Impacting Your Business Clean Energy Systems & Green Hydrogen

1. Impacting YourBusinessClean Energy Systems & Green Hydrogen Confidential Property of Proton Power, Inc. Tel: (865) 376-9002 Fax: (865) 376-1802 info@protonpowerinc.com www.protonpowerinc.com Proton Power, Inc. 487 Sam Rayburn Parkway Lenoir City, TN 37771

2. Cellulose To Hydrogen Power (CHyP) …And Make This… Electricity We Take This… Energy Crops Liquid Fuels Water MSW Heat In A Way That Is Carbon Negative Woody Waste Biochar

3. The Proton Power Difference… Inexpensive Hydrogen From Proton Power

4. How The CHyP System Works • Biomass processing system prepares feedstock • 45% maximum moisture content – 6-12mm chip sizes • Biomass broken down in pyrolysis process in CHyP • Heated to 1000C in absence of oxygen • Syngas cleaned by recirculating through incoming biomass • Tars, particulates removed • Syngas and biochar exit the CHyP • ~96% syngas, ~4% biochar

5. Advantages Of The CHyP Process • 65% H2, 30% CO2, <5% CO in syngas • Highest hydrogen content of any syngas • Up to 45% biomass moisture content acceptable • No need for expensive and energy-intensive drying process • Insignificant amounts of tars, particulates in syngas • No need for expensive and energy-intensive clean-up • ~96% syngas, ~4% biochar • High quality biochar is valuable co-product • One tonne of biomass yields 150 kg of hydrogen • 5x the yield of most competitors • 1 patent granted, 8 patents in process • This is different than anything else Low Capital, Production Costs  Excellent ROIs

6. Additional Benefits Of CHyP • Cellulosic fuel is renewable and sustainable • Process is carbon neutral or negative • Continuous operation • CHyP system can provide energy all ways energy used: heat, electricity, and liquid fuel • Small footprint allows remote locations • Hydrogen on-demand – no need for storage • Systems are scalable upward from 250 kwe A Renewable Energy System That Makes Sense

7. electricity projectfinancials

8. Electricity • 1200 kwh per tonne of biomass (measured bone dry) • Combustion product is mostly water • CHyP syngas output can be varied for genset operation • 40% H2 / 40% CO / 10% CH4 • Energy content up to 400 Btu/scfm – lowers gensetderate • Systems scalable upward from 250 kw

9. 5MWe Proton Power System

10. Project Scope Included Not Included Site Preparation Tractors, Loaders, Forklifts, etc. Fees and expenses associated with the application and/or qualification process for permits, approvals, and/or licenses Sales taxes, import taxes, tariffs, duties Financing costs • CHyPs • Natural Gas Gensets • Two-Stage Biomass Reduction • 3 Day Biomass Storage • Biochar Collection & Removal System • Controls • Biomass, Biochar Conveyors & Hoppers • Nitrogen Generation System • Pneumatic Compressor System • Buildings For CHyP Units, Gensets • Valves, Diverters, Etc. Included • Utility Interconnection Equipment • Installation • Startup and Commissioning • System Operation Training

11. System Price Vs. System Size Economics Smaller Systems Penalized: • Redundant CHyPs • Redundant Gensets • Biomass equipment not downwardly scalable Solutions: • Use small systems for base loads with no redundancy • Buy pre-processed feedstock Size Matters!

12. Production Cost Vs. System Size Economics Smaller systems penalized(again) due to labor component not downwardly scalable Solutions: • Use existing manpower to run CHyP systems • Better where labor rates low Labor Costs Drive Production Costs

13. ROI Vs. Biomass Cost Economics As expected, biomass cost is major determinant of financial performance Solutions: • Locate close to biomass source • Lock in long term agreements • Best when biomass is a byproduct of a manufacturing process and has a disposal cost Biomass Cost Has Significant Impact

14. ROI Vs. Electricity Rate Economics As expected, electricity rate is major determinant of financial performance Solutions: • Base load to offset retail rate without tying to grid • Locations with high electricity rates more attractive • Locations with high incentives more attractive Electricity Rate Has Significant Impact

15. Incentives – U.S. Economics • Grants • Investment Tax Credits • Production Tax Credits • Open-loop: $0.011/kwh • Closed-loop: $0.023/kwh • If construction begins by 12/31/13 • Renewable Energy Credits • Loan Programs Source: http://www.dsireusa.org/

16. ROI Vs. Biomass Cost (w Incentives) Economics Note: Production tax credit of $0.023/kwh assumed Production Tax Credit Doesn’t Help Much

17. ROI Vs. Electricity Cost (w Incentives) Economics Note: Production tax credit of $0.023/kwh assumed Production Tax Credit Doesn’t Help Much

18. Conclusions Economics Works best when: • Cheap source of biomass • Expensive electricity • Larger systems • Cheap labor or existing personnel • Use to serve a base electrical load • Can get by with no redundancy (small systems) • Location with high incentive programs Always check first to see if diesel supplementation is an alternative

19. applications:DIESEL SUPPLEMENTATION

20. Diesel Supplementation • 60% reduction in diesel consumption • Reduced diesel exhaust pollutants, too • Best financial return • Paybacks < 3 years • No new gensets required • No redundant gensets required

21. System Price Vs. System Size Economics Smaller Systems Penalized – but not as much as with new gensets: • Biomass equipment not downwardly scalable Solutions: • Buy pre-processed feedstock Size Still Matters!

22. Production Cost Vs. System Size Economics Smaller systems penalized(again) due to labor component not downwardly scalable Solutions: • Use existing manpower to run CHyP, biomass systems • Better where labor rates low Labor Costs Drive Production Costs

23. ROI Vs. Biomass Cost Economics Biomass cost is not a major determinant of financial performance Excellent ROIs over a wide range of biomass costs Excellent ROIs At Range Of Biomass Costs

24. ROI Vs. Diesel Cost Economics Diesel cost has moderate impact on financial performance But, financial performace good – even at low rates Diesel Cost Has Impact, But ROIs Good

25. applications:SYNTHETIC FUELS

26. Synthetic Fuels • One set of CHyPs makes hydrogen • One set of CHyPs makes bio-oil • Hydrotreater: Hydrogen used to upgrade bio-oil • Hydrocracking, distillation makes liquid fuels

27. 4.8M Gal/Yr Synthetic Fuels Facility Biomass Storage Biomass Transfer CHyP Syngas Production Green Diesel Storage & Loading Biochar Storage & Loading Synthetic Fuels Production

28. Project Scope Included Not Included Site Preparation Tractors, Loaders, Forlifts, etc. Fees and expenses associated with the application and/or qualification process for permits, approvals, and/or licenses Sales taxes, import taxes, tariffs, duties Financing costs • CHyPs • Synthetic Fuel Hydroprocessing System • Two-Stage Biomass Reduction • 3 Day Biomass Storage • Biochar Collection & Removal System • Controls • Biomass, Biochar Conveyors & Hoppers • Nitrogen Generation System • Pneumatic Compressor System • Buildings For CHyP Units, Synthetic Fuel System • Liquid Fuel Storage & Loading Facilities • Valves, Diverters, Etc. Included • Liquid Fuel Storage & Loading Facilities • Installation • Startup and Commissioning • System Operation Training

29. System Price Vs. System Size Economics Smaller Systems Penalized: • Hydroprocessing equipment not very downwardly scalable Solutions: • Paybacks, ROIs will still likely be good Size Matters!

30. Production Cost Vs. System Size Economics Smaller systems penalized(again) due to labor component not downwardly scalable Solutions: • Financial hurdle rates, budget drive the decision Labor Costs Drive Production Costs

31. ROI Vs. Biomass Cost Economics Financial performance good at varying biomass costs Suggestions: • Locate close to biomass source • Lock in long term agreements Biomass Cost Impact Not Significant

32. ROI Vs. Diesel Fuel Rate Economics Financial performance good at varying diesel costs Suggestions: • Know whether your income will be based on retail rate or wholesale rate – impacts the size of system that you select Diesel Fuel Rate Impact Not Significant

33. Incentives – U.S. Economics • RIN (Renewable Identification Number) • Based on renewable content of process • CHyP: 1.7 RINs per gallon • RIN value ~ $0.75/RIN (Mar 2013) • http://www.progressivefuelslimited.com/Web_Data/pfldaily.pdf • http://www.aeltracker.org/ • CHyP RIN value = $1.275/gal • USDA grants and loans • Renewable fuel tax credits • 30% tax credit over 10 years • Additional incentives vary state-to-state

34. ROI Vs. Diesel Cost (w Incentives) Economics Note: 1.7 RINs/gal, $0.70/RIN, 90% RINs sold RINs Make A Big Difference

35. ROI Vs. Diesel Cost (w Incentives) Economics Note: 1.7 RINs/gal, $0.70/RIN, 90% RINs sold RINs Make A Big Difference

36. Conclusions For SynFuels Plant Economics Works best when: • Larger systems • Income based upon retail price of liquid fuels

37. Summary • The Bigger, The Better • Synfuels projects are high return • Choose Diesel Supplementation vs. CHyP/NG Genset for electricity generation whenever possible • CHyP/NG Genset electricity projects can generate good returns under the right circumstances

38. questions/discussion

39. Biomass to Hydrogen PowerClean Energy Systems & Green Hydrogen Thanks For Your Time And Interest Tel: (865) 376-9002 Fax: (865) 376-1802 info@protonpowerinc.com www.protonpowerinc.com Proton Power, Inc. 487 Sam Rayburn Parkway Lenoir City, TN 37771