Distributed Energy Strategy - Solar PV Patrick McCoy May 4, 2017

Distributed Energy Resource Strategy Drivers for distributed energy resource (DER) planning Policies promoting distributed generation (DG) technology adoption by customers AB 327 (2013) – Policy requiring distributed energy resource planning by utilities beginning in 2015 SMUD’s response was to develop a new department to focus on DER strategies that will guide SMUD’s DER planning efforts Solar PV, electric vehicles, energy storage, energy efficiency, demand response, and integrated DER

Distributed Energy Strategy (DES) ER&D Grid Planning Grid Operations Customer Rates Resource Planning

Strategic Alignment for Guidance Board Strategic Directives SMUD 3.0 5-Year Strategic Plan Value Our Customers & Community Financially Fit Sustainable Future Operational Excellence Treasure Our Employees Be Safe. Always. Grid 3.0 Vision Grid Modernization Strategy Integrated DER Strategy Rate Strategy Energy Market Strategy ER&D Strategy 10/18/2016 Strategic Development Committee

DER Strategic Outcomes 10/18/2016 DER Strategic Outcomes The DER Strategy paves the way forward for SMUD to successfully deliver future value to our customers and community, in alignment with our corporate values and business model. Provide Outstanding Reliability & Power Quality Be Preferred Energy Services Provider/Advisor Reduce Pressure on Rates Contribute to Regional Carbon Reduction Extends Access for All Customers Engages customers with new products, services, and advice to help them reach their energy goals Promotes grid reliability and power quality through the strategic deployment of DERs Creates new value streams while reducing commodity costs and long-term grid investments Delivers SMUD’s share of a low carbon energy future Enables all customers to share in the value that more DERs on the grid would yield $ 10/18/2016 Strategic Development Committee

Adoption/Dispersion Analysis Results 2016-2030 Cumulative Adoption by Circuit, with Individual System Locations (kW)

Distributed Generation/PV Strategies and Tactics 10/18/2016 Distributed Generation/PV Strategies and Tactics Expand SolarShares Portfolio Launch Integrated DER Solutions Offer PV options to customers. Determine Preferred Communication Pathway Implement Smart Inverter requirement Incorporate dispersion findings into Distribution Planning Mitigate operational issues caused by high amounts of DG PV by enabling remote controls. Partner with 3rd party for low income PV products SolarShares for EAPR customers Develop creative financing mechanisms for non-profit/community customers Extend DG access to underserved markets through new products and flexible financing. 10/18/2016 Strategic Development Committee

Motivation for SolarShares Expand customer access to low cost solar energy by leveraging SMUD’s strengths Overcome limitations associated with: Customer siting of PV Customers in multifamily dwellings Low income customers Help customers achieve their renewable energy goals with a flexible alternative solar product Develop new products to meet a wider spectrum of needs

SolarShares Product Development One-size-fits-all approach does not adequately address customer demand “Standard” product kWh sales with fixed energy price Contracts with variable terms and discounted pricing for longer terms Customized products based on customer need Additional products Low income Hybrid New Community Development Future products Bundled with other products and services

SolarShares Product Development New Community Development Concept – provide alternatives for new community developers to include solar energy

SolarShares Product Development Hybrid Product Concept – address customer’s desire for visibility

SolarShares Resource Procurement Resource portfolio development Power Purchase Agreement (PPA) with 3rd party developers/owners CAISO (in-state market) BANC (regional market) Local resource opportunities (SMUD service territory) Tariff/pricing development Policies and procedures Fixed cost recovery PPA price target Program administration IT automated billing project activities Marketing and communications strategy Customer relationship management

Thank You! Patrick McCoy Strategic Business Planner, Solar PV Distributed Energy Strategy Grid Strategy and Operations Patrick.McCoy@smud.org