An Open Platform for Networked Energy Services

Metering Americas 2004

Presented by

Bob Warden

VP Worldwide Business Development

Echelon Corporation

2

The Problem – AMR Market is too small!

Traditional Utility Systems Are Fragmented– Automatic meter reading for “hard to read meters”– Pre-pay for high turnover populations– Time of use price for commercial and industrial

customers– …

Each with a marginal business case

Each with redundant infrastructure costs

Each with redundant maintenance costs

3

The Solution - A New Business Model

An Open Platform for Networked Energy Services (NES)

Many services amortized over one open infrastructure– Low cost metering services — AMR, load profiling, remote

disconnect/reconnect, tamper & theft detection– Real-time & time-of-use pricing, prepaid metering– DSM, load curtailment, demand forecasting– Distribution network optimization– Outage detection & isolation, restoration verification– Add new energy or other value-added services with minimal incremental

investment Company-wide operating improvements lead to quick payback

4

A Common Communication Infrastructure enables Networking “From Light Switches To Business Intelligence”

Increasing Business Intelligence

Transforming Data Into Knowledge

Connecting Networks to Networks

Enabling Intelligent Devices and Networks

5

Creating an open market for everything from Intelligent Devices to Enterprise Software

Flexibility to adapt existing Enterprise

Business ApplicationsEmpower new applications to

transform Data Into Business Value

Choice of Communication

Suppliers and WAN transmission Networks

Choice of Intelligent Meters and Network media

Choice of System Integrator and Installation Processes

6

What’s more important the Network or the Meter?

The same infrastructure used for remote meter reading, dynamic pricing, revenue protection, outage management...

… reduces operating costs, generates recurring revenue, separates regulated services from unregulated

... and can support future value-added services such as load control, street lighting management, appliance control, etc.

But, both Utilities and Suppliers want to leverage the meter to “own” the communication Network

7

Market wants a Safe Business Proposition

Improve return on core business– Improve quality and reliability of service– Decrease operating costs, improve

efficiencies

Build new business– Generate incremental revenue through

services– Decrease customer churn and reduce

“switching costs”

– Open Platform built on Standards– Choose best of breed products– Respond to regulatory change– Retain return on investment

8

Used New Business Model to create their own system World’s largest smart metering project

– >27 million smart meters in homes & buildings, €2 billion project cost– >15 million meters already installed, ~700K new meters installed per month– Anticipated yearly savings of €400 million starting in 2005

Transforming the Italian power grid into an intelligent services delivery platform will be completed in 2005

Much of this Vision Is A Reality in ItalyEnel Contatore Elettronico Project

System Software

IP

Meter

Data Concentrator

Power Line

9

Enel Contatore ElettronicoProject StatusEnel Chief Executive Paolo Scaroni said…

The Italian power company has invested EUR2 billion to develop AMM. They are being installed at a rate of 700,000 per month and will complete the rollout of the system by 2005. The system already allows the Italian utility to remotely control supply and billing to half of its total 30 million users.The meters create a bidirectional link between users and providers that allows

– electricity providers to offer different prices for different times of the day.

– users to easily shop around for the best energy provider or change their supply needs.

Enel sees EUR400 million a year in savings with the new system through remote billing and scrapping back office work.

From Dow Jones Business News, March 18, 2004

10

Two-way automated meter reading Distribution system asset & load

management Comprehensive revenue protection Outage management Dynamic – time-of-use, real-time –

pricing Prepayment without card Remote physical disconnect &

reconnect Real-time direct load control Value-added customer services

Enel Contatore ElettronicoAMM System Benefits begin in the Meter

11

Networked Energy Services benefit Every Utility Operation

Networked Energy Services

DemandForecasting

Capacity Planning

Capital Investment

Generation Work

Management Customer Services

AMR & Billing

Distribution Trends

Distribution Automation

Reads

QueriesInstallation & Services

Quality

Roll Out

Customer Information

12

Enel Contatore ElettronicoBusiness Model

Meter design owned by Enel and manufactured by contract manufacturersEnel granted IBM exclusive license to market its in-house developed Automated Meter ManagementIBM and Enel estimate that the potential worldwide market for AMM solutions is made up of 700 million clients and worth more than EUR120 billion.80 utilities from across the world have visited Enel's AMM testing center in Milan or expressed interest in buying the technologyA mid-sized utility with 5 million clients will spend around EUR100 per customer to upgrade its network to AMM stantards, Enel Chief Operating Officer Vincenzo Cannatelli said.

13

Echelon Infrastructure powers the Enel AMM System

Enel IT

IP Network

System Platform Software from Echelon

PL to GSM Networking based on Echelon Data Concentrator

Metering using Echelon powerline communication

14

A complete Networked Energy Services System

BillingCIS

ReportingPrepay EMS Outage CustomCustom

Other Middleware

Net

wor

ked

Ener

gy

Serv

ices

NES System Software based on

IP WAN

15

Now Echelon products can create the Networked Energy Services infrastructure for Everyone

Three infrastructure components– Meters– Data Concentrators– System Software

Two tools– Provisioning Tool software – Work Order Tool

System Software

Data Concentrator

Meters

PL LAN

IP WAN

Provisioning Tool

Software

Work Order Tool

Tools

16

EM-1010 Series Meters

Unmatched cost to feature ratio – Best value in market

Outstanding features include:– Time-of-use pricing

Controls usage– Load profiling

Understand the customer– Power quality measurements

Preventative maintenance– Many more…

17

DC-1000: Functions

Supervises power line LAN– Automatically manages meters– Ensures reliable communication– Detects line and device failures

Interface between System Software and meters– Meter Data Aggregation

Reduces WAN and device costs– Provides pass-through control of meters from

System Software Enables on-demand functionality

18

Critical Functions– Maintains network topology– Data collection– Control– Event handling

Provides a simple but powerful interface to NES hardware and data

Ensures version-to-version compatibility– Protects utility’s IT development investment

Scales to handle millions of devices

NES System Software: Role

Utility Software

Web services Web events

IP WAN

NES System Software

19

Echelon NES System Is Open Infrastructure

Built on top of open standards– ANSI/EIA 709.1-A-1999 & 709.2-A-1999

(LONWORKS®), CENELEC, IEC 61036 (2000), IEC 61107, ANSI C12.19, DIN 43857, TCP/IP, web services

Connects to other systems using open standards– Web services and SQL for interoperability with

enterprise systems– Provision for LONWORKS gateway to interoperate with

in-premise C-band devices

Is being offered on the market as standard infrastructure for others to build upon

20

Open business model for Networked Energy Services

VARs adopting Echelon’s NES system as the basis for their system offerings

Establishing the NES system as an open, worldwide standard

Opening and serving new marketsProgram announced Q4 2003

– Telvent: One of Spain's largest applied engineering and process management companies

– EDMI: Provider of electronic revenue meters to Australia, Asia, ASEAN, the Middle East, and Europe

21

The NES System is an Open Platform

Meter boards– For integration into your custom meter housing

Data concentrators– For integration into your custom enclosure and

WAN network

System software– For integration into your middleware and utility

applications

Provisioning software– For integration into your field-force automation

methodology and tools

Web services Web events

NES System Software

Work Order ToolProvisioning

Tool Software

22

Echelon helps others adopt The NES System

Will provide technical information, training, and support– For meter board hardware– For data concentrator hardware– For system software

Will provide sales information, training, and support– For system-level, business case modeling– For project qualification

23

Anyone can develop applications forNetworked Energy Services

BillingCIS

ReportingPrepay EMS Outage CustomCustom

Other Middleware

Net

wor

ked

Ener

gy

Serv

ices

IP WAN

24

To extract more Value from Intelligent device data

– Two-way automatic meter reads• Eliminate estimated bills• Download new information into meter remotely

– Disconnect switch integral in every meter• Connect, disconnect customer service remotely • Set customer service level remotely• Prepayment without card

– Time-of-use pricing• Promote energy conservation• Offer incentive rates

– Detailed quality of service information • At individual customer level• Comply with regulations

25

Transform Distribution Network

Improved energy conservation and forecasting– Lower peak and overall load– Manage supply and demand precisely– Avoid huge investments in new generation

Balance phase loads– Size distribution transformers optimally– Improve generation and transmission efficiencies

26

Transform Distribution Network

Comprehensive revenue protection– Detect reversal of meter wiring– Detect tampering with meter cover– Record meter power-downs

Superior Outage Management– Near real-time outage detection & restoration

reporting

Ripple control replacement– Replace legacy ripple control systems

27

Provide Headroom for Growth

Future Value-Added Services– Dynamic load control

• Thermostats, water heaters, etc.

– Gas and water meter remote reading– Street and traffic light management

– Appliances• Remote monitoring and control

– Medical Emergency Signaling….

28

NES platform business model benefits categories

Metering

Customer Service

DistributionOperations

Other

29

Business Model available for NES ROI Analysis

Number of utility customers 1,000,000

Total Costs $212,108,994

Total Benefits $371,599,897

Payback Period in years 4.93

Net Present Value (NPV) $159,490,904

Internal Rate of Return (IRR) 15.44%

30

NES System business model achieving momentum

Nuon - Leading Dutch utility

Pre-deployment trial in 2004– Full system test from meters to

enterprise applications for one city– Installations beginning in January

Potential for 2.7 million meter deployment beginning in 2005

31

Q&A

Questions?

Thank You