© 2013 IBM Corporation ROAD TO SMARTGRID Serhan ÖZHAN IBM Global Hizmetler Enerji Sektör Lideri ICSG – ROAD to SmartGrid

© 2013 IBM Corporation2IBM Proprietary 2012 IBM Corporation IBM continually changes its business mix toward higher-value services, technology and market opportunity Services Software Servers Financing IBM GMU Countries Embargoed Countries IBM Presence

© 2013 IBM Corporation3IBM Proprietary3 Something profound is now happening with the infusion of intelligence into the way the world works Our world is becoming INSTRUMENTED Our world is becoming INTERCONNECTED Virtually all things are becoming INTELLIGENT... Our planet is becoming smarter

© 2013 IBM Corporation4IBM Proprietary IBM’s experience and observations after more than 80 Smart Grid projects  Historically, Information Technology has been under utilized by Utilities  Technology is not the primary challenge in a Smart Grid project  Timeline: Deployment can be very fast and supported by a business case  Investments: benefits from the first projects can provide the investment for the rest of the journey  “Do nothing” strategy turns into more significant losses in the future and visible failure in front of the customers. Worldwide, IBM is seen as the most capable of all firms by IDC: Business Consulting Services 2013 Vendor Analysis IDC MarketScape: WW Business Consulting Market

© 2013 IBM Corporation5IBM Proprietary Smart Grid Implementation Progression Summary 5 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

© 2013 IBM Corporation6IBM Proprietary 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

© 2013 IBM Corporation7IBM Proprietary Smart Meters are a practical first step in the Smart Grid journey, bringing together the Customer, Grid and Work & Asset domains Improving billing accuracy Reducing operational costs Providing meaningful consumption information Reducing overall and peak demand Accelerate electric vehicle adoption Enabling more micro-generation Supporting implementation of smart grids Improving efficiency of industry processes Proactively managing customer debt Utilising electric vehicle storage capability Integrating intelligent devices and appliances for demand management Enabling increased use of intermittent energy supplies Services beyond the meter Operation of “virtual power plants”

© 2013 IBM Corporation8IBM Proprietary Global Smart Metering Technology Progression Generation 5 - Europe and Asia Charting the Path  110 million smart meters in Europe by 2015, 240 million by 2020  53 million smart meters in Asia Pacific by 2010, 350 million by 2016  600 to 700 million smart meters in China by 2020  Technology driven by large, more centrally controlled deployments in China, Spain, France, Norway and the United Kingdom  Move to standard protocols between the meter and the concentrator Sources: Berg Insight “Smart Metering – World 2010,” July 2010; Pike Research “Smart Grid Deployment Tracker 3Q10,”; IBM research Gen 1 – US, 1 way comm. Gen 2 – Enel, 2 way comm. Gen 3 – NA, restart Gen 4 – NA, accelerates Gen 5

© 2013 IBM Corporation9IBM Proprietary9 IBM believes that a significant business model transformation is happening

© 2013 IBM Corporation10IBM Proprietary10 Today, energy utilities face strategic challenges in all aspects of the business across the eight SGMM domains

© 2013 IBM Corporation11IBM Proprietary Our approach capitalizes on three foundational capabilities for SmartGrid Solution Development IBM Research Solution Delivery Nuclear Power Advisory Council Global IUN Coalition Partner Ecosystem SOLUTION DEVELOPMENT & DELIVERY POLICY THOUGHT LEADERSHIP GSGF GW Architecture Council

© 2013 IBM Corporation Smart Grid Domains: Important Elements (1 thru 4) Societal and Environmental Technology Includes: Information, engineering, integration of information and operational technology, standards, and business analytics tools A cohesive technology strategy must connect and support the innumerable data sources and users, that make up a Smart Grid, today and into the future. Includes: Conservation and green initiatives, sustainability, economics and ability to integrate alternative and distributed energy Smart Grid can provide the ability for a utility, and society, to make choices and take advantage of energy alternatives and efficiencies, regarding both production and consumption. People and Technology Domains Examines the specific changes brought about through a Smart Grid transformation. Strategy, Management & Regulatory Organization Includes: Vision, strategic planning, decision making, strategy execution and discipline, regulatory, investment process The mission, vision, strategy, and how it is managed must be fully integrated in order to guide the way through a successful Smart Grid transformation. Includes: Communications, culture, structure For Smart Grid to be successful, the organizational structure must promote and reward cross functional planning and design and operations, but still allow for empowered decision making.

© 2013 IBM Corporation Smart Grid Domains: Important Elements (5 thru 8) Work and Asset Management Grid Operations Includes: Optimizing the assets and resources (people and equipment) Operating and maintaining assets based on up to date, fact based performance data, enabling the evolution from preventative and reactive to predictive and self healing for more efficient use of resources. Includes: Advanced grid observability & advanced grid control, quality and reliability A solid core foundation of intelligent grid components and operational design, using technology and automation fused with enterprise processes becomes a holistic Smart Grid. Process Domains Examines the specific changes brought about through a Smart Grid transformation. Value Chain Integration Includes: Enabling demand and supply management, distributed generation, load management, leveraging market opportunities Extending automation beyond traditional boundaries, and across the entire value chain, opens opportunities for innovation and efficiencies. Customer Management and Experience Includes: Retail, customer care, pricing options and control, advanced services and visibility into utilization quality, and performance Through Smart Grid, the customer becomes empowered to make their own choices regarding their use and cost of energy.

© 2013 IBM Corporation14IBM Proprietary Lessons learned when deploying Smart Grid Projects 6 main reasons of increased cost of ownership and implementation: 1.Interfaces – a factor of additional instability of the application. Consider implementing any base functionality as a first choice. Target to keep only required system interfaces (for example, meter reading to billing). 2.Standardization of forms and reports: a project of such scale requires a dedicated team for creating of unified forms and reports – it is a separate process, which is a part of Conceptual Design phase. 3.Data readiness - consider as a separate project that requires detailed preparation prior to the implementation project, as well as change management and monitoring during implementation. 4.Unwillingness to change business processes and functionality are the reasons of redundant and unnecessary modifications standard software, increasing both initial isntallation and later maintenance/upgrade costs. 5.IT, Engineering and Business departments must be motivated for changes and clearly see their future benefits. 6.KPIs – expected benefits and Business Value for the whole enterprises should be agreed before starting the project. Any additional “tuning” of the System should be considered in terms of Business Value for the whole enterprise.

© 2013 IBM Corporation TEŞEKKÜRLER Serhan ÖZHAN IBM Global Business Services Energy & Utilities Leader T: M: M: ICSG – ROAD to SmartGrid