U. S. Department of Energy’s Smart Grid Program Steve Bossart IEEE Pittsburgh Section June 20, 2012

2 Smart Grid Topics Definitions & Concepts Smart Grids & Microgrids Drivers & Value Proposition Deployment Challenges Smart Grid Field Projects Metrics & Benefits Approach Smart Grid Progress

3 Definitions & Concepts

4 What’s Different with Smart Grid Consumer engagement with resources to solve power issues locally Two-way power flow in Distribution Two-way communications Integration of Distributed generation and storage Imperative to transform from passive to active control in Distribution Move from radial to network Distribution system New ways for Distribution to become a Transmission resource Potential to transform transportation sector

5 5 Smart Grid Principal Characteristics The Smart Grid will: Enable active participation by consumers Accommodate all generation and storage options Enable new products, services and markets Provide power quality for the digital economy Optimize asset utilization and operate efficiently Anticipate & respond to system disturbances (self-heal) Operate resiliently against attack and natural disaster

6 Smart Grid Technologies Integrated Communications Advanced Control Methods Decision Support & Improved Interfaces Advanced Components Sensors and Measurement Integrated Communications

7 Smart Grid Key Success Factors The Smart Grid is MORE: Reliable Secure Resilient Economic Efficient Environmentally friendly Safe

8 Context of Smart Grid Smart GridEnhanced by Smart Grid Two-way communications Sensors Controls Decision support tools Components Transformers Power electronics Conductors Sensing, control, automation, power transformation, and communications Renewable energy resources Electric vehicles Energy storage Distributed generation Grid friendly appliances/devices Load control/demand response Generation, storage, and load

9 Smart Grid & Microgrids

10 Definition by Microgrid Exchange Group A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode. Microgrid and OE’s Performance Target Develop commercial scale ( 98% at a cost comparable to non-integrated baseline solutions (UPS + diesel genset), while reducing emissions by >20% and improving system energy efficiencies by >20% OE’s 2020 Performance Target

11 Microgrids Smart Grids

12 Case for Grid Modernization & Value Proposition

13 Why Modernize the Grid? Today’s grid is aging and outmoded Unreliability is costing consumers billions of dollars Today’s grid is vulnerable to attack and natural disaster An extended loss of today’s grid could be catastrophic to our security, economy and quality of life Today’s grid does not address the 21 st century power supply challenges Adverse trends associated with the grid - Costs, reliability, peak loads, asset underutilization, TLRs, grid divorce The benefits of a modernized grid are substantial

14 Value Proposition Cost to Modernize $338-$476B over 20 years –$ 82-90B for transmission –$232-$339B for distribution –$24-46B for consumer $17-24B per year Benefit of Modernization $1294 – 2028 Billion Overall benefit-to-cost ratio of 2.8 to EPRI, 2011 Previous Studies Benefit to Cost Ratio for West Virginia of 5:1 Benefit to Cost Ratio for San Diego of 6:1 Benefit to Cost Ratio for EPRI (2004) 4:1-5:1 $165B Cost $638 - $802B Benefits EPRI Report:

15 Who are the Beneficiaries? Utilities (What’s in it for my shareholders?) Consumers (What’s in it for me?) Society (What’s in it for us?) We get what we reward!

16 Utility Value Proposition Opportunities Rate of return Operational Benefits –Outage restoration, billing, reduce T&D losses, optimize asset utilization, maintenance, planning Improved Customer Satisfaction Cost Risk of cost recovery Utilities are the engine for investment in Smart Grid

17 Consumer Value Proposition Opportunities More reliable service Reduce business loss Energy bill savings Transportation cost savings Information, control, options Sell resources into the market Cost “Consumer always pays” Is this compelling?

18 Societal Value Proposition Opportunities Downward pressure on electricity prices Improved reliability reducing consumer losses Increased grid robustness improving grid security Reduced emissions New jobs and growth in GDP Revolutionize the transportation sector Reduce import of foreign oil Cost No incremental cost? Does the societal value proposition make it compelling?

19 Smart Grid Implementation Challenges and Risks

20 Change Management A significant change management effort is needed: Why do we need to change? What is the vision? Who’s in charge? What is the value proposition? Consumer education, alignment, and motivation is critical Metrics needed for accountability and to monitor progress Active leadership by stakeholder groups needed Move at the “Speed of Value”

21 Technical Challenges Interoperability and scalability Large number of consumers actively involved Decentralized operations with 2-way power flow Getting the communications right “Future proofing” the technologies Cyber Security Conversion of data to information to action Market driven Where will we find the skilled resources to solve these?

22 Regulatory Challenges Time-based rates Clear cost recovery policies Policy changes that remove disincentives to utilities Societal benefits included in business case Increased utility commission workload Consistency among state utility commissions Potential cost of “carbon management” Future proofing vs. stranded assets Consumer privacy concerns Least cost Used and useful New operating and market models

23 Smart Grid Field Projects

24 Programs created by statute  Energy Infrastructure Security Act 2007: – Smart Grid Investment Grants (Sec. 1306) – Smart Grid Regional Demonstrations (Sec.1304)  Recovery Act Directed Programs: –Workforce Training - $100M –Interconnection-wide Transmission Planning and Resource Analysis - $80M –Interoperability Standards - $12M Additional OE initiatives - State & Local Energy Assurance - State Regulatory Assistance Recovery Act – Grid Modernization Top 10 States by Total Awarded StateAmt ($M) NC434 CA419 TX293 NY276 FL270 PA265 MD233 DC213 AL166 OH146 One-time Appropriation, $4.5B in ARRA funds  $620M for demonstration projects  $3.425B for deployment projects Investment Grants Smart Grid Demos Workforce Training Resource Assessment & Transmission Planning Smart Grid Interoperability Standards Other

25 American Recovery and Reinvestment Act ($4.3B) Smart Grid Investment Grants (99 projects) –$3.4 billion Federal; $4.7 billion private sector –>800 PMUs covering almost 100% of transmission –6500 distribution automation circuits –>15 million smart meters Smart Grid Demonstration Projects (32 projects) –$620 million Federal; $1 billion private sector –16 storage projects –16 regional demonstrations Smart Grid ARRA Activities

26 Additional ARRA Smart Grid Activities –Interoperability Framework by NIST ($10M) –Transmission Analysis and Planning ($80M) –State Electricity Regulator Assistance ($50M) –State Planning for Smart Grid Resiliency ($55M) –Workforce Development ($100M) Smart Grid ARRA Activities (continued)

27 Technology Deployment Customer Systems SGIG/SGDP Areas of Smart Grid Technology Deployment Customer Systems Advance Metering Infrastructure Electric Distribution Systems Electric Transmission Systems Displays Portals Energy management Direct load controls Smart meters Data management Back office integration Switches Feeder optimization Equipment monitoring Energy Storage Wide area monitoring and visualization Synchrophasor Technology Energy Storage Customer Systems Equipment Manufacturing Energy devices Software Appliances

28 Schedule for Benefits Analysis The DOE Metrics and Benefits work is transitioning into the reporting and analysis of impact metrics. See smartgrid.gov Metrics and Benefits Plan Build Metric Reporting and Analysis We are here Impact Metric Reporting and Analysis

29 Key Program Objectives Key Stakeholders: NARUC and PUCs EEI/EPRI NRECA/CRN APPA NASPI Consumer Advocates Utilities Three Objectives: Information Derived from 131 ARRA Smart Grid Projects Advancing the Business Case Sharing Lessons- Learned and Best Practices Determining R&D Needs System Engineering Advanced Analytics

30 Consumer Behavior Studies

31 SGIG Consumer Behavior Studies: Study Population Statistics Total of ~145,000 customers are expected to “participate” as treatment or control customers Plan to collect key demographic information on all treatment and control customers (ideally), subject to survey response rates Assuming 3 years worth of hourly interval usage meter data (1 year pre-treatment and 2 years post-treatment); this represents 3.9 billion data observations To put our SGIG analysis and evaluation effort into perspective: ComEd’s CAP study included ~8,500 participants and ran for 12 months (June May 2011) CA Statewide Pricing Pilot included ~2,500 participants and ran for 18 months (July 2002 – December 2003)

32 SGIG Consumer Behavior Studies: Overview of Research Topics Given the diversity of studies being undertaken as part of the SGIG program, we have a unique opportunity to evaluate issues in several topical areas: Research Topical Areas 1. Customer Acceptance: What motivates customers to accept time-based rate programs? 2. Customer Retention: What motivates customers to remain on time-based rate programs? 3. Customer Response: Will customers respond, and if so by how much will they respond, to time-based rate programs? 4. Role of enabling technology and information/education: Will customers respond, and if so by how much will they respond, to control and/or information technology and/or education alone?

33 Metrics and Benefits Approach

34 DOE Analytical Approach Example Improves feeder voltage regulation Reduced feeder losses worth $60 per MWh Automatic Voltage and VAR Control Capacitor controls Distribution Management System Functions Mechanisms Benefits What does the Smart Grid do? How does it do that? What “goodness” results? Monetary Value What is the goodness worth? What are Smart Grid technologies? Assets $6000

35 Smart Grid Functions SensingControlProtection Wide Area Monitoring, Visualization, and Simulation Power Flow ControlFault Current Limiting Diagnosis & Notification of Equipment Condition Automated Feeder Switching Dynamic Capability Rating Real-Time Load Measurement and Management Automated Islanding and Reconnection Adaptive Protection Automated Voltage and VAR Control Enhance Fault Protection Real-Time Load Transfer Customer Electric Use Optimization

36 Energy Storage Applications Renewable SupportInvestment DeferralAncillary ServicesLoad Management Renewables Energy Time Shift Electric Supply Capacity Deferral Area RegulationElectric Energy Time Shift Renewables Capacity Firming T&D Upgrade Deferral Load FollowingTransmission Congestion Relief Wind Generation Grid Integration, Short Duration Substation Onsite Power Electric Supply Reserve Capacity Time-of-Use Energy Cost Management Wind Generation Grid Integration, Long Duration Electric Service Reliability Voltage SupportDemand Charge Management Electric Service Power Quality Transmission Support

37 Five Primary Analytical Focus Areas Peak Demand and Electricity Consumption Advanced metering infrastructure Pricing programs & consumer devices Direct load control Peak Demand and Electricity Consumption Advanced metering infrastructure Pricing programs & consumer devices Direct load control Operations & Maintenance Savings from Advanced Metering Meter reading Service changes Outage management Operations & Maintenance Savings from Advanced Metering Meter reading Service changes Outage management Distribution System Reliability Automated & remote operations Feeder switching Monitoring & health sensors Distribution System Reliability Automated & remote operations Feeder switching Monitoring & health sensors Energy Efficiency in Distribution Systems Voltage optimization Conservation voltage reduction Line losses Operational efficiency Energy Efficiency in Distribution Systems Voltage optimization Conservation voltage reduction Line losses Operational efficiency Transmission System Operations & Reliability Application of synchrophasor technology for wide area monitoring, visualization, and control Transmission System Operations & Reliability Application of synchrophasor technology for wide area monitoring, visualization, and control

38 Qualitative Feedback

39

40 Variety of Stakeholders Electric Service Provider Decision makers Operations & maintenance Planning Engineering & design Customer service Traders Purchasing Regulatory support Billing

41 Smart Grid Progress

42 SGIG Deployment Status 9.3 of 15.5 million residential and commercial smart meters Distribution automation equipment on 4,200 out of 6,500 circuits 195 out of over 800 networked phasor measurement units

43 Smart Meters Deployed in SGIG Projects

44 Status of Smart Grid Investments in SGIG Program

45 Automated Distribution Circuits in SGIG There are approximately 81,200 distribution circuits in US 6,500 circuits is about 8% of total distribution circuits

46 Phasor Measurement Units in SGIG Projects

47 Customer Devices in SGIG Projects

48 Customers with Smart Meters Enrolled in Pricing Programs in SGIG

49 Case Studies

50 eEnergy Vermont A State-Wide Strategy for Smart Grid Development Key Activities Smart metering roll-out for outage management and time-based rates for demand response. Distribution system automation including switches, reclosers, SCADA, and communications backbone systems. Consumer behavior studies by Vermont Electric Cooperative (VEC)and Central Vermont Public Service to assess customer acceptance, response, and retention. Aims and Strategies A collaborative effort involving all of the state’s electric distribution companies to modernize Vermont’s electric grid and foster economic growth as part of the state’s “eState Initiative” with telecommunications and health care. Results and Benefits VEC’s outage management system has improved SAIFI by 50% and CAIDI by 40% since installed in VEC’s smart metering roll-out and outage management system has a 5 year payback period from operational saving alone. VEC received POWER Magazine’s first “Smart Grid Award” in August 2011 for its pioneering efforts in outage management. Restoration of the grid from Tropical storm Irene occurred quicker and with greater customer awareness of repair schedules due to smart meters, web portals, and more effective outage management. Utilities working together to modernize the grid. Facts & Figures Total Project Budget: $137,857,302 Federal Share: $69,928,650 Distribution Automation: 47 circuits and substations Smart meters: 311,380 Time-Based Rates: 1,500 customers targeted Vermont Electric Cooperative’s Smart Grid Operations Center

51 Oklahoma Gas & Electric Reducing peak demand in Oklahoma Key Activities OG&E’s “Positive Energy Smart Grid Project” is installing 750,000 smart meters system-wide and distribution automation equipment on 40% of the circuits serving homes, offices, farms, and factories. Aims and Strategies Defer construction of two 165 MW power plants by lowering peak demand using demand response programs that involve time-based rates and customer enabling technologies. Improve service and lower costs by operating automated capacitors and distribution switches. Results and Benefits Pilot demand response project of 3,000 customers during the summer of 2010 o 98% of participating customers saved money on their bills o Measureable demand reductions from customers participating in critical peak and variable peak pricing and who use the web portal, programmable communicating thermostats, and in-home displays Expect to lower operations and maintenance costs and improve service reliability and power quality. Customer- Enabling Technologies Used by OG&E Facts & Figures Total Project Budget: $293,201,332 Federal Share: $130,000,000 Customers Served: 766,866 Service Area: 30,000 square miles in Oklahoma and Western Arkansas Generation Capacity: 6,600 MW In-Home Display

52 City of Naperville Empowering Consumers in Illinois Key Activities Naperville’s “Smart Grid Initiative” completes a decade long efforts to automate the city’s entire electric distribution grid. Deploys smart meters city wide to all customers. Provides consumer education programs to engage public participation in shaping smart grid policies and programs. Aims and Strategies Strengthen reliability and reduce the frequency and duration of power outages. Empower consumers to manage their own power consumption and costs to enhance energy efficiency, reduce peak, and reduce power purchase costs from wholesale suppliers. Results and Benefits Distribution automation investments have improved System Average Interruption Duration Index each years since 1991 by from 15% to 55%. O&M costs from dispatching repair crews reduced by about 40%. Enacted Naperville Smart Grid Consumer Bill of Rights. Implemented Smart Grid Ambassadors Program Consumer programs for smart grid-savvy customers Facts & Figures Total Project Budget: $21,988,220 Federal Share: $10,994,110 Distribution Automation: Remaining 6 of 117 circuits Smart meters: 57,000 Time-based Rates: 1,500 customers targeted Residents provide feedback on Naperville’s smart grid policies and programs.

53 M2M Communications Agricultural Demand Response Program Saves Electricity in California Key Activities M2M Communications of Boise, Idaho, has developed a two-way, web-to-wireless controller for irrigation pumps. The controller is part of an irrigation load control system that includes sensors, smart meters, and other monitoring equipment. M2M created the Peak Energy Agricultural Rewards (PEAR) program, a demand response program marketed to agricultural customers of California’s investor owned utilities. Aims and Strategies As part of the PEAR program, farmers can earn cash incentives and avoid peak demand charges. Water consumption and soil moisture can be monitored from a web portal, enabling farmers to make informed decisions about possible participation in peak demand events. Farmers can schedule irrigation pump start up/shut off, saving water, time, and manpower, and improving overall efficiency. Results and Benefits DOE ARRA funds greatly contributed to M2M’s final R&D push to get the controller to market. PG&E called four peak pricing events in 2011; PEAR program participation reduced summer peak demand by an average of 18 MW per event. Reducing Peak Electric Demand and Increasing Efficiency of Farm Operations Facts & Figures Total project budget: $4,342,340 Federal share: $2,171,170 Devices installed: 300 Total summer peak demand reduction in 2011: 72 MW An irrigation pump connected to and controlled by M2M’s web-to- wireless controller

54 Operational Efficiency Improvements at Talquin Electric Cooperative Background: For over 70 years, members submitted their own meter readings (highly inaccurate) Rolling trucks 6,000 times/year for routine service connection/reconnection and 9,000 times/year for non- payment problems ($40-$50/truck roll) Outage locations based on pattern of customer phone calls TEC’s SmartGrid Program: Deployed AMI to about 56,000 customers and upgraded 46 of 86 circuits with advanced capacitors for voltage control and outage management. With AMI, TEC avoided 8,800 truck rolls in 2011 for non- payment problems saving more than $350,000 Expecting to avoid additional 5,500 truck rolls for routine service connections (savings of $200,000/year) Expecting to reduce outage durations from more precise pinpointing of faults and dispatching of repair crews to exact locations without guesswork. Technician changes out analog meter with a smart meter Facts & Figures Total Project Budget: $16,200,000 Federal Share: $ 8,100,000 Customers Served: 57,000 Service Area: 2,600 square miles spanning 4 counties in northern Florida

55 Life After ARRA Smart Grid Program

56 Life After ARRA Smart Grid Program Build and maintain momentum Make business case Identify, allocate, and quantify benefits Identify and quantify costs Address technical issues Address regulatory issues Address customers concerns

57 Contact Information Steve Bossart (304) Federal Smart Grid Website Smart Grid Clearinghouse Smart Grid Implementation Strategy