Impacting Your BusinessClean Energy Systems & Green Hydrogen

Proton Power, Inc.487 Sam Rayburn ParkwayLenoir City, TN 37771

Tel: (865) 376-9002Fax: (865) 376-1802

info@protonpowerinc.comwww.protonpowerinc.com

Confidential Property of Proton Power, Inc.

2

Cellulose To Hydrogen Power (CHyP)

Electricity

Liquid Fuels

Water

Heat

Biochar

We Take This…

…And Make This…

In A Way That IsCarbon Negative

EnergyCrops

MSW

WoodyWaste

3

The Proton Power Difference…

InexpensiveHydrogen

FromProton Power

4

How The CHyP System Works

1. Biomass processing system prepares feedstock– 45% maximum moisture content – 6-12mm chip sizes

2. Biomass broken down in pyrolysis process in CHyP– Heated to 1000C in absence of oxygen

3. Syngas cleaned by recirculating through incoming biomass– Tars, particulates removed

4. 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

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ELECTRICITY PROJECTFINANCIALS

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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 genset derate

• Systems scalable upward from 250 kw

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5MWe Proton Power System

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Project ScopeIncluded• 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

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

11

System Price Vs. System Size

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!

Economics

250 500 1000 5000 10000$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00$13.11

$9.15

$7.20

$5.17$4.56

System Price Vs. System SizeCHyP/NG Genset Electricity Plant

Series7

Freight

Install, etc.

Facilities

Biomass

Gensets

System Size (kw)

$/W

att

12

Production Cost Vs. System Size

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

Economics

250 500 1000 5000 10000$0.000

$0.020

$0.040

$0.060

$0.080

$0.100

$0.120

$0.140

$0.160

$0.180

$0.095

$0.047

$0.024$0.010 $0.010

$0.032

$0.032

$0.032

$0.032 $0.032

$0.033

$0.033

$0.033

$0.033 $0.033

$0.160

$0.113

$0.089

$0.075 $0.075

Production Cost Vs. System SizeCHyP/NG Genset Electricity Plant

Series4

Biomass

Materials

System Size (kw)

$/kw

h

13

ROI Vs. Biomass Cost

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

Economics

0 22 44 66 880.0%

5.0%

10.0%

15.0%

20.0%

25.0%

ROI Vs. Biomass Cost5 MW System, $0.15/kwh Electricity Cost

Biomass Cost ($/Ton)

RO

I

14

ROI Vs. Electricity Rate

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

Economics

$0.050 $0.100 $0.150 $0.200 $0.2500.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

ROI Vs. Electricity Rate5 MW System, $44/Ton Biomass Cost

Electricity Rate ($/kwh)

RO

I

15

Incentives – U.S.

• 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

Economics

Source: http://www.dsireusa.org/

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ROI Vs. Biomass Cost (w Incentives)

Production Tax Credit Doesn’t Help Much

Economics

Note: Production tax credit of $0.023/kwh assumed

0 22 44 66 880.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

ROI Vs. Biomass Cost4.8 Mgal/yr System, $0.10/kwh Electricity Cost

Biomass Cost ($/ton)

IRR

17

ROI Vs. Electricity Cost (w Incentives)Economics

Note: Production tax credit of $0.023/kwh assumed

$0.050 $0.100 $0.150 $0.200 $0.2500.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

ROI Vs. Electricity Rate5 MW System, $44/Ton Biomass Cost

IRR IRR w/ Incent

Electricity Rate ($/kwh)

RO

I

Production Tax Credit Doesn’t Help Much

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Conclusions

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

Economics

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APPLICATIONS:DIESEL SUPPLEMENTATION

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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

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System Price Vs. System Size

Smaller Systems Penalized – but not as much as with new gensets:• Biomass equipment

not downwardly scalable

Solutions:• Buy pre-processed

feedstock

Size Still Matters!

Economics

250 500 1000 5000 10000$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$7.78

$5.42

$4.02

$2.80$2.56

System Price Vs. System SizeCHyP Diesel Supplementation

Series7

Freight

Install, etc.

Facilities

Biomass

Gensets

System Size (kw)

$/W

att

22

Production Cost Vs. System Size

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

Economics

250 500 1000 5000 10000$0.0000

$0.0200

$0.0400

$0.0600

$0.0800

$0.1000

$0.1200

$0.0475

$0.0237$0.0119

$0.0047 $0.0047

$0.0210

$0.0210

$0.0210$0.0210 $0.0210

$0.0333

$0.0333

$0.0333$0.0333 $0.0333

$0.0179

$0.0095

$0.0080

$0.0071 $0.0071

$0.1197

$0.0876

$0.0742

$0.0662 $0.0662

Production Cost Vs. System SizeCHyP Diesel Supplementation

Series5

Utilities

Biomass

Materials

Labor

System Size (kw)

$/kw

h

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ROI Vs. Biomass Cost

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

Economics

0 20 40 60 800.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

ROI Vs. Biomass Cost5 MW System, $0.15/kwh Electricity Cost

Biomass Cost ($/Ton)

RO

I

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ROI Vs. Diesel Cost

Diesel cost has moderate impact on financial performance

But, financial performace good – even at low rates

Diesel Cost Has Impact, But ROIs Good

Economics

$2.85 $3.35 $3.85 $4.350.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

ROI Vs. Diesel Cost5 MW System, $44/Ton Biomass Cost

Diesel Cost ($/gal)

RO

I

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APPLICATIONS:SYNTHETIC FUELS

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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

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4.8M Gal/Yr Synthetic Fuels Facility

Biomass Storage Biomass Transfer

Green DieselStorage & Loading

CHyP SyngasProduction

Biochar Storage & Loading

Synthetic FuelsProduction

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Project ScopeIncluded• 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

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

29

System Price Vs. System Size

Smaller Systems Penalized:• Hydroprocessing

equipment not very downwardly scalable

Solutions:• Paybacks, ROIs will

still likely be good

Size Matters!

Economics

0.964 1.928 2.893 3.857 4.821$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00$11.59

$8.67

$7.08$6.97 $6.79

System Price Vs. System SizeCHyP Liquid Fuels Plant

System Size (Mgal Per Yr)

$/G

al

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Production Cost Vs. System Size

Smaller systems penalized (again) due to labor component not downwardly scalable

Solutions:• Financial hurdle

rates, budget drive the decision

Labor Costs Drive Production Costs

Economics

0.964 1.928 2.893 3.857 4.821$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$2.016

$1.170$0.912 $0.813 $0.754

$0.343

$0.343

$0.343$0.343 $0.343

$0.379

$0.379

$0.379$0.379 $0.379

$0.240

$0.240

$0.240$0.240 $0.240

$0.000

$0.000

$0.000$0.000 $0.000

$2.977

$2.131

$1.874$1.775 $1.716

Production Cost Vs. System SizeCHyP Liquid Fuels Plant

Series6

Water

Electricity

Biomass

Materials

System Size (Mgal Per Yr)

$/G

al

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ROI Vs. Biomass Cost

Financial performance good at varying biomass costs

Suggestions:• Locate close to

biomass source• Lock in long term

agreements

Biomass Cost Impact Not Significant

Economics

0 22 44 66 880.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

ROI Vs. Biomass Cost4.8 Mgal/yr System, $0.10/kwh Electricity Cost

Biomass Cost ($/ton)

IRR

32

ROI Vs. Diesel Fuel Rate

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

Economics

2.85 3.35 3.85 4.350.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

ROI Vs. Diesel Fuel Rate4.8 Mgal/yr System, $44/ton Biomass Cost

Diesel Rate ($/Gal)

IRR

33

Incentives – U.S.

• 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

Economics

34

ROI Vs. Diesel Cost (w Incentives)

RINs Make A Big Difference

Economics

Note: 1.7 RINs/gal, $0.70/RIN, 90% RINs sold

0 22 44 66 880.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

ROI Vs. Biomass Cost4.8 Mgal/yr System, $0.10/kwh Electricity Cost

IRR IRR w/ Incent

Biomass Cost ($/ton)

IRR

35

ROI Vs. Diesel Cost (w Incentives)Economics

Note: 1.7 RINs/gal, $0.70/RIN, 90% RINs sold

RINs Make A Big Difference

2.85 3.35 3.85 4.350.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

ROI Vs. Diesel Fuel Rate4.8 Mgal/yr System, $44/ton Biomass Cost

IRR IRR w/ Incent

Diesel Rate ($/Gal)

IRR

36

Conclusions For SynFuels Plant

Works best when:• Larger systems• Income based upon retail price of liquid fuels

Economics

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

Biomass to Hydrogen PowerClean Energy Systems & Green Hydrogen

Proton Power, Inc.487 Sam Rayburn ParkwayLenoir City, TN 37771

Tel: (865) 376-9002Fax: (865) 376-1802

info@protonpowerinc.comwww.protonpowerinc.com

Thanks For Your Time And Interest