June 29, 2009

“Smart Grid, Demand Response & Consumers”

NASUCA – Boston 2009

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Agenda

• EnerNOC Overview

• What is the “Smart Grid”?

• The Smart Grid’s First “Killer App”: Demand Response

• Making the Smart Grid a Reality: What will it take?

EnerNOC Overview

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What is EnerNOC?

- Big

Largest Commercial & Industrial Demand Response Provider in North America, with more than 3,000 MW under management from over 2,000 end-use customers across more than 5,000 commercial and industrial sites.

- Experienced

EnerNOC is active in every major electric market in North America with DR programs and also has bilateral relationships with regulated utilities throughout the United States.

- Thought Leader

EnerNOC has received two US Patents for the aggregation of distributed energy and generation resources. We are active at NAESB, NERC and NIST in setting standards for M&V that ensure consumers get what they are paying for.

- Smart Grid Operator

EnerNOC operates its own “Smart Grid” connecting its 5,000+ sites across the United States and Canada to its Network Operation Centers in Boston and San Francisco.

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EnerNOC Demand Response

EnerNOC Office

• ISO-New England (ISO-NE) • PJM Interconnection (PJM)• New York ISO (NYISO) • Ontario Power Authority (OPA)• Electric Reliability Council of Texas (ERCOT)

PROGRAMS IN RESTRUCTURED MARKETS

BILATERAL PROGRAMS – REGULATED UTILITIES

Burlington Electric Department (VT)

10 MW, 4 year contract

Idaho Power 65 MW, 5 year contract

Pacific Gas & Electric 40 MW, 5 year contract

Public Service Company of New Mexico

30 MW, 10 year contract

Salt River Project 50 MW, 3 year contract

San Diego Gas & Electric25 MW, 10 year contract

25 MW expansion (pending regulatory approval)

Southern California Edison

40 MW, 2 year contract

Tampa Electric Company 35 MW, 4 year contract

Tennessee Valley Authority

110 MW, 3 year contract

Xcel Energy (Colorado) 44 MW, 8 year contract

EnerNOC’s Demand Response Footprint

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What is the “Smart Grid”?

A Useful Analogy

- What is the Internet?

- Is it the network switches, server farms, and fiber optic cables?

Or does the Internet, and the value it provides, come from the applications that sit on top of the enabling infrastructure?

The Internet’s “Killer Apps”: email, social networking, the World Wide Web

“Knowledge is Power” – Sir. Francis Bacon

The Smart Grid is ultimately about information – knowledge – but the true value – or power - of that knowledge lies in how it can be used.

The Smart Grid can be a vehicle to hugely empower consumers

PROVIDED

• It allows customers, or those they designate, to timely and directly access their information

• It prevents unauthorized parties from doing so – the systems are secure

• It provides an open foundation on which to provide services – that is, it is based on open, non-proprietary protocols, as the Internet is

The Smart Grid is not AMI

- Advanced Meters and the Infrastructure that connects them are not inherently “smart”

- The Smart Grid is more than meters and wires

- Smart Meters and AMI enable “smart” applications

- It is the applications that provide the real value- Demand Response / Price Responsive Load through “smart” rates

- Energy Management

- Grid Management

As with the Internet, it is the applications we haven’t thought of yet, that will probably provide the most value to consumers

The Smart Grid’s First “Killer App”:Demand Response

“Demand response is clearly the ‘killer application’ of the smart grid.”

- FERC Commissioner Jon Wellinghoff

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C&I Demand Response – The First “Killer App”

- Most DR today isn’t “smart” and comes in the form of Interruptible Tariffs (“Press and Pray”) and residential Direct Load Control, with little to no real-time visibility.

- Aggregators like EnerNOC have enabled next-generation demand response without waiting for AMI/Smart Grid deployments – we make existing meters “smarter” and operate our own “smart grid.”

- Post AMI deployment, there is still a crucial role for an Aggregator. C&I demand response will never be plug & play:

– ZigBee chips may allow DLC for refrigerators and washing machines in the home, but that approach won’t work for C&I loads.

– If a meter cannot be successfully attached to loads, its communication and/or control functionality provides limited benefit.

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*As of 9/30/08

EnerNOC’s DR Technology

Network Operations Center (NOC)

Our two NOCs, staffed 24x7x365,

feature advanced technology and

specialized staff to ensure that load

reductions happen quickly, efficiently,

and consistently for both the utility

and end user.

EnerNOC Site Server (ESS)

The ESS is a gateway device that

establishes communication with sites in

our network and provides near-real time

visibility into end-user energy

consumption. The ESS also allows the

NOC to remotely curtail loads in order to

deliver demand response capacity.

EnerNOC has invested millions in its highly-scalable technology platform, which provides a foundation for consistent and reliable DR event performance.

PowerTrak®

EnerNOC’s web-based energy

management platform, PowerTrak,

monitors energy consumption and

enables end-user load control.

PowerTrak also provides end-users with

a web portal and utilities with the ability

to view load reductions during demand

response events.

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Why is Demand Response Important?

Annual Energy Demand

50%

100%

Winter Spring Summer Fall

75%

90%

25%

In 2008, 10% of New England’s peak demand occurred in

46 hours.*

* EnerNOC Analysis of ISO New England market data: http://www.iso-ne.com/markets/hstdata/znl_info/hourly/2008_smd_hourly.xls.

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Demand Response Benefits Ratepayers

• ISO-New England: Electricity Costs White Paper (2006)

– Reducing electricity use by 5% during peak times will save consumers $580 million per year

• Brattle Group: Quantifying Demand Response Benefits in PJM (2007)

– $138-281 Million of system benefits to PJM if load curtailed 3% during top 20 5-hour price blocks of 2005

• Summit Blue: Demand Response Resources Valuation and Market Analysis (2006)

– Forecast: Demand response will save $892 million in capacity charges over next 20 years (present value, 2004 $)

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What Do We Do? - Demand Response Actions

Curtailment Self-Generation

Examples of Processes that EnerNOC Controls

Air handlersAnti-sweat heatersChiller controlChilled water systems Defrost elementsElevators    EscalatorsExternal lightingExternal water features HVAC systems

Internal lightingIrrigation pumps MotorsOutside signageParking lot lightingProduction equipment Processing linesPool pumps / heatersRefrigeration systemsWater heating

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Where Do We Do It? – Typical Providers

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0% 50% 100% 150%

How Do We Do It - Aggregation

Customer 1

Customer 2

Customer 3

Customer 4

100% RISK 0% RISK

Customer 8

Customer 9

Customer 10

Customer 11

Customer 12

Customer 13

Customer 14

Customer 5

Customer 6

Customer 7

Customer 15

Customer 16

UtilityEnerNOC

Portfolio Management is a key component of this “Killer App,” allowing participation from

end-users who are too small to directly interface with a market or utility.

0% RISK

0% 50% 100% 150% 0% 50% 100% 150%

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How Do We Do It - Performance Coaching

4/23/09 (12:12) tatkinson@enernoc.comBill will make sure his team shuts everything down. I will call him back in 10 minutes with an update.4/23/09 (12:26) tatkinson@enernoc.comCalled Bill again to indicate that they are making progress as of 1:20 reading, but still not all the way there. He is on it with his team, and he apologized that “they weren’t on the ball at 12pm.”

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Demand Response Benefits to Consumers

Revenue Community Environment

Performance coaching, coupled with portfolio management allows Aggregators like EnerNOC to guarantee performance to utilities and ISOs/RTOs without penalizing participating customers. Reliability is maintained and expensive and dirty new generation is avoided.

Making the Smart Grid a Reality:

What will it take?

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Making the Smart Grid a Reality: What will it take?

• Customer/Agent access to meter data.– Customers need to own their own information and be able to access it on their

own terms

• Interoperability and Open Standards.– The Smart Grid must be a platform that allows innovators to innovate

• Smart Rates– Information is useless if it is not actionable

• Proper incentives.- The enabling technology may be present, but without smart policies,

disincentives still exist.

- Policies are needed that level the playing field between DR and supply-side investments.

- Decoupling addresses some disincentives associated with DSM, but mostly in terms of energy efficiency.

- Carrots appear to work better than sticks at motivating changes in utility behavior.

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Energy Network Operations Center

Aaron Breidenbaugh, Senior Manager of Regulatory Affairs and Public Policy617-224-9918 abreidenbaugh@enernoc.com