Presentation at Smart Grids Conference Salzburg, Austria, May 2009

1. Smart Grids in the US
Smart Grids in the US
and PV‐Grid Integration
Smart Grids Conference
Salzburg 2009
May 14, 2009
Navigant Consulting, Inc.
77 South Bedford Street
Burlington, MA 01803
©2009 Navigant Consulting, Inc. (781) 270‐8303
www.navigantconsulting.com

2. Navigant Consulting’s Energy Practice
Navigant Consulting, Inc. (NCI) is a specialized consulting firm known
globally for its emerging energy technology and strategy expertise.
Navigant Consulting
Navigant Consulting Energy Practice
Energy Practice
• Publicly traded Business
Power Systems, Emerging
since 1996 Markets and
Planning &
Technologies &
g
(NYSE: NCI)
(NYSE NCI) Performance
Pe fo a e
Pricing Energy Efficiency
• 2008 revenues ‐ Improvement
$810 million
• 42 offices globally
Clean Energy and Smart Grids
Visioning Valuation and Planning and
and Strategy Business Case Implementation
©2009 Navigant Consulting, Inc. 1

3. Agenda
1 Evolution of Smart Grids in the US
2 PV Integration with Smart Grids
©2009 Navigant Consulting, Inc. 2

4. Agenda
1 Evolution of Smart Grids in the US
2 PV Integration with Smart Grids
©2009 Navigant Consulting, Inc. 3

5. Drivers of US Smart Grids
Forces including customer involvement, energy reliability and climate
change are driving the evolution of the Smart Grid.
Smart Grids in the US
Energy Reliability
Customer Involvement Climate Change
and Security
• Mo e a d bette
More and better • Re e able e e y
Renewable energy • Po e uality to
Power quality to
information for utilities, integration support the future
customers and energy • New end‐use products economy
service providers and services that • A resilient electric
• Customers as energy consume less fossil‐ power system to
partners based energy withstand and recover
• New energy products • More efficient delivery from natural disasters
and services system
y and attack
©2009 Navigant Consulting, Inc. 4

6. Key Observations and Trends
Several factors are influencing the evolution of the Smart Grid in the
United States.
Evolutionary Factors
y Key Observations and Trends
y
• Utilities are seeking regulatory security for recovery of Smart Grid
Regulatory/
investments
Investment
• Some utilities are waiting for recovery before implementing any
Recovery
y
technology, others are experimenting first
technology others are experimenting first
• Standards bodies are racing to keep up with leading utilities and
Standards the vendors they have selected
Development • New models are being employed to keep pace with the changes in
technology
• Value analyses and business cases are starting to consider more
Value complex benefits for multiple stakeholder groups
Clarification • Companies are beginning to consider new approaches to evaluating
Companies are beginning to consider new approaches to evaluating
investments in system technologies
The Federal • Grants will support deployment of Smart Grid technologies and
Stimulus
Stimulus systems
Package • Demonstrations will help explore advanced functionality
©2009 Navigant Consulting, Inc. 5

7. Smart Grid Deployments
Utilities across North America are engaged in a number of pilots and
system implementations.
eployment
Technology Smart Grid
Implementation Implementation
Full De
Scale
on
Demonstratio
S
Technology Pilot Integrated Pilot
Pilot/D
Individual Technology Integrated Systems
Scope
©2009 Navigant Consulting, Inc. 6

8. Government Activity and Support
With $4.5 B in funding support, the Federal Stimulus package will be
an unprecedented driver for Smart Grids development in the US.
American Recovery and
Reinvestment Act
• $4.5 B in federal
investment for Smart
State Initiatives
State Initiatives Grid development
• Smart Grid
• California Investment Grant
• Pennsylvania Program
• Illinois • Smart Grid
• Mi hi a
Michigan Government
G t Demonstrations
Activity
Research and
Development
NARUC‐FERC Smart Grid Collaborative
©2009 Navigant Consulting, Inc. 7

9. Agenda
1 Evolution of Smart Grids in the US
2 PV Integration with Smart Grids
©2009 Navigant Consulting, Inc. 8

10. Integrating PV with Smart Grids
Navigant Consulting conducted a large multi‐client study to examine
the opportunities created by integrating PV with Smart Grids.
Does PV‐Smart Grid :
• Enable higher penetration of
PV? Smart Grid
PV Drivers
• Help PV provide value for the
Help PV provide value for the Drivers
grid?
• Create new business
opportunities?
©2009 Navigant Consulting, Inc. 9

11. Smart Grid‐PV Framework
Smart Grid systems support better communications and control
between distributed resources and the utility distribution system.
AMI facilitates communications
between utility information
systems and PV inverters
Information Flow
Inverter
Power Electrical Utility
Smart
Service AMI Information
Control Meter
Panel Systems
Operator Interface
Power Flow
Load Utility
Energy Storage Circuits DA Distribution
(ES) System
DA helps manage
Demand DR curtails small amounts
ES provides input to feeder voltage and
Response of customer load for short
inverter to compensate for accommodate changing
(DR) periods of time (<2 hrs)
PV variability (<8 hrs) power flow
PV system Smart Grid plus DR and ES Functionality Electrical System Components
©2009 Navigant Consulting, Inc. 10

12. Smart Grid Enables More PV on Distribution Feeders
The Smart Grid enables higher penetrations of PV by addressing key
technical challenges.
Can the PV‐Smart Grid enable higher penetrations of PV?
Can the PV‐Smart Grid enable higher penetrations of PV?
• Barriers to high penetration of PV include:
− Technical T&D challenges
g
− Communications challenges
− Regulatory and business model challenges
• Th S
The Smart Grid addresses key technical T&D challenges
t G id dd k t h i l T&D h ll
• By addressing the technical issues will allow utilities to accept
more PV on distribution feeders without compromising
operating performance and service quality
ti f d i lit
Yes. Smart Grid could support more PV on distribution feeders.
©2009 Navigant Consulting, Inc. 11

13. Increased Distributed PV Penetration
NCI estimates that rooftop PV penetration could be significantly higher
by 2020 as a result of addressing T&D barriers with Smart Grid.
The Smart Grid Enables Cumulative Installed Capacity
p y
Higher Penetration of PV Rooftop PV
• Addressing technical challenges 20,000
could result in:
• hi h
higher net metering caps
t t i 16,000
16 000
• better interconnection
MWpDC
12,000
standards and processes
• more prevalent time of use
p
M
8,000
8 000
tariff options
• These changes simplify 4,000
interconnection of PV and improve
its economics, increasing the
its economics increasing the 0
projected installed capacity by over 2010 2015 2020
60% by 2020. Rooftop PV Penetration without Smart Grid
Rooftop PV with Smart Grid
©2009 Navigant Consulting, Inc. 12

14. High Penetrations of PV Adds New Value
Distributed PV can provide benefits in key areas. Combining this
resource with energy storage enhances its value.
Can the PV‐Smart Grid help PV provide value for the grid?
Can the PV Smart Grid help PV provide value for the grid?
• The greatest value of PV is derived from avoiding central
generating capacity and avoided energy costs
• Energy storage is a key for enhancing the value of PV in a Smart
Grid context
• When concentrated, PV can provide benefits related to grid
e o e ae , a p o i e e e i ea e og i
optimization
• PV is cost effective assuming continuation of rebates and ITC
credits however, the incremental value of Smart Grid is not
credits – however, the incremental value of Smart Grid is not
enough to overcome the loss of incentives
Yes. PV in high penetrations can provide grid benefits.
©2009 Navigant Consulting, Inc. 13

15. Most Promising Areas of Opportunity
NCI identified the three most promising areas of business
opportunity created by the PV‐Smart Grid.
Spinning
S i i
T&D Capital Reliability
Reserve
Deferral 3%
3%
3% Power Quality
Emissions 1%
Reductions
3%
Grid Optimization
Grid Optimization
Coordinated control of PV inverters,
primarily for regulating feeder
voltage, may also provide utility or
Central others ability to trip PV off in an
Generation active mode
Capacity
Deferral
28% Central
Generation
Energy Offset
59%
Smart Capacity Firming
Meet end‐use energy demand by
coordinating on‐site PV and energy DG PV Power Plant
storage with demand response and Aggregate distributed PV systems
potentially coordinate net end‐use across area or region into a reliable
demand with utility requirements
d d ith tilit i t and predictable energy resource
d di t bl
©2009 Navigant Consulting, Inc. 14

16. Unlocking Value Could Create New Business Opportunities
By leveraging the Smart Grid and high penetrations of distributed
PV, new opportunities to unlock value can be created.
Can the PV‐Smart Grid create new business opportunities?
Can the PV Smart Grid create new business opportunities?
• The analysis reveals three main areas for new value:
• Deferred/avoided energy and capacity from traditional
/ gy p y
generation
• Smart capacity firming by combining PV with energy storage
• Grid optimization through coordinated control of PV
Grid optimization through coordinated control of PV
inverters
• Tapping this value will require enhancements to technology,
policy and business models
policy and business models
Yes. PV‐Smart Grid could create new business opportunities.
©2009 Navigant Consulting, Inc. 15

17. Enhancements to Achieve Benefits
Achieving the benefits highlighted in the study requires
enhancement of technology, policy and business models.
Technology Policy Business Models
Business Models
• Technical/business • Eligibility of • Tariffs and pricing
requirements for integrated mechanisms that
coordination of
di i f PV/energy storage
PV/ monetize the
i h
AMI and PV systems for benefits provided
• Functional state/federal by distributed PV
requirements for
f rebates and
rebates and •S
Service offerings to
ff
leveraging PV as a Investment Tax facilitate
grid resource Credits participation of PV
• Modification of
Modification of as a grid resource
as a grid resource
technical standards
(e.g., IEEE 1547) to
allow PV inverters
to provide grid
support
©2009 Navigant Consulting, Inc. 16

18. Contact Information
Forrest Small
Director, Energy Practice
Burlington, MA 01803
Burlington MA 01803
+1 781‐270‐8303
Forrest.Small@navigantconsulting.com
©2009 Navigant Consulting, Inc. 17