Renewable Energy Options. National Grid s Connect21. Agenda. yet, a very local New York business. An International Energy Company.

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1 Agenda Role of Renewable Natural Gas in Closing the Carbon Cycle Background on National Grid Renewable Natural Gas Fundamentals Newtown Creek Wastewater Treatment Plant Project Renewable Natural Gas and Transportation Christopher A. Cavanagh, PE Principal Program Manager Customer Strategy and Environmental November 3, 214 An Option for Zero Net Emissions Buildings Conclusions 2 An International Energy Company yet, a very local New York business 7 million + customers 3,7 MW Electricity Generation UK Electric 11 Million Customers UK Gas New York represents 6% of National Grid s US business 8, employees 2.3 million gas customers 1.6 million electric customers 3,7 MW electric generation $1 billion in annual capital investment 3 4 National Grid s Connect21 Renewable Energy Options Current energy networks have served us well but can t meet the growing innovation demands of the 21 st Century With a smarter regulatory framework, we can: drive economic growth improve energy efficiency & security, advance innovative technologies Our Connect21 framework links customer needs & policy goals with technology and smart solutions Our job: build resilient backbone, inform and educate customers about choice and energy management, offer customized solutions Injection (in front of meter) Displacement (behind meter) ISO EPM Transmission TG Generator Waste AD Full Clean-up Wind Commercial H 2 Distribution Solar PV HW CHP 5 6 1

2 Agenda Background on National Grid Renewable Natural Gas Fundamentals Newtown Creek Wastewater Treatment Plant Project What is Renewable Natural Gas? Pipeline quality gas derived from biomass resources that is injected into the gas distribution network Sources of biomass include wastewater treatment plants, landfills, livestock manure, municipal solid waste, agricultural residues and energy crops Feedstock Renewable Natural Gas and Transportation An Option for Zero Net Emissions Buildings Anaerobic Digestion / Gasification Upgrading, clean-up, methanation Injection of pipeline quality gas Conclusions 7 8 How is Renewable Natural Gas Produced? Why Should It Be Considered? Anaerobic Digestion (AD) High-moisture organic material such as wastewater, food waste & certain livestock manure Microorganisms convert organic matter into biogas Commercially available and in use today 5-6% CH 4 4-5%+ CO 2 Thermal Gasification (TG) Low-moisture feedstock such as forestry waste, crop residue, municipal solid waste and energy crops Thermal breakdown of solid biomass into syngas and converted to methane A proven technology likely to reach commercial-scale implementation within 1 years 25% H 2 (+ N 2, CO, CO 2 ) Renewable Natural Gas is a here and now energy solution that delivers the following benefits: Lowers greenhouse gas (GHG) emissions by offsetting the use of natural gas (and in some instances capturing methane that would have otherwise entered the atmosphere) Provides a real option for managing and using local waste resources to produce renewable energy Leverages the existing natural gas network to deliver a renewable fuel for homes, business, industrial, and transportation needs Stimulates the local economy and creates jobs Enhances diversity of supply with a local and domestic resource 9 1 Renewable Natural Gas Is Interchangeable With Natural Gas for Everyday Uses in Our Homes and Businesses What Is the Potential? Hot Water Fireplaces Gas Ranges, Ovens & Cooktops Recent study by American Gas Foundation (released Sept. 211) Finding: Under a reasonable long-term scenario, Renewable Natural Gas could be used to meet the natural gas needs of half of all American homes. Cars, Trucks, Vans & SUVs Furnaces Fleet Clothes DryersVehicles & Public Transportatio n Category Energy Potential (billion cubic feet /yr) Potential as a Percentage of Overall Demand* CO 2 Abatement (million tons/yr) Direct Jobs Created (low high range) Non-Aggressive AGF Study Scenario Aggressive Technical Potential 967 2,485 9,45 4% 1% 4% ,825 32,189 22,692 82,765 86, , * Based on a national usage of approximately 24 TCF of natural gas (for 21), source EIA 12 2

3 National What Grid study is the potential in? Vision Agenda Background on National Grid Renewable Natural Gas Fundamentals Newtown Creek Wastewater Treatment Plant Project Renewable Natural Gas and Transportation An Option for Zero Net Emissions Buildings Conclusions Newtown Creek Demonstration Project National Grid and the New York City Department of Environmental Protection are working together to deliver renewable gas from the largest wastewater treatment plant in New York City Once operational, the project will inject enough gas to provide heat to approximately 2,5 homes and reduce CO 2 emissions by about 16, tons annually (equal to CO 2 emissions of approximately 3, cars) Picture of Newtown Creek wastewater treatment plant in Brooklyn, NY. Source: New York City Department of Environmental Protection Newtown Creek Demonstration Project Process Layout of a Typical NYC Water Pollution Control Plant Flow ADG Purification Process

4 Simplified Process Flow Typical Clean-up System Components Gas Drying Compression H 2O Anaerobic Digester PSA Buffer Vessels Tail Gas Vessel Tail Gas Vacuum Pump Odorant CO 2 Thermal Oxidize r Pipeline Quality Renewable Gas Source Gas compression/liquids knock-out H 2 S Removal Various Options Pretreatment TSA or PSA CO 2 Separation Multiple systems (Dry, Wet, PSA, Membrane) Thermal Oxidizer/Flare Balance of plant Meters Chromatographs Gas sampling Odorizers TSA: Temperature Swing Adsorption PSA: Pressure Swing Adsorption Courtesy of Air Liquide Greenlane Biogas Upgrading System 19 2 Economic Benefits Agenda National Grid will finance the initial capital investment and NYC-DEP will provide a base volume of gas to them in return at no cost. This will allow National Grid to recoup its capital and operating expenses over the term of the agreement and provide a levelized cost to NYC gas customers that is expected to be competitive with traditional supply sources. The City of NY will receive a revenue stream from this project, which will be a function of gas volumes above the base level and market prices. Background on National Grid Renewable Natural Gas Fundamentals Newtown Creek Wastewater Treatment Plant Project Renewable Natural Gas and Transportation An Option for Zero Net Emissions Buildings Conclusions Transportation Sector Is Well Positioned to Embrace Renewable Natural Gas The environmental attributes of renewable gas can be recognized through Renewable Fuel Standard (RFS) EPA program RFS sets annual mandates for renewable transportation fuels in the United States RFS program was created under the Energy Policy Act (EPACT) of 25 & it was expanded and extended by the Energy Independence & Security Act (EISA) of 27 Requires 36 billion gallons of renewable fuel by 222 RFS2 also established new RINs that are differentiated by type of biofuel USEPA Renewable Fuel Standard (RFS-2) Renewable Natural Gas is a Cellulosic Biofuel as produced from landfills, wastewater facilities, food waste, etc. CNG customers that contract for independent supplies of renewable gas can generate credits called RINs. (1 RIN = 77, Btu LHV ) Gas RINs traded for $.89 =$1.32/ GGE = $1.3/therm

5 Agenda Background on National Grid Renewable Natural Gas Fundamentals Newtown Creek Wastewater Treatment Plant Project Renewable Natural Gas and Transportation Net-Zero Emissions Buildings Net-Zero Emissions: A net-zero emissions building produces (or purchases) enough emissions-free RE to offset emissions from all energy used in the building NREL/TP Enabling Technologies Renewable Pipeline Gas + Efficient Buildings Micro-CHP Small Renewable Energy Storage An Option for Zero Net Emissions Buildings Conclusions Infrastructure required Gas and electric? Gas or Electric? NRG s CEO predicts there will be one; the gas infrastructure. The gas infrastructure will also be able to transport CO (derived from NYSERDA Trends) 2, sq. ft. Central Heat and AC 6,578 kwh/yr 115 DTH natural gas per year* Upgrades Deep Energy Retrofits Micro Combined Heat and Power Renewable Natural Gas** Solar Photovoltaic 25, Heat & HW 5, * CO 2 24% higher if heated with No.2 oil ** Soy-based Bio-heating oil not carbon neutral 2, sq. ft. Central Heat and AC 6,578 kwh/yr 115 DTH Gas/yr Upgrades Deep Energy Retrofits (savings 46%*) MicroCHP Renewable Natural Gas Solar PV 25, 5, Heat & HW $68,19 * Average of (12) gas homes studied , sq. ft. Central Heat and AC 6,578 kwh/yr 115 DTH Gas/yr Upgrades Deep Energy Retrofits 25, 5, HHW 2, sq. ft. Central Heat and AC 6,578 kwh/yr 115 DTH Gas/yr Upgrades Deep Energy Retrofits 25, 5, MicroCHP (1.2kW)* Renewable Natural Gas Solar PV * Based on (5) demos. $87,18 MicroCHP Renewable Natural Gas (12.9%*) Solar PV * ½ NY Anaerobic Digestion potential $87,

6 2, sq. ft. Central Heat and AC 6,578 kwh/yr 115 DTH Gas/yr Upgrades Deep Energy Retrofits MicroCHP Renewable Natural Gas Solar PV (3.17kW) * Based on central PV facilities 25, 5, $12,998 2, sq. ft. Central Heat and AC 6,578 kwh/yr 115 DTH Gas/yr Upgrades Deep Energy Retrofits MicroCHP Renewable Natural Gas Solar PV 25, 5, plus Energy Storage 12 kwh (based on EPRI 21) Final $16, Conclusions Energy is critical to human well being Direct correlation to reduction of poverty and economic growth Need to develop collaborative regulatory and government approaches Energy can be clean Scale is challenge Natural gas utilities can play a critical role in the future Enabling green transportation Net zero concept Asset management expertise in a CCS world Question & Answer christopher.cavanagh@nationalgrid.com