1. Discussion with NASUCA TRANSITIONING TO THE GRID OF THE FUTURE November 8, 2015 Austin, Texas

2. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE BACKGROUND AND INITIATIVE OVERVIEW 2

3. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID Future of the Grid – Evolving to Meet America’s Needs Developed through a public/private partnership with the Department of Energy’s (DOE) Office of Electricity Delivery and Energy Reliability (OE) 3  Workshops in Seattle, Dallas, Durham, and New York City  National Summit in Washington, DC  Input from over 400 industry stakeholders – including policymakers, utility representatives, vendors, and game changers  Final report published in December  Available at: www.smartgrid.gov/future_grid and http://www.gridwise.org/uploads/reports/GWA_14FutureoftheGridReport_final.pdfwww.smartgrid.gov/future_grid

4. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE Grid Modernization: Framing the Issues 4 Electric System of the Future Evolving Grid Operations Evolving Business Model Evolving Regulatory Model Planning the Transition

5. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID Consumers  Will have different expectations and demand new options  Prosumers Characteristics: Electric System of the Future Generation  Will be both centralized and distributed  Will be both dispatchable and non-dispatchable  Microgrids will be complementary, not a replacement 5 Markets  Wholesale and retail  Third party non-regulated competitive players Balancing Supply and Demand  Will become increasing complex and important Energy Storage  Will not replace the need for “dispatchable” options

6. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID Evolving Grid Operations: Key Themes from Workshops  Will still want and need a grid  No longer just a delivery “pipe” => two-way power flow  Must be agile and “fractal” - flexible, adaptable, responsive  Enabling platform for very dynamic and complex system  Capable of supporting robust retail market transactions  Capable of coordinating wholesale and retail functions (operational and market) will be essential  Distribution grid will look and act more like transmission grid  Balancing supply and demand -increasingly complex and important 6 Evolving Grid Operations

7. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID Evolving Business Model Evolving Business Model: Possible Future Value Props for Grid Operator  Supporting/implementing public policies  Integrating all types of generations – agnostic to where it comes from  Increasing grid efficiency  Optimizing assets utilization  Maintaining a safe and reliable grid  Enabling highly reliable and resilient energy services to end consumers  Enabling customers to provide services back to grid  Facilitating a retail market for consumers to buy and sell services  Identifying most cost-effective way to achieve outcomes 7

8. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE Our Objective 8 To create a guide to facilitate public policy discussions for state and local policy makers and regulators to create their strategies (policy level) and roadmaps (regulatory level). The guide will focus on framing the issues associated with distributed energy resources (DERs) as a driver for change from multiple stakeholder perspectives.

9. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID How we define DERs  DERs are “behind the meter” resources that can impact system demand. These resources include distributed generation, distributed storage, smart load management (including EVs), and traditional demand response/load control. We will also consider the impacts of combined DERs into non-utility owned microgrids. 9

10. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID Engaging Stakeholders 10 Utilities IOUs Munis Coops RTO/ISO Retail Services Providers Transmission Companies Consumers Industrial Commercial Residential Consumer Advocates Government DOE NIST USDA - RUS Regulators PUCs FERC/NERC FCC FTC Policy Makers Governors’ Offices Energy Offices Federal Local – Mayors State Legislators Others Financial – Investors R&D Organizations EPRI Industry Trades EEI APPA NRECA NEMA ACORE SEPA AEE Environmental Stakeholders EDF NEDC EA UCS Vendors/Service Providers ITC Providers Services Equipment Manufactures Third Party Players Solar Providers Wind Providers Microgrid Providers DER Aggregator

11. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE Implementation Support Cost/Benefit Development & Analysis Tools Partners DOE & Labs EPRI/Industry Universitie s Methodology/Framewor k Considerations/Options Interdependencies Implications Framing Policy Considerations Role of the utility Role of 3 rd parties Risk management – Stranded Assets New rules Guiding Principles Decision & Investment Guide Technical Assistance & Tools Research and Development (QTR) 11 Policy Makers & Industry DOE & National Labs Technical Public Policy Distributed Energy Resources Our Focus Collaborate, Coordinate & Leverage

12. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE FUTURE OF THE GRID Policy Considerations Associated with Increasing DERs  Role of the utility versus role of third parties  Transparent, fair, and equitable allocation of costs for maintaining and operating the grid with increasing DER penetrations  Utilities’ obligation to serve and universal service compact  Balancing pubic good while allowing consumer choice and control  Maintaining consumer protections in a changing environment  Consumer education – bringing consumers along as part of the conversation  Others? 12

13. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE Two Breakout Groups Group 1 – How do we maintain affordability for all consumers with increasing penetrations of DER?  Impacts of rooftop or community PV (and other DER) on non-participating consumers?  How can all consumers take advantage of the benefits of DER?  How do we properly value the higher costs associated with DERs (i.e., costs shifts)? Group 2 – What are the key policy considerations for Consumer Advocates related to DER  Are there additional policy considerations that should be covered?  What do you want to make sure policy makers consider, know or include when developing new policies?  What opportunities do DERs present for consumers? 13

14. FUTURE OF THE GRID TRANSITIONING TO THE GRID OF THE FUTURE 14 THANK YOU