Nel ASA — Investor Presentation 2014

Nov 3, 2014

NEL Hydrogen – if the future could choose…

Company presentation, November 2014 Bjørn Simonsen, Director – Market Development and Public Relations

IMPORTANT INFORMATION

THIS PRESENTATION (HEREINAFTER JOINTLY REFERRED TO AS THE "PRESENTATION") HAS BEEN PREPARED BY NEL ASA ("NEL" OR THE "COMPANY") EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, THE PRESENTATION TO ANY OTHER PERSON.

THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE.

THERE MAY HAVE BEEN CHANGES IN MATTERS WICH AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOT SINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION.

THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS OF NEL OR ASSUMPTIONS BASED ON INFORMATION AVAILABLE TO THE COMPANY. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECT CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. NEL CANNOT GIVE ANY ASSURANCE AS TO THE CORREC TNESS OF SUCH INFORMATION AND STATEMENTS.

THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY'S BUSINESS, SEGMENTS, DEVELOPMENT, MANAGEMENT, MARKET ACCEPTANCE, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, INCLUDING, BUT NOT LIMITED TO, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CUSTOMS DUTIES, VAT OR VARIATIONS THEREOF, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS DOCUMENT.

THIS PRESENTATION DOES NOT CONSTITUTE OR FORM A PART OF, AND SHOULD NOT BE CONSTRUED AS, AN OFFER OR INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OF THE COMPANY.

THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS.

PRESENTATION OUTLINE

NEL Hydrogen at a glance

Our technology and current business

The game changer: Hydrogen as energy carrier

Our value proposition

THIS IS NEL HYDROGEN

• We supply solutions for hydrogen generation
• Our roots date back to 1927 (Norsk Hydro)
• In-house technology with superior energy efficiency
• Over 500 electrolyser units sold; over 100 in operation
• Annual revenues of NOK ~80 million
• Production facility in Notodden, Norway
• Listed on the Oslo Stock Exchange (sept 2014)
• Positioned for an expected massive growth in the hydrogen market

LOCAL ROOTS, GLOBAL PRESENCE

6

PURE ENERGY & PURE WATER

HYDROGEN - A MARKET IN TRANSITION:

MARKET FOR HYDROGEN IS GROWING

• 78% reforming, 18% gasification, 4% electrolysis

• ~1% is from water electrolysers today
• General growth in market: lighter grade fuels (refineries), polysilicon industry & energy sector
• Water electrolyser market expected to grow significantly – refueling and energy storage being main drivers

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

MARKET OUTLOOK: WATER ELECTROLYSIS

PRESENTATION OUTLINE

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 eletrolyser 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

In-house Outsourced/partners

16

NEXT GENERATION TECHNOLOGY

Pressurized electrolyser

• Pilot stage Pressurized electrolyser currently developed at 60 Nm³/h (~250 kW)
• Increasing market share & entering new markets
• Higher operation flexibility and smaller footprint

PRESENTATION OUTLINE

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

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 hydrogen 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
• 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

BUSINESS CASE FOR HRS IN OSLO REGION

• Energy input: 60 kWh/kg
• Sales price: NOK 90/kg (full tank: 5 6 kg)
• CAPEX, HRS + production: NOK 15+ million
• HRS refueling capacity: 500 kg/day

Business case depends on electricity/hydrogen price & number of customers

HYOP AS dedicated Norwegian HRS operating company

Viable business case in Oslo-region: >10,000 FCEVs

OSLO & AKERSHUS HYDROGEN STRATEGY

Ensuring commercial introduction of hydrogen in the Oslo-region.

• 2014 2018: 400 MNOK (high public share)
• 2019 2020: 1000 MNOK (gradually lower public share)
• Action plan 2015 2016 approved by Akershus: 23 MNOK (of ~100 MNOK)
• Other financers: Transnova, EU

HYDROGEN REFUELING STATIONS

NEW REFUELING STATION PROJECT

COMMERCIAL GRADE STATION 10 X CAPACITY 30% COST REDUCTIONS

Based on unique experience & well functioning technology

PRESENTATION OUTLINE

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

SALES AND PROFITABILITY

• Sales H1 2014: NOK 38 million
• New sales: NOK 11 million
• After-sales NOK 27 million
• Operating income H1 2014: NOK 9.4 million
• Operating income margin of 24.6%

MANAGEMENT, OWNERS AND CONTACTS

Management

Lars Markus Solheim	Erik Evju
CEO	Director, Finance
	
With NEL Hydrogen since 2005	With NEL Hydrogen since 1994
	
Long experience from employment	Education: Bank, insurance and
in NEL, with previous positions as	business administration from
Lead Automation Engineer and	Norwegian School of Management
Director Operations	(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
	(assembly and logistics mgr) and
Experience with hydrogen since	GPV (production and logistics mgr)
2008: Researcher (IFE), followed by	
key positions in the HyNor-project,	Education: Spec. In Logistics,
The Norwegian Hydrogen Council	Norwegian School of Management
and Norwegian Hydrogen Forum.	(BI)
 Education: M.Sc. in Energy and Environmental Engineering (NTNU)

45

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	NE 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/Nm 3 H 2 )		$3.8 - 4.4$
Purity (measured on dry basis)
$H_2$ purity $(\%)$		$99.9 \pm 0.1$
$O_2$ purity (%)		$99.5 \pm 0.2$
After purification (1)
$O2$ -content		$< 2$ ppm $v$
H 2 O-content		$<$ 2 ppm $v$
Pressure
$H2$ 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

CUSTOMER	Tokuyama Corporation
COUNTRY	Malaysia
PRODUCT	11 x NEL A•485
CAPACITY	5500 Nm3/hour
APPLICATION	Polysilicon (20,000 tonnes/yr)
INSTALLED	2013 - 2014
ORDER VALUE	160 MNOK

Even though large resources of natural gas is available nearby the plant, electrolysis based hydrogen was chosen due to its superior purity, alongside with good access to local, renewable electricity.