July 11, 2016 • Las Vegas

IoT Utility Day State of the Electric Utility Industry: What Does the Future Hold?

Karen Lefkowitz Vice President, Smart Grid & Technology, PEPCO HOLDINGS

2

State of the Electric Utility Industry

What Does the Future Hold? Presented by: Karen Lefkowitz, vice president, Smart Grid & Technology July 11, 2016

3

Pepco Holdings Quick Facts

§  Service territory: 8,340 square miles

§  Customers served •  Atlantic City Electric: –  547,000 – electric

•  Delmarva Power: –  515,000 – electric –  130,000 – natural gas

•  Pepco: –  842,000 – electric

§  Total population served: 5.4 million

As of 2/19/16

4

About Exelon

§  Nation’s leading competitive energy provider, with approximately 34,000 employees nationwide

§  Its mission is to be the leading diversified energy company – by providing reliable, clean, affordable and innovative energy products

§  Exelon works in every stage of the energy business •  Transmission and delivery •  Competitive energy sales •  Power generation

§  Exelon’s six utilities deliver electricity and natural gas to about 10 million customers in the Mid-Atlantic Region (Atlantic City Electric, BGE, Delmarva Power, PECO and Pepco) and northern Illinois (ComEd).

5

Your Grandfather’s Grid

§  Plan/construct for normal growth (3% - 10%) §  Ensure stable power quality §  Restore on failure

6

Traditional Customer Interactions & Impacts

§  Flip a switch §  Pay a bill §  Steady load growth = Modest rate increases §  Customer interest is generally very low

14,198

4,599

1,920 1,584

6

Facebook

PlayingSports

ReligiousAc7vity

Twi;er

Interac(ngwiththeiru(lity

7

Think Customer!

8

Distribution System of the Future

A system of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter.

Transactive Energy:

Source: Gridwise Alliance

9

Town Center Microgrid Project

10

New Grid Consumers

§  More engaged §  More demanding §  Self generating §  Consuming less

•  And we’re encouraging that!

11

Net Metering – A Partial Solution

§  Current Interval reads for an NEM Customer with AMI are measured hourly and aggregated into daily use.

§  The hourly data can give a better picture of the energy supplied.

§  Hourly data shows energy consumed when the solar system is not generating.

§  However, the transitions that occur on a minute by minute basis are not apparent.

-8

-6

-4

-2

0

2

4 Acct #: XXXXXXX016 (1/30/14)

12

Electricity Travels at the Speed of Light §  1 Second Data provides a clearer picture of the transactional nature of

DG §  This is for a 19 KW residential System §  While this larger residential PV system produces more than the load

much of the time when the sun is out, there are a number of times during the day: morning and evening, during cloud shear, or during high premise loading that still require power being supplied by the grid

§  For average sized systems (~5KW) this situation would be higher in both frequency and magnitude

S o l a r

L o a d

N E T

Energy Borrowed from the Grid

TotalSystemSize:19KW(AverageSystemSize5KW)

$-490.70

13

Germany’s Results

§  Sudden, significant increase in installed DER

§  Majority of customers support the ‘new normal’ §  Shutdown of nuclear units underway §  Startup of older coal-fired plants §  Led to:

§  Increased Cost §  Decreased Reliability §  Increased carbon output

14

Large Scale Renewable Energy - Germany

15

Large Scale Renewable Energy - US

16

PHI PV Integration Statistics

17

PHI Current Microgrid Projects – Chesapeake College

Solar Ties in at 25kV

Battery

Next Steps

18

245

240

235

230

225

220

Nodes TimeofDay

Volts

TimeofDayNodes

245

240

235

230

225

220

Volts

Without ENGO

With ENGO

Campus Microgrid Project Example

§  ENGO = Edge of Network Grid Optimizer §  Act as “shock-absorbers” for the grid §  Flattens the feeder voltage profile and ultimately relieve

operational burden from primary side assets §  Completely and autonomously injects reactive power to

control the secondary voltage to be equal to the set point voltage commanded by the Grid Edge Management System

New optimization devices may be necessary to manage voltage

19

The Future – Challenges To Be Met •  Distributed generation is here to stay and growing fast

•  High penetration solar, DR, battery storage and microgrids will present new challenges and opportunities

•  Volumetric pricing will not be sustainable.

•  The grid will likely encounter reduced stability, power quality and voltage issues, in the absence of continued investments

•  The grid will require increased monitoring and control along with expanded secure communications

•  Grid operations and control will rely on more and better integrated data

•  The Grid adds value for distributed resource capabilities

Utilities will need a new financial/regulatory model to withstand the impacts of distributed energy and energy efficiency

20

University of Maryland - WaterShed