Case study of Brazil's smart grid market

Silver Spring NetworksOverviewAlexandre Sicchieroli Soares – asoares@silverspringnet.comSales Engineer

Agenda• Global scope and Brazilian presence• Market Drivers for Our Solutions in Brazil• Regulatory and Government Framework• Technological Overview (high level)• Device Manufacturer Partnerships in Brazil• Current Projects• Challenges We’ve Seen in Deployments• Market potential2

Silver Spring Networks – worldwide presenceFocus on utilities• 10 year-old company – long and proven real world deployments• #1 share in networking technology in USA and Australia• Single platform for multiple Smart Grid applications- Advanced Metering, Distribution Automation, Demand-side Management• Standards Based – future-proofed and fostering innovation• Silver Spring Brasil – initiated in Feb/2010 - taking responsibility for LatAm• Global experience•••3

Forces and OpportunitiesHistoricalReliability andLoad ManagementOperationalEfficiencySecurityRecentEnvironmentalRegulationCustomerInvolvementEmergingRenewableIntegrationNew Sourcesof DemandCarbonMonetization4

New challenges to be consideredNew forcesEnvironmentalRegulationCustomerInvolvementReliabilityCost5

The impact of new forcesCustomerRecognition that relationship needs to changeRegulatory pressure to deliver clear consumer benefitRegulationLegislation on goals for EE, RPS, GHG abatementRestructuring to align incentives (e.g., decoupling)Shifting focus to demand side6

Local presence in BrazilMarket opportunity• Silver Spring sees Brazil as a core geography in its globalexpansion planning- Market leader already in USA and Australia, two mature markets• Strong investment from corporate- Local Sales & Services team- Marketing presence through events and related shows- Continuous support from HQ• Product certification / management / development• Meter vendor integration• Capability for local production• Importation logistics7

Our Platform VisionConnects Any Device that Generates / Distributes / Consumes / Monitors EnergyUtility OperationResidentialDevicesSmart GridDevicesCommercial &IndustrialDevices8

SG Drivers in the Brazilian marketFrom the Utilities’ perspective• Primary- Non-technical loss- Operational efficiency (Monthly cellular network fees are expensive)- Operational cost reduction (Cellular not often reliable/available /truck rolls)• Secondary- Government mandate for smart meter – not yet clear what directionthis will go, predictions vary• No “Big Push” for residential Smart Metering in Brazil right now- Distributed generation (new sources of energy connecting on to thegrid such as solar panels)9

Initial Solutions for BrazilAMI & DA – Current Market DriversSSN – AP /bridgeSSNE C MSSNE C MMeterConcentratorMDMAccessPointSSNBridgeResidentialcustomersSSNBridgeSSNBridgeSSNBridgeIndividual C&I orresidentialRelay10© 2008 Silver Spring Networks. All rights reserved. 10

Regulatory bodiesSingle National Approach• ANEEL – government regulatory body that creates all policydefinitions that utilities must follow• Anatel – approves and certifies all telecommunicationdevices permitted in country- Silver Spring has all of its devices already certified• INMetro – approves metrology devices (i.e. meters)- Meter vendors submit their meters with Silver Spring integrated NICsto ensure RF module does not interfere with device metrology11

Silver Spring Brazil integrationLocal meter vendor partnerships• Individual metering (integrated network interface card)- Group A (Commercial and Industrial indirectly-metered)- Residential Group B (both single and poly phase direct metering)• Metering – Centralized (Pole Mounted)• External interface (e.g. via serial port) to the meter• DA Partners – self-healing solution12

Current ProjectsPrimary drivers of NTL and Operational Efficiency• Operational Efficiency – PoC / full deployment- C&I only to start, across a large service territory- Lower operational cost – truck rolls are expensive- Build a broad network for future applications to be accommodated• Non-Technical Loss - pilots- Pole-top concentrator box in low-income area – R&D funded- Mixed metering (polyphase / concentrator) service area• Integration with utility’s own already-existing MDC/MDM system• Customer benefits proven:- Faster response time- Network more reliable- Readings happen more often13

Challenges• Field crew training• Equipment adjustment- Internal x external antennas for radio networking• Installation characteristics- NTL schemes include areas with poor infrastructure and includephysical protection that would interfere with “normal” radio networkoperations• metal boxes• underground concrete vaults• poletop device congestion14

CompetitionLow cost is important decision criteria• GPRS solution still quite challenging for utilities- Costly monthly operating expenditure- In best case, SLA is about 75%- Not practical for C&I or DA installations where reliability and throughputspeeds for the network are more important• PLC has had mixed success in Brazil- Succeeded in some but failed in others• Works best when lines are being replaced (e.g. BTX twisted-pair cablingreplacement program upgrades the lines to permit low-baud rate PLC tofunction)• Grid characteristics don’t help PLC at all• PLC not extensible, secure, difficult to scale• Low-cost, non-scalable RF mesh present in market- “seems to work” for small-scale deployment and establishes pricepressure on scalable, enterprise-style solutions like SSN15

Market opportunity• Brazil continues to grow at higher-than-average GDP levelsagainst OECD comparatives• “Can’t be left behind” mentality• + 60MI meters to be replaced if / when mandate getsissued• Areas of major development AMI / DA / EV / EE / ODS /DSM- SSN platform is optimally positioned to adapt to market trends andpriorities to bring maximum benefits to customers and partners16

17Thank you!