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Smart Grid Initiatives Brendan Herron VP – Corporate Development & Strategy

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1 Smart Grid Initiatives Brendan Herron VP – Corporate Development & Strategy

2 About Us  The leader in Smart Grid with intelligent sensors and utility device management and analytic software solutions  Locations include U.S., Europe, Australia, Singapore and Brazil.  Enabler of Smart Grid communications, sensing and analytics platform for SmartGridCity TM with Xcel Energy  Collaborating with Iberdrola and EDF in an EU-funded program to develop European Smart Grid platform that enables an open standard for metering, integrated communication technologies, and advanced distribution management capabilities.  Member of: GridWise Alliance, Smart Grid Australia, IEEE, European Consortiums (EU FP7 ADDRESS, EU FP7 OPEN, PRIME) and the Joint US-China Cooperation on Clean Energy.  Winner of: –2009 World Economic Forum Technology Pioneer –2009 VentureBeat Ten Top 10 innovations driving the future of the Smart Grid –Go Green East 2009, –Dow Jones 2008 Ten Most Innovative Clean Tech Companies in Europe –2006 Red Herring’s Top 100 Private Companies, and –2006 Platts Global Energy Commercial Technology of the Year award. Investors Proprietary and Confidential2

3 “... a power system that can incorporate millions of sensors all connected through an advanced communication and data acquisition system. This system will provide real-time analysis by a distributed computing system that will enable predictive rather than reactive responses to blink-of-the-eye disruptions.” (EPRI, emphasis added) Smart Grid Vision (picture courtesy of Xcel Energy) Proprietary and Confidential3 CURRENT’s Area of Focus “The Middle Mile” Today:High degree of automation, optimization and control Limited automation, optimization and control

4 Smart Grid around the World Europe - “Without effective deployment of the SmartGrids concepts, European security of electricity supply in general, and the operational security of the European electricity grids in particular, may not be maintained. This is crucial not just for the large scale development of renewables, but also because of the steady demand growth and more onerous environmental requirements which conventional grids and methodologies will increasingly find difficult to meet” (European Commission Smart Grids Technology Platform, “SmartGrids, Strategic Deployment Document for Europe’s Electricity Networks of the Future (Draft)”, September 2008) U.S - The U.S. has made Smart Grid a National Policy and provided $4.5 billion dollars to roll out Smart Grid solutions –“That means 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.” (President-elect Obama, 8 Jan 09) Canada - “Provincial initiatives on conservation, renewable generation and smart meters begin the move towards a new electricity system, but their full promise will not be realized without the advanced technologies that make the smart grid possible. The challenges that Ontario faces in simultaneously incorporating distribut­ed generation, addressing growth, and replacing aging infrastructure while maintaining reliability and qual­ity of service are daunting. While new grid infrastructure will be necessary to connect generation resources, replace aging assets and address growth, simply adding wires and equipment without intelligence is not a viable option.” (Ontario Smart Grid Forum, February 2009) Proprietary and Confidential4

5 Up to 5% reduction in electric demand with no impact on customer Estimated 87% reduction in cost of outages $0.50 for every $1 spent on electricity (EPRI) “Without a radically expanded and smarter electric grid, wind and solar will remain niche power sources” (MIT, similarly European SG Platform, Ontario Smart Grid Forum) Enables better utility and end user energy usage Improve Grid Operations Integrate Intermittent Renewables Enable End User Energy Management Reduce Outages Smart Grid Platform (communications, sensing, software) Proprietary and Confidential5 CURRENT Value Model - $1,400/customer PV Benefits

6 The Growing Consensus on the need for a broad Smart Grid 85% of the carbon reduction benefits of a Smart Grid come from System Optimization and Integration of Renewables and only 15% will come from End- User Energy Management. (i.e. the benefit of smart meters). UK based Climate Group “while the smart meter may have become the ‘poster child’ for the smart grid, advanced sensors, synchro-phasors, and distribution automation systems are examples of equipment that are likely to be even more important in harnessing the value of smart grid.” U.S. National Association of Regulatory Utility Commissioners (NARUC) “but less well-known is the fact that the potential for efficiency improvements within the electric power industry from distribution to transmission and generation itself is large.” U.S. Federal Energy Regulatory Commission Chairman Wellinghoff “If we expect the horse — i.e. the consumers — to push the cart before it is ready, we may never get the Smart Grid off the ground. This means that we should not focus immediately on the end user and demand response; rather, we must start with the backbone—the transmission and distribution systems — while proceeding carefully to go inside consumers’ homes.” Honorable Frederick J. Butler, President National Association of Regulatory Utility Commissioners (NARUC) Proprietary and Confidential6

7 Reduce VARs → Reduce Losses → Reduce Load → Reduce Emissions  Actual substation load reduction achieved in this example was between 4% to 7% over the course of about an hour by optimizing the system  Expected nationwide target is 3% to 5% of load –On national basis, 3% would save over $10 billion annually –Reduce carbon equivalent to taking 15% of all cars in the U.S. off of the road Total Load Reduction as Efficiency is Enhanced Proprietary and Confidential7 As power factor improved... … load decreased.

8 CURRENT – Successful Deployment at Xcel SmartGridCity™ CURRENT System Optimization Solution successfully implemented. Preliminary Results are exceeding expectations. Improve Grid Operations Enabled several in-home energy management systems Integrated Meters with Xcel Billing System Proprietary and Confidential8 Monitoring impact of distributed renewables on grid assets and performance Detected unknown distributed renewables feeding onto grid. Integrate Renewables Xcel Energy moved from reactive to preventive maintenance program. Voltage problems have been reduced by over 90%; there have been no customer voltage complaints this year. Unpredicted transformer failures have been significantly reduced. Outage cause, location and restoration times have also been significantly reduced. Reduce Outages Enable End User Energy Management

9 CURRENT’s Lessons Learned Government/Utility/Vendor Partnership increases effectiveness and speeds implementation. Experience with deploying and operating Smart Grids leads to new ways to lower costs and increase the value. –For example, leveraging existing or public networks (fiber, DSL, cable, 3G wireless, WiMax) can reduce costs and time to value. Grid operational improvements through sensing, communications and control can be implemented relatively quickly and provide a high value across all customers. –High value grid improvements can also be deployed in a modular fashion to lower initial cost and overall project risk. Engaging even an educated “green” consumer can be a challenge. –Customers may not be interested even if hundreds of dollars of technology is given away free. –Not everyone has central air conditioning (only 25% of Boulder) which limits effectiveness of much of the in-home technology. Many of the advanced in-home devices require a broadband connection to be truly functional, but using the consumers’ broadband connection can require one or more truck rolls due to firewall and router configuration issues. Proprietary and Confidential9

10 Why isn’t it happening? Utilities act rationally in a regulated environment –lack incentives to reduce usage –Earn rate of return on invested capital –not rewarded for implementing new technologies and often run the risk of being judged imprudent. Historically, regulators and consumer advocates focus on the immediate rate impact without taking into account gains from efficiency, conservation, renewables or a world where carbon has a cost Environmental & reliability benefits go to society but not the utility No sustained, prioritized, and coordinated program of global, national and local government action Capital markets “ The real risk in a true coal-to-cool-air, wind-to-light implementation of the smart grid is that these technologies that transform conservation and efficiency efforts can lead to degradation of the regulated return and uncompensated demand destruction. ” ( Xcel Energy Smart Grid, A White Paper) Proprietary and Confidential10

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