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					                                   Session 1 of a 5 Part
GE Energy                        Series on the Smart Grid




The Smart Grid … Lunch and Learn
       Session 1: The Smart Grid and its
                   Benefits

                                                            1
Smart Grid Learning Series



Session 1: The Smart Grid and its Benefits

Session 2: The Smart Grid… The Consumer View

Session 3: The Smart Grid… The Distribution View

Session 4: The Smart Grid… The Transmission View

Session 5: The Smart Grid… The View from Rural America




                                                         2
Session 1: The Smart Grid and its Benefits
Topics:
The Grid … An Overview
The Benefits of a Smart Grid
Good Things Enabled by the Smart Grid
     •    Renewable Intermittent Generation. i.e. Wind
     •    Renewable Dispatchable Generation i.e. Landfill Gas, Geothermal
     •    PV Solar
     •    Plug In Vehicles
     •    Demand Side Management
Calculating the Benefits of A Smart Grid
     •    Utility Benefits
     •    Consumer Benefits
     •    Societal Benefits
Impact of Policy Discussion



                                                                            3
Introduction
Electricity changed the world




                                A whole new
                                world
                                of opportunity
                                came into view




                                                 5
Add more capacity whenever needed




     … power more opportunity. No
     worries.




                                    6
What worked in the past won’t work anymore




           Old grid structures need to be updated
           New grid structures are being built at
           record paces
           The strain on resources, fuel, siting,
           building and maintenance are
           overwhelming




                                                    7
Soaring energy demand



   World energy consumption
   forecasted to triple in
   about 40 years




                              Source: U.S. Army Corps of Engineers ERDC/CERL TR-05-21




                                                                                        8
Electricity prices on the rise


    U.S. sees 6.5%
    spike in ’09
                          6.5%
    electric bills




                                 Source: EIA (Energy information Administration)




                                                                                   9
Outages affect everyday life … every day
                                    Power outages force
                                    evacuation of Woodstock
                                    hospital            7/30/08
    Woman in iron lung dies         Chicago, IL
    during a power outage
                                                           Storm knocks out Euro 2008
    Los Angeles, CA     5/29/08
                                                           TV feed worldwide
                                                           Vienna, Austria   6/25/08
Lights out in Vancouver after
underground fire
Thousands in left without power                                   Power outages widespread
Vancouver, Canada      6/14/08                                    in Texas after Dolly
                                                                  Harlingen, Texas     7/25/08

  Trip on Mexico's transmission
  line causes national power                             South Africa’s power outages
  outage                                                 create national emergency
                          5/26/08
  Mexico City, Mexico                                    Johannesburg, South Africa 2/13/08

          Power outage disrupts Hynix
          DRAM production                     Hours-long power outages anger, frustrate
          South Korea, Korea 5/22/08          Pakistanis; government pushes daylight
                                              savings                          6/1/08
                                              Islamabad, Pakistan



                                                                                                 10
Green energy takes center stage

   Time                           National Geographic
  Magazine
                                     Changing climate
 How to win the
 War on global
   warming
                  Vanity Fair           April 2008

                  Green Issue   The Economist            Hispanic
 April 28, 2008                                          Business
                                  The future
                                  of energy             Going Green



                  May 2008

                                 June 21, 2008          May 2008
                                                                      11
Electricity … Poised to change the world
again



                     “We can’t solve
                     problems by using the
                     same kind of thinking we
                     used when we created
                     them.”
                                  - Albert Einstein




                                                      12
Time is now … to shape the market
          “…updating the way we get our electricity by starting to build
          a new smart grid that will save us money, protect our power
          sources from blackout or attack, and deliver clean, alternative
          forms of energy to every corner of our nation.”
                            -from transcript of America’s Recovery and Investment Plan




                              The American Recovery and Reinvestment
                                Act of 2009
                                  Pay down the cost of smart grid
                                 investments
                                  Matching grant program
                                  Funding pool for pilot projects




                                                                                         13
Today’s Grid
Today’s grid … an engineering marvel




                                       15
Grid inefficiency




                    Source: AEP PUC Hearing




                                              16
Aging assets
  Transformer failure rate
   100%


   80%


   60%


   40%


   20%


    0%
          1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97
                                   Age in Years

                                                                                    17
The Smart Grid
What is a Smart Grid?


        The integration of two infrastructures… securely
  Electrical infrastructure


Electrical
Infrastructure




Information
Infrastructure


                                Sources:: (1) UtilityPoint, by Ethan Cohen 7/18/0 (2) EPRI® Intelligrid




                                                                                                          19
Why?
Enables …




                     Energy
                    efficiency

     More
  renewables
                 Consumer
               empowerment
                                 20
Growing Complexity In Modern Grids…




                                      21
Capabilities required to manage the future grid




                                                  22
Flexibility for emerging capabilities

                                Wide-Area
                               Protection &              Renewables
                               Automation                Forecasting

                     Wide-Area
                     Monitoring                                   Renewables
                      & Control                                   Smoothing




                      Delivery
                    Optimization                               Demand
                                                              Optimization




                                             Asset
      Reliability                         Optimization
     Optimization




                                                                               23
Standards for open architecture



    NERC

              Scalable        Integrity
              Secure          Ease of use
              Shareability     Cost
                             effectiveness
              Ubiquity
                              Openness




                                             24
Smart Grid
 Benefits
Increasing grid efficiency




                                          Commissioner Wellinghof, U.S. Federal Energy
                                          Regulatory Commission testifying to U.S. Congress,
                                          May 2007




         Smart Grid delivers:
          Utility savings: $46MM/yr (2% total load reduction)
          Environmental benefits: 290K tons of CO2 reduction

                                                      Source: Energy Information Administration & GE Estimates

                                                                                                                 26
                                        Quantifying the benefits … demand response
                                               Customers enrolled in direct load control programs, by
                                               region
                           1,400,000

                           1,200,000

                           1,000,000
                                                                                                                                               “Demand response is clearly the ‘killer
Customers




                                             800,000                                                                5 MM
                                             600,000
                                                                                                                    customers                  application’ for the smart grid.”
                                             400,000                                                                                           - Jon Wellinghoff, FERC Commissioner, Dec. 29,
                                             200,000                                                                                           2008
                                                         0
                                                                    RFC        FRCC     MRO   SERC   WECC    NPCC     TRE     SPP    ASCC/HI



                                                         Current potential peak load reduction, by DR program                                    Current DR programs can reduce peak load
                                             12000
                                                                                                                                                demand by up to 41 GW (~6% of peak demand
        Potential Peak Load Reduction (MW)




                                             10000                                                                                              for 2008).

                                              8000
                                                                                                                 41                              Utilities reported 13.6 GW of actual peak load
                                                                                                                                                reduction in 2007.
                                                                                                                 GW                              Smart grid-enabled DR programs may achieve
                                              6000
                                                                                                                                                peak load reductions of 7%-22%1
                                              4000
                                                                                                                                                         1Electric
                                                                                                                                                                 Advisory Committee, “Keeping the
                                                                                                                                                         Lights On in a New World,” January 2009
                                              2000


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                                                                          Source: FERC Assessment of Demand Response & Advanced Metering,
                                                     ge
                                                 er




                                                                          December 2008
                                               Em
Demand Optimization – Value to Consumer
               Consumer
               Interface
   Smart
 Thermostat




                                               Demand
                                Smart
                               lighting


                                          Pacific Northwest National Laboratory announces the
                                          results of two studies demonstrating consumers and
                                            information technology can play an active role in
 Smart Meter       Efficient                                managing the grid
                  appliances
                                            “On average, consumers who participated in the
                                            project saved approximately 10 percent on their
                                                            electricity bills”



                                                                                                28
GE roadmap for a Smarter Grid
                    What it is                    Why                 Utility Value/MM Customers*
                                                                          $16MM/yr, 51K tons of CO2
Demand         Manage peak via control      Defer upgrades, optimize      reduction+
optimization    of power consumption        generation & renewables       Res. consumer savings up to 10%
                                                                          Based on 1.6% peak load reduction using critical peak
                                                                          pricing resulting in reduction in fuel costs and deferral
                                                                          of generation capacity

Delivery       Reduce delivery losses in     Less energy waste and        $7MM/yr,, 45K tons of CO2
                                                                          reduction+
optimization     distribution systems         higher profit margins       Based on 0.2% loss reduction and 0.5% CVR peak
                                                                          load reduction resulting in reduction in fuel costs and
                                                                          deferral of generation capacity

                                                                          $11MM/yr, ~4.5 yr ROI
Asset           Prognostics for proactive     Reduced outages and         Based on system-wide deployment of advanced
optimization    equipment maintenance          focused maintainers        transformer M&D resulting in transformer life
                                                                          extension and reduction in inspection,
                                                                          maintenance & repair costs


Reliability     Wide Area Protection &         Increased network          $7MM/yr
optimization           Control              performance & reliability     Based on the deferral of the capacity upgrade of
                                                                          two 220kV transmission lines for 3 yrs (each line
                                                                          30 miles long with a cost of upgrade of $1.5MM
                                                                          per mile)


Renewables       Use of Forecasting &         Compensation for            Key step for meeting RPS targets,
optimization         Smoothing               production variability       especially in areas with weak
                                                                          grids

                                                                         *Utility savings are approximate annual
                                                                         savings per one million customers
                                                                         + $85/kW-yr peak generation capacity value
                                                                                                                              29
Policy Discussion
North American trends and drivers
State Programs and Policies…Dealing with generation in a carbon constrained world
         State & Market Policy…… Wholesale markets still evolving
         RPS…… Evolves to become one of the solutions for GHG emissions
         Energy Efficiency & Demand Response…... Increasing use of programs, impact varies

Environmental Policy….. States tackling “sticky” issues
         CO2/GHG Policy….. States feel the need to take action
         CAIR/CAMR….. Cleaner air
         Regulations to address water scarcity.….. Usage restriction may impact gen. type & output

Transmission Expansion….. Federal & state help on the way, conflicts & timing
Fuels, Supply, & Price….. Supply & Government policy driving the fuel of choice
         Natural Gas….Takes on a bigger role in generation; Can supply match?
         LNG.…. The backstop for NG; Are supplies secure?
         Coal/IGCC ..… Uncertain future due to policy & technology constraints
         Nuclear..…The holy grail with issues
         Oil..…Small role but potentially significant



                                                                                                     31
Importance of Policy Incentives




                                  Source: EER


                                                32
Optimizing our electrical infrastructure
Through knowledge and empowerment

                System capacity




                 Time of use rates
   Demand




                   Base rate          High           Peak
                                      2X-4X      3X–15X
                                      Base        Base

            0      2   4    6     8   10   12   14    16    18   20   22   24


                                                                                33
Regulation must reward utility efficiency


                            Per Capita Electricity Sales (kWh/person)
                   14,000
                                                   U.S.

                   10,000

                                                     CA
                    6,000



                    2,000

                       0 1960        1973                       2008




                                                                        34
Wind RPS and purchase obligations
Wind Issues/Outlook                                   US Wind Installations and RPS, 2008
High $/kw costs drives continued need for
subsidies
Capital dries up, Stimulus $$ need to start flowing
National RES policy needed to drive growth
Bottlenecks driving transmission needs

     Cumulative Wind Power Capacity
     Projected Growth, 2000-2020(MW)




                                                                            Source: EER




                             Capital supply & transmission constrains growth
                                                                                          35
Energy efficiency and demand response

Trends/Observations                                               Energy Efficiency Resource
States trying to favorably impact conservation & efficiency
                                                                  Standards
Proliferation of Energy Efficiency & Demand Response
programs
Electric consumers do not see utility wholesale cost volatility
Income factor impacting demand
Activists: ban new transmission to encourage efficiency in NE

Impact

EE program impact limited, lg. size housing dampens
results
CA programs have averted construction of 15 large power
plants
NY peak shaved by 1GW during peak period by DR
program
Industry recognizing DR is cost effective and profitable
                                                                              Source: Pew Center on Global Climate
States adding smart meters, transparent pricing                               Change




                         EE & DR Programs Impact Need for Gen. & T&D

                                                                                                                     36
 Emissions, CO2 and GHG

Regional Initiatives, Driving Uncertainty
States & Provinces taking lead on legislation
State Regulatory Commissioners target CO2 emissions
Financial burden to consumers not clearly articulated
Shift to out of state generation…impact on system reliability?
Emissions’ leakage…cost of CO2 to be a major contributing
factor; Penalties



Legislation adds burden to the states
Generation mix critical to success
      NG to play a major role.
      Renewables becoming more important
Proven “clean technology” can revitalize Coal                    RGGI
                                                                 CO2 capped at 188 tons through 2014; capped at 169M tons by 2018
Efficiency & Demand response programs become more critical       Midwestern Regional Greenhouse Gas Reduction Accord
Meeting deadlines very challenging                               Reduction of GHG emissions 60-80 % below 1990 levels by 2050

                                                                 Western Climate Initiative
                                                                 Reduction of GHG emissions 15% below 2005 levels by 2020,
                                                                 industry wide.


                         Gas Generation & Renewables Big Winners
                                                                       Sources: EPA, Pew Center on Global Climate Change; RGGI/WCI/CERA   37
Transmission expansion needed
                                                               Average Congestion and RMR Costs, 2001–06
                                                       $7


                                                       $6



 Stagnant investment over the past 15-20               $5


 years creates congestion and limits           $$/MW
                                                       $4


 renewable implementation                              $3



 EPAct 2005 created NIETC, FERC                        $2


 backstop authority to site new transmission           $1


 lines                                                 $0
                                                            PJN      NEW YORK ISO    ISO NE            ERCOT
                                                            CAISO
 2005-09 Federal vs. States’ rights issues
                                                            Transmission Projects Across N America

 2000 investment level grows from $5B to
 10B/yr by 2006, expected to reach to
 ~$13B/year by 2010 (2008 data)
 Total transmission investments of $150
 billion through 2022 (2008 data)




                      Legislation & Investments needed to address
                       Congestion & Enable Renewables Growth
                                                                                              Sources:, EIA, CERA, CEC   38
Summary


Economic and environmental demands are forcing functions

Investment in technology can accelerate their adoption

The Smart Grid is dynamic and must be viewed as a system

Demand response is the 5th fuel … let’s compensate for it

Policy will drive behavior




                                                            39
Smart Grid Learning Series … next week



Session 1: The Smart Grid and its Benefits

Session 2: The Smart Grid… The Consumer View

Session 3: The Smart Grid… The Distribution View

Session 4: The Smart Grid… The Transmission View

Session 5: The Smart Grid… The View from Rural America




                                                         40

				
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