Smart Grid Overview US Chamber of Commerce Kieran

Smart Grid Overview US Chamber of Commerce Kieran Mc. Loughlin Smart Grid Solution Leader Global Energy & Utility Industry November 5 th 2008 © Copyright IBM Corporation 2008

Agenda § § § 2 What is Smart Grid? Why is Smart Grid Happening? Utility Smart Grid Development, a Journey Investments in Smart Grids…Opportunities Questions © Copyright IBM Corporation 2008

The most important commodity for a utility to manage, other than electricity, is information. 3 © Copyright IBM Corporation 2008

What is Smart Grid? § At the highest level it is about the transformation, modernization, automation and digitalization of the Electricity Supply Chain § It is the Trojan Horse for change, for achieving a 21 st century intelligent electricity network needed to support and enable a 21 st century growing economy in an ever competitive global market § The term "smart grid" refers to the use of advanced communications technologies and modern computing capabilities. . (engineering & materials as well). . to upgrade the electric power grid, effectively making it more intelligent, enabling it to operate more reliably and efficiently, and allowing customers enhanced support, opportunities, and direct involvement in controlling power consumption. In the face of increasing electricity demands and concerns over the environment as well as problems with assuring operational efficiencies, smart grid technologies promise critical solutions for tackling national energy and environmental problems. For business and industry, smart grid solutions could be a boon 4 © Copyright IBM Corporation 2008

Smart Grid from an Information Perspective …Intelligent Utility Network It is the continuous sensing, information network which overlays and connects together a utility’s equipment, devices, systems, customers, partners and employees. It enables ‘ondemand’ access to data & information which is used to better manage, automate & optimize operations and planning processes throughout the utility, throughout the electricity supply chain – for the customer’s benefit 5 © Copyright IBM Corporation 2008

The advancement of network automation, communications and information technologies is leading a transformation in the electricity supply chain Impact: • Standards • Management • Communications • Security • Transparency • Scale • Price Performance Central Distributed Networked 6 © Copyright IBM Corporation 2008

Why is Smart Grid happening? Regulatory & Policy Financial Mkts Expectations Customer Demand & Expectations Alternate Energy Distributed Generation 7 Environment Security Energy / Fuel Competition & Cost Aging Infrastructure Changing Workforce © Copyright IBM Corporation 2008

Smart Grid is Global. . China ranks #1 in geographical breakdown of electric power T&D investment forecast 2005 -2030 1. 6 USD TR While Chinese T&D infrastructure investment mainly focuses on new installations for power stations, substations, power grids, etc, European and US expenditure on T&D networks 1. 4 1. 2 1. 0 0. 8 0. 6 0. 4 0. 2 N. America Europe S. Asia E. Asia Distribution Africa Other Developed China Frontier S. America Middle East Russia Transmission Economies grow on the back of a reliable electricity supply chain Source: International Energy Agency 8 © Copyright IBM Corporation 2008

The Development of Smart Grid is a Journey As-Is Intermediate To-Be/Vision DOMAIN TO DOMAIN INTEROPERABILITY ENTERPRISE INTEROPERABILITY §Vertical Integration §Minimal Transverse Integration §Vertical Integration §Transverse Integration between Domains §Have to overcome adoption of emerging information standards & data access issues §Open data access environment §Interoperability standards §Utility vendors on common standards §Integration middleware is ‘Smart’ & services based Smart Grid Maturity Level 1 & 2 Smart Grid Maturity Level 3 DOMAIN SILOS INFORMATION SILOS Smart Grid Maturity Level 4 & 5 The potential value of the Information which Smart Grids can generate is being explored in pieces from the bottom up 9 © Copyright IBM Corporation 2008

The Smart Grid Vision. Interoperability & Information Exchange Animated SGMM L 5 Innovating & Optimizing along the Supply Chain SGMM L 4 Optimizing the Enterprise SGMM L 3 Optimize => Analyze Grid Operations SGMM L 3 Analyze Work & Asset Management Optimize And/Or Customer Operations And/Or Estimated Information Measured Manual Processes Automated Limited Communications Widespread SGMM L 1/L 2 Invest in Domain Infrastructure Analyze Collect Transport data to control Field Measure/ Monitor SGMM L 0 Silos Collect Monitor SGMM L 3 Domain to Domain Integration. Optimizing Domains SGMM = Smart Grid Maturity Model Utility Information is being designed from the top down 10 © Copyright IBM Corporation 2008

Smart Grid Roadmap Smart Grid Initiatives Smart Grid Roadmap Initiate Strategize Development Launch Smart Grid Design Initiatives Solution Macro Design Solution Micro Design Build Solution Build & Test Deploy Run Solution Acceptance Deployment Operation & & Pilot & Rollout Maintenance Establish PMO Component Business Model Strategic Roadmap Smart Grid Development Iterative Process Initiative A Initiative B Initiative Maturity Model X Proof of Concepts Establish & Maintain Governance Model 11 © 2008 IBM Corporation

Utilities are investing in many technologies…. process automation, real-time monitoring & control systems etc to achieve greater reliability and efficiency… Internet Information & Control systems Integration Automation Analytics tools Distributed Generation Automation and Digitalization EV & Hybrids Energy Storage Data & Process Modelling Smart sensors Equipment Smart meters ICT networks 12 Materials © Copyright IBM Corporation 2008

Developing the Customer Domain, Market Opportunity Distributed Generation & Storage 13 Hybrid Vehicles ©

Developing the Grid Operations Domain, Market Opportunity Distributed Generation & Storage 14 © Copyright

Developing the Work & Asset Domain, Market Opportunity Distributed Generation & Storage 15 ©

Optimizing the Utility, Optimizing the Electricity Supply Chain New Business Models, New Products, New Offerings Back Office Systems Customer Information Systems Meter Data Management Systems Financial Management Systems HR Management Systems Account /Billing Systems Business Intelligence External Information Systems Services Purchasing Inventory Systems IT IT IT Network Services Networks Services Communications Networks Services IT Networks Analytics Applications Management Services Operations Support Systems Call Management Systems Utility Data Model Framework BI/Analytics Framework Planning & Design Applications Geographical Information Systems Operations Analysis Tools Demand Side Management Systems Outage Management System Field Device Management Services Asset MRO Management Systems Work Management Systems Common infrastructure: Communications, IT, Security, Standards, BI/Analytics Framework, Network Monitoring, Applications, Data sources, Data models, Services, Tools, timing, portals Operations Frontline Systems Customer Portal Meter Data Collection Engine Transmission Management Systems Distribution Management Distribution Systems Management Systems Equip Condition Monitoring Mobile Data Systems Account for Geospatial Distribution, Time Scale Distribution, Intelligence Distribution Communications Networks, Firewall & Security Services Field Based Systems Field Based Devices 16 Customer Premise AMI Network Distributed Generation & Storage Substation Devices Equipment Monitoring Grid Devices Assets Mobile Field Force © 2008 IBM Corporation

Conclusions § Smart Grid is the Transformation of the Electric Utility Industry and Electricity Supply Chain § Electricity is a precious commodity which has been taken for granted in the US § Alignment of Drivers …Social, Economic, Competitive and Technical § There are opportunities all along Smart Grid development journey § ‘Do nothing’ is not an option 17 © 2008 IBM Corporation