About IDEAL POWER In 2007, Ideal Power’s founder and Chief Technology Offi cer, Bill Alexander, developed an entirely new principle of operation for electronic power converters, which are devices that change electricity from one form to another. He formed the company and the fi rst patent was fi led.

Ideal Power calls its patented technology Power Packet Switching Architecture™ (PPSA), and the company’s goal is to establish PPSA as the preferred technology for the $50 billion annual electronic power converter industry.

Ideal Power had a successful Initial Public Offering in late 2013 (NASDAQ: IPWR) and has won multiple industry awards and grants for its technology. It has been granted more than 20 patents, and continues to aggressively fi le for U.S and international patent protection for its new approach to power conversion.

Capital-effi cient business modelIdeal Power also has a capital-effi cient business model that can enable it to address multiple markets simultaneously with a standard low cost platform and generate high returns with minimal capital needs. As the Company scales, it plans to work with established leaders to license its products in order to serve the growing global market.

Snapshot: IDEAL POWER

Founded: 2007

Stock Symbol: NASDAQ: IPWR

Headquarters: Austin, Texas

Intellectual Property: more than 20 granted U.S. and international patents

Company BackgrounderOctober 2014

Conventional power conversion: expensive and ineffi cientConventional electronic power conversion uses direct or continuous power fl ow through a number of switches and fi lters, as shown below. This traditional approach to power conversion requires inductors, transformers and capacitors that are large, heavy and ineffi cient.

Figure 1. Conventional Inverter

The future of power conversion: PPSA technologyIdeal Power’s patented Power Packet Switching Architecture (PPSA) offers a unique solution to the traditional, less effi cient method of power conversion. PPSA improves the size, cost, effi ciency, fl exibility and reliability of conventional electronic power converters.

Figure 2. Ideal Power PPSA Converter

Ideal Power’s patented PPSA technology uses 100 percent indirect power fl ow. All the power is temporarily stored in a unique magnetic storage component called an AC Link. The power conversion process starts when the input switches are turned on, allowing power to fl ow into the AC Link. The output switches are off at this time.

4120 Freidrich Lane, Suite 100, Austin, TX 78744 tel: +1.512.264.1542 email: info@idealpower.com web: www.idealpower.com

Once the AC Link is charged, the input switches are turned off. The energy storage in the AC Link then oscillates between high voltage and high current. When the voltage swings around to match the exact output requirement, the output switches are turned on with high accuracy, releasing the stored energy. Small input and output capacitors are used (not shown) to keep continuous power fl owing into and out of the system. The input and output switches are never on at the same time, which creates electrical isolation between the input and output.

PPSA: A game-changerPPSA offers a number of revolutionary benefi ts for the electronic power converter industry:

Electrical Isolation Because the input and output are never directly connected, the PPSA indirect process provides electrical isolation without the cost, weight and losses of an isolation transformer.

Elimination of PWM PPSA eliminates the Pulse-Width-Modulation step in conventional inverters. The PWM square wave must be smoothed into a sinusoid that requires large inductors and capacitors. Removing these fi lters, and the isolation transformer, eliminates the need for the majority of capacitors and magnetics (consisting of iron cores with copper wire) in PPSA products. This signifi cantly reduces materi-al, manufacturing, shipping and installation costs.

Soft switching PPSA power switches turn on and off at zero voltage. This is called soft switching. Switching losses are normally the largest loss factor in conventional converters and PPSA’s soft switching reduces these losses to less than 0.5 percent. Soft switching also lowers component stresses and improves a product’s long term reliability.

Inherent buck-boost PPSA allows the converter to decrease voltage (buck) or increase voltage (boost) without additional hardware stages.

Multi-port Many applications will increasingly depend on hybrid power converter systems that integrate separate energy systems such as solar and storage. PPSA enables multiport systems without adding additional power converter hardware stages (adding cost) or processing steps (adding to effi ciency losses).

Next Generation Power SwitchesIdeal Power’s existing products use four commodity silicon power semiconductor components - two IGBT (Insulated Gate Bipolar Transistor) and two diodes - to create a bi-directional switch needed in its products. The Company’s existing products have been third party tested to provide 96.5 percent effi ciency (CEC-weighted) or generate only 3.5 percent in losses, superior to competitors especially when the isolation transformer loss in their systems is included. The closest competing product to our current 30kW battery converter has 92.5 percent effi ciency (CEC-weighted) and weighs more than six times as much for the same power. Ideal Power’s lower weight reduces material, manufacturing, shipping and installation costs. Its higher effi ciency further improves ROI by lowering the electrical input to the system and the number of batteries required.

The Company has received a $2.5M grant from the Advanced Research Projects Agency – Energy of the US Department of Energy to develop and commercialize new bi-directional switches that will further improve effi ciency, power density, reliability and cost of its products. Just one of our BD-IGBT (bi-directional IGBT) will replace the four commodity components used today. Simulations on its new BD-IGBT (bi-directional-IGBT) switch indicate that these switches may improve effi ciency to 98.5 percent, reducing losses from its current products by more than half.

$50 Billion Market Opportunity Ideal Power’s goal is to establish its PPSA technology as the industry standard in electronic power conversion industry, an industry that is highly fragmented by applications, power and geographic region. The Company’s PPSA technology allows a standard high volume hardware platform to address multiple applications and to support both U.S. (60Hz 480Vac) and international (50Hz 400Vac) grid standards, which typically requires many separate low volume hardware designs.

The Company has chosen to initially focus on the high growth Electrical Energy Storage (ESS) markets. The cost of battery storage, particularly lithium ion batteries, has declined sharply in recent years and is forecasted to continue to signifi cantly decline, further driving these markets.

The ESS industry has many segments, including utility, commercial, residential and off grid, all of which require power converters. Ideal Power has analyzed these markets and identifi ed the most economically attractive and fastest-growing segments: grid-tied commercial and off grid microgrid. These ESS markets are often co-sited with solar PV and are forecasted to grow nearly 20x over the next four years to $500 million. There is also signifi cant market demand for commercial and microgrid ESS without PV, further increasing the size of this market in the near term.

Power Converter — Selected Vertical Markets

Variable Frequency Drives (VFDs) for AC Motors

PV Inverters

Battery Converters for energy storage systems (ESS)

Battery converters for grid-tied commercial ESS with PV

Battery converters for off grid microgrids ESS with PV

$21 B 6% CAGR

71GW 13% CAGR$12B 4% CAGR

4GW 52% CAGR$1.5B 33% CAGR

643MW 111% CAGR$300M 92% CAGR

400MW 88% CAGR$200M 71% CAGR

2018 MW and Growth Rate2018 $M and Growth Rate

Ideal Power’s products for Commercial and Microgrid ESSIdeal Power’s products improve system effi ciency, size, weight, reliability and most importantly the installed system costs of commercial and microgrid ESS. With the recent introduction of Ideal Power’s 125kW family of power converters, the Company supports installations from 30kW to more than 1MW by using multiple units in parallel. The Company’s battery converters support stand-alone energy storage systems (ESS) applications and its hybrid converters signifi cantly improve the energy and cost-effi ciency of integrating energy storage with photovoltaic or other types of distributed generation. Using its standard modular products, Ideal Power provides ESS integrators a range of product options with a high level of fl exibility to confi gure their installations to their end customer needs.

Ideal Power’s products support grid-tied, off grid and grid resilient (battery backup) requirements. They also support both U.S. (60Hz 480Vac) and International (50Hz 400Vac) grid standards without the requirements for an internal or external isolation transformer.

Battery Converters for Commercial ESS: $300+M by 2018One of the most fi nancially attractive and fastest growing markets for energy storage is the installation of batteries in commercial buildings, an early focus of Ideal Power. In California these commercial demand charges can reach 50 percent of the utility bill, and, when state incentives are used, commercial ESS can reduce these demand charges with three-year fi nancial paybacks. Three of the leading commercial ESS integrators—Sharp Electronics, Green Charge Networks and Coda Energy—are using Ideal Power’s 30kW battery converter in their commercial ESS. Increasingly, these companies are offering fi nancing to commercial building owners, eliminating upfront costs and guaranteeing demand charge savings, further accelerating market adoption.

This market for power converters for Commercial EES is rapidly expanding due to declining system costs, as well as increasing utility demand charges and the need for emergency backup power. It is forecasted that revenue from battery converters co-sited with PV in this market will increase to $300 million by 2018.

111% CAGR 2014-2018$300M for Commercial

Battery Converters in 2018

IHS: The Role of Energy Storage in the PV Industry — Sept 2014

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Battery Converters for Microgrid ESS: $200+M by 2018Another high growth energy storage market segment is for Microgrid ESS. These are energy storage systems that provide power to the billion individuals worldwide who lack access to the electricity grid or depend on expensive diesel generation. Integrating energy storage with distributed generation including PV, wind and diesel can reduce diesel fuel requirements by 70 percent or more. When both purchase and delivery cost of the diesel fuel is considered, these systems can have two-year fi nancial paybacks.

Ideal Power is partnering with EnerDel in this fast growing Microgrid ESS market. EnerDel’s Mobile Hybrid Power System (MPHS) integrates Ideal Power’s 30kW hybrid converter with EnerDel’s lithium ion batteries and control systems. EnerDel will offer its MHPS to both military and commercial customers globally.

This market for power converters for Microgrid ESS with PV is also forecasted to grow an attractive 71 percent annual growth rate, increasing to $200 million by 2018.

IHS: The Role of Energy Storage in the PV Industry — Sept 2014

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88% CAGR 2014-2018$200+ M for Off grid

Microgrid Converters in 2018

Other markets for Ideal Power:Ideal Power is addressing the commercial energy storage and off grid microgrid markets with a standard set of products that can also be used in a wide variety of other applications. The Company is also selling products into solar, electric vehicle charging infrastructure, and distributed wind applications.

The Company is pursuing aggressive cost reduction by scaling its manufacturing volume and it will also gain further performance and cost advantages as it migrates to its next generation bi-directional power switch. As it achieves these goals it will continue to expand the number of markets and customers that is serves.

Ideal Power is focusing on high growth, high value applications that leverage its unique capabilites. As the company grows it plans to enter large established markets such as the $21 billion variable frequency drive market. Product licensing is expected to help facilitate the entrance into more established markets.