Using Information Technology to Meet the

Carbon ChallengeJon C. Arnold

Managing Director, Microsoft Utilities Group

Utility Industry Market Drivers

Energy Technology Consumerization

Globalization & Price Pressures

Workforce Challenge

Resource Adequacy and Operational Efficiency

Regulatory Uncertainty

Climate Change

The drive for sustainable and cleaner energy sources shifts energy efficiency and distributed generation into the hands of consumers. - Gartner May 2007

Costs surge for building power plants due to the incredible demand in China and the rest of Asia for raw materials.

– New York Times 2007

More than half of today’s utility work force (about 300,000 workers) will be eligible for retirement over the next 10 years and most of them plan to retire.

- U.S. Bureau of Labor Statistics

“We are at the stage where emergency situations are becoming more frequent.”

- Rick Sergel, president and CEO of NERC

Regulatory certainty and climate now supersede concerns about reliability and fuel costs. – GF Energy CXO Survey 2007

Over 90% of the industry’s CEO’s now expect to implement a global climate strategy.

- GF Energy CXO Survey 2007

Trend in Global Average Surface Temperature

Business and Regulatory Environment

229

197

11,297

11,067

48.8

62.3

16,376

58.7

16,077

65.3

C02 emissions over the period (gr. CO2 /KWh): Total 250

C02 emissions over the period (gr. CO2 /KWh): Spain 227

Emission-free production: total (GWh) 10,586

Emission-free production: Spain (GWh) 10,370

Ratio of emission-free production to total production (%) 49.5

Ratio of emission-free production in Spain to total production (%) 61.7

Total emission-free installed capacity: (MW) 15,679

Total emission-free installed capacity: (%) 60.6

Emission-free installed capacity: Spain (MW) 15,372

Emission-free installed capacity: Spain (%) 68.0

Iberdrola’s Emissions Indicators, 2005–2006

Business and Regulatory Environment

Shareholders and credit agencies are taking note…

Role of IT

Promising New Technology Combos

New combos– Smart metering/smart

appliances– Intelligent grid– Satellite imaging,

geographic information systems (GIS), and global positioning systems (GPS)

New Services– Smart metering– Recycling services for

hardware– EH&S Saas– Forest Credit Certification

Actions Utilities can take to mitigate the effect of green

house gases• Increasing the proportion of renewables

• Investing in carbon sequestration or reforestation

• Participating in voluntary carbon trading markets

• Helping utility customers reduce or shift energy consumption through energy efficiency and demand response programs

• Decreasing transmission line losses through strategies including intelligent grid

• Carbon management solutions including monitoring, verification, management, trading, risk management

• Internal supply chain, fleet optimization, green travel and operations such as green data centers

Customer Business Challenge

Customer Business Challenge SolutionSolution Customer

Results/BenefitsCustomer

Results/Benefits

AEP Improves Reporting and Compliance with Software Plus Services

• Coal-fired generation with large carbon footprint

• Large exposure with cap and trade — $1.6 billion

• Limited access to data for compliance management

• Workforce challenge• Variations in business

processes and technology

• Coal-fired generation with large carbon footprint

• Large exposure with cap and trade — $1.6 billion

• Limited access to data for compliance management

• Workforce challenge• Variations in business

processes and technology

• MESH project – Standardized approach for managing environmental, safety and health compliance

• Enviance software as a service for compliance management

• Software Plus Services for more complex requirements that require a combination of internally based transactional and analytic applications.

• MESH project – Standardized approach for managing environmental, safety and health compliance

• Enviance software as a service for compliance management

• Software Plus Services for more complex requirements that require a combination of internally based transactional and analytic applications.

• Increased eficiency freeing tme for compliance activities – doubled their capacity for work

• Documented Processes to mitigate aging workforce

• Improved visibility and collaboration speeding resolution

• Reduced notices of violation

• Increased eficiency freeing tme for compliance activities – doubled their capacity for work

• Documented Processes to mitigate aging workforce

• Improved visibility and collaboration speeding resolution

• Reduced notices of violation

Microsoft Windows Server Microsoft SQL Server Microsoft Office

Customer Business Challenge

Customer Business Challenge SolutionSolution Customer

Results/BenefitsCustomer

Results/Benefits

Duke Energy Automates Regulatory Reporting and Compliance

• Maintain environmental compliance during corporate expansion

• Eliminate disparate applications and manual, paper based compliance management methods

• Achieve a positive ROI from implementation of the new system

• Maintain environmental compliance during corporate expansion

• Eliminate disparate applications and manual, paper based compliance management methods

• Achieve a positive ROI from implementation of the new system

Etrac project enabling Duke to minimize business disruptions and fines through improved compliance management ESS Essential Suite™ for Utilities:•ESS Essential Compliance ManagerTM

Etrac project enabling Duke to minimize business disruptions and fines through improved compliance management ESS Essential Suite™ for Utilities:•ESS Essential Compliance ManagerTM

• Greater executive visibility of compliance issues

• Replaced over 30 disparate compliance systems with one integrated system

• High ROI - increased role based productivity, decreased time commitments, and reduced disruptions and fines

• Greater executive visibility of compliance issues

• Replaced over 30 disparate compliance systems with one integrated system

• High ROI - increased role based productivity, decreased time commitments, and reduced disruptions and fines

Microsoft Windows Server Microsoft SQL Server Microsoft SharePointMicrosoft Office

Microsoft Office Microsoft® SharePoint Portal ServerLive Communication ServerLive Meeting

Customer Business Challenge

Customer Business Challenge SolutionSolution Customer

Results/BenefitsCustomer

Results/Benefits

Reducing the Carbon Footprint through next generation Collaboration Tools

• 10% carbon reduction target year-on-year from ongoing operations

• Reduce costs

• Improve safety

• One E.ON – standardized approach

• 10% carbon reduction target year-on-year from ongoing operations

• Reduce costs

• Improve safety

• One E.ON – standardized approach

• Green Travel – points mean prizes!

• Electricity Sourcing – ongoing operations entirely from renewable sources

• Buildings Management

• Use of Microsoft tools – Live Meeting, LCS/Communicator, Video Conferencing, SharePoint

• Green Travel – points mean prizes!

• Electricity Sourcing – ongoing operations entirely from renewable sources

• Buildings Management

• Use of Microsoft tools – Live Meeting, LCS/Communicator, Video Conferencing, SharePoint

• Savings from Live Meetings in 2006 £120k+

• Live Communication server getting business pull and providing green benefits after some initial resistance

• SharePoint team sites are forming part of the big picture of carbon reduction

• Approach being used in some other countries within E.ON group

• Savings from Live Meetings in 2006 £120k+

• Live Communication server getting business pull and providing green benefits after some initial resistance

• SharePoint team sites are forming part of the big picture of carbon reduction

• Approach being used in some other countries within E.ON group

Energy Efficiency in Data Centers

Microsoft Releases a Set of Best Practices for Energy

Efficient Data Centers

©2008 IDC 12

http://download.microsoft.com/download/a/7/b/a7b72ab1-ca17-4589-923a-83b0ff57be6d/Energy-Efficiency-Best-Practices-in-Microsoft-Data-Center-Operations-CeBIT.doc

Climate Change is a Business Issue

©2008 IDC 13

”Companies that persist in treating climate change solely as a corporate social responsibility issue, rather than a business problem will risk the greatest consequences.”Harvard Business Review, Oct. 2007 — A Strategic Approach to Climate by Michael E. Porter and Forest L. Reinhardt

Microsoft in Utilities Microsoft in Utilities www.Microsoft.com/utilitieswww.Microsoft.com/utilities

Thank You!Thank You!