SMART GRID: What is it? Opportunities, and Challenges Dr. Damir Novosel IEEE PES President Elect President, Quanta Technology LLC May 15, 2015

Uniquely critical infrastructure providing an "enabling function" U.S. Electric Grid Uniquely critical infrastructure providing an "enabling function" National Academy of Engineers: Top engineering achievement affecting the quality of life 10,000 power plants 150,000 miles of high-voltage transmission lines and 375,000 towers Millions of miles of lower-voltage distribution lines and 30M poles More than 12,000 substations 40 to 60 years old grid requires transformation to a modern grid Slide 2

Old Grid Slide 3 How to develop more redundant, less vulnerable, and safe grid to meet the energy needs of society?

Enabling Electric Transportation Modern Grid Electrical vehicles Smart Grid uses advanced technologies to improve the grid performance to meet the energy needs of society: Engaging Consumers Enhancing Efficiency Ensuring Reliability Enabling Renewables Enabling Electric Transportation

U.S. Outage Cost = $125 Billion/Year (DOE) Grid Resilience: Challenges and Opportunities Asset Management: Aging Infrastructure, Reliability, Grid Hardening – Weather and Security (Physical & Cyber) Distributed Resources, Microgrids, Electric Vehicles Demand Side Innovations Environmental Needs Plant Retirements and Natural Gas Usage and Electrical Interdependency Competitive Transmission U.S. Outage Cost = $125 Billion/Year (DOE) Complex grid structures require "Smart Grid" solutions Equipment with gunshot damage Slide 5

Grid Transformation Smart Grid Investments Transmission made smarter with enhanced monitoring, protection & control Distribution transformed with automation & feeder optimization Demand response w/smart meters Utility grade battery storage Enabling microgrids adoption, "behind the meter“ distributed energy resources, and Electrical Vehicle requires a robust, hybrid T&D grid – Grid connection required for reliability and market reach Smart Cities - How will electrical system help improve the livability, workability and sustainability Geothermal Biomass MSW/LFG Wind Solar Conventional hydropower 2000 2010 2020 2030 2040 2012 History Projections 600 500 400 300 200 100 Non-Hydro Renewable Sources Grow 3.2% Annually Game Changer – Solar Grows 7.5% Annually

Energy’s Critical Role in Smart Cities Smart meters on every home and building give residents and the utility invaluable information about energy use, leading to greater efficiency, improved reliability and cost savings. Alternative energy reduces the need for fossil-fuel generation. The communications network that connects smart meters can often be used for other city purposes. Visualization and analytics provide full situational awareness of what is going on with the electric power and gas systems. Source: ComEd Clearly defined interconnection standards make it easy for residents to plug solar and wind into the grid. Automation equipment can execute protection schemes in microseconds, minimizing outages. Automated outage management detects disturbances and isolates areas before they create a cascading blackout. Electrical Vehicles (EVs) reduce fossil fuel consumption and increase energy independence. They can fortify the grid and increase the integration of renewable energy

Building a Stronger, Smarter Grid What is Required? Reinforcing the transmission system to provide access to renewable resources Transformation into a modern grid with coordinated planning and operations and use of automation and communications Integrating new types of generation and new loads into the system Distributed and variable generation resources, storage, microgrids Demand response Electrical vehicles Slide 8

Smart Grid Highly Instrumented Advanced Sensors & Computing Example: 1,700 networked GPS-synchronized measurements, funded by DOE Smart Grid Investment Grants and private sector funds Source: North American Synchro- Phasor Initiative (NASPI) Slide 10

What Value Can Smart Grid Offer? 4/19/2017 What Value Can Smart Grid Offer? More resilient and more efficient grid: REDUCED OUTAGE COST U.S. Outage Cost = $125B/Year (DOE) Enhanced ability to ACCOMMODATE RENEWABLES, CUSTOMER GENERATION, MICROGRIDS Ability to handle ELECTRIC TRANSPORTATION NEW/BETTER SERVICES for consumers Seamless DEMAND RESPONSE OPTIONS and SYSTEM EFFICIENCY Opportunity to include CYBERSECURITY and DATA PRIVACY into architecture/ protocols • More resilient grid -- More data, hence much faster response to disturbances & recovery, potential avoidance • More efficient grid – More data, hence closer to optimal “dispatch” capability • Enhanced ability to accommodate variable resources (renewables), distribution-side generation, microgrids • Ability to handle and integrate electric transportation into the grid • Opportunity to integrate cybersecurity and data privacy into architecture/ protocols • Opportunity to create better services for consumers • Opportunity to seamlessly respond to demand profile changes and integrate demand response Slide 11

4/19/2017 How Congress Can Help Support regulatory policies for coordinated & consistent approach in simultaneously managing assets: Aging infrastructure, Grid hardening, and System reliability Development of regional planning and operational tools to more accurately forecast renewable resource, energy load, market price, and the availability of natural gas supply for generators Developing sensors and tools to monitor, protect and control the grid and prevent wide-spread blackouts System Reliability & Capability Sustainability & Business Goals Capital/O&M Budgets Aging Infrastructure Grid Hardening Holistic Asset Management • More resilient grid -- More data, hence much faster response to disturbances & recovery, potential avoidance • More efficient grid – More data, hence closer to optimal “dispatch” capability • Enhanced ability to accommodate variable resources (renewables), distribution-side generation, microgrids • Ability to handle and integrate electric transportation into the grid • Opportunity to integrate cybersecurity and data privacy into architecture/ protocols • Opportunity to create better services for consumers • Opportunity to seamlessly respond to demand profile changes and integrate demand response Slide 11

4/19/2017 How Congress Can Help Promote incentives for the development of new transmission Continue supporting power electronics and control applications for renewable generation, electrical vehicles, and other equipment Develop low-cost distributed energy storage technologies, microgrids, and demand response for integration of distributed generation Develop and support new types of generation and new uses of electricity for fuel and usage diversity Regulatory policy for connecting microgrids should support value creation and enable both incumbent utilities and energy service companies to develop it • More resilient grid -- More data, hence much faster response to disturbances & recovery, potential avoidance • More efficient grid – More data, hence closer to optimal “dispatch” capability • Enhanced ability to accommodate variable resources (renewables), distribution-side generation, microgrids • Ability to handle and integrate electric transportation into the grid • Opportunity to integrate cybersecurity and data privacy into architecture/ protocols • Opportunity to create better services for consumers • Opportunity to seamlessly respond to demand profile changes and integrate demand response Slide 11

4/19/2017 How Congress Can Help Improve grid communication and interoperability through timely development of Smart Grid standards and roadmaps Put selected standard development on a “fast-track” Address cyber security issues Develop an institutional infrastructure for testing and certification of products to be compliant with Smart Grid standards Resolve technical and jurisdictional issues associated with equipment and devices that operate across institutional, regulatory, and information architectural boundaries (e.g. grid spare parts) Support energy sector workforce training programs, apprenticeships and best practices, including military veterans transition • More resilient grid -- More data, hence much faster response to disturbances & recovery, potential avoidance • More efficient grid – More data, hence closer to optimal “dispatch” capability • Enhanced ability to accommodate variable resources (renewables), distribution-side generation, microgrids • Ability to handle and integrate electric transportation into the grid • Opportunity to integrate cybersecurity and data privacy into architecture/ protocols • Opportunity to create better services for consumers • Opportunity to seamlessly respond to demand profile changes and integrate demand response Slide 11