1. Designing the NY REV Distribution System Platform: More than Smart Webinar Jim Gallagher Executive Director New York State Smart Grid Consortium August 4, 2015

2. 2 Jim Gallagher Executive Director New York State Smart Grid Consortium (NYSSGC) Named Executive Director of the New York State Smart Grid Consortium (NYSSGC) in April 2013, James T. Gallagher brings over 35 years of energy policy and industry experience to his role. As Executive Director, Gallagher oversees the Consortium and its members as they work toward broad statewide implementation of a safe, secure, and reliable smart grid to modernize New York’s energy infrastructure. Gallagher is the architect of the NYSSGC’s priority initiatives, which are designed to modernize New York’s electrical grid to improve reliability and resiliency, lower long-term costs, and identify best practices for meeting the evolving energy service needs of consumers. He is currently co-facilitator of the stakeholder process for Market Design and Platform Technologies for the NY Public Service Commission’s Reforming the Energy Vision (REV) Proceeding.priority initiatives Prior to joining the NYSSGC, Gallagher served as Senior Manager for Strategic Planning at the New York Independent System Operator (NYISO), where he was responsible for establishing the long term strategic direction for the NYISO, which operates New York’s electric transmission system and wholesale power markets. Before joining the NYISO in 2011, Gallagher served as Director of Energy Policy for the City of New York, and he was the lead energy advisor to the Office of Mayor Michael Bloomberg. Prior to working with the City, he was Director of the Office of Electricity and Environment for the New York Public Service Commission, where he enjoyed a 21 year career, and held senior energy policy positions at Northeast Utilities, the Pennsylvania Governor’s Energy Council, and in the late 1970’s, the Tennessee Valley Authority. At TVA he developed and led the organization’s pioneering “Solar Homes for the Valley” program. Gallagher is a member of the Advisory Board of Grid4EU, the largest smart grid project funded by the European Commission. Through this effort, Gallagher collaborates with international energy and technology experts to learn and create best practices and technological solutions for grid modernization. Gallagher also serves on the EPRI Grid Modernization Advisory Group and sits on the Board of Directors for the Advanced Energy Research and Technology Center. He is on the Executive Advisory Committee for the U.S. Department of Energy’s State and Local Energy Efficiency Action Network. He earned a B.S. in Business and Economics from Lehigh University, and an M.S. in Energy Management and Policy from the University of Pennsylvania.

3. Consortium Overview 2

4. Consortium Mission A Forum for Advancing Grid Modernization in NY State  Maintain vision of future grid  Advocate benefits for producers, suppliers, and consumers  Support initiatives that demonstrate capabilities of advanced grid technologies  Provide technical resources for industry and policy makers  Priorities for 2014/2015  Real world projects - - Multiple microgrid demonstrations  Utility of the Future (REV)  Strengthen research and international collaboration 4

5. 5 NY’s Reforming the Energy Vision (REV) Proceeding Considering  Fundamental changes in ways utilities provide distribution service  Aligning electric utility practices and regulation with technological advances in information management, pricing, power generation and distribution  Improving system efficiency, empowering customer choice, and encouraging greater penetration of clean generation and energy efficient technologies and practices

6. Key Functions of the DSP  Designs and operates distribution system that integrates DERs as major means of meeting system and customer needs  Optimize operations by balancing production and load in real time  Monetize system & social values  Use market based means where appropriate  Coordinate interactions among customers, the distribution system and energy services companies (DSP markets and NYISO) 6 The Distribution System Platform

7. Introduction: Market Design & Platform Technology Groups (MDPT) Purpose Provide guidance for utility Distributed System Implementation Plans (DSIPs) on near- and mid-term market design and platform technology issues, Process Two working groups—one focused on DSP Market Design and one focused on Platform Technology. Report to Department of Public Service, August 17 th, 2015. Co-facilitated by NYSSGC, RMI, NY PSC Staff 7

8.  What defines the DSP market, and how might it evolve from near-term to mid-term to long-term?  With a focus on the near and mid-term term, what functionalities and capabilities must DSP and market actors provide to achieve REV’s goals?  How will different actors interact and what are the implications for data availability and transparency?  What elements of market design must be standardized across DSPs and what rules are needed to adequately govern the market? Proposed Approach and Key Questions to Address 8 Market Design Group

9. Proposed Approach and Key Questions to Address  What are the platform technologies needed to support market design, while complementing and enhancing grid operations?  What are key interfaces needing updated standards and protocols? If a pre-defined standard does not exist, what are the needs for a standard and the appropriate standards body to create it  What are the technology and human resource gaps and options that should be considered? Platform Technology Group 9

10.  Establish DSP Structure that optimizes distribution system operations, improves reliability, and enhances affordability through improved integration of DER  Where appropriate, competitive distribution markets utilized to procure and compensate DER for value of services provided  Initial DSP markets focused on DER to address utility operational needs and to offset of defer distribution infrastructure investments  DSP markets should complement and not replicate existing NYISO wholesale markets DSP Market Design – Where we want to go 10

11.  Basic market design and interactions uniform across DSPs, but value of products based on specific location and time  Evolve the markets over time based on sophistication of participant capabilities and infrastructure capabilities.  Provide locational temporal based price visibility. Create a locational based distribution system “adder.”  Customer experience enhanced through new technological approaches and innovative competitive offerings (e.g. digital marketplace, automated demand response). DSP Market Design – Where we want to go (continued) 11

12.  Improved system/DER visibility for real time network monitoring/balancing  Pervasive use of system intelligence to enable automate grid operations and dynamic load management  Seamless integration of retail and wholesale markets and operations  Strategic implementation of AMI where determined appropriate  Communications and data management infrastructure in place to support overall market and operational requirements  Cyber secure DSP Platform Technology – Where we want to go 12

13. 13 Key Functions and Capabilities of DSP 1) Enhanced Distribution Planning  Probabilistic forecasting  Identify DER hosting capacity  Determine Locational based marginal costs  Integrated utility/NYISO planning  Identify and prioritize locations needing Dist. System capacity/operational relief  Establish Distribution Planning Working Group

14. 14 Key Functions and Capabilities of DSP (continued) 2) Expanded Distribution Grid Operations  Optimize load, supply and other power parameters at local distribution level. Emphasis on automated response.  Orchestrate multi-directional power flows from DER  Improve load and network monitoring and visibility to aid situational awareness and rapid response to atypical events  Cyber security

15. 15 Key Functions and Capabilities of DSP (continued) 3) Distribution Market Operations  Primary responsibilities  Develop and implement vibrant markets for DER products and services  Manage market operations and processes  Specific functions  Develop and administer market rules  Maintain awareness of DERs system wide  Design and conduct initial RFPs/auctions to acquire DER  Facilitating and processing market transactions  Measuring and verifying participant performance

16. 16 Key Functions and Capabilities of DSP (continued) 4) Ensuring Data Availability  Provide authorized customer and distribution system data needed to facilitate market participation  The MDPT group identified  Areas of need for specific types of data  Current availability of such data  Data interface issues  Specific data necessary for the DSP planning and operations functions  Consensus not achieved

17. 17 Key Functions and Capabilities of DSP (continued) 5) Necessary Platform Technologies  Establish geospatial models of connected DER and system elements  Sensing and control needed to maintain a stable and reliable grid  Optimization tools that consider demand response capabilities as well as the generation output of existing and new DERs in the grid  Need to measure DER performance: advanced metering needed to support DER and active customer participation. Broad Advanced Metering Infrastructure (AMI) implementations must be accompanied by business case.

18.  July 15 th – Draft Report issued for public feedback  July 31 st – Public Feedback Due  August 17 th – MDPT Final Report released  September 3 rd – NY DPS staff issue DSIP guidance  January, 2016 – Utilities file DSIPs Major Milestones Going Forward 18

19. Contact Information New York State Smart Grid Consortium 387 Park Avenue South 3rd Floor New York, NY 10016 James T. Gallagher, Executive Director jgallagher@nyssmartgrid.com NewYorkRevWorkingGroups.com NYSSmartGrid.com 19