West Virginia Smart Grid Implementation Plan Costs, Benefits, and Roadmap Smart Grid Interoperability Summit June 16, 2010 Toronto, Canada

2 Today’s Discussion What is the 21 st Century telling us? –Asset utilization is low on power system West Virginia Smart Grid Implementation Plan –High outages and coal-fired generation Results for West Virginia –5:1 benefit-to-cost to implement Smart Grid Key Lessons for the State and the Nation –Portion of capital can be used for Smart Grid 2

What is the 21 st Century Telling Us?

4 From the 20 th to the 21 st Century Substantial Increase in Consumer Involvement Generation 47% 17,342 units Transmission 43% 164,000 miles Distribution 34% 3 million miles Consumer Systems <1% 12.3 M DG 500 wind parks 50 solar parks 500 wind parks 50 solar parks 5,000 distributed wind 5,000 utility solar 5,000 distributed wind 5,000 utility solar 2 M architectural wind 5 M building solar 2 M architectural wind 5 M building solar 25 M residential solar 1 M PHEV/PEV 10 M PHEV/PEV 50 M PHEV/PEV 100,000 Buildings as PP 4

5 Sea Change in the Network Consumer engagement with resources to solve power issues locally Two-way power flow in Distribution As prices increase, local renewables will increase in residential, commercial, and industrial Imperative to transform from passive to active control in Distribution New ways for Distribution to become a Transmission resource

6 Smart Grid Characteristics The Smart Grid is “transactive” and will: Enable active participation by consumers Accommodate all generation and storage options Enable new products, services and markets Provide power quality for the digital economy Optimize asset utilization and operate efficiently Anticipate & respond to system disturbances (self-heal) Operate resiliently against attack and natural disaster Updated 02/25/2008 …the enabler

7 Interoperability Challenges Cyber and interoperability standards Merging of legacy and Smart Grid components Technology obsolescence Network congestion Integration of variety of technologies/vendors –Communications, sensors, data transmission Data management Privacy Two-way communications and power flow Updated 02/25/2008

West Virginia Smart Grid Implementation Plan (WV SGIP) If you come to a fork in the road, take it. - Yogi Berra

9 West Virginia Smart Grid Implementation Plan Address the role of coal in Smart Grid Support economic development in State of West Virginia Only state-wide Smart Grid implementation plan completed Only second Smart Grid study to be published in the nation $540K project jointly funded by NETL, RDS, Allegheny Power, AEP, State of West Virginia, WVU, and DOE OE Results describe the approach and value proposition of implementing Smart Grid in West Virginia Cost & benefit analysis compare the state of current electricity grid and future Smart Grid in West Virginia

10 WV SGIP Process Updated 02/25/2008

11 Key Facts About West Virginia 991,000 electric customers (142,000 commercial and industrial) 16,500 MW of generation (90% coal-fired & 90MWh) Over 47,000 miles of distribution circuits 5,900 miles of transmission lines 58M MWh traded outside the state 32M MWh used inside the state AEP and Allegheny Energy serve 98% of the customers SAIDI (with storms) = 439 min/customer/yr National Avg SAIDI= 120 min/customer/yr SAIFI = 1.52 Storm SAIFI = 0.45 NOx = 157K T/yr SOx = 456K T/yr CO2 = 87M T/yr Updated 02/25/2008

12 Generation Capacity

13 Principal Characteristics Smart Grid Maturity Matrix Evaluation Updated 02/25/2008 Current State Future State WV Smart Grid As-Is Principal Characteristics Aggregate Score

Final Results

15 Proposed West Virginia Smart Grid Solutions SolutionScope Advanced Meter Infrastructure (AMI) All residential, commercial and industrial Customers represented by 998,317 meters IT Integration (IT) A CIS Upgrade to accommodate AMI and DR functionality & Outage Management Demand Response (DR) The aggregated sum of 104 MW of DR from Residential, Commercial and Industrial Customers Distribution Management System (DMS) The automated fault clearing & restoration of service, circuit monitoring and control of the Distribution System to include 707 circuits of 1107 total circuits Distributed Energy Resources (DER) 100MW of Base Generation, 800 MW of Peak Generation, 250 MW of Advanced Storage and 100 MW of Wind Resources all capable of being dispatched on demand

16 Important Distinctions for WV Reductions in WV consumption go to exporting more energy –104MW of DR, doesn’t necessarily mean a reduction of generation. It likely means 104MW of increased export. –More efficient delivery system (reduced line losses) means more export. Benefits from reduced WV outages is higher than most states –Higher outage parameters (number and duration) are the overriding benefit potential of a WV Smart Grid Updated 02/25/2008

17 WV Smart Grid Costs & Benefits PV 20-yr Cost and Benefits ($M) SolutionCostBenefits AMI$399$1,649 IT$170$1,308 DR$22$1,091 DMS$454$3,288 DER$832$5,289 Total$1,878$12,625 Benefit to Cost Ratio for West Virginia 5:1 Benefit to Cost Ratio for San Diego 6:1 Benefit to Cost Ratio for US (EPRI, 2004) 4:1 to 5:1

18 WV Benefits by Beneficiary PV 20-yr Benefits by Beneficiaries ($M) SolutionConsumerOperationalWV SocietyUS Society AMI$630$439$308$271 IT$563$136$326$283 DR$23$614$240$214 DMS$2,909$73$303$2 DER$3,368$2$301$1,618 Total$7,493$1,263$1,479$2,389

19 WV Annual Benefits ($M) Key Success Factors BenefitsAnnual Benefits ($M) (All Beneficiaries) ReliabilityReduced Consumer Losses$898 Reduce Power Quality Events$131 EconomicReduce Price of Electricity$399 Job Creation$215 Consumer Sales of DER Resources$175 Increased Energy Sales as Exports$7 Reduced Transmission Congestion$1 Increased Transportation Fuels Business$5 Consumer Conservation$20 Operational Savings$194 EnvironmentalReduced Emissions$7 Security Reduced Blackout Probability & Dependence on Foreign Oil $13 SafetyReduce Hazard Exposure$1

20 Total Benefits & Cost Racking

21 Racking Costs & Benefits by Solution

22 Implementation Plan Updated 02/25/2008

23 Comparing Business As Usual to the Smart Grid Plan Year $ Millions

Key Lessons for West Virginia and the Nation

25 Coal and Smart Grid Study Areas Baseload coal becomes larger fraction of generation Distributed coal enables high penetration of intermittent renewables Potential for coal-CHP applications Sensitivity analyses Poly-fuel and poly-products, shift in generation mix, impact of EVs, impact of utility storage, impact of proposed carbon and renewable energy legislation Updated 02/25/2008

26 Conclusions Implementing a Smart Grid will: –Radically improve system reliability –Lower the carbon footprint –Support a better sustainable business climate –Generate benefits beyond the borders WV “numbers” (20-yr present value) –~ 1 million meters –Total Smart Grid Cost - ~ $1.9B –Total Smart Grid Benefit - ~ $10B –Benefit Cost Ratio: 5:1 A Smart Grid can be implemented with a portion of the business as usual (BAU) 10-year capital plan. A WV Smart Grid benefits the regional market (others outside the state benefit greatly)

27 For More Information 27 For additional Information: Steve Bossart Director, Integrated Electric Power Systems Office of Systems Analysis and Planning National Energy Technology Laboratory