The Energy to go Clean 1
Dynamic Forces of An Industry on the Edge What if...... electricity demand grew 50% in 20 years?... 50% of skilled utility workers retired in 10 years?... carbon constraints became severe?... fuel costs kept rising dramatically?... power quality demands got much higher?... renewables were mandated all over the country?... reliability rules became more stringent? What if they all came true... all at once Would you...... build 50% more power plants... hire 50% more workers... build 50% more power lines... raise rates over and over again? 2
Would You Ignore These Market Drivers? Environmental and Regulatory Concerns High and Volatile Fuel Prices Tightening Reserve Margins Global warming 29 States with legislation NIMBY Not In My Backyard States with Legislation Insufficient Generation Assets T&D Constraints / Aging Infrastructure RPS RPS and Energy Efficiency 3
Electric Utility Reliability Issues Peak Load 21, 000 August 8, 2006 18,000 LOAD (MW) 15,000 December 20, 2006 Base Load 12,000 9,000 M Summer peak day load Typical base load 0 Midnight 6 A.M. Noon 6 P.M. Midnight dangerously close to not having enough capacity. Walter Higgens, CEO, Sierra Pacific Resources 4
Electric Utility Cost Issues $300 $250 Cost of Electricity (PJM East - Summer) $200 $/MWh $150 $100 Average Price to Consumer Hourly Wholesale Cost to Utility $50 $0 Energy Efficiency DR + EE 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative Hours of Operation DR Programs are the most cost effective options for reducing peak demand California Energy Commission 2005 5
Let s Learn from Others - Intelligence to the Edges Centralized Model Mainframe Intelligence in middle Distributed ib t Model Client-server Intelligence migrates out True Network Model Internet Telecommunications Intelligence everywhere 6
The Smart Grid Intelligence Everywhere?.Almost Here!! Renewables Dist Gen Outage g Transformer Monitoring Distribution Control Smart Grid Intelligent pp Appliances Service Disconnect DR TOU & CPP Peak Reduction AMI AMR Automated reads Integrated Demand Response 15 min LP Transactive Demand Response 7
Comverge Core Strategy Increase Focus on Clean Energy Increase Capacity Offerings Long-Term Recurring Revenues AMI Focus Capacity Beyond the Peak Renewable Capacity Follow the Money, EPACT DR+EE Offerings are linked Energy Intensity Focus Follow the Money Increase Clean Focus Link to RPS Couple all Resources Foundation Longevity Margin Strength C&I Offerings Capitalize on Large Scale Rollouts (EPACT) Utilize Channels DR Provider of Choice VPC Wins Increase Offerings Capitalize on Mkt Momentum Create Long-Term Value 8
VPC Value Proposition Gas Fired Peaking VPC Capital Cost $600K/MW $240K/MW Environmental / NIMBY NOX/CO 2 None Response Time 15-30 minutes < 5 minutes Operating Volatility Locational Benefit Targeted Deployment Regulatory Acceptance 9
Proven VPC Track Record PacifiCorp Power Sheds Load: 90 MW for 2 hours 4100 4050 90 MW 4000 3950 3900 3850 3800 3750 3700 Normal VPC Operation Recovery Normal Operation Operation 2:00 PM 2:30 PM 3:00 PM 3:30 PM 4:00 PM 4:30 PM 5:00 PM 5:30 PM 10
Execution Since the IPO >> Increased MWs Under Contract >> Bolstered our Market Presence 1000 Long Term MWs Under Contract 866 MW MWs Owned or Under Management 2400 2200 MW C&I 750 1800 Residential MWs 500 362 MW MWs 1200 250 600 362 MW 0 April 2007 (IPO) Current 0 April 2007 (IPO) Current >> Expanded Contracted Revenues 137% Growth $476 $500 >> Flourishing Market Dynamics RFP Activities Surge n millions) $ (i $375 $250 $125 $201 AMI Activities Accelerating Regulatory Mandates Continue $0 April 2007(IPO) Current * Includes 165 MWs and $114 million in contracted revenues subject to regulatory approval 11
Total MWs Provided To Industry MWs owned under long term capacity contracts 866* MWs provided for sale in market programs 897 MWs managed for a fee 437 Total MWs of Customer Capacity Owned or Managed 2,200 MWs provided through technology sales 6135 6,135 * Includes 165 MWs subject to regulatory approval 12
Expanding p g Customer Base Network Operations Data Center Operations Program g Offices Corporate Offices 13
The NEWEST ReNEWable An Evolution?...A Revolution? Demand Response Energy Efficiency Demand Response AND Energy Efficiency Solar Wind Solar AND Wind Or.. An Intelligent Eco System With ALL of the Above 14
The Energy to go Clean 15