1. FSO Smart Grid Overview July 23, 2009 Environmental Impacts of Smart Grid & Challenges of Connecting Electric Vehicles September 27, 2011 Steve Bossart, Project Management Center

2. 2 Topics Case for modernization Main topics Environmental impacts Electric vehicles Other topics Field projects Metrics & benefits Smart Grid maturity model Smart Grid organizations Barriers and challenges

3. 3 Case for Grid Modernization

4. 4 4 4 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

5. 5 Value Proposition Cost to Modernize $338-$476B over 20 years –$ 82-90 B for transmission –$232-$339 B for distribution –$24-46 B for consumer $17-24 B per year Benefit of Modernization $1,294 – $2,028 Billion Overall benefit-to-cost ratio of 2.8 to 6.0 5 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 $165 B Cost $638 - $802 B Benefits EPRI Report: http://www.smartgridinformation.info/pdf/3272_doc_1.pdf

6. 6 6 Today’s grid - status quo is not an option Aging –70% of transmission lines are 25 years or older –70% of transformers are 25 years or older –60% of circuit breakers are 30 years or older Outmoded –Designed in the 50s and installed in the 60s and 70s, before the era of the microprocessor. Stressed – Never designed for bulk power shipments – Wholesale power transactions jumped 300% from 2000 to 2005. Insight Magazine, Oct. 2005

7. 7 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

8. 8 Environmental Impacts of Electric Power System & Transportation Sector Enabled by Smart Grid

9. 9 9 Environmental Impacts ELECTRIC POWER SYSTEM Carbon dioxide Nitrogen oxides Sulfur dioxide Particulate matter Air toxics (e.g., mercury) Fly ash and bottom ash Polychlorinated biphenyls Other transformer oils TRANSPORTATION SECTOR Carbon dioxide Nitrogen oxides Hydrocarbons Carbon monoxide

10. 10 EIA Pollutant Data Under a “Business As Usual” Scenario

11. 11 Grid Features Enabled by Smart Grid That Impact Environmental Emissions Demand Response Electric Vehicles Variable Renewables Distributed Energy Resources Transmission and Distribution Systems Energy Storage Customer Systems Outage Management Improved Operations and Maintenance

12. 12 Some Smart Grid Operational Practices That Impact Environmental Emissions Conservation Load changes –Demand response –Demand dispatch Efficiency –Generation –T&D –End-use devices Dispatch of generation & storage –Central, distributed, & consumer –Fossil fuel, nuclear, variable renewables, hydro –Baseload & peaking Electric vehicle charging

13. 13 Demand Response Shift load to different time or eliminate or reduce load Load types include climate control, lighting, hot water, refrigeration, laundry, EV charging, industrial processes Using demand response for regulation may reduce emissions (ORNL, 2000) –More closely match load and generation Predict annual growth rate of 1.07% from 2008-2030 (EIA) EE programs could reduce growth rate to 0.83% (EPRI) Predict annual growth rate for peak demand of 1.5% from 2008-2030 (EIA) EE/DR could reduce peak demand growth rate to 0.83% (EPRI)

14. 14 Impact of Peak Demand Reduction by DR 2030 EPRI (2008 )

15. 15

16. 16 Electric Vehicles Includes plug-in hybrid and all-electric vehicles Reduces transportation emissions from gasoline & diesel fuels while reducing import of crude oil During EV charging, electric power system emissions will depend on generation mix Plug-in electric vehicles will increase demand for electricity

17. 17 Annual GHG Emissions Reductions from PHEVs in the Year 2050 “Well to Wheels Study” EPRI (2007)

18. 18 Carbon Footprint by Vehicle Type Source: (ICF, 2010)

19. 19 Variable Renewables & Energy Storage Environmental impacts must consider: –Generation/storage mix used to meet demand when power output from variable renewables cannot meet demand –Distance between variable renewables/storage and load –Need for ancillary services to maintain grid stability (volt/VAR, frequency regulation, load following) –Power losses during storage –Serving baseload, peak load, or both

20. 20 CO 2 Impact of Smart Grid Enablement of Renewable Resource Deployment 2030 Source: EPRI (2008)

21. 21 5,150 BkWh / Year 69% Fossil Energy + 25% Electricity Demand 2008 4,107 BkWh / Year 71% Fossil Energy 2,357 mmt CO 2 2,526 mmt CO 2 Electricity Demand 2035 United States Coal could shift toward clean coal with CCS? Natural gas from Marcellus and other shale gas? Permanent repository for spent nuclear fuel? Renewables includes hydro at about 7% Continued reduction in cost for variable renewables? Incentives favoring investments in technologies with GHG reduction?

22. 22 Study by Carnegie Mellon University Thermal Plant Emissions Due to Variable Renewable + + + 1 2 n = Firm PowerVariable Power Compensating Power Time Power Gas Wind Does operating one or more gas turbines to fill in variable wind or solar power result in increased NO x and CO 2 emissions compared to full-power steady- state operation of natural-gas turbines?

23. 23 Results The results of CMU’s analysis demonstrates that CO 2 emissions reductions from a wind (or solar PV) plus natural gas system are likely to be 75-80% of those presently assumed by policy makers. Nitrous oxide reduction from such a system depends strongly on the type of NO x control and how it is dispatched. – For the best system examined, NO x reductions with 20% wind or solar PV penetration are 30-50% of those expected. –For the worst, emissions are increased by 2-4 times the expected reductions with a 20% RPS using wind or solar PV.

24. 24 Transmission and Distribution Systems Power loss increases with distance Power loss associated with voltage transformation More generation is needed to offset T&D losses Typical losses on U.S. T&D system is about 6-7% Transmission congestion can be relieved with DER Low-loss conductors & superconductors

25. 25 Impact of Reduced Line Losses Voltage Reduction 2030 Energy Savings Corresponding to Reduced Line Losses Baseline Residential Retail Electricity Sales, 2030 [billion kWh]:1,737 U.S. Distribution Substations:2,179 U.S. Distribution Substations Serving Predominantly Residential Circuits:1,525 Ratio of Residential Electricity Sales per Residential Distribution Substation: Billion kWh / Res. Distribution Substation1.14 Ratio of Load Reduction to Voltage Reduction: (1% reduction in voltage yields 0.8% reduction in load)0.8 Average Percent Voltage Reduction:1%2%3%4% Market Penetration Effect, 2030 [billion kWh] 25% of Res. Dist. Substations (381):3.5710.414 50% of Res. Dist. Substations (762):71420.828 Source: EPRI (2008)

26. 26 Customer Systems Demand response requires smart appliances and customer interface (e.g., HAN, in-home displays, programmable thermostats) Encourages conservation (i.e., Prius effect) Efficient appliances (i.e., EnergyStar) Customer-owned generation and storage –Electric vehicles –Photovoltaic Different classes of customers –Residential, commercial, industrial, agriculture –Industrial parks, universities, manufacturing –Potential microgrid and CHP applications

27. 27 Improved Operations and Maintenance Reduced vehicle miles –Condition-based maintenance –Remote meter reading Generation dispatch considering cost & emissions –Generation type –Distance from generation to load –Charging storage and electric vehicles

28. 28 Outage Management Less vehicle miles –Reduced outages, duration, and extent –Knowledge of location and cause of outage –Better planning

29. 29 Reduction in Electricity Use from Smart Grid Mechanism Reductions in Electricity Sector Energy and CO2 Emissions* Direct (%) Indirect (%) Conservation Effect of Consumer Information and Feedback Systems3- Joint Marketing of Energy Efficiency and Demand- Response Programs-0 Key Enabling Technology: Disaggregation of Total Loads into End Uses- - Deployment of Diagnostics in Residential and Small/Medium Commercial Buildings3- Measurement & Verification (M&V) for Energy Efficiency Programs10.5 Shifting Load to More Efficient Generation<0.1- Support Additional Electric Vehicles and Plug-In Hybrid Electric Vehicles3- Conservation Voltage Reduction and Advanced Voltage Control2- Support Penetration of Renewable Wind and Solar Generation (25 percent renewable portfolio standard [RPS])<0.15 Total Reductions126 *Assumes 100 percent penetration of the smart grid technologies. PNNL (2010) Reduce CO2 emissions by 442 million metric tons by 2030

30. 30 Smart Grid Energy Savings and Avoided CO 2 Emissions EPRI, 2008

31. 31 Some References on Environmental Impact of Smart Grid EPRI. “Environmental Assessment of Plug-In Hybrid EVs,” Palo Alto, CA, 2007 EPRI. “The Green Grid: Energy Savings and Carbon Emissions Reductions Enabled by a Smart Grid,” Palo Alto, CA, June 2008 PNNL. “The Smart Grid: An Estimation of the Energy and CO 2 Benefits,” January 2010 NETL, “Environmental Impacts of Smart Grid”, DOE/NETL- 2010/1428, January 10, 2011

32. 32 Electric Vehicles

33. 33 Challenges of Electric Vehicle Charging Cul-de-sac factor Transformer overload Mobility of load Billing Gas tax recovery Carbon credits Helpdesk support Data security and privacy Installation model Messaging and education Reference: Public Utilities Fortnightly, June 2011, Top 10 EV Challenges

34. 34 PEVs and Emissions Public Utilities Fortnightly, June, 2010

35. 35 Electric Vehicle Charging Assume all U.S. passenger vehicles excluding cars and trucks are converted to plug-in electric vehicles Electricity to charge 130 million PEV would be 13% of U.S. electricity consumption (3,723 TWh) PNNL - Up to 84% of vehicles could convert to PHEV without additional electric infrastructure ORNL - By 2020, 10% PEV penetration would increase electricity by 1-2% and –By 2030, 25% PEV penetration would increase electricity by 2-5% Plugging In, Public Utilities Fortnightly, June 2010

36. 36 Metrics for Best In-Class Alternative Vehicles Vehicle Type Urban Gasoline Vehicle Chevy Cruze Urban Electric Vehicle Chevy Volt Honda Civic GX FuelGasoline BatteryBattery/GasolineNatural Gas Fuel Economy 32 MPG40 MPG163 MPG-e 168 MPG-e electric 50 MPG gas 36 MPG-e Urban Range408 mi450 mi127 mi450 mi250 mi Fuel cost per mile $0.09/mi$0.07/mi$0.05/mi$0.019/mi$0.026/mi Source ICF International EV Lit Review Table ICF International EV Lit Review Table EV Lit Review Table

37. 37 Trip Distance vs. Average Fuel $/Mile

38. 38 Trip Distance vs. Total Cost Per Mile

39. 39 Capital, “Fuel”, and Total Cost Capital Cost $/mile Average $/mile fuel expense TOTAL cost $/mile Chevy Volt (PHEV) $0.335/mile Variable: $0.02 - $0.048/mile Variable: $0.355 - $0.383/mile Nissan Leaf (PEV) $0.252/mile$0.012/mile$0.264/mile Chevy Cruze (gasoline) $0.17/mile$0.065/mile$0.235/mile

40. 40 WV Military Affairs / Public Safety, November 20, 2008 Smart Grid Activities

41. 41 WV Military Affairs / Public Safety, November 20, 2008 American Recovery and Reinvestment Act Smart Grid Investment Grants (99 projects) –$3.4 billion Federal; $4.7 billion private sector –877 PMUs covering almost 100% of transmission –200,000 smart transformers –700 automated substations –40 million smart meters –1 million in-home displays Smart Grid Demonstration Projects (32 projects) –$620 million Federal; $1 billion private sector –16 storage projects –16 regional demonstrations Current Smart Grid Activities

42. 42 WV Military Affairs / Public Safety, November 20, 2008 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) DOE Renewable & Distributed Systems Integration (9) EPRI Smart Grid Demonstrations (12 projects) Smart Grid System Report to Congress –http://www.smartgrid.gov/resources Current Smart Grid Activities (continued)

43. 43 WV Military Affairs / Public Safety, November 20, 2008 Metrics

44. 44 WV Military Affairs / Public Safety, November 20, 2008 44 Smart Grid Metrics Reliability Outage duration and frequency, momentary disruption, power quality Security Ratio of distributed generation to total generation Economics Electricity prices & bills, transmission congestion costs, cost of outages Efficient T&D electrical losses, peak-to-average load ratio Environmentally Friendly Ratio of renewable generation to total generation, emissions per kwh Safety Injuries and deaths to workers and public Field Data Metrics Benefits Value

45. 45 WV Military Affairs / Public Safety, November 20, 2008 Benefits Analysis Framework Benefit Category Benefit Sub-category Benefit Economic Improved Asset Utilization Optimized Generator Operation (utility/ratepayer) Deferred Generation Capacity Investments (utility/ratepayer) Reduced Ancillary Service Cost (utility/ratepayer) Reduced Congestion Cost (utility/ratepayer) T&D Capital Savings Deferred Transmission Capacity Investments (utility/ratepayer) Deferred Distribution Capacity Investments (utility/ratepayer) Reduced Equipment Failures (utility/ratepayer) T&D O&M Savings Reduced Distribution Equipment Maintenance Cost (utility/ratepayer) Reduced Distribution Operations Cost (utility/ratepayer) Reduced Meter Reading Cost (utility/ratepayer) Theft ReductionReduced Electricity Theft (utility/ratepayer) Energy EfficiencyReduced Electricity Losses (utility/ratepayer) Electricity Cost Savings Reduced Electricity Cost (consumer) Reliability Power Interruptions Reduced Sustained Outages (consumer) Reduced Major Outages (consumer) Reduced Restoration Cost (utility/ratepayer) Power Quality Reduced Momentary Outages (consumer) Reduced Sags and Swells (consumer) EnvironmentalAir Emissions Reduced Carbon Dioxide Emissions (society) Reduced SO X, NO X, and PM-10 Emissions (society) SecurityEnergy Security Reduced Oil Usage (society) Reduced Wide-scale Blackouts (society). * Methodological Approach for Estimating the Benefits and Costs of Smart Grid Demonstration Projects, EPRI, January 2010.

46. 46 WV Military Affairs / Public Safety, November 20, 2008 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?) 46 We get what we reward!

47. 47 WV Military Affairs / Public Safety, November 20, 2008 DOE has supported development of a computational tool Smart Grid Computational Tool InputsOutputs Assets, Functions, and Mechanisms Impact Metric Results Estimates and assumptions Examples AMI/Smart Meters, Automated Feeder and Line Switching Annual Generation Costs, Number of Tamper Detections Cost Parameters and Escalation Factors Discount Rate, Total Capital Cost, Inflation Rate, Population Growth Value of Service, Price of Capacity at Peak, Value of CO2 Sensitivity Factors High and Low case Value of CO2 Monetary Value of up to 22 Benefits NPV Analysis of Project Sensitivity Analysis of Project Analytics

48. 48 WV Military Affairs / Public Safety, November 20, 2008 Observational Results Utility workers (management, planners, designers, O&M)  Job impact, complexity, troubleshooting, business model Customers (residential, commercial, industrial, agricultural)  Cost, comfort, convenience, involvement, understanding Regulators (Federal, state, and local)  Used and useful, cost recovery, customer preferences Investors (IOU, municipalities, coops, …)  Business case, risk Product and service providers  Competition and market

49. 49 WV Military Affairs / Public Safety, November 20, 2008 Smart Grid Organizations

50. 50 WV Military Affairs / Public Safety, November 20, 2008 Some of the Smart Grid Working Groups NERC Smart Grid Task Force Federal Smart Grid Task Force Electricity Advisory Board GridWise Alliance Smart Grid Policy Center FERC NARUC Smart Grid Committee GridWise Architecture Council EPRI Smart Grid Advisory Group Smart Grid Interoperability Panel

51. 51 WV Military Affairs / Public Safety, November 20, 2008 Smart Grid Maturity Model

52. 52 WV Military Affairs / Public Safety, November 20, 2008 What is the Smart Grid Maturity Model? SGMM is a MANAGEMENT TOOL that provides a COMMON FRAMEWORK for defining key elements of SMART GRID TRANSFORMATION and helps utilities develop a PROGRAMMATIC APPROACH and track their progress.

53. 53 WV Military Affairs / Public Safety, November 20, 2008 How is the SGMM Used? SGMM is used to help organizations: –Identify where they are on the smart grid landscape –Develop a shared smart grid vision and roadmap –Communicate using a common language –Prioritize options and support decision making –Compare to themselves and the community –Measure their progress –Prepare for and facilitate change

54. 54 WV Military Affairs / Public Safety, November 20, 2008 The model at a glance 6 Maturity Levels: Defined sets of characteristics and outcomes 8 Domains: Logical groupings of smart grid related capabilities and characteristics 175 Characteristics: Features you would expect to see at each stage of the smart grid journey

55. 55 WV Military Affairs / Public Safety, November 20, 2008 Breaking new ground; industry-leading innovation Optimizing smart grid to benefit entire organization; may reach beyond organization; increased automation Investing based on clear strategy, implementing first projects to enable smart grid (may be compartmentalized) Taking the first steps, exploring options, conducting experiments, developing smart grid vision Default level (status quo) Integrating smart grid deployments across the organization, realizing measurably improved performance The Smart Grid Maturity Model – levels LevelDescription PIONEERING OPTIMIZING INTEGRATING ENABLING INITIATING DEFAULT

56. 56 WV Military Affairs / Public Safety, November 20, 2008 Eight SGMM domains Strategy, Mgmt & Regulatory SMR Vision, planning, decision making, investment process Organization and Structure OS Culture, structure, training, internal communications, knowledge mgmt Grid Operations GO Grid reliability, security, safety, observability, control Work & Asset Management WAM Mobile workforce, asset tracking & maintenance, GIS Technology TECH IT architecture, standards, infrastructure, integration, tools Customer CUST Customer role in energy use, cost, & source, advanced services Value Chain Integration VCI Demand & supply management, leveraging market opportunities Societal & Environmental SE Conservation, sustainability, impact on environment

57. 57 WV Military Affairs / Public Safety, November 20, 2008 Strategy, Management & Regulatory Organization & Structure Grid Operations Work & Asset Management Technology Customer Value Chain Integration Societal & Environmental Results0 1 2 4 2 000 3 2 44 33 22 This is where we aspire to be in X years NOTE: There is no “correct” target profile implied in the model; the optimal profile will vary by utility. This is where we are today

58. 58 WV Military Affairs / Public Safety, November 20, 2008 Some Barriers and Challenges

59. 59 WV Military Affairs / Public Safety, November 20, 2008 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 59 Move at the “Speed of Value”

60. 60 WV Military Affairs / Public Safety, November 20, 2008 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 60 Where will we find the skilled resources to solve these?

61. 61 WV Military Affairs / Public Safety, November 20, 2008 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 61

62. 62 WV Military Affairs / Public Safety, November 20, 2008 References Smart Grid Implementation Strategy www.netl.doe.gov/smartgrid/index.html Federal Smart Grid Website www.smartgrid.gov Smart Grid Clearinghouse www.sgiclearinghouse.org/