1. © FedSources 2009 Ι 8700 Westpark Dr. McLean, VA 22102 Ι www.fedsources.com Ι 703.891.6700 In Focus: The Federal Energy Domain RAY BJORKLUND, SVP AND CKO 16 NOVEMBER 2009

2. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 2 Federal Energy Domain  Focus on what’s addressable by federal contractors in facilitating practical “energy independence”  Energy production  Power generation  Applied sciences and technology, but not basic sciences  Energy management  Resources management and sustainability initiatives, but not environmental enforcement  Regulatory oversight, but not departmental management or Inspectors General  Energy consumption “Energy” ≠ Department of Energy Source: FedSources analysis

3. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 3 Federal Energy Domain Model Source: FedSources analysis of GFY2010 President’s Budget and Federal Energy Management Program reporting; contractor-addressable dollars in GFY2010 and compound annual growth rate (CAGR) from GFY2008 to GFY2010; does not include grants, loans, subsidies, or incentives

4. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 4 Target Agencies in the Domain Model Source: FedSources analysis of GFY2010 President’s Budget and Federal Energy Management Program reporting; contractor-addressable dollars in GFY2010 and compound annual growth rate (CAGR) from GFY2008 to GFY2010; does not include grants, loans, subsidies, or incentives

5. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 5 Energy Spending by Subdomain Source: FedSources analysis of GFY2010 President’s Budget and Federal Energy Management Program reporting; contractor- addressable market does not include grants, loans, subsidies, or incentives $10B ARRA effect Strong potential for near-term triple-digit growth in Energy Management

6. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 6 Energy Spending by Spending Category Source: FedSources analysis of GFY2010 President’s Budget and Federal Energy Management Program reporting; contractor- addressable market does not include grants, loans, subsidies, or incentives Compared to an government-wide addressable CAGR of 3%...

7. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 7 Federal Energy Market Drivers  Executive Order 13423 (24 Jan 2007) Strengthening Federal Environmental Energy, and Transportation Management  Public Law No: 110-140 (19 Dec 2007) Energy Independence and Security Act of 2007  Public Law No: 111-5 (13 Feb 2009) American Recovery and Reinvestment Act of 2009 (ARRA)  Executive Order 13514 (5 Oct 2009) Federal Leadership in Environmental, Energy, and Economic Performance Leverage these drivers in selling to target agencies

8. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 8 Source: Remarks of President Barack Obama – Address to Joint Session of Congress, February 24th, 2009; cloud map courtesy wordle.net The President’s Agenda: Three Pillars

9. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 9 What Is Congress Thinking? (1)  Congress appropriated…  Net cut of about $95M  “Earmarks” of approx $345M  A number of activities self-supporting; no appropriations or increased offsetting collections  Power Marketing Administration (mostly)  Tennessee Valley Authority  Nuclear Regulatory Commission  Federal Energy Regulatory Commission  Residual ARRA funding offsets some appropriations Source: FedSources analysis of House Rept. 111–278, Conference Report to accompany H.R. 3183 Energy and Water Development and Related Agencies Appropriations Act, 2010 Energy Production and Energy Management subdomains

10. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 10 What Is Congress Thinking? (2) Source: FedSources analysis of GFY2010 President’s Budget and House Rept. 111–278, Conference Report to accompany H.R. 3183 Energy and Water Development and Related Agencies Appropriations Act, 2010 Many “puts and takes”

11. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 11 What Is Congress Thinking? (3)  Congressional concerns:  Overlapping programs  Risk of risky technologies  Moving low-risk technologies from the lab to practical application  Not pursuing technologies of interest to Congress  Effective use of ARRA funding  Infrastructure protection Source: FedSources analysis of House Rept. 111–278, Conference Report to accompany H.R. 3183 Energy and Water Development and Related Agencies Appropriations Act, 2010

12. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 12 What Is Congress Thinking? (4)  Cyber security R&D funding for  National electricity grid security  Protocols and policies for Smart Grid integration  Validate and test SCADA technologies and software  DOE to establish a public-private organization of producers and technology providers to  Identify vulnerabilities and develop strategies  Test and validate technologies and software  Develop and disseminate best practices Source: FedSources analysis of House Rept. 111–278, Conference Report to accompany H.R. 3183 Energy and Water Development and Related Agencies Appropriations Act, 2010; SCADA is supervisory control and data acquisition

13. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 13 Other Energy-related Initiatives  GSA-PBS retrofit and conservation $35+M  DoD construction, facility modifications, and research $90+M  GSA alternative fuel vehicle acquisition $3+M  DoD-DESC $50+M  Synthetic fuels  Biomass and algae oil to energy  Hydrogen technologies  Automated fuel handling and measuring equipment  Supply chain automation Source: FedSources analysis of GFY2010 President’s Budget

14. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 14 Addressing the Federal Energy Market Objective is to facilitate “energy independence” Energy Consumption requires effective purchasing methods and improved efficiencies New fuel systems, like alternative fuels Purchasing methods, like energy performance contracts Energy Production requires new technology, process improvement Generating technologies, like hydrokinetics Distribution methods, like Smart Grid Energy Management ties production and consumption together with overarching programmatic controls and oversight Monitoring, like automatic metering Budgeting, like greenhouse gas trading $25.64B $4.21B $28.77B Source: FedSources analysis of GFY2010 President’s Budget and energy legislation; amounts represent GFY2010 addressable market

15. © FedSources 2009, All Rights Reserved. Reproduction Prohibited. 15 Get ‘em While They’re Hot! Source: FedSources analysis of GFY2010 President’s Budget and Federal Energy Management Program reporting; contractor-addressable dollars in GFY2010 and compound annual growth rate (CAGR) from GFY2008 to GFY2010; does not include grants, loans, subsidies, or incentives