MicrogridsObservations from a Project Development PerspectiveMidwest Energy Policy ConferenceOctober, 2016

Derek Price

Johnson Controls, Inc. —2

Johnson Controls – After the TYCO merger

Johnson Controls, Inc. —4

Johnson Controls - Microgrid Project Development

• Customers

• Projects

• Hundreds of Central Utility Plants and Distributed

Generation projects

• Project Engineering Development Teams

• Financing Mechanisms

• Products

• Building Automation

• Energy Storage

• Security

• Economic Dispatch Engine

• Complementary Relationships with other market

participants

Johnson Controls, Inc. —5

Microgrid – North American Adoption by Vertical in 2020(Market has high component of campus environments)

26.0%19.0%

Public Institutions

Military Installation

27.0%

City / Community

17.0%University / Research

9.0%

Commercial / Industrial 3.0%

Island

1.0%

Remote Communities

Source: GTM, Navigant, LBN, BCG, Johnson Controls Analysis

Johnson Controls, Inc. —6

Energy Storage Can Provide Multiple Operational Benefits Along With Cost Savings and Revenue Opportunities

Examples of potential value:

Power Quality Improvement

Power Factor Correction

Voltage Support

Back Up Power

Demand Charge Management

Load Shift

Frequency Regulation

Capacity Demand Response

Renewable Energy Support

Source: RMI

Johnson Controls, Inc. —7

Markets for Energy Storage

HawaiiDriven by Demand

Charges, solar PV

integration as well

as Federal and

State tax credits –

when integrated with

Solar PV

California

Driven by Demand

Charges, solar PV

integration, State

incentives and Federal

Tax credits – when

integrated with Solar

PV

Puerto Rico

Driven by Solar

Firming requirements,

Demand Charges and

Federal Tax credits –

when integrated with

Solar PV

PJM ISO

Driven by

Frequency

Regulation

Market

Johnson Controls, Inc. —8

Project Development Process

Understand Customer’s Drivers

• Resiliency, Sustainability, Financial Metrics

• Preliminary Analysis

• Reduce Energy footprint, optimize

generation/storage

• Run economic models

• Optimize new equipment installation

• Customer Review

• Detailed Analysis & Design

• Develop Bid Package and Quotes

• Understand interconnection process, cost

and schedule impact

Isle Royale Remote Microgrid

Johnson Controls, Inc. —9

Observations

Microgrids don’t typically pay for

themselves

• Checkpoints with customer along

development cycle to ensure

alignment

• Sometimes moved to next phase of

project

Development process still evolving

• Utility interface

• Learning to work with other

providers

Energy Efficiency isn’t usually included

Contracting Process

• T’s and C’s

Service Providers - Engineering

Services, Communication, Power

System Automation

Typical Backup generation ready for

integration – renewable energy firms

not as much

Energy Storage

• Significant pricing declines

expected

• Alternative technology applications

Johnson Controls, Inc. —10

Financing

Public/Institutional/University/Commercial/Industrial

Customer Budget for the investment in Resiliency

• Additional Debt

• Make other budget choices

Performance Contract – ESCO

Off Balance Sheet – Power Purchase Agreement

Department of Defense

Drivers for Sustainability, Renewable Energy and Energy

Security

• Enhanced Use Lease

Johnson Controls, Inc. —11

Questions?