© 2010 IBM Corporation Smarter Power for a Smarter Planet Overview Shlomo Shamy E&U Solutions manager Global Technology Unit (GTU) IBM Israel Feb 2011

© 2010 IBM Corporation 2 Smart Energy for a Smarter Planet © 2010 IBM Corporation 2 Smart Energy for a Smarter Planet A globally integrated world 6x Increase in global water usage since the 1900s, twice the rate of human population growth Idle computer capacity Annual consumer product and retail sales lost in United States due to supply chain inefficiencies $40 billion 85% 40% to 70% The losses of electrical energy due to inefficiency - around the world People worldwide pushed below the poverty line by personal healthcare expenditures 100 million Annual impact of congested roadways $78B lost 3.7B lost hrs 2.3B gallons of gas $11.5 billion Worth of produce is wasted in India because of outdated post-harvest infrastructure of total port volume in North America is empty containers 22% Spent on IT maintenance 70¢ per $1 Lost annually in the US due to healthcare fraud $100 billion

© 2010 IBM Corporation 3 Smart Energy for a Smarter Planet © 2010 IBM Corporation 3 Smart Energy for a Smarter Planet What is happening? Organizations will need to optimize their use of energy and water and minimize GHG emissions. CO 2 emissions contribute to climate change, which impacts water systems. Energy production results in CO 2 emissions. Water is needed to generate energy and energy is needed to provide water. WATER CARBON ENERGY

© 2010 IBM Corporation 4 Smart Energy for a Smarter Planet © 2010 IBM Corporation 4 Smart Energy for a Smarter Planet Increasing desire by consumers for a role in energy management and conservation Growth in renewable generation and distributed resources New entrants and disruptive technologies Increased pressure on operational efficiency and workforce productivity Aging asset performance with increased expectations on reliability Climate change and environmental concerns Market forces, impacting the landscape of utilities around the world, requiring the transformation of industry business models. Market Forces

© 2010 IBM Corporation 5 Smart Energy for a Smarter Planet © 2010 IBM Corporation 5 Smart Energy for a Smarter Planet What can be done? To deliver power more responsibly and more efficiently, energy and utilities organizations are working toward a smarter energy value chain. ENSURING CLEANER ENERGY SUPPLY Meeting stringent greenhouse gas emissions targets while maintaining sufficient, cost-effective power supply. TRANSFORMATION OF THE GRID Transforming the grid from a rigid analog system to a dynamic and automated energy delivery system. EMPOWERMENT OF CONSUMERS Empowering consumers by providing them with near real-time, detailed information about their energy usage. ENERGY AND UTILITIES

© 2010 IBM Corporation 6 Smart Energy for a Smarter Planet © 2010 IBM Corporation 6 Smart Energy for a Smarter Planet Why should we act? There is an imperative from government and consumers alike for energy and utilities organizations to transform themselves to ensure environmental responsibility, economic competitiveness and national security. By leading innovation throughout the industry, their positive impact will be felt far beyond. ENERGY AND UTILITIES LOCAL AND GLOBAL ECONOMIES ENVIRONMENT AND SOCIETY

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 7 Our world is becoming INSTRUMENTED Our world is becoming INTERCONNECTED Virtually all things, processes and ways of working are becoming INTELLIGENT 7 How should we act?

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 8 ++= An opportunity to think and act in new ways— economically, socially and technically. 8

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 9 Measuring, Monitoring, Modeling and Managing MeteringSensing Real Time Data Integration Real Time + Historical Data Data Modeling + Analytics Visualization + Decisions  Data modeling and analytics to create insights from data to feed decision support and actions Feedback to user and data source; Incentives and actions to change behavior Feedback to user and data source; Incentives and actions to change behavior  Comparison of historical data, with newly collected data  Data collection  Data Integration Source: IBM Corporate Strategy What does it mean to become Smarter?

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 10 Proof-point - Beacon Institute

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 11 The Intelligent Utility Network solution is a suite of offerings to help utility companies develop a smarter grid supporting Transformation Management, Information Technology and Individual Domains & Projects What is the Intelligent Utility Network Solution ?

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 12 Energy and Utilities market forces are creating the need for an evolution in the energy value chain. Coal/ Gas Nuclear Hydroelectric UTILITY Consumer Power Flow Periodic Information Flow Continuous Information Flow Traditional Grid UTILITY SMART GRID Solar Wind Solar Wind Coal/Gas Hydroelectric Solar Nuclear Wind Energy Storage Plug-in Vehicle DYNAMIC INFRASTRUCTURE A transformed grid that empowers consumers and provides the energy for a sustainable future.

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 13 Advanced Meter Infrastructure Meter Head-End Device Meter Data Management System (MDMS) Communications Layer Home Area Network Transmission & Distribution Network Communications Layer Data Historians SCADA RTU Substation Assets (not managed by SCADA) Electrical Grid Field Assets (downstream of substation) Power Generation Fossil / Nuclear plant devices monitoring (Non-Operational) Distributed Generation Communications Layer Distributed Generation Assets (Wind, Solar, Hyrdo, Diesel) Central Generation Transmission Network Substation Distribution Network Residential Customer Commercial Customer Distributed Generation Renewable Generation Mobile Workforce Data Communication Network Integration of the physical and digital instrumentation points and across disparate systems Utility Operation Center

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 14 Smart Grid building blocks are composed of many individual technologies from both Operations & Information Technology Fields ….We are seeing the Convergence of IT and OT

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 15 Smart Grid Implementation Progression Summary August Converse and share information, analyzing and acting upon it to balance supply with demand given real- time conditions Integrate consumers and providers with the network& enable participation & conversation Orchestrate the network and its participants to continuously assure an optimized, secure, balanced and reliable network Optimize network functions based on rules & constraints Measure & Control Gain observability over the network and automate control functions Orchestrate Connect Participants Analyze & Act Optimize Monitor & Automate (Network) Maturity over time Basic FunctionalityAdvanced Functionality One-way Flow Participatory Network

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 16 Smart energy and utilities: Transforming the grid. SMART IS Knowing exactly where a power outage occurs and instantly dispatching a crew to fix the problem. SMART IS Preventing outages before they occur by sensing potential equipment failures. SMART IS Extending asset life by sensing and managing the stress placed on aging equipment. SMART IS Reducing peak load by communicating with energy consumers and having them turn off non-essential machinery or appliances.

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 17 Smart energy and utilities: Transforming the grid. DONG Energy: Installed remote monitoring and control devices to gain an unprecedented level of information about the current state of the grid, lessening outage times by a potential 25-50%. US electric and gas company: Plans to leverage a mix of leading-edge communication technologies, smart meters and first-of-a-kind process innovations to create an intelligent utility network. Energie Baden-Württemberg: Offers residential customers smart appliances and meters that enable them to adjust electricity consumption based on price—reducing waste and easing peak loads. Pacific Northwest National Laboratory: Used intelligent measurement devices, smart appliances and a virtual marketplace to help manage stress in the electric grid, achieving a 50% reduction in short- term peak electricity distribution loads and a 15% reduction in overall peak loads.

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 18 Smart energy and utilities: Empowering the consumer. SMART IS Helping customers conserve energy by providing them with tools to proactively manage their energy usage. SMART IS Analyzing customer energy usage and providing customized energy products and services to meet their needs. SMART IS Helping customers establish a “smart home” that turns appliances on and off to reduce energy costs. SMART IS Ensuring that customers are billed accurately and on time.

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 19 Smart energy and utilities: Empowering the consumer. Pacific Northwest National Laboratory: Provided customers with smart appliances such as water heaters that can sense impending grid failures and automatically respond by cutting back on power consumption. A Canadian regulator: Launched a pilot time-of- use program that rewards consumers for using less power during times of shortage or peak demand, leading participants to shift 25% of their usage away from peak hours. Ecotricity: Re-engineered its business processes and systems to enhance the speed and accuracy of billing while working toward the ultimate goal of a fully interactive, automated, multi-channel customer experience. enemalta: A major electric and water utilities provider in the country of Malta selects IBM for a 70 million euro, five-year agreement to design and deliver a nationwide Smart Grid implementation.

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 20 Smart energy and utilities: Ensuring cleaner energy supply.. SMART IS Smoothing power demand in order to take advantage of off-peak supply such as wind. SMART IS Maintaining a sufficient, cost-effective power supply while managing stringent greenhouse gas emissions targets.

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 21 Smart energy and utilities: Reducing greenhouse gas emissions. A German Power Company: Deployed a proof-of- concept Wind Generation Monitoring Solution that will connect numerous power plants to a central monitoring application, enabling better collection and use of raw data. A European Generation Company: Built a tool for optimizing unit commitment, the process of finding and dispatching power sources at the lowest possible cost. It allows planners to easily compare power generation scenarios, programs and production costs and then select the optimal demand coverage at any given time

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 22 Which comes first: the smart grid or the electric car? To provide all this electricity for all these e-vehicles, power grids must become smart grids—capable of sending and receiving data along with energy. Utility companies, are planning: - peak demand reduction, - carbon management -cost reasons And completing plans and participating in standards bodies to prepare for the: - energy increase, - peak variability and - storage mobility

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 23 Energy Storage Electricity can’t be commercially stored - Energy can: Thermal Storage Pumped Energy Storage Others: Mechanical Biological, Chemical, … Electric Vehicle: May practically become the first ever commercially mean to store electricity

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 24 What is Watson?

Smart Energy for a Smarter Planet - Intelligent Utility Network © 2010 IBM Corporation 25 We’ve only just begun to uncover what is possible on a smarter planet. For more information: Shlomo Shamy IBM Israel 94 Em Hamoshavot st. Petha Yikva. Let’s work together to drive real progress in your business or organization and the world. Thank you for your time