Nel ASA — Investor Presentation 2014

Nov 20, 2014

Q3 - NEL ASA

Q3 - Company presentation, November 2014

PRESENTATION OUTLINE

Condensed Interim Financial Statement

• NEL Hydrogen at a glance
• Our technology and current business
• The game changer: Hydrogen as energy carrier
• Our value proposition

Condensed Interim Financial Statement

	2014	2013	2014	2013
(figures NOK million)	Q3	Q3	9M	9M
Comprehensive income	$\blacksquare$	0.04	$\blacksquare$	0.13
Total operating cost	(0.76)	(9.54)	(6.11)	(30.52)
Pre-tax profit (loss)	(0.48)	(9.28)	(5.50)	(29.93)
Net cash flow from operating activities	(1.06)	(9.25)	(9.00)	(29.28)
Cash balance end of period	50.47	18.12	50.47	18.12

NEL Hydrogen AS

Income statement
	2014	2014
(figures NOK thousands)	Q3	9M
Total operating revenue	19068	57 259
Total operating costs	13983	42866
Operating profit (loss)	5085	14 393
Net financial income (expense)	-17	-17
Pre-tax profit (loss)	5048	14376

Balance sheet
	2014
(figures NOK thousands)	30 Sept
ASSETS
Non-current assets	2729
Current assets	40 201
Total assets	42930
EQUITY AND LIABILITIES
Equity	24551
Liabilities	18379
Total equity and liabilities	42930

PRESENTATION OUTLINE

Condensed Interim Financial Statement

NEL Hydrogen at a glance

Our technology and current business

The game changer: Hydrogen as energy carrier

Our value proposition

THIS IS NEL HYDROGEN

• Supplier of solutions for hydrogen generation
• Roots date back to 1927 (Norsk Hydro)
• In-house technology with superior energy efficiency
• Over 500 electrolyser units sold; over 100 in operation
• Production facility in Notodden, corporate office in Oslo, Norway
• Listed on the Oslo Stock Exchange (sept 2014)
• Positioned for an expected massive growth in the hydrogen market

LOCAL ROOTS, GLOBAL PRESENCE

PURE ENERGY & PURE WATER

HYDROGEN - A MARKET IN TRANSITION:

INDUSTRIES WE SERVE:

MARKET FOR HYDROGEN IS GROWING

Million tonnes

• 78% reforming, 18% gasification, 4% electrolysis
• ~1% is from water electrolysers today
• Cumulatieve growth within energy segment until 2030: from ~100 MW to 5 GW*

Source: CryoGas International, MarketsandMarkets, Navigant Research. Compiled by Arkwright

PRESENTATION OUTLINE

Condensed Interim Financial Statement

NEL Hydrogen at a glance

Our technology and current business

The game changer: Hydrogen as energy carrier

Our value proposition

LOWERING THE CARBON FOOTPRINT

OUR 3 ADVANTAGES

1 EFFICIENT

• NEL has currently the most energy efficient water electrolyser in the market (3 – 15% better than competitors)*
• High efficiency due to design & non-patented active coating

2 ROBUST

• Basis from 87 years of experience
• Uncomplicated and reliable operation
• Low need for maintenance shutdowns
• Cell stack replacement after 7 years, system lifetime 30+ years

3 LARGE - SUPERIOR SCALABILITY

• By increasing plant size from 250kW to 2,5MW, capex for production capacity reduced by >60%.

HOW WE SERVE TODAY'S INDUSTRY MARKET

NEW PRODUCT FOR NEW MARKETS

Pressurized electrolyser

• Pilot stage Pressurized electrolyser currently developed at 60 Nm³/h
• Increasing market share & entering new markets
• Higher operation flexibility and smaller footprint

PRESENTATION OUTLINE

Condensed Interim Financial Statement

• NEL Hydrogen at a glance
• Our technology and current business
• The game changer: Hydrogen as energy carrier
• Our value proposition

HYDROGEN AS AN ENERGY CARRIER

GROWTH IN RENEWABLE ENERGY

Electricity generation from wind/solar (GW)

Source: EIA – "Medium-Term Renewable Energy Market Report 2014"

• 40% of renewable electricity in 2020 from wind and solar (27% in 2013; EIA)
• Cost competitive with conventional electricity generation in many locations
• Main driver for energy storage
• Several energy storage projects initiated world wide

THE CHALLENGE OF RENEWABLES

INTERMITTANCY

HOW TO STORE 734 GWh?

734 GWh STORED IN BEVs

8,600,000 Tesla Model S P85

30,500,000 Nissan Leaf

734 GWh STORED IN BEVs (50% DISCHARGE)

17,200,000 Tesla Model S P85

61,000,000 Nissan Leaf

ENERGY STORAGE OPTIONS

POWER… TO GAS

POWER-TO-GAS, MAIN CONSIDERATIONS:

• ELECTRICITY PRICE
• GRID BALANCING SERVICES
• HYDROGEN
• FOR FUEL
• INJECTED INTO GAS GRID
• RE-ELECTRIFICATION
• METHANATION
• TO VEHICLES
• INJECTED INTO GAS GRID
• HEAT FOR CENTRAL HEATING GRID

THE FUEL OF THE FUTURE, AVAILABLE TODAY

DO WE NEED HYDROGEN VEHICLES?

Source: Toyota Motor Corporation & Report: A portfolio of Powertrains for Europe

…"THEY ARE JUST LIKE THE CARS OF TODAY"

• FCEV: Fuel Cell Electric Vehicle
• Range: 600+ km
• 1 kg H² = 100 km
• Energy content: 3 x gasoline (weight)
• Conversion efficiency: 60 vs 20% for internal combustion engine
• Refueling time: 3 4 minutes
• No limitations on vehicle size
• Low impact on range from cold climate operation
• Noise & emission free (pure water) - James May, Top Gear

It's the most important car since the car was invented"

FCEV ARE BEING INTRODUCED NOW

TOYOTA OFFICIAL LAUNCH: APRIL 2015

The need for an alternative to fossil fuel is real. And in time, hydrogen will be our most sustainable option. Not only because hydrogen can be produced from renewables like solar and wind but also because the only emission from the tailpipe is water vapor. So what was once seen as a pipe dream now has more potential than ever."

• Toyota Motors, 2014

HYDROGEN REFUELING STATIONS

BUSINESS CASE OF RUNNING A HRS:

Trucked in reformed natural gas

• Use case costs include refuelling station costs, compression, storage, and distribution as appropriate – electricity price: ~50 €/MWh

OSLO & AKERSHUS HYDROGEN STRATEGY

Ensuring commercial introduction of hydrogen in the Oslo-region.

• 2014 2018: 400 MNOK (high public funding: Oslo/Akershus/Transnova/EU)
• 2019 2025: 1000 MNOK (gradually lower public funding)
• EU's hydrogen program: 1.4 B€ until 2020
• Infrastructure going forward: commercial grade HRS:
• Higher capacity & availability/redundancy
• Lower CAPEX & OPEX

HRS-EXPERIENCE IN NEL:

NEL HRS DELIVERIES:

• Reykjavík, Iceland
• Hamburg & Berlin, Germany

STATOIL & HYDRO:

• Porsgrunn, Kjellstad & Økern, Norway

HRS-technology from Statoil & Hydro now owned by NEL.

PRESENTATION OUTLINE

Condensed Interim Financial Statement

• NEL Hydrogen at a glance
• Our technology and current business
• The game changer: Hydrogen as energy carrier

Our value proposition

OUR VALUE PROPOSITION

Unique electrolyser technology

Superior energy efficiency

Design and scalability

Quality and reliability

Green technology

o Non-patented active coating

o 3 - 15% more efficient than competitors*

o Flexible design & competitive systems from 500 kW – multi-MW

o High regularity & long lifetime

o Enables fully zero-emission hydrogen production

Profitable business o Positive cash flow from current business

Appendix

WHAT IS "ELECTROLYSIS"?

Electrolysis is the process of splitting water into hydrogen and oxygen using an electrical current. The inputs to this process are simply feed water and electrical power. Below a schematic of a typical hydrogen generation plant is seen:

OUR CUSTOMER REFERENCE LIST

MARKET OUTLOOK: WATER ELECTROLYSIS

MANAGEMENT & CONTACT DETAILS

Management

Lars Markus Solheim CEO	Erik Evju Director, Finance
 With NEL Hydrogen since 2005  Long experience from employment	 With NEL Hydrogen since 1994  Education: Bank, insurance and
in NEL, with previous positions as Lead Automation Engineer and Director Operations	business administration from Norwegian School of Management (BI)
 BSc in System Engineering from Buskerud University College	 Norwegian School of Export
Bjørn Simonsen Director Market development and public relations	Ole Arnt Lindgren Director, Production
 With NEL Hydrogen from September 2014	 With NEL Hydrogen since 2009  Previous experience include ABB
 Experience with hydrogen since 2008: Researcher (IFE), followed by	(assembly and logistics mgr) and GPV (production and logistics mgr)
key positions in the HyNor-project, The Norwegian Hydrogen Council and Norwegian Hydrogen Forum.	 Education: Spec. In Logistics, Norwegian School of Management (BI)
 Education: M.Sc. in Energy and Environmental Engineering (NTNU)

Contact details

NEL Hydrogen AS

Tel: +47 35 09 38 38 E-mail: info@nel-hydrogen.com Web: www.nel-hydrogen.com

Address: P.O. Box 24, NO-3671 Notodden, Norway

POWER-TO-GAS (more in-depth)

P2G: EFFICIENT ALTERNATIVE TO BATTERIES

• For large scale energy storage, power-to-gas (P2G) is the most attractive pathway
• P2G in brief: conversion of electricity to gas
• Electrolysers are the key component of P2Gsystems
• NEL Hydrogen is well positioned to be part of this growth
• Superior large-scale supplier (> 120 Nm³/h)
• Experienced and reliable supplier

NEL A - TECHNICAL SPECIFICATIONS

	NEL A.150	NEL A.300	NEL A.485
Capacity / Nominal Flow Rate
Capacity range ( $Nm^3 H_2/hr$ ) per unit	$50 - 150$	$151 - 300$	$301 - 485$
Production capacity dynamic range	20 - 100% of nominal flow rate
Energy (electrolyser cell stack)
Typical power consumption ( $kWh/Mm^3 H_2$ )	$3.8 - 4.4$
Purity (measured on dry basis)
$H_2$ purity $(\%)$	$99.9 \pm 0.1$
$O2$ purity (%)	$99.5 \pm 0.2$
After purification (1)
$O2$ -content	$< 2$ ppm $v$
$H2O$ -content	$< 2$ ppm $v$
Pressure
$H_2$ outlet pressure after electrolyser	200 - 400 mm WG
$H_2$ outlet pressure after compressor (2)	Max 250 bar g
Operation
Operating temperature	80 ° C
Electrolyte	25% KOH aqueous solution
Feed water consumption	0.9 litre / $Nm^3 H_2$

CASE STUDY(1): ILLOVO SUGAR SA Ltd

COMPANY	Illovo Sugar SA Ltd
COUNTRY	South Africa
PRODUCT	NEL A•485
CAPACITY	360 Nm3 /hour
APPLICATION	Refined Sugar
INSTALLED	1983

"The original electrolyser is still in operation today and is extremely reliable. It runs at full capacity 24 hours a day. No significant maintenance is required"

Alastair Warman Engineering Manager Illovo Sugar Ltd

CASE STUDY(2) GUARDIAN – EGYPTIAN GLASS CO.

COMPANY	Guardian – Egyptian Glass Company
COUNTRY	Egypt
PRODUCT	NEL A•150
CAPACITY	120 Nm3 /hour
APPLICATION	Float Glass
INSTALLED	1998

"Since the start-up of the plant in May 1998, we have enjoyed a stable production with high gas purity, without any problems whatsoever"

Ihab Ishak UtilityManager Egyptian Glass Co.

CASE STUDY (3) INDUSTRIAS DE ACEITE FINO S.A.

COMPANY	Industria de Aceite FINO S.A.
COUNTRY	Bolivia
PRODUCT	NEL A•300
CAPACITY	300 Nm3 /hour
APPLICATION	Edible Oils & Fats
INSTALLED	2012

"The refurbished electrolyser works perfect for us. It is very easy and safe in operation. In addition we have made significant savings in our energy costs with this electrolyser."

Cesar Campoverde Production Manager Industrias de Aceite Fino

CASE STUDY (4) HYDROGEN FOR POLYSILICON INDUSTRY