Ion Projected Cost (in $/kWh) 2015 2020 Cell Residential ES System $180-$225 $100-$120 $1000-$1200 $500-$600 Battery Pack $400-$500 $200-$250 $800-$1000 $400-$500 Utility Scale ES System Installed system cost could easily be 2X the cost of battery pack 2020 projected cost reductions are aggressive

The Integration of Everything Customer data analytics and B2B interaction will be key

Challenge #2 – Sensors Enables Information Sensors Communications Computational Capability Geographic Information Systems Customer Information Systems

Intelligent Sensor Systems O&M Productivity Outage Restoration Equipment Reliability Access to real-time and predictive information about the condition and performance of every component of the end-to-end power system.

Challenge #3 – Information & Communications Integrating across Platforms Advanced Metering Situational Awareness DER and Storage Distribution Grid Management DR and EV’s High Reliability/Security Low Requirements 10’s kbps Bandwidth 1000’s kbps Milliseconds Latency Minutes

Information & Communications Architecture Defining Roles and Market Interfaces

Challenge #4 – The Flexible Generation Fleet Central Fleet Operations are being called upon to rapidly evolve Design envelops and operational parameters are being stretched, creating risks Reliability Availability Environmental Performance Safety Increased Costs Heat Rate Life Cycle and Maintenance

Reliable Power System Operations Policy/ Environmental Impacts Challenge #5 – Develop an Integrated Power System and Environmental Modeling Framework Reliable Power System Operations Policy/ Environmental Impacts Market Forces Objective: this is what we are good at – testing, demonstration, modeling, analysis – and this provides critical data – performance, benefit, cost that will be needed by NARUC and other stakeholders to make informed policy and regulation Phase III is scheduled to begin once the framework is established later this year The framework will still be modified as demonstrations provide feedback to the process Two types of demonstrations: Application of the methodology to a specific system Demonstration of one or more technologies that lead to an integrated grid, with the results synthesized and used to inform further studies.

Understanding the Value of an Integrated Grid Interconnected Value of Grid Connectivity Integrated Value of DER and Grid Resiliency Voltage Support Emissions Reduction Distribution Optimization Loss Reduction Demand Response

Together…Shaping the Future of Electricity