“The Future’s So Bright I Gotta Wear Shades”

Demand Response Prospects in PJM

October 1, 2012

Introduction to EnerNOC

Market Leader in C&I Demand Response and Energy Efficiency

Largest Demand Response provider in the world

More than 8,000 MW of Demand Response under managementacross 12,500 customer sites

Over 500,000 MWh of Energy Efficiency achieved to date

100+ utility and grid operator partners 100+ utility and grid operator partners

Strong Track Record

Publicly traded on NASDAQ (ticker: ENOC)

2011 revenues of ~$280 million

600+ full-time employees

Headquarters in Boston

Types of PJM Demand Response

• Capacity – Mandatory. Called during emergencies to alleviate actualor anticipated shortages of operating reserves on a zonal or sub-zonal basis

• Energy – Voluntary. Offered into PJM’s energy markets anddispatched when cost-effective to do so and only when doing soprovides net benefits to consumers

• Reserves – Voluntary. Offered into PJM Reserve markets and paid• Reserves – Voluntary. Offered into PJM Reserve markets and paidclearing price when economic. Dispatched during reserve shortages.

• Regulation – Voluntary. Offered into PJM regulation market andpaid to follow load on a second-to-second basis

3

REGULATION FROM DR

4

A new kid on the block!

5

RESERVES FROM DR

6

7

ECONOMIC DR

8

9

Order 745 has had a major impact

Since PJM has implemented Order 745, economic DR activity has exploded

In just the first seven months of 2012, compared to the same time last year

• MWh settled are up 6.7x

• Participating sites are up 3x

• Settlements are up 1.7x

• There has been more economic DR than in all of 2010 and 2011 combined

10

This is all the moreimpressive given the fact that2012 load weighted LMPs arelower than at any time in thepast decade

CAPACITY DR

11

Capacity Markets: The Consumer Perspective

12

Capacity = Energy delivered when needed

13

New Capacity Market(RPM)

Capacity DR: An Ongoing Growth Story

15,000

20,000

25,000

Energy Efficiency

RPM and FRR DR

Interruptible Load for Reliability

Active Load Management

Committed IL, DR & EE

0

5,000

10,000

2005/2006 2007/2008 2009/2010 2011/2012 2013/2014 2015/2016

DR Capacity will continue to grow

• 2009 and 2011 BRAs saw reductions in committed DR due to impacts of ILRgoing away, low prices and a major retroactive change in M&V rules

• These changes have been digested by the market, DR has adapted to them,and prices have improved

• The market has also understood and accommodated PJMs multiple DR• The market has also understood and accommodated PJMs multiple DRproducts

• 2012 BRA saw a record amount of DR clear (almost 15,000 MW) includingsignificant amounts of Summer Extended and Annual DR

• Almost 5,000 MW remained uncleared and poised to participate in 2013

• Capacity prices are rising - 79% increase in market prices between 2012and 2015 BRAs make DR much more interesting to potential participants

15

Emergency DR saves billions of dollars1. The Market Monitor reported that without 9,300 MW DR and EE clearing

in the 2013/2014 Base Residual Auction, capacity costs paid byconsumers would have been $11.8 billion more than they were for justone year. That’s $200 for every customer in PJM.

2. Generator revenues would have been $11.8 billion higher than they willnow be -> 11.8 billion reasons why Big Generators want to reduce DRparticipation by any means possible.

3. This occurred because the DR and DG, offered was far less expensivethan Generation alternatives.

Fundamental facts are these:

1. Large amounts of untapped DR potential remains

2. DR continues to be the lowest cost source of new capacity, whetherLimited, Summer Extended, or Annual

3. Limited DR may be effectively capped, but Summer and Annual DRwill continue to grow, displacing more costly Big Generation

4. Big Generators will continue to complain about it16

17

Contact Information:

Aaron Breidenbaugh – Director of Regulatory Affairs

EnerNOC, Inc. | 101 Federal St. | Boston MA 02110

(617) 913 9054

abreidenbaugh@enernoc.com

18