© 2007 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialT-Systems InternationalSmart Grid 1

Smart Grid

Utility Challenges and Telecomm Opportunities

Rick GeigerExecutive Director, Utilities & Smart Grid

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Service Providers and Electric Utilities

Business Model: CAPEX vs OPEX

Not an issue for Munis & Co-ops

Business Drivers – Voice & Data vs 120VAC

SLAs

Disaster Recovery

My customers - Who’s your retailer?

Not an issue for Munis & Co-ops

Technology Horizons

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Coverage – Always a Challenge

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Cooperatives

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Cooperatives

Are located in 80% of the nation’s counties

Are the largest electric utility network in the nation

Total more than 930 local systems in 47 states

Have 40 million member-owners

Distribute power over 2.4 million miles of line

Own $112 billion in generation, transmission, and distribution assets

Source: NRECA

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Public Power

Located in 49 of 50 States

2010 Community Owned Electric Utilities

Serving 45 million people

14% of US Electric Power

Source: APPA

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US Electricity Industry Statistics

Number of Electricity Providers% of Total

Publicly Owned Utilities 2,010 61.5%

Investor Owned Utilities 212 6.5%

Cooperatives 883 27.0%

Federal Power Agencies 9 0.3%

Power Marketers 153 4.7%

Source: Energy Information Administration

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Flexible tariffs cause changing demand patterns

More complex to predict

Climate change and energy efficiency goals

Standards and interoperability

Network security and reliability

Stimulus packages

Additional sales volume by electric plug-in vehicles

Economically store electricity

Innovation and regulation drive change in the utility industry

Unpredictable renewable supply sources

Distributed generation sources feeding into unmonitored grid areas

Changing Supply:Renewable Generation

ChangingDemand Patterns

Regulation/Compliance

NewOpportunities

Change Drivers

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Smart Grid:Transformation of an Industry

Distribution(Local Utility)

Network ControlCenter

Power Generation

Transmission(Utility)

Network ControlCenter

Federated Data Centers

Energy Information

Industrial Customer

Commercial Customer

Residential Customer

Distributed Generation Sources

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Utilities are challenged with a more complex operating environment

Intransparent build-up (geography & scale)

Significant increase in offtake

Integration of new applications

Change

Ch

alle

ng

es

Capacity

Commu-nication

Capabi-lities

Timing of feedin Moving load Increased information

requirements

Management of increased stochastic generation

Potential for storage & feedin

Technical specs defined outside utility industry

Competition for ownership of innovative efficiency solutions

Distributed Generation EV & Storage Energy Management

Smart Grid Challenges

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Utilities will respond along three dimensions in building the Smart Grid

Dimensions Requirements RationaleSG Building

BlocksReadiness

CapacityInfrastructure

Layer

Commu-nication

ICTLayer

CapabilitiesApplications

Layer

Adequate capacity Transition from

distribution focused to contribution capable

Today’s consumption supplied though no demand shifts included

Physical infrastruc-ture to accommodate complex load flows Basic system

status Creation of an

information rich and potentially real time operating environment

Current system highly reliable in “look and see” mode

Increased levels of uncertainty around system behavior

Electricity delivery Integration of new

infrastructure elements

Substitution of phy-sical with virtual capacity

Stable environment with limited need for short term action

Increased system stress through erratic offtake / feed-in

( )

( )

Available today Not available today

Smart Grid Building Blocks

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Business and regulatory requirements open new business opportuntities

InfrastructureLayer

ICTLayer

ApplicationsLayer

Supply Side Demand SideGrid Operation

Energy Storage

“Near-Time” Pricing

Self-Healing Grid

Micro Grids

SystemEngineering

Visualization & Prediction

Load Mgt. & Balancing

Advanced Grid Sens. & Contr.

Demand Response

SG Building Blocks

Smart Grid business opportunties for SPs

Smart Grid Opportunities

Substation Automation

V2G

Narrow- / Broadband Enablement

Data Integrity Management

Smart Meter

Building/Home Energy Mgmt

Web Services

Business Energy Mgt.

DG Integration Work Force

Mgt.

Comms for Vehiclesby 2020

Residential smart meters

Comms for new installations

Energy Management

Source: Booz & Company, Newton Energy Research, ABS Energy Research

Comms C&I smart meters

Application hosting

Network of substations

Plan, design, operate

Top Utilities: We can do it better

than SPs

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Strategic and architectural challenges: Will Utility/SP infrastructures converge?

Market Expectation

Utilities rolling-out Smart Metering

Strong regulatory and public pressue to deliver energy efficiency solutions

SP / Challenger under pressure to enable mass market broadband connectivity

Competition

Smart Grid as a hosted service

Utility and SP under pressure by declining retail margins

Renaissance of home automation services fueled by energy efficiency solutions (and renewable integration)

Utility and SP independently fighting for retail customer ownership

How to develop a communication infrastructure meeting the requirements of an integrated though unbundled utility value chain?

Could convergence of utility and SP networks enhance a joint value proposition?

What are the regulatory and legal implications?

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Way Forward: Developing the Vision for the converged infrastructure network

Develop a converged network position

– Outline an end-to-end Smart Grid solution

– Win-win value proposition and business models

Explore utility industry readiness

Consider a cross-industry Smart Grid initiative

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