1. DOE’s Grid Modernization Activities Potential Roles for Equipment Manufacturers March 17, 2005 National Electrical Manufacturers Association William Parks Office of Electricity and Energy Assurance

2. We’ve Changed! OETD, EA merge to form new office

3. Office of Electricity and Energy Assurance Mission “ The mission of the Office of Electricity and Energy Assurance is to lead national efforts to modernize the electric grid, increase grid capacity and reliability, and strengthen energy infrastructure security.”

4.  Transmission Reliability  Electric Distribution Transformation  Electricity Storage  Superconductivity  GridWorks  GridWise  Infrastructure security technology  Visualization and Decision Analysis Tools Office of the Director  Modeling and Analysis  Electric Markets Technical Assistance  Electricity Exports/ Presidential Permits  Power Marketing Administration Liaison Permitting, Siting, & Analysis Organizational Structure  Energy Infrastructure Protection  State/Local Gov’t Partnerships  Training and Exercises  Visualization  Critical/Vulnerability Assessment  Emergency response support Infrastructure Security & Emergency Response Research & Development Resource Management Staff

5. Grid Modernization – A National Energy Priority “Transmission lines and pipe lines and generating facilities are deteriorating. Different regions share electricity over unreliable transmission lines. These strains on the system lead to higher prices and they lead to bottlenecks in delivery. …we've got modern interstate grids for phone; we've got a modern connection with our highways; America needs a modern electricity grid, too, in order to make sure that we can compete in a global economy…” March 9, 2005 “To keep our economy growing, we also need reliable supplies of affordable, environmentally responsible energy. Nearly four years ago, I submitted a comprehensive energy strategy that encourages conservation, alternative sources, a modernized electricity grid and more production here at home, including safe, clean nuclear energy.” State-of-the-Union Address, February 2, 2005 “Consumers and businesses need reliable supplies of energy to make our economy run -- so I urge you to pass legislation to modernize our electricity system, promote conservation, and make America less dependent on foreign sources of energy.” State-of-the-Union Address, January 20, 2004 “…it's clear that the power grid needs an overhaul. It needs to be modernized. As we go into an exciting new period of American history, we want the most modern electricity grid for our people… we need more investment; we need research and development…” September 15, 2003 President George W. Bush

6. May 27, ‘04 Schools closed by power outage in Detroit, Michigan May 17, ‘04 Multiple power outages affect Michigan- Indiana Border April 29, ‘04 200k lose power in Washington State June 3, ‘04 Over 400,000 without power in Texas Outages are widespread, frequent, and costly to the economy* May 31, ‘04 Power outages causes fire at hospital, school in Illinois May 12, ‘04 Tree limbs cut off power to 31k in Utah January 31, ‘05 60,000 lose power in Jacksonville January 19, ‘05 25,000 without power in California November 5, ‘04 35,000 in DC area lose power November 2, ‘04 Over 280,000 lose power in Michigan October 29, ‘04 60,000 lose power in San Francisco, California August 16, ‘04 800,000 lose power in Hurricane Charley *Recent LBNL study estimates annual costs from outages at $80 Billion Outage Costs to the Nation Selected 2004 Reliability Events

7. Grid Modernization Issues  Need greater regulatory certainty at the Federal, regional, and state levels (e.g., restructuring, siting, and permitting)  Need to attract more investment and develop new technologies for upgrading aging electric delivery infrastructure and equipment  Need mandatory and enforceable national electric reliability standards  Need to relieve constraints in power flows and supplies  Need to strengthen regional entities for streamlined planning and more efficient market operations

8. Grid Modernization Benefits  Improves electric reliability and lowers outage costs to consumers  Strengthens energy security and lowers financial risks to utilities from terrorism  Promotes investment in infrastructure, jobs creation, and regional economic growth  Enables greater development of alternative energy sources (e.g., wind, nuclear)  Increases energy efficiency and lessens environmental impacts

9. Grid Modernization and Electric Reliability Strategies  Prevention – keep problems from occurring  Detection – ready for immediate action  Response – proper ”tool kits” for any contingency  Modernization – “next generation” of grid technologies and partnerships for market integration

10. Portfolio of Technologies HTS tape to HTS cable Advanced Conductors Interconnection Device Novel storage concept Diamond Sensor 2kWh Superconductor Flywheel Demonstrator Superconducting Substation Supervar System Smart Controller ETO DC to AC inverters Eastern Interconnection Phasor Project

11. Partnerships for Market Integration (Recent Examples)  IEEE 1547 – Standards for interconnecting distributed energy systems with the grid  New England Demand Response Initiative  Mid-Atlantic Demand Response Initiative  PJM Interconnection – Implementing IEEE 1547 in Mid-Atlantic states  Pre-certification of Distributed Generation  NRECA  NARUC  USCHPA  FERC

12. Mechanisms for Participation  Planning – help determine future priorities and advanced technology needs of the grid  Implementation – support research, development, and demonstration of advanced transmission and distribution technologies and appropriate electricity legislation  Evaluation – provide feedback on the effectiveness of RD&D activities and new technologies

13. Planning –  Participate in RD&D planning workshops and webcasts  Provide feedback on program plans and office documents  Stay abreast of office activities by visiting the office website often  Be cognizant of pertinent energy-related legislation ~120 Organizations participated Program Plans Help determine future priorities and advanced technology needs of the grid National Electricity Roadmap

14. Implementation –  Participate in solicitations  Upcoming GridWise/ GridWorks solicitation  Develop advanced technologies  Partner with utilities to field test the latest technologies  Electric reliability legislation Utility Organizations Equipment Manufacturers + Support research, development, and demonstrations of advanced transmission and distribution technologies and appropriate electricity legislation

15. Energy Legislation – Electricity Title (e.g. HR6)  Most urgent: Create legal foundation for mandatory and enforceable national electric reliability standards Establish FERC jurisdiction for reliability Establish ERO to develop technically sound standards Either ERO or FERC can enforce standards Provide technical support to FERC and ERO  Facilitate grid investment by reducing siting, permitting, and cost recovery uncertainties Designate “National Interest Electric Transmission Corridors” Corridor designation required for FERC exercise of backstop authority Coordinate federal review of T&D projects, if applicant requests Support regional transmission plans, siting protocols, and cost allocation plans  Other provisions Authorize OE and RD&D programs Increase use of demand response; report on real time transmission system monitoring projects, study benefits of economic dispatch

16. Evaluation –  Provide feedback about new technologies  Participate in peer review workshops  Work to identify vulnerable components of the electric grid Superconductivity for Electric Systems 2004 Annual Peer Review 2004 Transmission Reliability Program Peer Review Electric Distribution Transformation FY04 Annual Program and Peer Review Meeting Energy Storage Systems 2004 Annual Peer Review Provide feedback on the effectiveness of RD&D activities and new technologies

17. Public-Private Partnerships  Utilities  Investor-Owned  Public Power  Cooperatives  Federal  Equipment Manufacturers  State Agencies  Trade Associations  Professional Societies  Universities  National Labs DOE can’t do it alone… Making connections with partners is crucial for success For the latest updates on the office merger and other news, check the following websites: www.electricity.doe.gov and www.ea.doe.gov