DEMAND RESPONSE MARKET OVERVIEW AND ROLE OF LIGHTING

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WHAT IS DEMAND RESPONSE (DR)? FERC/DOE definitionWhat?Changes in electric usage by end-use customers from their normal consumptionpatterns Why? in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity useWhen? at times of high wholesale market prices or when system reliability is jeopardized By example:– Residential direct load control via paging of air conditioners– Monthly incentives to commercial customers for reducing load when requested– Pre-established high electricity prices in effect for participating customers when a utilitydeclares the high-price period (critical peak pricing) What is sometimes considered DR?– Time of use rates– Permanent load shifting– Thermal energy storageThese program typesarenot dispatchableSource: Peak Load Management Alliance (PLMA) DR to DER Evolution Training, 2019.4 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED4

5“SIMPLE” DR & EE DEFINITIONSBoth DR and EE reduce load, butEnergy Efficiency is apermanent change inenergy consumption,generally with no decreasein service level.Demand Response is atemporary change in energyconsumption, generally withsome decrease in service level(e.g., less comfortable climate,sub-optimal lighting).Source: Peak Load Management Alliance (PLMA) DR to DER Evolution Training, 2019.5 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

Call on DR when it is neededPeak-Day Load ShapeBefore and After Load Control12,0001000 MWMegawatts500 MW250 MW11,000Use moreDRresources10,0009,000Use few DRresourcesUse few DRresources8,000910 11 12 13 14 15 16 17 18 19 20 21 22 23 24HourSource: NavigantSource: Peak Load Management Alliance (PLMA) DR to DER Evolution Training, 2019.6 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED6

PEAK DEMAND SAVINGS FROM RETAIL DEMAND RESPONSEPROGRAMSNATIONAL MARKET OVERVIEW: 2018 DRCAPACITYSource: “2019 Assessment of Demand Response and Advanced Metering”; Federal Energy Regulatory CommissionStaff Report, December 20198 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

COMMON APPLICATIONS OF DEMANDRESPONSECapacity Resource/Emergency ResponseEconomic DRActive Management /Grid ResponsiveSource: Navigant Curtailment when called by utility or gridoperator for system stability Common, proven application for reliability Curtailment called for high market prices or toavoid starting a new unit Application for cost savings Operator dispatch for short term relief/operating reserves, balancing renewables Automated response to grid conditions or10price signals.Source: Peak Load Management Alliance (PLMA) DR to DER Evolution Training, 2019.10 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

TYPES OF DR PROGRAMS190 utilities responded to SEPA’s2019 annual Utility Survey: Enrolled DR capacity: 20.8GWDispatched DR capacity:12.3 GWSource: “2019 Utility Demand Response Market Snapshot “, presented by Smart Electric Power Alliance (SEPA) at 40th PLMAConference, November 2019.11 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

2018 DEMAND RESPONSE ENROLLED CAPACITYTop States:1. Florida - 2,911.4 MW2. California - 1,335.4 MW3. North Carolina - 1,319.8 MW4. Maryland - 1,212.8 MW5. Illinois - 1,146.5 MWSource: “2019 Utility Demand Response Market Snapshot “, presented by Smart Electric Power Alliance (SEPA) at 40th PLMAConference, November 2019.12 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

CONTRIBUTION IN DEMAND RESPONSE BY CUSTOMERSECTORNATIONAL MARKET OVERVIEW: 2018 DRDEMAND RESPONSE CONTRIBUTION BY CUSTOMER mercial,22%Source: Based on data in the “2019 Assessment of Demand Response and Advanced Metering”; Federal Energy RegulatoryCommission Staff Report, December 2019”13 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

DEMAND RESPONSE EVOLUTION Largely manualcontrol Interruptible tariffsfor large C&I 1-way Direct LoadControl forResidential Used for CapacityPlanning &Emergencies Introduced ToWholesale Markets Increased automation Increased Precision Eventually AncillaryServices Behavioral/voluntaryOptions Smarter Equipment 2-way communications Some Near Real-TimeVisibility Provide Multiple GridServices Respond to Controlsand/or Price Signals Distribution &Transmission Relief Introduction ofStorage Migration to DER1616 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

A RECENT SURVEY REVEALS DR AMONG THE MOST USEFUL DERFOR UTILITY OPERATIONSWhich will be the most prevalentDER in terms of capacity by2025?Which DER will be the mostuseful to utility operations by2025?Solar isexpected tobe the mostprevalent DERDR isexpected tobe the mostuseful DERSource: Navigant Consulting, Inc. Public Utilities Fortnightly. July 2017. State & Future of thePower Industry. tate-and-future-of-powerindustry-217 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED17

LIGHTING SHOWS SIGNIFICANT CONTRIBUTION IN DRPOTENTIAL ESTIMATESSource: 2025 California Demand Response Potential Study, Final Study Results,LBNL, 2017.21 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

AUTOMATED DEMAND RESPONSE & OPENADRWhat is Automated DR? Automated Demand Response (Auto-DR) consists of fully automated signaling froma utility, Independent System Operator (ISO), Regional Transmission Operator(RTO) or other appropriate entity to provide automated connectivity to customer enduse control systems, devices and strategies.What is OpenADR ? Open Automated Demand Response (OpenADR) is an open and interoperableinformation exchange model and emerging Smart Grid standard. OpenADRstandardizes the message format used for Auto-DR so that dynamic price andreliability signals can be delivered in a uniform and interoperable fashion amongutilities, ISOs, and energy management and control systems. While previouslydeployed Auto-DR systems are automated, they are not standardized orinteroperable.Source: OpenADR Alliance, https://www.openadr.org/22 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

AUTOMATED DEMAND RESPONSE REQUIREMENTS IN BUILDINGCODESCalifornia Title 24 2016 Section 130.1(e)Demand Responsive Controls—Lighting and Automation In buildings larger than 10,000 square feet, total lighting power shall be capable of beingautomatically reduced by a demand response signal by at least 15%. Lighting reduction shall be uniform. Non-habitable spaces do not count toward this requirement Spaces with less than 0.5 watts per square feet shall not count toward total power Demand response controls and equipment shall be capable of receiving and automaticallyresponding to at least one standards-based messaging protocol.OpenADR Requirements in City of Austin building codes (starting late 2016) for newlyconstructed buildings or facilities.Excerpts from the code: “ C405.2.6 Demand response. For all buildings having central control of a) lighting levels and/or b)the ability to turn on and off individual lamps, the controls shall have the capability to reduce lightinglevel in response to signals, based on OpenADR 2.0 or higher protocols, from a centralized contactor software point. Controls may be programmed to provide either an automatic or an operatoradjustable degree of lighting reduction.”23 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

LIGHTING CONTROLS: DR OPPORTUNITIES Demand reductions using connected LEDlighting system with embedded sensorsand wireless controls integrated into theluminaire. successfully demonstrated. The luminaires connect to wireless accesscontrols (WACs) that are connected to theEMS. As a prototype, the version of the solutionused for this project allowed for grouping offixtures by functional area. Newer versionsallow for fixture by fixture control. The solution is scalable for any job size,from small to large. Integration into EMS or buildingmanagement systems (BMS) can beachieved through the network gateways. SDG&E demonstration establisheddemand reduction capabilities during DRevents.Connected Lighting Points System ArchitectureSource: San Diego Gas & Electric Emerging Technologies Program, Wireless LightingControls Automated Demand Response, August 201625 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

COSTS AND ENERGY BENEFITS FROM NETWORKED LIGHTINGCONTROLS Energy-only cost-effectiveness of demand responseenabled lighting systems varies by building size andservice territory. In Pacific Gas & Electric Company’s service territory,where commercial retail electricity rates are relativelyhigh (especially on peak), there is a net benefitacross all building sizes and types. In contrast, in Southern California Edison’s serviceterritory where electricity rates are lower, the costeffectiveness depends strongly on the building size,with a net benefit for large buildings only. The results for the San Diego Gas & ElectricCompany’s service territory are somewhere betweenthese two cases. Primary value proposition for demand responseenabled networked lighting controls comes from thesite-level energy savings that are realized with orwithout demand response participation.Source: “The Value Proposition for Cost-Effective, Demand Responsive-Enabling,Nonresidential Lighting System Retrofits in California Buildings”, CEC, April 2019.28 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

CUSTOMER VALUE PROPOSITION OF NETWORKED LIGHTINGCONTROLS: QUANTIFICATION OF NON-ENERGY BENEFITS Recent study by the Lawrence Berkeley National Lab (sponsored by the California Energy Commission)developed a framework to capture the high customer values from Networked Lighting Controls (NLC) nonenergy benefits to drive DR adoption.The study reviewed more than 130 networked lighting control case studies to quantify the non-energy benefits and developa benefits value intensity model that captures the energy and non-energy benefits related to building, people and revenueSource: “The Value Proposition for Cost-Effective, Demand Responsive-Enabling, Nonresidential Lighting System Retrofits in California Buildings”, CEC, April2019.29 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL RIGHTS RESERVED

Top States: Source: "2019 Utility Demand Response Market Snapshot ", presented by Smart Electric Power Alliance (SEPA) at 40th PLMA Conference, November 2019. 13 / 2020 NAVIGANT CONSULTING, INC., N/K/A GUIDEHOUSE, INC. ALL R IGHTS RESERVED NATIONAL MARKET OVERVIEW: 2018 DR