IBM - Empowering the Consumer

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Let’s Build a Smarter Planet: Energy and Utilities– Empowering the Consumer:

Let’s Build a Smarter Planet: Energy and Utilities– Empowering the Consumer <%savo.user.displayname%> - <%savo.user.title%> <%Date%>

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2 The world is smaller and flatter.

The reality of living in a globally integrated world is upon us.:

3 The reality of living in a globally integrated world is upon us. Global financial crisis has had lasting impacts on the overall market. Volatility in price and demand for energy worldwide. Growing concern about the effects of climate change. Increasingly empowered and interconnected consumers. The world is connected: economically, socially and technically. 3

The need for progress is clear.:

4 The need for progress is clear. Proportion of worldwide CO 2 emissions created by power generation, the largest man-made source. 1/4 Projected growth in worldwide energy demand by 2030. 36.8% Kilowatt-hours wasted each year by consumers due to insufficient power usage information. 170 billion

The opportunity for progress is clear.:

5 The opportunity for progress is clear. Smart grid technology has the potential to reduce the power sector’s CO 2 emissions 14% by 2020. 14% lower emissions In the Pacific Northwest National Laboratory Smart Grid project, consumers decreased their overall peak load on the grid by 15% when offered the opportunity to save an average of 10% on their electricity bills. 15% reduction in peak loads The U.S. could save up to $70 billion in infrastructure spending over the next 20 years through better management of existing assets. $70 billion

The way the world works is changing—and leaders must lead through the unknown. :

6 The way the world works is changing—and leaders must lead through the unknown. Drop in utilities CEOs’ confidence in their organizations’ ability to manage change. 7 in 10 Utilities CEOs anticipate turbulent change and bold moves. 19 % CHANGE NEEDED 14% 2008 19 % 2006 2008 17% 69% PAST CHANGE SUCCESS 6% 21% 55% 21% No/limited Change Moderate Change Substantial Change 74% 24% Source: 2008 IBM CEO Study

For energy and utilities organizations, this means finding a way to lead in a new environment shaped by three key factors.:

7 For energy and utilities organizations, this means finding a way to lead in a new environment shaped by three key factors. CLIMATE CHANGE CONCERNS As the debate over climate change has become much more public, governments around the world are responding with new energy policies, programs and legislation. Consumers are increasingly concerned about the environmental impact of the products they buy, including energy. CONSUMER EMPOWERMENT Newly empowered consumers are leveraging provider choice options, actively managing their usage, moving toward self-generation of power and making their voices heard through multiple channels. TECHNOLOGY INNOVATION Lower-cost communications, more cost-effective computing and open standards are strengthening the business case for technology innovation in the energy and utilities industry. Technologies such as smart meters, network analytics and distributed generation are changing the way energy is created and delivered. Source: IBM, “Plugging In the Consumer”

There is an imperative from governments and consumers alike for energy and utilities organizations to transform themselves to ensure environmental responsibility, economic competitiveness and national security.:

8 There is an imperative from governments and consumers alike for energy and utilities organizations to transform themselves to ensure environmental responsibility, economic competitiveness and national security. By leading innovation throughout the industry, their positive impact will be felt far beyond. ENERGY AND UTILITIES LOCAL AND GLOBAL ECONOMIES ENVIRONMENT AND SOCIETY

This mandate for change is a mandate for smart.:

9 This mandate for change is a mandate for smart.

To deliver services more responsibly and more efficiently, energy and utilities organizations are working toward a smarter energy value chain.:

10 To deliver services more responsibly and more efficiently, energy and utilities organizations are working toward a smarter energy value chain. ENSURING CLEANER ENERGY SUPPLY Incorporating renewable energy and electric vehicles into the power grid and meeting stringent greenhouse gas emissions targets while maintaining reliable, cost-effective power supply TRANSFORMING THE UTILITY NETWORK Transforming the utility network from a rigid analog system to a dynamic and automated energy delivery system. EMPOWERING THE CONSUMER Empowering consumers by providing them with near real-time, detailed information about their energy usage. ENERGY AND UTILITIES

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11 They are doing so by becoming instrumented, interconnected and intelligent.

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12 INSTRUMENTED We now have the ability to measure, sense and see the exact condition of everything. Today, there are 1 billion transistors for each person on the planet. In 2010, the number of RFID tags embedded into our world and across entire ecosystems is estimated to reach 30 billion. In 2008, 6.7 million intelligent meters were used for advanced metering in the U.S., compared to 947,000 in 2006. Remote monitoring devices tell when and where faults occur and where the inefficiencies are, enabling smarter sourcing and distribution of power.

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13 INTERCONNECTED People, systems and objects can communicate and interact with each other in entirely new ways. The Internet of people is 1 billion strong. Almost one third of the world’s population will be on the web by 2011. There are an estimated 4 billion mobile phone subscribers worldwide. Hybrid car sales in the U.S. market are expected to cross the one million mark by 2012. Virtual marketplaces between consumers and providers allow consumers to trade flexibility in usage for lower costs.

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14 INTELLIGENT We can respond to changes quickly and accurately, and get better results by predicting and optimizing for future events. Every day, 15 petabytes of new information is being generated. This is 8 times more than the information in all U.S. libraries. An average company with 1,000 employees spends $5.3 million a year to find information stored on its servers. If the U.S. grid were just 5% more efficient, the energy savings would equate to permanently eliminating the emissions from 53 million cars. Power grids use sensors, smart meters, digital controls and analytic tools to automatically monitor and control two-way energy flow.

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15 An opportunity for energy and utilities organizations to think and act in new ways. Transform electric grid and gas and water infrastructures from rigid, one-way systems to dynamic, automated and reliable information networks . Empower consumers and improve satisfaction by providing them with near real-time, detailed information about their energy usage. Incorporate renewable energy and electric vehicles into the power grid and meet stringent greenhouse gas emissions targets while maintaining a reliable, cost-effective power supply. + + =

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16 The Solution Architecture for Energy and Utilities Framework (SAFE) is an innovative software platform uniquely positioned to provide network visibility and control, process automation and business collaboration solutions across the energy and utility value chain. IBM’s SAFE Framework enables Energy & Utilities industry solutions. Key benefits: An approach to align technology with utility business needs The ability to build a simplified enterprise architecture— one project at a time Utility industry best practices and solution accelerators to speed deployment Reusable implementation patterns to lower risk Support for the adoption of open and industry standards A choice of business applications and services from IBM and IBM Business Partners Integration Optimization Analytics Collaboration Security Resiliency Asset, Device and Service Monitoring Asset Lifecycle Management Business Process Automation Regulatory, Risk and Compliance Management Improved Customer Experience Informed Decision Making Security Solutions

Energy and Utilities: Empowering the consumer.:

17 SMART IS Updating and integrating customer systems to support the technology evolution and new business requirements. SMART IS Providing consumers and businesses with tools to proactively analyze and manage their energy usage. SMART IS Knowing how to incorporate new and localized energy resources into the utility network. Energy and Utilities: Empowering the consumer. 1 2 3

Customers are demanding the ability to collaborate with utilities to create smarter homes and buildings.:

18 Customers are demanding the ability to collaborate with utilities to create smarter homes and buildings. 90% 75% 100 million Of consumers on a time-of-use pricing pilot in Ontario were able to shift their load and save an average of 3% on their energy bills. 1 Smart meters will be deployed in the next five years, half of which will have a built-in Home-Area Network (HAN) gateway for in-home energy management programs and services. Of consumer respondents to IBM’s Global Utility Consumer Survey indicated that they would like a smart meter and tools for managing their energy usage.

Smart is: Providing consumers and businesses with tools to proactively analyze and manage their energy usage.:

19 Smart is: Providing consumers and businesses with tools to proactively analyze and manage their energy usage. Utilities are employing smarter technologies and applications to enhance and improve customer relationships. 1 Communication channels Devices Consumer Utility Usage information Energy Action

Smart is: Providing consumers and businesses with tools to proactively analyze and manage their energy usage.:

20 Smart is: Providing consumers and businesses with tools to proactively analyze and manage their energy usage. The benefits: • Alignment of values between the utility and its customers • Automatic control for convenient usage adjustments • Increased customer satisfaction • New revenue streams through additional products and services and lower costs per customer Enable the network Extend utility operations into the home by deploying smart meters and enabling them to communicate with other devices. Gather relevant data Gather data from devices and provide information about energy consumption patterns. Collaborate Work with customers, incenting them to adjust their energy consumption via time-of-use pricing or voluntary curtailment programs. How will you do it? Ensure that usage information is timely and consistent across all customer communication channels. Provide customers with recommendations for alternate consumption patterns and reward actions that are advantageous to both the utility and the customer in measurable, transparent and meaningful ways. 1

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21 A centralized energy market operator: Seeking to improve the quality of service they could offer, three utility providers in one U.S. state wanted to provide energy consumers with direct access to their consumption metrics. The organizations hoped that by being better informed, consumers would be able to act more responsibly when it came to their energy use. IBM has partnered with utilities around the world to implement innovative solutions. 1 Energie Baden-Württemberg: Worked with IBM to put in place a first-of-a-kind solution that generates and displays the underlying price of electricity as it changes throughout the day. In addition to providing a basis for changing consumption behavior, it also establishes a low-cost platform for changing EnBW’s customer-facing processes like billing.

A centralized energy market operator uses streaming data to help consumers make more responsible energy choices.:

22 A centralized energy market operator uses streaming data to help consumers make more responsible energy choices. Key benefits: Provides a common point of information sharing among energy retail companies and transmission companies Supports regulatory requirements and standards Key IBM assets utilized: WebSphere portals and dashboards Tivoli security solutions Business Process Management Information integration and archiving 1 Asset, Device and Service Monitoring Asset Lifecycle Management Business Process Automation Regulatory, Risk and Compliance Management Improved Customer Experience Informed Decision Making Security Solutions Integration Optimization Analytics Collaboration Security Resiliency

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23 Smart Metering and Beyond: Transforms distributed utility operations by extending operational awareness of consumer demand to the end points of the utility network and into the customer premises. Customer Web Portals: Enables next-generation online capabilities across new business processes, customer experience and technology innovation. These solutions are powered by our unique expertise spanning all facets of customer management and operations. 1 Customer Intelligence and Analytics: P rovides fact-based input and customer-oriented methods to drive customer insight across marketing, sales and service.

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24 How will you… Provide your customers with the information and tools they need to make informed energy decisions? Provide incentives to your customers to make informed decisions that can help your utility manage the load in a more predictable manner? Achieve a reasonable cost-to-serve through consistent approaches to dealing with customers across all channels—including contact center, Web, mobile and IHDs?

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25 2 The deployment of new technologies and shifts in customer behavior are demanding transformation on the part of utilities. 4 in 5 70% Consumers would change the times at which they perform energy-consuming housework in exchange for savings of 50% or more on their energy bills. Of the 5,000 respondents in IBM’s 2008 Global Utility Consumer Survey are willing to experiment with how they interact with energy providers. $4.2 billion Will be spent in 2013 on information and communications technology for the smart grid in the U.S. and Canada.

Smart is: Updating and integrating customer systems to support the technology evolution and new business requirements.:

26 Smart is: Updating and integrating customer systems to support the technology evolution and new business requirements. With customers’ emerging role as both a supplier and consumer of energy, there is a need for utilities to enhance tools and technologies to better integrate the customers’ participation in the value chain. Meter Data Management Mobile Workforce Load Management Outage Management Geospatial Information System Customer Information System Data Customer Customer Relationship Management System Insight Communication channels 2

Smart is: Updating and integrating customer systems to support the technology evolution and new business requirements.:

27 Smart is: Updating and integrating customer systems to support the technology evolution and new business requirements. Update customer systems Adapt to climate-related regulations, complex rate structures, technology innovation, increased data volumes and an empowered consumer. Manage data Manage high volumes of data, multiple integration touch points and increased number of participants requiring access to customer data. Present usage information Provide customers with information on prices, costs and usage with convenient, automated controls and tools to enhance their experience. How will you do it? Proactively shape the regulatory framework to drive change in an operating scope beyond traditional services. Modernize customer systems to support new processes and manage larger amounts of data. Provide seamless access to information through all channels. 2 The benefits: • Leveraged meter data • Improved billing flexibility and scalability • New tools and information availability for customer care agents • More accurate billing information

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28 IBM is beginning to partner with organizations around the world to implement innovative solutions. A U.S. utility: A nticipates lowering its own operating costs while helping its customers lower their energy bills. The ability to monitor and change energy use through smart grid technology will save customers money and lower general energy consumption. A Canadian regulator: Launched a pilot time-of-use program that rewards consumers for using less power during times of shortage or peak demand, leading participants to shift 25% of their usage away from peak hours. 2

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29 These solutions are powered by our unique expertise spanning all facets of utilities’ customer systems. Customer Focused Utility: Helps utilities understand their customers’ expectations, define the capabilities needed to satisfy those expectations, and build those customer-related capabilities into the smart grid transformation plans. Customer Systems Implementation and Modernization: Focuses on the componentization, consolidation, modernization and replacement of legacy and packaged customer systems, as well as their integration with other applications across the enterprise. Customer Systems Management: Provides a managed environment for customer systems and their technical environments, which helps utilities improve service levels and business flexibility while reducing operational cost, time and risk. 2

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30 How will you… Update customer-facing applications (CIS, CRM) to support new rates and manage larger amounts of data? Maintain the security of sensitive customer data—as well as the information that can be derived from it—contained in records generated by smart meters? Enroll consumers in demand-response and energy-efficiency programs?

The demand for alternate and renewable sources of energy is growing.:

31 The demand for alternate and renewable sources of energy is growing. 20-20-20 Net-zero 1 million The EU climate package sets targets of a 20% cut in greenhouse gas emissions, a 20% increase in the use of renewable energy and a 20% cut in energy consumption through improved energy efficiency by 2020. The California Solar Initiative authorized the state to invest $3.2 billion in small-scale solar electric power systems over eleven years and to establish the statewide goal of building one million solar electric roofs amounting to 3,000 megawatts (MW) of solar electric power. A net-zero energy home is capable of producing, at minimum, an annual output of renewable energy that is equal to the total amount of its annual consumed/ purchased energy from energy utilities. 3

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32 Solar Wind Solar Wind Coal Hydro Solar Nuclear Wind Energy storage Energy storage Energy storage Plug-in vehicle Smart is: Knowing how to incorporate new and localized energy resources into the utility network. Innovative processes and systems enable the utility to incorporate new energy resources into the grid, to manage and maintain those resources, and to ensure the necessary flow of information and finances among participants. Energy flow Information flow Payment/collection flow 3 UTILITY

Smart is: Knowing how to incorporate new and localized energy resources into the utility network. :

33 Smart is: Knowing how to incorporate new and localized energy resources into the utility network. Provisioning Track the installation of distributed resources: where, when and how to incorporate utility operating practices and models. Monitor, maintain, control Continuously assess resource availability, impending failures, repairs and upgrades. Dispatch the resources based on operating needs. Settlement Securely execute all financial transactions, including payments and collections. How will you do it? Efficiently scale distributed energy resources by ensuring the safety and reliability of network operations and by implementing maximum adoption of distributed energy technologies at the lowest cost. Provide fair compensation and transactional efficiency for customers. 3 The benefits: • Ensure the safe and reliable operation of the network • Provide distributed energy technologies at the lowest cost • Ensure efficient transactions—i.e., both utilities and consumers are fairly compensated

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34 IBM has partnered with utilities around the world to implement innovative solutions. MVV Energie: Teamed with IBM Global Business Services and others to create a virtual marketplace that provides energy companies and customers with real-time energy generation, consumption and availability data. Users can employ this solution, which leverages IBM WebSphere MQ Telemetry Transport software, to monitor local energy reserves and view current pricing for outside energy sources. European Demonstration Project: IBM Global Business Services and IBM Research developed a real-time energy monitoring and management solution that can balance the charging of vehicles against the availability of wind energy reserves. Conversely, the solution can draw energy reserves and regulation power back from the cars into the grid to stabilize energy availability. An advanced modeling and run-time solution, hosted on IBM BladeCenter servers, is used to analyze the collected data and host the real-time analytics and portal software. 3

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35 These solutions are powered by our unique expertise spanning all facets of the energy and utilities system. Renewable Energy Resources: Visioning, strategy and development of IT and communications infrastructure required to integrate distributed energy into the utility network and to gain visibility that will enable better management of electricity supply and demand. Electric Vehicles: Visioning and strategy to support the various business models which may develop around the supply and demand of electricity with PHEVs and EVs. Development of IT infrastructure and standards required to enable the supply and billing of electricity to PHEV and EV mobile customers. 3

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36 How will you… Ensure the optimum time to charge and discharge grid-connected batteries for frequency control and energy resource? Manage network technologies so they become a controllable resource more than a customer service? Bill for an EV charge in a public space for a driver that does not have an account with your utility? Manage seamlessly in an environment where there are many different devices and companies?

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37 Why IBM? Only IBM can provide the unique combination of technology and expertise you need to ensure reliable, cost-effective and environmentally sound operations across the energy and utility value chain—from the source, through the grid, to the end consumer.

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38 Solution Architecture for Energy and Utilities Framework: Software capabilities. Deliver convenient, personalized customer experiences by enabling interactive communication and providing consumers with more control over their energy sources and usage. Use data and information aggregated from business and operation systems to analyze events, develop insights, correlate reactions to change and improve business flexibility and performance. Comprehensively manage and prevent security risk across all business domains. Visualize infrastructure availability and performance through device, event and usage data, providing real-time control and analysis to speed time to resolution. Track, document and make decisions about the procurement, deployment, operation, maintenance and disposal of generation plant, transmission or distribution field assets. Manage large quantities of utility documents and processes to comply with government- mandated regulations. Model, manage and optimize business processes resulting in faster time to market, increased customer satisfaction, and higher productivity. Asset, Device and Service Monitoring Asset Lifecycle Management Business Process Automation Regulatory, Risk and Compliance Management Improved Customer Experience Informed Decision Making Security Solutions Integration Optimization Analytics Collaboration Security Resiliency

IBM’s Solution Architecture for Energy and Utilities Framework enables utility companies to start with any solution and build upon it over time to achieve a simplified, strategic infrastructure.:

39 IBM’s Solution Architecture for Energy and Utilities Framework enables utility companies to start with any solution and build upon it over time to achieve a simplified, strategic infrastructure. Achieve a simplified, strategic infrastructure. Choose a project and implement it to achieve immediate ROI. Build on the value of previous projects, reusing assets and implementation patterns. 1 2 3

Energy and Utility companies benefit from added speed, choice and flexibility, along with lower levels of risk and the support of a vast IBM Business Partner network.:

40 Energy and Utility companies benefit from added speed, choice and flexibility, along with lower levels of risk and the support of a vast IBM Business Partner network. Speed: Leverage industry best practices, repeatable business patterns and open standards to implement solutions faster than ever. Choice: Utilities choose the solutions that provide the most value to them, in the order and at the pace that makes the most sense. Flexibility: Techniques built on business process management and service-oriented architecture means easier deployment and interoperability of solutions. Lower risk: Incremental projects, each with a defined payback period, are more easily scoped and implemented—and build on infrastructure deployed in previous phases. Business Partner network: Pre-validated, powerful applications integrate seamlessly with IBM SAFE Framework middleware.

Why must we take action now?:

41 Why must we take action now? VOLATILE DEMAND AND INCREASING COST Changing utility business conditions will create new challenges of balancing supply and demand from both an operational and financial perspective. Current utility infrastructure will need to be upgraded to address this challenge. ENVIRONMENTAL CONCERNS Consumers are increasingly concerned about the environmental impact of the products they buy, including energy. As a result, they are demanding that utilities provide them with new sources of energy and more information that will enable them to make smarter decisions. CONSUMERS DEMAND A DIFFERENT MODEL Consumers desire more information and reliability when it comes to their energy use and the system as a whole. Building a smarter infrastructure is a singular way to meet these demands while stimulating growth in the greater economy.

How to get started: A five-step roadmap to smart.:

42 Prioritization Invest in the transformation of your infrastructure. Strategy Shape a sustainable energy and utilities environment wherever you operate. Integration Share data across the value chain to promote smarter consumption. How to get started: A five-step roadmap to smart. 1 2 3 Optimization Effectively manage supply and demand. 4 Discovery Identify the next frontier for energy and utilities locally and globally. 5

We’ve only just begun to uncover what is possible on a smarter planet. :

43 Let’s work together to drive real progress in our world. We’ve only just begun to uncover what is possible on a smarter planet. The world will continue to become smaller, flatter and smarter. We are moving into the age of the globally integrated and intelligent economy, society and planet. There’s no better time to start building smarter energy and utilities organizations—focused on providing energy responsibly to empowered consumers. And there’s no better time to invest in creating the kind of society we all desire.

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44 APPENDIX

Where is IBM applying its expertise today?:

45 Where is IBM applying its expertise today? Developing smart energy grids around the world. Helping retailers track products from the supplier to the store shelf. Implementing intelligent traffic systems to increase efficiency and reduce environmental impact. Engineering more resilient and adaptable strains of rice. Providing crime fighters with instant mobile access to mountains of pertinent data. WE ARE…

To empower consumers, smart energy and utilities organizations are working to…:

46 To empower consumers, smart energy and utilities organizations are working to… MEET DEMAND FOR ALTERNATE ENERGY SOURCES Improve energy efficiency while mitigating environmental impact. DRIVE COLLABORATION AND SHARE DATA Engage and enable customers to make more informed decisions, and reward them for doing so. INTEGRATE THE CUSTOMER INTO THE VALUE CHAIN Reshape services and processes, and ensure continuous access to information. EMPOWERING THE CONSUMER

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47 An opportunity for energy and utilities organizations to think and act in new ways. Meet demand for alternate energy sources. Integrate the customer into the value chain. Drive collaboration and share data. + + =

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