Cool Energy, Inc.

5541 Central Ave, Suite 172 - Boulder, Colorado 80301(303) 442-2121 - www.coolenergyinc.com

Powering a Clean Tomorrow™

Turning wasted heat into clean electricity with up to 100% IRR

2

Cool Energy Overview

• ThermoHeart Engine makes clean electricity from wasted heat

• Customer payback as short as 1 year• Current sales of product & licenses • 7 patents issued, 3 pending• Sophisticated engine models

Daily, millions of $$ are wasted up exhaust stacks

3

Market Entry Strategy

• 1500 trillion BTU wasted by US industry• 15 GW US generation, 50GW world• Other companies serve large applications• CEI serves $50B small application segment of

$150B total market • 1st Markets: pollution control equipment ($500M)

& diesel gensets ($2B)

Of 15GW of applications CEI could serve, focused on two

4

Waste Heat Recovery Niche#1: Thermal Pollution Control Equipment

• End-of Pipe air pollution control equipment• $2B annual sales, $500M potential WHR add-ons• EU and Japan best current markets• 10-12% market growth in Asia• Targets 24/7 processes: chemical mfg, food

processing, refineries, kilns

5

Thermal Pollution ControlHeat Recovery Schematic w/heating

750º C1000 scfm

4x 25kWe ThermoHeart Engines (2-stage config)

320º C1000 scfm

114º C1000 scfm

375º C1350 lpm

290º C1350 lpm

TherminolHTF Loop284 kWth

HeatRejection Radiator206kWth

80º C250 lpm

60º C250 lpm

AC or DCElectrical Load

78 kWe fromThermoHeart

1000 scfm Direct Fired Thermal Oxidizer

78 kWe total fromThermoHeart WHR system

Water/glycolHeating loop130kWth

Space and WaterHeating Load

6

Waste Heat Recovery

• 5% to 10% power boost• 1 Year payback @ 6000

hours/year• >$2B annual market

• Live demo in 2013• 7% power boost• Does not reduce genset

performance• Simple exhaust hookup

Niche #2: Diesel & NG Genset Exhaust Gas

7

WHR from Remote Gensets• Mining, oil & gas, islands dependent on diesel• Stirling WHR improves genset efficiency 5% to 10%• Diesel genset electricity costs >$0.35/kWh• Cool Energy engine modules can be used in arrays• 300K units <200kW sold per year, 33K > 500kW

8

Customer Value – 25kW WHR

Simple Payback Elec Rate Payback IRR7000 hours/yr, $0.10/kWh 4.0 years (US) 25%7% loan $0.15/kWh 2.5 years (Calif) 40%NO SUBSIDIES $0.25/kWh 1.5 years (Italy) 67%or INCENTIVES! $0.35/kWh 1.0 years (genset) 100%

9

Cool Energy ThermoHeart Engine25kW Stirling Engine• High efficiency, great customer IRR• 3-year service interval (20,000 hours)• Novel thermo-mechanical layout• Clean and very quiet• Modular design for systems 25 – 500 kW

Cool Energy Small ORC Solid State TE

Cost/Watt $2.50 $2.50 -$3.50 $5-$10

Efficiency 30% 25% 10%

O&M-$/MWh $13 $15 $5

Temp range 100-400C 100-400C 350-650C

Power 25-500kW 125-500kW 10W-25kW

Companies Ormat, GE Alphabet

10

Technology & Deployment

Jan2007

Jan2008

Jan2009

Jan2010

P1 - 350W10% eff.

Jan2011

P2 - 2,000 Watts16.5% efficiency @ 230°C

P0 - 50W<5% eff.

In demo3x P3 - 3000W

22% efficiency @ 275°C

Jan2012

3kW ThermoHeart On 24/7 Test

25kWIn build

11

25kW First Unit Parts Arriving

12

Marketing and Sales– Building sales pipeline:

20 units - 2015, 200 - 2016, 1500 - 2017– Sales of $5M in 2016 and $45M in 2018– Schneider Electric has 3kW engine on test – Quotation to Schneider for 8 25kW engines– Sales & licensing agreement with Edisun– Discussions ongoing with

• Fortune 10 US energy company• Fortune 100 US defense contractor• Three US thermal oxidizer suppliers• Major power company in India

13

Cool Energy Team• Dr. Sam C. Weaver – Chairman and Co-founder

– Ph.D., M.S., B.S. Metallurgical Engineering– Serial entrepreneur >40 years in materials and energy– Exits: Millen Mtls to Dyson, Nuclear Ceramics to Eagle-Picher

• Bill Gross – Board Member, Founder and CEO of Idealab– Founder of GNP Development & Knowledge Adventure – Founded Idealab in 1996: dozens of RE and tech startups– Trustee of Caltech (summary of BG exit values)

• Samuel P. Weaver – President/CEO and Co-founder– B.S., Engineering & Applied Science, Caltech– Engineering Lead: Network Photonics, InPhase Technologies– Director of Worldwide Sales, dBm Optics

• Brian Nuel – Director of Engineering– B.S., M.S. Mech. Eng., High Honors, UI, Urbana– Design of engines, medical devices, telecomm devices– Cummins, P&G, Medtronic, Zolo Technologies, LASP

• Biz Dev/Sales – Amtegrity, Ted Treanor, Burl Amsbury• Financial – Novinger, Ball, & Zivi, P.C.

14

Cool Energy Outlook

•Opportunity & Resources‒ Initial deliveries of 25kW engines Q1 2015‒ Experienced team & continuous progress‒ Customer sales & licensing on-going

‒ Diedrich Manufacturing, Schneider Electric, Edisun Heliostats

‒ >$2.5B near-term WHR market‒ >$50B worldwide market for roadmap apps‒ Proprietary engine design tools are unique

Licensing model for cash efficiency

15

Appendix Information

16

Pro Forma FinancialsM

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Cool

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Figures in $1,000 unless noted 2014 2015 2016 2017 2018ThermoHeart 3kW Units Sold (1 ea) 25 150 500ThermoHeart 3kW Unit Price ($) 35,000$ 27,500$ 20,000$ ThermoHeart 3kW Unit COGS ($) 27,500$ 22,500$ 15,000$ ThermoHeart Licensing Fee ($) 7,000$ 5,500$ 4,000$ ThermoHeart 20kW Units Sold (1 ea) 1 20 200 1500 5000ThermoHeart 20kW Unit Price ($) 200,000$ 150,000$ 70,000$ 40,000$ 35,000$ ThermoHeart 20kW Unit COGS ($) 250,000$ 135,000$ 45,000$ 25,000$ 20,000$ ThermoHeart 20kW Licensing Fee ($) 14,000$ 8,000$ 7,000$

ThermoHeart Revenue (CM Partners) 14,875$ 64,125$ 185,000$ Cost of Goods Sold (9,688)$ (40,875)$ (107,500)$ Licensing Fees (2,975)$ (12,825)$ (37,000)$

Partner Gross Margin 14.87% 16.26% 21.89%

Cool Energy Headcount (FTE) 6 20 40 60 90ThermoHeart Revenue (Cool Energy) 200$ 3,000$ Cost of Goods Sold (250)$ (2,700)$ Licensing Fees -$ -$

Cool Energy Gross Margin -25.00% 10.00%Cool Energy Up-FrontLicensing Revenues 50$ 100$ 2,500$ 2,500$ 5,000$ Cool Energy Licensing Royalties -$ -$ 2,975$ 12,825$ 37,000$ Grant/Design Income 850$ 750$ 1,500$ 2,500$ 5,000$ Cool Energy Expenses (680)$ (2,267)$ (4,533)$ (6,800)$ (10,200)$ RD&D ExpensesGS&A and Overhead (524)$ (1,745)$ (3,491)$ (5,236)$ (7,854)$ Total Revenues 1,100$ 3,850$ 6,975$ 17,825$ 47,000$

EBITDA (354)$ (2,862)$ (1,049)$ 5,789$ 28,946$ Depreciation (20)$ (43)$ (89)$ (80)$ (72)$

EBIT (374)$ (2,905)$ (1,138)$ 5,709$ 28,874$ Taxes -$ -$ -$ 534$ 10,131$

Net Margin -41.51% -341.76% -16.31% 29.04% 39.88%

Profit (Loss) (374)$ ($2,905) ($1,138) $5,176 $18,743Cash on Hand (EOY) $4,826 $1,921 $784 $5,959 $24,702

17

Waste Heat RecoveryNominal System CostsAssumptions:

• Volume Production of ThermoHeart Engine (500/year)• Single engine application (BOS cost/W reduces for multiple-engine systems) • Engine and electrical interconnection located near WHR source

20kW Nominal WHR System BOM

ThermoHeart Engine $32,500.00Hot Pump $2,500.00Cold Pump $800.00HTF $200.00Hot HX $4,000.00Cold HX $1,000.00Fluid piping $1,000.00Inverter $4,000.00Control System $1,500.00Installation $2,500.00Total $50,000.00

18

Waste Heat RecoveryCustomer Value

Engine Peak Power 20kWSystem Cost/Watt $2.50Installed Cost $50,000Annual O&M $/kWh $0.013Financing Rate 7.00%Years of Operation 10

Levelized Cost of Electricity (LCOE)

Potential Channel Partners:Coffee Roasters (Diedrich)Concentrated Solar (Edisun)Gensets (Cummins, Caterpillar)Pollution Control (Epcon, Anguil)Brick MakersCement KilnsIndustrial Kilns (CoorsTek)

Competitive with Grid Electricity

LCOE Analysis ($/kWh)

Annual Energy Produced (kWh)

Annual O&M costs

Annual Energy $ Savings (@$0.12 per kWh)

Net Annual $ Savings $50,000

Capacity Factor

LCOE ($/kWh)

20% 35040 $455.52 $4,204.80 $1,630.40 0.216$ 30% 52560 $683.28 $6,307.20 $3,505.04 0.148$ 40% 70080 $911.04 $8,409.60 $5,379.68 0.115$ 50% 87600 $1,138.80 $10,512.00 $7,254.32 0.094$ 60% 105120 $1,366.56 $12,614.40 $9,128.96 0.081$ 70% 122640 $1,594.32 $14,716.80 $11,003.60 0.071$ 80% 140160 $1,822.08 $16,819.20 $12,878.24 0.064$ 90% 157680 $2,049.84 $18,921.60 $14,752.88 0.058$

100% 175200 $2,277.60 $21,024.00 $16,627.52 0.054$

Capacity Factor is the ratio of the annual energy produced to the maximum that the engine could generate if operating at max output 24/7/365 (100% capacity factor)

19

OECD Electricity Prices, Returns

Engine Peak Power20kW

System Cost/Watt$2.50

Installed Cost$50,000

Annual O&M $/kWh$0.01

Capacity Factor80%

Years of Operation10

OECD Country

Residential Electric Rate ($/kWH)

Commercial Electric Rate ($/kWh)

20kW Annual Commercial Savings

20kW Commercial Payback Time (yrs) IRR

Austria $0.27 $0.14 $18,220.80 2.7 38%Belgium $0.26 $0.14 $18,010.56 2.8 38%Czech Republic $0.21 $0.15 $20,225.09 2.5 43%Cyprus $0.40 $0.28 $37,843.20 1.3 79%Denmark $0.41 $0.12 $14,716.80 3.4 30%Finland $0.21 $0.11 $14,520.58 3.4 30%France $0.19 $0.12 $15,627.84 3.2 32%Germany $0.35 $0.16 $20,603.52 2.4 44%Greece $0.17 $0.13 $16,188.48 3.1 34%Hungary $0.23 $0.13 $17,407.87 2.9 37%Ireland $0.26 $0.15 $19,958.78 2.5 42%Italy $0.28 $0.28 $37,745.09 1.3 79%Japan $0.26 $0.18 $23,687.04 2.1 50%Mexico $0.10 $0.12 $15,417.60 3.2 32%Netherlands $0.24 $0.12 $15,501.70 3.2 32%Poland $0.20 $0.12 $15,669.89 3.2 33%Portugal $0.25 $0.14 $18,094.66 2.8 38%Spain $0.30 $0.15 $19,454.21 2.6 41%Sweden $0.25 $0.10 $13,203.07 3.8 27%UK $0.20 $0.13 $16,454.78 3.0 34%USA $0.12 $0.07 $8,353.54 6.0 14%

20

C&I Waste Heat Recovery Market

• Data from coops – 26,000 WHR opportunities

• 7% of electricity from coops – 370,000 total US sites

• 50% of sites suitable for SolarHeart (<100kW)

• $25B TAM at $2500/kW

• $8B SAM – 9.5GW capacity

21

WHR Public Benefit Potential

• 9.5 GW of capacity from top 30% of sites• 50 TWh annually @ 60% capacity factor• $7.5B in annual energy savings @ $0.15/kWh

• 30 M tons CO2 annual emissions reductions

• 135,000 tons SOx/NOx reduction

22

WHR from Remote Gensets• Mining, oil & gas, islands dependent on diesel• Stirling WHR improves genset efficiency 5% to 10%• Diesel genset electricity costs >$0.35/kWh• Cool Energy engine modules can be used in arrays• 300K units <200kW sold per year, 33K > 500kW

23

Waste Heat RecoveryMilitary Applications

• “Unleash us from the tether of fuel.” – Gen James T Mattis, USMC, 2003 (DSB 2008-02-ESTF)• Gensets are military’s largest wartime fuel consumer (34%)• 125,000 gensets fielded; 2.1GW capacity; 10,000 new/yr• Gensets use 360 Mgal/year JP-8 during wartime• $15/gallon burdened fuel cost in theater• 2003 – 2007: >3000 casualties in fuel/water supply ops• Shipboard heat recovery also of interest

24

Core Technology Advances

SolarHeart® Engine• Low temperature Stirling engine • Converts heat to electricity • High-surface-area heat exchangers• Non-metallic regenerator• No circulating lubrication • 3-year service interval (20,000

hours)• Clean and very quiet

3kW Engine Specification• 3.0 kW design @ 300C• 36” diameter x 45” L• >20% efficient at 250C• >22% efficient at 300C• Nitrogen working gas• Reliability testing underway

now• Higher-power designs in

progress

Beta Prototype – 2000W16.7% measured efficiency @215C

Product Design – Cast Parts, Simpler Mechanism22.3% measured efficiency at 270°C

3100W peak output to date

25

Thermal Conversion EfficiencyP3 Engine Design Measured

26

Reliability and Manufacturing Planning

– Units running currently on 24/7 reliability testing– Total engine testing to date: >280 million cycles

(5000 hrs + 2860 hrs)– Measuring ring wear, piston wear– Tracking power/efficiency over time/cycles– Testing alternative (simpler) ring designs– Projected ring life – 16,000 hours, still improving– Exploring simpler manufacturing for regenerators,

pistons, rings– Working with 2 contract manufacturers

27

Technology & Deployment

2007 2008 2009 2010 2011 2012

3kW ThermoHeart On 24/7 Test

Benchtop Proto50W

5% eff

Solar Engine I350W

10% eff

Solar Engine II

2kW16% eff

2013 2014

WHREngine I3 x 3kW22% eff

WHREngine II2 x 25kW30% eff

28

25kW Design Specifications20/25kW ThermoHeart®

Engine• Converts heat to electricity • High-surface-area heat exchangers• Non-metallic or metallic regenerator• No circulating lubrication • 3-year service interval (20,000 hours)• Novel thermo-mechanical layout• Rotary transmission mechanism• Nitrogen working gas• Clean and very quiet

20/25kW Engine Family Specification

• 15 kW design @ 200C• 20 kW design @ 300C• 25 kW design @ 400C• 52” diameter x 105” L• > 15% efficient at 200C• > 25% efficient at 300C• > 30% efficient at 400C

29

Thermal Conversion Efficiency20/25kW Engine Design Modeled

30

Thermal Pollution ControlHeat Recovery Schematic w/heating

750º C1000 scfm

4x 25kWe ThermoHeart Engines (2-stage config)

320º C1000 scfm

114º C1000 scfm

375º C1350 lpm

290º C1350 lpm

TherminolHTF Loop284 kWth

HeatRejection Radiator206kWth

80º C250 lpm

60º C250 lpm

AC or DCElectrical Load

78 kWe fromThermoHeart

1000 scfm Direct Fired Thermal Oxidizer

78 kWe total fromThermoHeart WHR system

Water/glycolHeating loop130kWth

Space and WaterHeating Load

31

WHR Market Channels

Cool Energy Channel Markets

RemoteGeneration

WHR

IndustrialCustomers

DoDCustomers

DoDCustomers

3)Strategic PartnersOEM / Licensing

3)Strategic PartnersOEM / Licensing DealersDealers

1) End Users for Pilots1) End Users for Pilots

2) Energy Service Companies2) Energy Service Companies

• Key steps: pilot demonstrations, channel partners, licensing

Power GeneratorIntegrators

Power GeneratorIntegrators

. . . . . . .

Military WHRSolutions

Industrial WHR

Solutions

DistributedGeneration

32

Advisors

• Bill Gross – Board Member, Founder and CEO of Idealab– Founded Idealab in 1996, has incubated dozens of startups in

renewable energy and  internet– Founder of GNP Development– Founder of Knowledge Adventure – Board member for multiple companies– On the Board of Trustees for the California Institute of Technology

• Andy Goldstein – Manufacturing– Executive positions in engineering, quality, manufacturing,

marketing, and materials- startup companies and Fortune 1000 companies.

– 30 years technology commercialization in data storage, optical communications, and medical industries.

– VP of Product Generation at Medtronic Navigation & founding members of Network Photonics, - raised $117M in venture funding

• Amir H. Massihzadeh– Business Development– B.S., Civil Engineering, CU – Boulder; Cert of Management

– University of Denver– President and Founder, Rheinzink America, Inc.– Vice President of Sales, Puma Steel

33

Key Intellectual PropertyIssued Patents

Patent Number

What it Protects Competitive Advantage

7,617,680 Power Generation Using Low-Temperature Liquids

• LNG re-gasification application• Japan, Chine EU Markets

7,694,514Direct Contact Thermal Exchange Heat Engine or Heat Pump

• Roadmap engine design• Reduced cost - no internal heat exchangers• Enables lubricated engine design

7,805,934Displacer Motion Control Within Air Engines

• Roadmap engine design• Very broad patent for ideal Striling engine

operation• Applies to beta and gamma style engines

7,810,330

Power Generation Using Thermal Gradients Maintained by Phase Transitions

• Broad patent on open-loop phase transition temperature differential for power production

• Roadmap application• Further protection of LNG re-gasification

application

7,877,9998,539,771

Power Generation and Space Conditioning Using a Thermodynamic Engine Driven Through Environmental Heating and Cooling

• Application patent for power generation using solar thermal or geothermal temperature or evaporative cooling approaches for temperature differences

• Building-integrated applications

8,224,495

Control of Power Generation System Having Thermal Energy and Thermodynamic Engine Components

• Control system for arrangement of heat sources and uses in a building to maximize customer value

• Applies to control systems for buildings that include power generation use of heat

34

Key Intellectual PropertyPending and In-Process Patents

Application Number

What it Protects Competitive Advantage

12/577,649Patterned foil regenerator • Superior regenerator design for performance

• Product of trade secret manufacturing method

12/790,583Configurable plate and fin heat exchanger

• Protect form of 3kW heat exchanger• Product of trade secret manufacturing method

61/444,653Piston and ring design for ring-based self-lubricating piston assembly

• Protect form of 3kW and 20/25kW piston assembly

• Product of trade secret assembly method

TBD

Thermo-mechanical layout of 20/25 kW engine

• Unique high-performance layout• Efficiency: minimizes dead volume• Efficiency: fully isolates hot side gases from

cold• Cost: single kinematic linkage for two piston

sets

TBD

Mechanical transmission assembly for four-cycle Stirling engine

• Protects mechanical linkage between pistons and generator in 20/25kW engine

• Efficiency: maximizes transmission of engine power

• Durability: minimizes wear friction• Durability: true straight-line motion

TBDLow-friction, low-wear cam and carriage assembly for Stirling engine transmission system

• Protects cam and follower system in kinematic transmission

• Durability: minimizes wear friction

35

Key Intellectual PropertyEngine Modeling and Branding

IP Type What it Provides Competitive Advantage

In-House Numerical

Model

Ability to design thermo-dynamic configurations in high-dimensional Stirling engine trade-space by optimizing free variables for best customer ROI

• Cost: thermo-mechanical engine configuration optimized for lowest cost, best efficiency

• Optimizes over thousands of potential engines each run

• In-house tool unavailable to any other company

In-House Numerical

Model

Ability to analyze and optimize kinematic mechanisms by optimizing free variables for highest engine durability within thermodynamic constraints

• O&M Cost: engine mechanism configuration optimized for lowest maintenance, best efficiency

• Optimizes over thousands of potential mechanisms each run

• In-house tool unavailable to any other company

Trade secretDesign and fabrication method for very high surface area heat exchangers using off-the-shelf components in a custom housing

• Cost: uses high-volume, high-precision, low-cost components

• Assembly is rapid, lends itself to automation

Trade secretFabrication method of non-metallic regenerators via a custom dimpling mechanism

• Unique in-house method developed to pattern high-temperature plastic

• Efficiency: has demonstrated 10% improvement in engine output

Trade secretTechniques for controlling valves between the thermal cycles and the crankcase space for startup and shutdown of Stirling engines.

• Provides low-power method for starting kinematic engine

• Uses off-the-shelf components and controllers

TrademarksCool Energy (77631139), ThermoHeart (pending), SolarHeart (77631126), SolarFlow (77631112), Powering a Clean Tomorrow (85423664)

• Protects cam and follower system in kinematic transmission

• Durability: minimizes wear friction