1. OPSI Annual Meeting Session 4: Future Generation Mix in PJM Arshad Mansoor Senior Vice President October 7, 2013 Power System Transformation

2. 2 © 2013 Electric Power Research Institute, Inc. All rights reserved. Unprecedented Pace and Scale of Change Driven by Technology, Policy, and Consumer Expectation Shale gas Variable generation (wind and solar) Local generation Demand for electricity Cyber & Physical security Energy and environment policy

3. 3 © 2013 Electric Power Research Institute, Inc. All rights reserved. Adapting to Change Power System Transformation A Highly Interconnected Power System that Optimizes Energy Resources A Highly Interconnected Power System that Optimizes Energy Resources A Resilient, Flexible, and Connected System

4. 4 © 2013 Electric Power Research Institute, Inc. All rights reserved. The Imperative for Transformation: Grid Reliability & Energy Affordability The European Network of Transmission System Operators for Electricity (Entsoe) October 04, 2013 Major Capacity outage during times of high variable generation would pose “a severe risk for the system to collapse.” The reduction in fault levels weakens the overall strength of the network resulting in quality of supply issues such as large voltage steps, harmonics and flicker Energy Affordability German Residential Electricity Price: 40c/kWh and rising Spain: $25.5B Euro deficit since renewable subsidies were not recovered through rates because of price cap Energy Affordability German Residential Electricity Price: 40c/kWh and rising Spain: $25.5B Euro deficit since renewable subsidies were not recovered through rates because of price cap