HighPressure Electrolysis Optimized for Supplying Premium Power from

High-Pressure Electrolysis Optimized for Supplying Premium Power from Wind and Photovoltaic Power Sources National Hydrogen Association Annual Conference, April 2008

Presentation Outline v. Technology, Company and Market Background v. System Concepts for Energy Storage v. Development and Economics Of Large Wind Energy Storage v. Present Program For Self-Refueling, Extended Back-Up Power Systems -2 -

Technology Description v Avalence Produces Ultra-High Pressure (6500 psi) Hydrogen Directly in the Electrolysis Cells Ø Eliminates Costly, High Maintenance Mechanical Compressors Ø Eliminates Costly Pre-Compressor Chillers and Dryers v Series/Parallel Electrical Configuration Flexibility in Renewable Applications Ø Minimizes, Inefficient and Costly Power Conditioning Equipment Ø Increases System Production “Up-Time” v Inexpensive Electrode and Separation Membrane Materials Ø Reduces System Material Cost Ø Maintains Competitive Efficiency Operation (62 k. Wh/kg) §Includes All Power Inputs -3 -

Spunout in 2002 From Industrial Gas Equipment Manufacturing Firms 70 Years In Low Pressure H 2 Electrolyzers 40 Years In Oxygen Generators To The Navy Fleet The Companies Synergistically Share Facilities and Resources Ø ~$3 M Seed Angels As Of 3/08 Ø ~$2. 5 M Cumulative Revenues As Of 3/08 -4 -

Hydrofiller™ Target Market Evolution -5 -

Common Technology Platform: Real Customers Ø INDUSTRIAL ª 10 kg/day w/ O 2 – Maine Oxy Ø STORAGE SOLUTIONS ª ¾ kg/day – Enabling Technologies ª¾ kg/day – Chewonki Institute ª¾ kg/day – UTC ØTRANSPORTATION ª 3 kg/day – Auto Major ª¾ kg/day – James Madison U ª¾ kg/day – U of Toledo ª 10 kg/day – Fort Collins, CO ª 3 kg/day – NYSERDA ª 10 kg/day – Robins AFB JMU Hydrofiller 15 Denotes Renewable Integration -6 -

Energy Storage Utilizing Hydrogen Unique Flexibility to Optimize System v. Allows Independent Sizing of Components to Optimize System Performance and Economics ØFuel Cell – Supply Required Electric Power ØStorage – Support Required Period of Power ØElectrolyzer – Fill H 2 Storage in Required Period or Absorb Set Fraction of Available Power v. Both Peak Shaving and Off-Peak Utilization for Baseload Stabilization (Grid Firming) v. Allows H 2 Production and Sale for Transportation Fuel Maximize the Value of the Power Supplied -7 -

The Fully Integrated System Technology Value Proposition Block Diagram Ø Avālence Produces Ultra-High Pressure (7000 psi) Hydrogen Directly in the Electrolysis Cells Eliminates Costly and Unreliable Me H 2 Production: 0. 5 to 10 kg/day H 2 Pressure: Up to 7, 000 psi -8 -

Example of Fully Integrated Wind, Base Load Power And Electrolyzer Hydrogen For Peak Shaving, Baseload Technology Value Proposition Firming, And Transportation Fuel Production Ø Avālence Produces Ultra-High Pressure (7000 psi) Hydrogen Directly in the Electrolysis Cells Eliminates Costly and Unreliable Me H 2 Production: 0. 5 to 10 kg/day H 2 Pressure: Up to 7, 000 psi -9 -

Two Approaches to Large Wind Value Technology Value Proposition Enhancement Utilizing Hydrogen Ø Produce H 2 Full Time – Replace Turbine Peaking Plants v Electrolyzer Sized for Full Turbine Capacity Ø Avālence Produces Ultra-High Pressure (7000 psi) v On Demand Dispatch as High Value Peak Power, and/or Hydrogen Directly in the Electrolysis Cells v Sell Excess H 2 As High-Value Transportation Fuel Eliminates Costly and Unreliable Me Ø Selectively Produce H 2 – Peak and Baseload Usage v When Available Wind Power Supply Exceeds Grid Demand v When Available Wind Power Exceeds Distribution Line Capacity v To Maintain a Minimum Dispatchable Energy Reserve v Size Components to Maximize Overall Value Proposition v On Demand Dispatch for Grid Firming and Peak Shaving H 2 Production: 0. 5 to 10 kg/day § Will Increases Value of All Delivered Power in the PPA H 2 Pressure: Up to 7, 000 psi v Can Also Sell Excess H 2 As High-Value Transportation Fuel -10 -

Simple Economic Assessment of Technology Value Proposition Large Wind Energy Storage Cap. Ex and Cost Assumptions Ø Avālence Produces Ultra-High Pressure (7000 psi) Hydrogen Directly in the Electrolysis Cells Ø Electrolyzer: $480/k. W Eliminates Costly and Unreliable Me Ø Fuel Cell: $200/k. W Ø H 2 Storage: $200/kg Ø Annual O&M, Refurbishment Reserve: v 3% of System Cap. Ex for H 2 System v 1% of System Cap. Ex for Wind System H 2 Production: 0. 5 to 10 kg/day Ø H 2 Pressure: Up to 7, 000 psi Wind Power Installed Cost: $1. 50/W Ø Average PPA for Raw Wind: 3. 5¢/k. Wh -11 -

Large Wind Energy Storage: Simple Scenario Technology Value Proposition (No Transportation Fuel) Hydrogen Solution: Wind Power – Electrolysis – Storage – FCs Ø Avālence Produces Ultra-High Pressure (7000 psi) Design Assumptions Hydrogen Directly in the Electrolysis Cells ª 100 MW Wind Park Rated Capacity Eliminates Costly and Unreliable Me ª 35% Average Capacity Factor ª 20 Year Design Life for Amortization ª 1 Day of the Fuel Cell’s Rated Electric Output Stored as Hydrogen ªElectrolyzer Efficiency: 54 k. Wh/kg H 2 Production: 0. 5 to 10 kg/day ªFuel Cell Efficiency: 27 kg/k. Wh H 2 Pressure: Up to 7, 000 psi -12 -

Detailed Economics: Peak Power Production 100 MW Electrolyzer, 100 MW FC, 90, 000 kg Storage All Power Converted to H 2 100 MW Installed Wind, 100 MW Electrolyzer, Without H 2 90, 000 kg Storage, 100 MW Fuel Cell System With H 2 System Annual Electrolyzer, Storage, Fuel Cell System Cost (20 Year Amortization) - $4. 3 MM Annual Wind Turbine Installation Cost (20 Year Amortization) $7. 5 MM Annual Operating, Maintenance, Refurbishment $1. 5 MM $3. 2 MM Annual “Junk” Power Yield 307 GWh - Annual On-Demand Dispatchable Power Yield - 153 GWh Present Annual Value of 306 GWh @ 3. 5¢/k. Wh $10. 7 MM Annual Profit $1. 7 MM Increased Value Of Dispatched Peak Electricity Required to Match Annual Profit 8. 8 ¢/k. Wh NREL Estimates Peak Power Value at 15 to 20 ¢/k. Wh -13 -

Economic Model Scenarios: Baseload Firming Technology Value Proposition Equipment Sizing and Capability Assumptions Ø 100 MW Electrolyzer, 100 MW FC, 90, 000 kg Storage PPA Value to Match Current Profits ª 100% of Wind Farm Power Can Be Absorbed 6. 5¢/k. Wh ª 100 MW On-Demand Power Ø Avālence Produces Ultra-High Pressure (7000 psi) ª 24 Hours at 100 MW Output From Stored H 2 Hydrogen Directly in the Electrolysis Cells Ø 50 MW Electrolyzer, 50 MW FC, 45, 000 kg Storage ª 50% of Wind Farm Power Can Be Absorbed Eliminates Costly and Unreliable Me ª 50 MW On-Demand Power ª 24 Hour at 50 MW Output from Stored H 2 5. 4¢/k. Wh Ø 33 MW Electrolyzer, 50 MW FC, 45, 000 kg Storage ª 33% of Wind Farm Power Can Be Absorbed ª 50 MW On-Demand Power ª 24 Hours at 50 MW Output From Stored H 2 5. 1¢/k. Wh Ø 33 MW Electrolyzer, 25 MW FC, 22, 500 kg Storage ª 33% of Wind Farm Power Can Be Absorbed H 2 Production: 0. 5 to 10 kg/day ª 25 MW On-Demand Power H 2 Pressure: Up to 7, 000 psi ª 24 Hours at 25 MW Output From Stored H 2 4. 9¢/k. Wh -14 -

Detailed Economics: Baseload Firming 33 MW Electrolyzer, 25 MW FC, 22, 500 kg Storage 1/3 of the Available Power Converted to H 2 100 MW Installed Wind, 33 MW Electrolyzer, 90, 000 kg Storage, 25 MW Fuel Cell Without H 2 System With H 2 System - $1. 3 MM Annual Wind Turbine Installation Cost (20 Year Amortization) $7. 5 MM Annual Operating, Maintenance, Refurbishment $1. 5 MM $2. 0 MM Annual “Junk” Power Yield 307 GWh 205 GWh Annual On-Demand Dispatchable Power Yield - 51 GWh Present Annual Value of 306 GWh @ 3. 5¢/k. Wh $10. 7 MM Annual Profit on “Junk” Power @ 3. 5¢/k. Wh $1. 7 MM Annual Electrolyzer, Storage, Fuel Cell System Cost (20 Year Amortization) Increased Value Of 256 GWh of “Firmed” Electricity Required to Match Annual Profit 4. 9 ¢/k. Wh -15 -

Status Of Hydrofiller™ 5000 Development Technology Value Proposition as of March ‘ 08 Ø Preliminary Design of 300 kg/day and 750 k. W System Avālence Produces Ultra-High Pressure (7000 psi) ØØIndividual Cell Design Concept Complete ØHydrogen Directly in the Electrolysis Cells Technology Development Partners Engaged Eliminates Costly and Unreliable Me Ø MIT - Fluid Design Ø Hyper. Comp - Carbon Fiber Wrapping Ø Supporting Patent Activities Initiated Ø Awarded $2. 4 M DOE Grant to Build 1/10 th Scale Plant Ø Total Development Budget For Full Scale Prototype Estimated at $3. 5 Million H 2 Production: 0. 5 to 10 kg/day Ø Targeting 2010 for Full Scale Plant Demonstration H 2 Pressure: Up to 7, 000 psi -16 -

Self-Refueling Back-Up Power Technology Value Proposition Application Ø Integrated Electrolyzer, Storage, and Fuel Cell Avālence Produces Ultra-High Pressure (7000 psi) ØØRenewable or Grid Powered Hydrogen Directly in the Electrolysis Cells Ø When Power is Unavailable Eliminates Costly and Unreliable Me Ø Powers Critical Systems Using the Fuel Cell Ø When Power is Available Ø Collects Moisture From Air As Needed With Dehumidifier Ø Produces H 2 When Power Available and Storage Not Full H 2 Production: 0. 5 to 10 kg/day H 2 Pressure: Up to 7, 000 psi Ø Price Point Versus Refueling Turn Cost Will Set Market Size -17 -

Self-Refueling Back-Up Power Application Schematic Example: Grid and Renewably Powered 0. 7 kg/day System Oxygen Waste Stream 6500 psi Hydrogen Storage Nominal 12 scfh, 6500 psi Hydrogen Fuel Ultra-High Pressure Electrolyzer Deionized Water Dehumidifier 24 V DC Signals 5 k. W Fuel Cell Nominal 1. 8 k. W Up to 3 k. W from PV To Load Pulls Moisture from Ambient Air Back-Up Battery, Control Electronics and Input Power Switching 20 to 32 V DC Power 26 V DC Power PV Array (Up to 3 k. W) 2 k. W Rectifier 220 V Input Power -18 -

Variable Input Voltage PV Example v. Electrolyzer Acts Like A Resistor that Doesn’t Go Through the Origin (0 Volt, 0 Amp) v. Tracks the Peak H 2 Production Point Without Any Front End Power Conditioning -19 -

Typical PV Performance Data 3 kg/day Rated System v 11: 00 am – System Start-Up Ø 60 Volts Ø 2. 7 kg/day Rate Ø 16 C Cell temp v 1: 30 pm - Peak H 2 Production Rate Ø 54 Volts Ø 3. 5 kg/day Rate Ø 55 C Cell Temp v 5: 20 – H 2 Production Ceases Ø 30 Volts 11: 00 am 6: 00 pm -20 -

UTC Power Test Unit ØPV and/or Grid v 24 V DC (flexible) v 240 V AC ØRated at 0. 7 kg/day H 2 at 6500 psi and 1. 8 k. W ØFeeds Standard 6000 psi Gas Bottles ØFuels 5 k. W Pure. Cell Fuel Cell from UTC ØPreliminary Integrated System Testing is Ongoing -21 -

Contact Information CEO: Stephen Nagy Operations and Fundraising sfn@avalence. com President: Martin Shimko Technology Development, Sales, and IP Protection mas@avalence. com Alpha Unit with >8000 hours Operation 1240 Oronoque Road • Milford, Connecticut 06460 • Tel: 203 -701 -0052 • Fax: 203 -878 -4123 www. avalence. com -22 -