This Phase I System Impact Study Report (PH1) has been prepared in accordance with the PJM Open Access Transmission Tariff, Part VII, Subpart D, sections 307 and 308 for New Service Requests (projects) in Transition Cycle 2. The Project Developer/Eligible Customer (developer) is Scarlet Energy Storage LLC, and the Transmission Provider (TP) is PJM Interconnection, LLC (PJM). The interconnected Transmission Owner (TO) is Virginia Electric and Power Company (d/b/a Dominion Energy Virginia).

The Phase I System Impact Study is conducted on an aggregate basis within a New Services Request’s Cycle, and results are provided in both (i) a single Cycle executive summary format and (ii) an individual project-level basis. The Phase I System Impact Study Results (for both the executive summary and individual reports) will be publicly available on PJM’s website. Developers must obtain the results from the website.

In accordance with PJM Manual 14H, section 4.3, PJM takes the following actions during the Phase I System Impact Study:

1. PJM studies each New Service Request on a summer peak, winter peak and light load RTEP base case study. The case year is dependent on the new services cycle under study. PJM will identify the base case year to be used in the study of a specific cycle on its website.
2. PJM will only perform load flow analysis during the Phase I System Impact Study.
3. In Phase I of the Cycle, PJM conducts an Affected System screen to identify any New Service Request with Affected System impacts and provides each Affected System Operator with a list of New Service Request in the Cycle with potential impacts to their respective system.
4. PJM will create both the short circuit and stability base cases to be used in the Phase II System Impact Study.
5. The Phase I System Impact Study results will be publicly available on PJM’s website. Project Developers and Eligible Customers must obtain the results from the website.

The Transmission Owner takes the following actions during the Phase I System Impact Study:

1. Identify required Interconnection Facilities to accommodate the New Service Request.
2. Identify required Network Upgrades to mitigate system violations from the Phase I System Impact Study.
3. Provide planning-level preliminary estimates of Interconnection Facilities and Network Upgrades including scope, cost and elapsed time to complete the work.

At the close of Phase I System Impact Study, PJM will initiate Decision Point I (DP1). During DP1, the Project Developer will have 30 days to decide whether to proceed with their project. If the Project Developer elects to proceed, they should provide the elements defined in the PJM Open Access Transmission Tariff, Part VII, Subpart D, section 309.A.1. Additional information on these elements is available in PJM Manual 14H sections 4.4, 6, and 7.

Allowable project modifications at Decision Point I are defined in PJM Open Access Transmission Tariff, Part VII, Subpart D, section 309.B. Additional information regarding allowable project modifications can be found in PJM Manual 14H, section 9.8.

The Project Developer has proposed a Storage facility located in the Virginia Electric and Power Company (d/b/a Dominion Energy Virginia) zone — Spotsylvania County, Virginia. The installed facilities will have a total capability of 200.0 MW with 200.0 MW of this output being recognized by PJM as Capacity.

Physical Interconnection Facility Study

Physical Interconnection Facilities Study is not performed as part of the Phase I System Impact Study. Physical Interconnection Facilities Study will commence in the Phase II System Impact Study.

AH1-263 will interconnect on the Virginia Electric and Power Company (d/b/a Dominion Energy Virginia) transmission system at the Chancellor 115 kV Substation.

The table below shows a summary of the total cost estimates for this New Service Request project. In the Phase I SIS, the costs shown are subject to change as a result of a facility study performed by the TO during the Phase II or Phase III System Impact Study.

Based on the Phase I SIS results, the AH1-263 project has the following allocation of costs for interconnection. The cost contribution towards Readiness Deposit are also shown below.

* Contributes to calculation for Readiness Deposit #2 (RD2). See Readiness Deposit section of report for additional detail.

Definitions

Transmission Owner Interconnection Facilities: Facilities that are owned, controlled, operated and maintained by the Transmission Owner on the Transmission Owner’s side of the Point of Change of Ownership to the Point of Interconnection, including any modifications, additions or upgrades made to such facilities and equipment, that are necessary to physically and electrically interconnect the Generating Facility with the Transmission System or interconnected distribution facilities.

Stand Alone Network Upgrades: Network Upgrades, which are not part of an Affected System, which a Project Developer may construct without affecting day-to-day operations (e.g. taking a transmission outage) of the Transmission System during their construction.

Network Upgrades: Modifications or additions to transmission-related facilities that are integrated with and support the Transmission Provider’s overall Transmission System for the general benefit of all users of such Transmission System. Network Upgrades have no impact or potential impact on the Transmission System until the final tie-in is complete.

Notes

Note 1: PJM Open Access Transmission Tariff (OATT), Part VII, Subpart D, section 307.5 outlines cost allocation rules. The rules are further clarified in PJM Manual 14H, section 4.2.6. PJM shall identify the New Service Requests in the Cycle contributing to the need for the required Network Upgrades within the Cycle. All New Service Requests that contribute to the need for a Network Upgrade will receive cost allocation for that upgrade pursuant to each New Service Request’s contribution to the reliability violation identified on the transmission system in accordance with PJM Manuals.

Note 2: There will be no inter-Cycle cost allocation for Interconnection Facilities or Network Upgrades identified in the System Impact Study costs identified in a Cycle; all such costs shall be allocated to New Service Requests in that Cycle.

Note 3: For Project Developers with System Reinforcements listed: If this project presents cost allocation to a System Reinforcement indicates $0, then please be aware that as changes to the interconnection process occur, such as other projects withdrawing, reducing in size, etc, the cost responsibilities can change and a cost allocation may be assigned to this project. In addition, although this project presents cost allocation to a System Reinforcement is presently $0, this project may need this system reinforcement completed to be deliverable to the PJM system. If this project desires to come into service prior to completion of the system reinforcement, the Project Developer will need to request PJM to perform an interim deliverability study to determine if they would be deliverable for all or a portion of their output for each delivery year until the system reinforcement is complete.

Per Tariff Part VII, Subpart D, section 309 (Decision Point I) A.1.a.i and PJM Manual 14H, section 6.2, Readiness Deposit #2 (RD2) are funds committed by the Project Developer or Eligible Customer based upon the applicable contribution to Network Upgrades as defined below. Readiness Deposits are not used to fund studies nor to offset Security.

During Decision Point I (DP1), the Project Developer or Eligible Customer is required to submit Readiness Deposit #2, which is calculated as 10% of cost allocation for required Phase I Network Upgrades minus Readiness Deposit #1.

Note 1: “Network Upgrades” referred to in the calculation include both (i) the Physical Interconnection Network Upgrades and (ii) the System Reliability Network Upgrades as shown in the Cost Summary table.

Note 2: Readiness Deposit #1 (RD1) = ($4,000 * Project Size (MW))

Note 3: Readiness Deposit #2 (RD2) = 10% of cost allocation for required Network Upgrades minus RD1. Readiness Deposit #2 (RD2) can be zero, but may not be a negative number.

Readiness Deposit #2 Due for Project AH1-263

Readiness Deposit #2 has been calculated for the project based on the Phase I System Impact Study results and is shown in the table below. This Readiness Deposit #2 must be provided at Decision Point I through either a wire transfer or letter of credit per Manual 14H, Section 6.2.

Note: Failure to provide an acceptable form of Readiness Deposit #2 by the end of Decision Point I will result in withdrawal and termination of the New Service Request.

For additional detail regarding Readiness Deposit Refunds, reference PJM Manual 14H, section 6.2.1. The Readiness Deposit Letter of Credit template can be found here.

The total preliminary cost estimate for the Transmission Owner scope of work (including TOIF and Physical Interconnection Network Upgrades) is given in the table below. These costs do not include CIAC Tax Gross-up.

Based on the scope of work for the Interconnection Facilities, it is expected to take a range of 36 to 40 month(s) after the signing of a Generator Interconnection Agreement (as this is a FERC connection) and construction kickoff call to complete the installation of the physical connection work. This assumes that there will be no environmental issues with any of the new properties associated with this project, that there will be no delays in acquiring the necessary permits for implementing the defined interconnection work, and that all system outages will be allowed when requested.

The schedule for any required Network Impact Reinforcements will be more clearly identified in the Phase II and Phase III System Impact Studies.

PJM performed a power flow analysis of the transmission system using a 2028 load flow model and the results were verified by Dominion.

The developer is responsible for all design and construction related activities on the developer’s side of the Point of Change in Ownership. Dominion interconnection requirements can be found here.

To the extent that these Applicable Technical Requirements and Standards may conflict with the terms and conditions of the Tariff, the Tariff shall control.

The developer will be required to install equipment necessary to provide Revenue Metering (KWH, KVARH) and real time data (KW, KVAR) for their generating Resource. See PJM Manual 01, PJM Manual 14D, and PJM Tariff Part IX, Subpart B, Appendix 2, section 8.

The Project Developer will be required to comply with all interconnected Transmission Owner’s revenue metering requirements located at the following link: PJM - Transmission Owner Engineering & Construction Standards.