Ali Vojdani - IEEE

Utility Integration Solutions, Inc.www.UISOL.com• Integration specialistof the utility industry• Leader in utilityindustry integrationbest practices &standards• Licensed softwarefor managingdemand responseUISOL Solution Center in Silicon Valley, CA2 Proprietary

DR Rewards• DR is critically important• To bridge the grim reserve margin picture in US (135 GW New Generation required,57 GW planned)• To avoid the unacceptable price volatility we see in wholesale markets today• To remedy the abysmal asset utilization in the utility industry• DR is a viable resource• E.g., 7000 sites representing 6 GW in PJM Interconnection today• Many customers are willing to participate• Aggregators have been willing and able to provide curtailment services• DR is economical• EG., BGE estimates that the capital cost of DR is at $165/kW; 3-4 times cheaperthan the cost of installing new peaking generation, which is around $600-800/kW.• Many other benefits, including• Green• National security• New jobs• Congestion management in grids• Protecting equipments in a SmartGrids3 Proprietary

DR Challenges• As a resource, DRis more difficult tomanage thancentral generation• Unless we getbetter atmanaging andautomating DR, itwill become thelimiting factor forDR growthKEYNo Significant DevelopmentEarly Stages of DevelopmentModerate DevelopmentFully DevelopedSource: UISOL Final Report submitted to California Energy Commission on Project No.500-01-043, DR-04-01, “California Demand Response Network, April 2005.--GAPS In DR*ECONOMIC ELEMENTSLow cost of participationSufficient level of economic benefitsIT ELEMENTSFlexible DR Business ArchitectureHighly Integrated IT Infrastructure for DRMARKET OPERATIONSBroad-base of DR programsConsistency of DR program offeringsUse of DR as a reliable power resourceScalability of DR ProgramsHigh penetration across customer classesVoluntary and default programsHigh level of customer awarenessPOLICY ELEMENTSActive market monitoring by regulatorsStandardized market rules & regulationsQuality assurance standards for DR services------------4 Proprietary

The Curse of Dimensionality• Dealing with millions ofdistributed resources wouldrequire a different level ofsophistication than we havetoday*• Some analysts caution thatthe impact of distributedresources on the utilityindustry could be analogousto the impact of personalcomputers on mainframecomputingIt takes a 1000,000 KW to get 1 GW*Most people know how to make a hamburger. Some may even be able to operate a mom and pop fast food joint. Very few can scale it as McDonald.5 Proprietary

DR Management TechnologyDRTransactionVolumeWhereWe Are TodayGapWhere WeNeed to BeSophisticationManualProcessesSemi-AutomatedProcessesTraditionalAutomationModernAutomationNext Generation:Dynamic DRM6 Proprietary

Lessons Learned in California• Beyond a certain level,manual processesbecomeunmanageable• Goal is to achieve“10x10” improvementsin DR performance• It is feasible toautomate DR end-toend with modernbusiness processintegrationtechnologies“A Major Step Forward for Implementation of Demand Response Programs in California, UISOL press release, 8/11/20067 Proprietary

Expected Process Automation BenefitsSource: Presentation of Pete Langbein of PJM at UIC2008, 9/16/2008• Quicker participation of DRresources in markets• Improved transparency for allparticipants• Reduce time and administrativecosts• Scalability for higher volume ofparticipation (number ofparticipants and number oftransaction per participant)• Simplify the process to providemore opportunity to participatefor small resourcesSee also www.uisol.com/new/news/uisol-to-implement-nextgeneration-demand-response-management-application-for-pjm/PJM Interconnection coordinates the movement ofelectricity through all or parts of Delaware, Illinois,Indiana, Kentucky, Maryland, Michigan, New Jersey,North Carolina, Ohio, Pennsylvania, Tennessee,Virginia, West Virginia and the District of Columbia.This service area has a population of about 51 millionand a peak demand of 144,644 megawatts.Source of statistocs and map: PJM.com8 Proprietary

Why is DR Management Complex?1. Large dimensionality of transaction management• E.G., ,PJM already has to deal with 7000 DR sites, compared with 2000 gen. sites2. DR Business Network is complex• Many entities are involved in the DR value chain• Many people at each entity• Many DR processes, many tasks• Many interfacing systems3. DR processes are new and evolving• Process maturity level 1 on a 1-5 scale• Processes are not documented, consistent, measured, or optimized• Processes are extending to residential customers with programmable communicatingthermostats (PCT), in home displays, and home area networks (HAN)• There is a shortage of experienced people• Standards (e.g., for Process and IT) are yet to be developed4. DR business rules change frequently• Need to keep up with the changes in the (often inflexible) IT applications• As an industry we are not used to rapid change5. Need visibility to maintain the integrity of DR, including• Audit trail (Who did What, When)• Measurement and verification (M&V) of DR to avoid gaming and ensure reliability9 Proprietary

DR Business Network Is ComplexExampleDRAggregatorEnergyCustomerUtilityDRCommunityISO/RTOMeter ServiceProviderEnergyServiceProviderCurtailmentServiceProviderMarketMonitor10 Proprietary

DR Business Network Need to Be IntegratedCustomerCollaboration(e.g.,RegistrationProcess)UtilityData Integration(e.g., CustomerInformation)AggregatorISOBusinessProcessIntegration(e.g., DemandBidProcessing)11 Proprietary

DR Touches Many Application InterfacesREGISTRATIONCommercialSystemsNetworkModelManagementMarket ManagementDataWarehouseEXTERNALTAGGINGE_TAGS for the DC line / Before DAM through end of ADJ Period?? / As neededEnergyManagementSettlement &BillingTransmissionRights Mgt13 Proprietary

Inflexible Systems Cannot Handle ChangeThe Graveyard of Stranded DR ApplicationsSee “California Demand Response Network”, Final Report on California Energy Commission Project No. 500-01-043, DR-04-01, April 2005.14 Proprietary

Need for Flexible Infrastructure• We need flexible DRapplications that canwithstand significant changesin DR tariffs and businessrules• It is often cheaper to buy anew flexible application thanto maintain an inflexible oneImpact of 1989 Loma Prieta Earthquakeon San Francisco Bay Bridge15 Proprietary

Implementing DR Enabling TechnologiesExample-A UtilityAMI NetworkAMI NetworkCollection EngineCollection SystemCustomerSelf ServiceAnalytics/BusinessIntelligenceMeter Data Management(MDM)CIS/BillingIVRISOHandheld &MobileExistingDatabase(e.g., MV90)SCADAOtherMonitoring/SensingDevices, PCTs, …System Management & Admin. ToolsApplication Interface AdaptersData Collection AdaptersReportsCalculation EngineValidation, Estimation, and EditingStorage(Configuration& Usage)MDM ApplicationsAggregationCustomer Baseline Load CalculationRevenue ProtectionAdvanced BillingConnect/DisconnectAMI Asset MgtCSR ToolsAMI Deployment SupportStandards-based Enterprise Service BusOMSOperationSystem Planning& Asset ManagementField Service/Work MgtGISFinance & AccountingDemand ResponseManagement(DRM)AggregatorsServiceProvidersCustomersDevices16 Proprietary

Integrating the DR Business NetworkDR BPMApplicationADR BPMDR ProcessDefinitions/Monitoring, Business RulesMeasurement,ControlDRInformationModelDR ProcessDefinitions/Monitoring, Business RulesMeasurement,ControlDRInformationModelAgent(Requestor)ApplicationBApplicationYAdapter*See also www.uisol.com/demand-response/Application ZDR BPMMonitoring,Measurement,ControlDR BusDRInformationModelDRMDR ProcessDefinitions/Business RulesTask Lists/In-BoxNotificationsAgent(Responsible)Agent(Approval)Other Agents(Substitution/Escalation)17 Proprietary

Demanding Flexibility From DR VendorsSmart Requirements SpecificationNeed to add “flexibility” as a key requirement tothe list of traditional requirements for:• Performance• Security• Usability• Portability• Availability• Scalability• Reliability18 Proprietary

Ensuring FlexibilityThe Flexibility Test• Need to add “flexibility test” to the list of traditional tests:• Functionality test• Availability test• Performance test• Security test• Volume test• Integration test• Flexibility test would be a predictor of change order costs,and should answer questions such as:• How fast and at what cost can you change an application?• Are small modules of business functions exposed as services, so that they can bereconnected?• How fast and at what cost can you change an interface?• While our industry has recognized the need for“interoperability testing”*, the need for “flexibility testing”has yet to be widely recognized.* See MultiSpeak.org19 Proprietary

Need to Be Proactive in Enabling DR• To enable growth in DR weneed to improve our DR• Processes• Systems• Organization/People• The best time to improve ourDR capability is before weare forced to• A good starting point is to• Assess where you are,• Where you need to be, and• Design a flexible DRTransformation Roadmapthat can bridge the gap20 Proprietary

Summary• A major challenge in the Intelligent Grid is integration and management of DR• DR management (DRM) is complex and unless we get much better at it, it willbecome the limiting factor in DR growth• To get better at DRM, we need to• Understand what DR processes are, assess/troubleshoot their performance, and comeup with a realistic DR Process Improvement Roadmap that we can successfullyexecute over time• Implement a Dynamic DRM Software that can automate and efficiently manage theDR business network• Design and execute a DR Organization Change Enablement Program to managethe people dimension• We need to follow a Smart Integration Approach to ensure the DR systems andprocesses are flexible and can easily incorporate the never ending changes inDR business rules• Request flexibility• Perform flexibility test• Build flexibility into interfaces• Meeting these challenges will not be easy but is worth it--there is no betteralternative21 Proprietary

References*• Building an infrastructure for demand response, PowerEconomics, Volume 5, Issue 9, October 2001.• California Demand Response Network, Distributech 2006.• How to Get More Response from Demand Response, theElectricity Journal, Vol 19, No. 8, Oct 2006.• The Missing Link-Every one is in favor of demandresponse, but little gets delivered when system operatorsneed it the most., Public Utilities Fortnightly, Special Editionon Demand Response, March 2007.• Smart Integration-The smart grid needs infrastructure that isdynamic and flexible, IEEE Power & Energy Magazine,November/December 2008*Authored/Co-authored by Ali Vojdani22 Proprietary

More Information• UISOL web site: http://UISOL.com• E-mail: AVojdani@UISOL.com• Tel: 925-939-044923 Proprietary

Speaker BioAli Vojdani is the CEO of UISOL. He has over 27 years of experience in theapplication of IT in the utility industry as part of his professional career atUISOL, Vitria Technology, Perot Systems, EPRI, PG&E, and McGill University.Ali has been involved in numerous business integration and transformationprojects in US, Canada, UK, and Australia. His work on improving resourcescheduling at PG&E became the finalist of the 1997 prestigious Frantz Edelmanaward for the best management science application world-wide.In 2004 Ali instigated the all new annual Utility Integration Conference (UIC)and has successfully chaired UIC for the last five years. He also regularlyconducts training workshops on Business Process Management (BPM) andDemand Response Management for utilities.Ali has been an evangelist for enabling Demand Response (DR) over the lastdecade. His work has resulted in the cutting edge software solution DRBizNetfor integrating the demand response business network.Dr. Vojdani has a Ph.D. in electrical engineering and has authored over 60technical publications.24 Proprietary