Building Momentum

1. Building Momentum

2. We will cover... • Fuel Cells • Why Alkaline Fuel Cells? • Markets and Applications • Manufacturing • Independent Review • Intellectual Property • Road to Commercialisation 2

3. … it’s a bit like a battery that works continuously generating electricity without combustion… What is a Fuel Cell? ELECTRICITY HYDROGEN HEAT WATER AIR Schematic of the original fuel cell

4. Fuel Cell Technologies There are many chemistries that can generate electricity... ...all involve reacting hydrogen with oxygen to form water, electricity and heat in the presence of a catalyst

5. Fuel Cell Technologies Industrially pure water is a product of the reaction, so an operating temperature above 100oC generates steam... ...which requires additional product safety engineering and increases manufacturing costs

6. Fuel Cell Technologies Fuel cells generate electricity directly without combustion or mechanical steps such as do engines or turbines .... ... this makes fuel cells the most efficient devices for generating electricity from fuel

7. Fuel Cell Technologies Different fuel cell types are suitable for different applications...

8. Fuel Cell Technologies Of all the fuel cell types Alkaline is the most efficient and does not have to be engineered for higher pressures that result from steam

9. Fuel Cell Technologies Alkaline fuel cells are a proven technology... ...used in manned US and Russian space missions and in submarines to provide power and drinking water

10. Historically... ...historically alkaline fuel cells have also been demonstrated in a wide variety of applications... ... but were unable to compete against low fossil fuel costs because...

11. Fuel Cell Technologies ...Platinum catalysts added significant cost and also required pure oxygen as well as hydrogen... which is essentially rocket fuel

12. Fuel Cell Technologies ...AFC Energy has re-engineered the proven alkaline technology removing cost. Platinum has been replaced with ceramic based catalysts at less than 5% of the cost of platinum... ...and oxygen is taken from air... ... This opens up the market for large-scale industrial power generation....

13. Low risk business model ... Our first market is the surplus hydrogen generated from the production of chlorine and caustic soda. Our first customer is Akzo Nobel. ... Our proto-type system was tested in the field and led to...

14. ... the Beta System: Modular Power Cartridge docking Electronics/ Fluid controls Fuel cell stack in cartridge Alkaline electrolyte tank Cartridge assembly

15. Beta System Design • ... the Beta System is designed for low lifetime cost of ownership • It is easily mass produced, assembled and installed. • It operates continuously and is controlled remotely, hot swapping” means the Beta System does not have to be shut down even when electrode cartridges are changed. • It is modular and designed for heat recovery • ...the result is a low cost per MWeh over the lifetime of the installation CHP = Combined Heat and Power MWeh = Megawatt hours of Electricity

16. Beta System: Fuel Cell Development At the end of their useful life cartridges are removed and disassembled. Electrodes are cleaned and reused… ... a refurbished cartridge is only a third of the cost of a new cartridge of the same power.

17. Beta System: ...Designed for easy containerising or skid mounting...

18. Multi-megawatt Power Plant (6MW) ...Designed for large-scale installations...

19. Markets

20. Markets ...essentially AFC Energy’s alkaline fuel cell generates electrical power from hydrogen fuel at the lowest unit cost... ...the economics of any particular application depend upon the cost of the fuel and the value of the outputs, principally the electricity.... ....for this reason AFC Energy is focussed directly on the chlor-alkali market where waste hydrogen is readily available and the electricity is required on site ... Other sources of hydrogen usually require an intermediate step... Several countries such as Korea, USA and Germany offer financial incentives for electricity produced from fuel cells, making them more attractive.

21. Markets: Sources of Hydrogen Feedstock Utilised Output Fuel Processing Power Waste H2 H2 Ammonia Cracking H2 + N2 Heat Gas Natural Gas Methane Reforming H2 Purification AFC Mainly H2+CO2 Low Oxygen Air Biogas Water Gas Shift Clean Syngas Underground Coal Gasification Coal Syngas Clean Water Solid Raw Syngas (Mainly H2+CO) Municipal Waste Plasma Gasification Installations successfully trialled by AFC Energy Installations currently planned by AFC Energy

22. Chlor-alkali: AkzoNobel ...two commercial systems were installed at AkzoNobel’s Bitterfeld plant in Germany, Q4 2011... ...an agreement is in place for further supply... AFC Energy works closely with AkzoNobelto demonstrate the commercial fuel cell system

23. Chlor-alkali Market • ... Our primary market is Chlor-alkali, where hydrogen availability is plentiful... • ...it consumes 1% of the world’s electricity… • …and produces 1.65 million tonnes of hydrogen a year as a by-product... • …Globally this industry can support more than 3000 MWe of generating capacity

24. Waste to Energy Market • Ordinary household waste can be converted into hydrogen. • UK generates 60 million tonnesof carbon-based waste every year… equivalentof 15,000 MW of electricity. • Fuel cell increases output efficiency of Waste to Energy plants by c.40%. • AFC Energy is accessing this market through Waste2Tricity Limited (W2T) • W2T is gaining commercial traction and positioning WtE facilities so that they are fuel cell ready... WtE = Waste to Energy AFC Energy owns 25% of Waste2Tricity Limited

25. Waste to Energy Market: Tees Valley ...with planning permission now in place Air Products' Tees Valley Renewable Energy Facility will generate 49MW of renewable power. In the longer-term, Air Products' plant has the potential to produce renewable hydrogen and is being considered for a demonstration of AFC Energy’s fuel cell technology. This would involve alkaline fuel cells generating power, alongside more conventional CCGT, using hydrogen separated from the syngas stream. CCGT = Combined Cycle Gas Turbine

26. Market: Clean Coal …coal gasification enables CCS whilst producing hydrogen… …alkaline fuel cells increase power generation efficiency from 30% to c. 50%... …AFC Energy has partnered with Linc Energy... …gasification underground using Linc Energy’s technology largely eliminates the ecological impact of coal… CCS = Carbon Capture and Storage

27. Steel Making Coke Oven Gas released from coal during the coking process is c. 55% hydrogen which can be separated for use in fuel cells. It is also possible to generate hydrogen using the hot (1500oC) slag to break water molecules apart. Companies including Nippon Steel, POSCO and Tata Steel are actively working on hydrogen generation projects. ...AFC Energy is in discussions with potential partners

28. Other Applications • There are a range of other potential applications, including: • distributed energy from reformed natural gas or biogas • in association with intermittent renewables where electrolysers generate hydrogen from surplus power • UPS for applications such as telecoms and data centres

29. Q. How will AFC scale up production?

30. Manufacturing • AFC Energy is Investing in automated production and assembly. • Lower Cost production • Develop production team • Drive cost reduction and quality • Volume Ramp • Using standard industrial technologies • High volumes 30

31. Factors affecting stack costs Anticipated Beta system cost profile Applications like FC vehicles and replacements for domestic boilers, which need 100,000’s units to achieve target costs... AFC Energy needs just two customers! BoM = Bill of Materials FC = Fuel Cell

32. Q. How do investors know what technical progress is being made?

33. CPI Independent Review - highlights ... unlike any other company developing fuel cells AFC Energy’s technical and manufacturing progress is regularly reviewed by an independent assessor and a summary of the review is published. ... The Centre for Process Innovation has been carrying out the review and is given unrestricted access to AFC Energy’s work and people.

34. Q. What protection does AFC Energy have for its Alkaline fuel cells?

35. Intellectual Property (IP) ...AFC Energy is the first in its field to re-engineer alkaline fuel cells using modern materials, process, modelling and manufacture. ... there had been little patenting of anything to do with alkaline fuel cells since the 1960’s... ...present IP portfolio includes 12 families of patents... to ‘ring-fence’ unique aspects of AFC’s technology. More patent applications in the pipeline......

36. Road to commercialisation Commercial System Sales ESCo installations Commercial Demonstration & Early Adopter Licence fees/royalties Grant Funded projects Q1/2012... ESCo = Energy Supply Company

37. Experienced Board Tim Yeo - chairman Ian Williamson - CEO Ian Balchin – CSO Dr Gene Lewis - CTO Sir John Sunderland - NED David Marson - FD Mitchell Field - NED David Smith – NED Linc Energy CSO = Chief Strategic Officer CTO = Chief Technical Officer

38. Summary • AFC Energy is re-engineering proven fuel cell • technology to compete with conventional • power generation • First contracts, licences and grants secured • First market, waste hydrogen from the • chlorine industry • Second market waste to energy – where alkaline fuel cell systems are being designed into WtE power stations • Capable of rapid scale up with automated assembly • progress is independently monitored and published • Intellectual property secured • ESCo is the preferred route to market - selling electricity not plant. • AFC Energy’s alkaline fuel cell systems will enable a transformation to a hydrogen economy

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