No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the permission of Plug Power Inc. COMPANY CONFIDENTIAL Copyright 2006 by Plug Power Inc.
Fuel Cells and the Hydrogen EconomyDr. John F. Elter, CTOPlug Power, Inc.
JESMMay 24, 2007
SAFE HARBOR STATEMENTThis presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to our 2007 milestones and statements regarding our growth plans. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements, including, without limitation, the risk that the anticipated benefits of our acquisitions will not materialize, unit orderswill not ship, be installed and/or convert to revenue, in whole or in part; Plug Power’s ability to develop commercially viable on-site energy products; the cost and timing of developing Plug Power’s on-site energy products; market acceptance of Plug Power’s on-site energy products; Plug Power’s ability to manufacture on-site energy products on a large-scale commercial basis; competitive factors, such as price competition and competition from other traditional and alternative energy companies; the cost and availability of components and parts for Plug Power’s on-site energy products; Plug Power’s ability to establish relationships with third parties with respect to product development, manufacturing, distribution and servicing and the supply of key product components; Plug Power’s ability to protect its intellectual property; Plug Power’s ability to lower the cost of its on-site energy products and demonstrate their reliability; the cost of complying with current and future governmental regulations; the impact of deregulation and restructuring of the electric utility industry on demand for Plug Power’s on-site energy products and other risks and uncertainties discussed under “Item IA—Risk Factors” in Plug Power’s annual report on Form 10-K for the fiscal year ended December 31, 2006 , filed with the Securities and Exchange Commission (“SEC”) on March 16 , 2007 , and the reports Plug Power files from time to time with the SEC. Plug Power does not intend to and undertakes no duty to update the information contained in this press release.
Agenda
Introduction
Industry Overview
What is Plug Power Doing
Challenges
What’s Next
Figure 10. Type, 1970 - 2025
WORLD ENERGY MARKET USE BY FUEL
Sources: History: Energy Information Administration (EIA), International Energy Annual 2002, DOE/EIA-2019(2002) (Washington, DC, March 2004), web site www.eia.doe.gov/iea/. Projections:EIA, Systems for the Analysis of Global Energy Markets (2005).
• Polar ice caps are melting faster than ever
•More and more land is being devastated by drought
•Rising waters are drowning low-lying communities•By any measure, Earth is at the tipping point
The Debate Is Over
BUILDINGS ACCOUNT FOR HALF OF ALL GREENHOUSE GAS EMISSIONS
Building 48%
Industry 25%
Tran
spor
tation
27%
COMPETING MENTAL MODELS
Centralized generation with de-centralized use
Generation at point of use
FUEL CELL AND HYDROGEN INDUSTRY DRIVERS
Energy Security• Develop domestic primary energy sources for H2 including HC
and renewables to diversify energy supply• Imported oil threatens the economy by both price and
availability
Environmental Benefit• H2 production with carbon management• Reduce greenhouse gasses and other pollutants (e.g., SOX, NOX)
Energy Efficiency• FC-powered automobiles and light trucks• Point of use stationary power
What is a Fuel Cell?
A fuel cell is a electrochemical device that converts chemical energy directly into electrical energy.
AnodeH2 2H+ + 2e-
EO=0 V
CathodeO2+4H+ + 4e- 2H2OEO = 1.23 V
Classification of Fuel Cells
Type T (oC) Electrolyte Conductor-----------------------------------------------------------------------------------
PEM <100* H+-membrane H+
PBI 160-190 H3PO4 H+
Alkaline <200 KOH OH-
Phosphoric acid ~200** H3PO4 H+
Molten carbonate ~500 Li2CO3+K2CO3 CO32-
Solid Oxide ~1000 Y2O3/ZrO2 O2--------------------------------------------------------------------------------------------------------------------------------
North America
Focus on back-up power (power following)
Protecting the Source
US Government support
Europe
Focus on Combined Heat & Power (heat following)
Reducing Consumption
Gas Utilities are involved with fuel cell promotion
European union support
Asia
Focus on Combined Heat & Power (heat following)
Reducing Consumption
Gas Utilities are involved with fuel cell promotion
Japanese government budget for fuel cell research, development, & demonstration ($1billion over next 3 years (2005-2007)
GLOBAL PERSPECTIVE
Activities Span 3 ContinentsActivities Span 3 Continents
CROSSING THE CHASM
Reference:Geoffrey A. Moore
The EarlyMarket
Innovators,technologyenthusiasts
Earlyadopters,
visionaries
Earlymajority
pragmatists
Late majorityconservatives
Laggards,skeptics
Time
Customers wanttechnology
and performance
Customers wantsolutions
and convenience
The
Cha
sm The MainstreamMarket
THE ADOPTION CURVE
MassStationary
Market
2000 20XX
Value
Commodity
f(cos
t, re
liabi
lity,
feat
ures
)
Automotive
Early Adopters
$18-$50/kW
$300-$700/kW
$8000-$20,000/kW
It’s a fuel cell
I can buy it at Home Depot My 1st car is a
fuel cell car
To be the leading provider of clean, reliable on-site energy.
VISION STATEMENT
2000
Innovators / Early Adopters
Value
Commodity
Mar
kets
RemoteStationary
IntermittentPower
Market Engagement
Progressive Market Engagement
Grid TiedCHP Automotive
MaterialHandling
GenDrive
PLUG POWER’S CONTINUOUS RUN SYSTEMS
Fuel
Water
Hydrogen DC Electricity
ACElectricity
Air Water and Heat
FIRST GENERATION GENSYS® FUEL CELL SYSTEM
GenCore® 5T Fuel Cell System with cell tower
GENCORE® TARGETS THE $1.9B USD1 GLOBAL BACKUP BATTERY MARKET FOR THE TELECOM INDUSTRY
1 Source: Frost and Sullivan.
System Reliability Improvement
• Extended run • Scalable backup power• Remote monitoring and
diagnostics• Redundancy or replacement
Operating Expense Reduction• Eliminates battery replacement
and maintenance• Reduces personnel callouts
during outages• Alleviates space shortages for
next-generation telecom networks
• Reduces customer churn resulting from network outages
SOLUTION: GENCORE®
Durable, robust solution for extended backup
Capable of replacing or augmenting batteries
Maintains batteries at full charge during outage
Predictable and scaleable run time
Low maintenance
Outdoor operation eliminates costly facility
modifications
Small footprint
Lightweight
Environmentally friendly
BACKUP POWER FOR SPRINT TOWER
GENCORE®
CUSTOMER INSTALLATIONS
Wireline Application
Rooftop in Edmonton Cell Tower in Venezuela
Wireless Applications
South Africa
GENCORE® VALUE ADDEDA major carrier in South America used battery back up for their cell tower and then switched to GenCore in October for dependability over 99.5%.
42.45
78.82
90.77
78.77
69.42
99.46
99.98 99.86 99.96
20
30
40
50
60
70
80
90
100
May '06 June '06 July '06 Aug '06 Sept '06 Oct '06 Nov '06 Dec '06 Jan '07
% Availability
CUSTOMERS
Field Proven
GenCore systems operating in 24 counties
Class 1
Class 2
Class 3
MATERIAL HANDLING MARKET
MATERIAL HANDLING $1.5B USD INDUSTRYValue Proposition
Increased Productivity: More product moved
Lower Operational Costs: Labor downtime reduced
Continuous Power: Trucks run at full speed 24x7
More Commercial Space: Battery rooms eliminated
Zero Emissions: Safe, clean, and efficient power sources
Easy Adoption: Fits in same space as a battery
PLUG POWER’S CONTINUOUS RUN SYSTEMS
Builds On Experience Of First Generation SystemBased On Autothermal Reforming And PEM Stack TechnologyBase Configuration Is LPG Fuel, DC Power Output For Telecom Industry
THE NEXT-GENERATION GENSYS PROTOTYPE
Field Experience
Venezuela ScotlandNew York
South Africa
Alabama Tennessee Michigan
Florida
More than 500 systems sold to customers around the
world!
BROAD LIST OF CHALLENGES FOR THE INDUSTRY
Codes and Standards
Cost
Efficiency
Volume
Hydrogen Fear
Understand the impact of good systems thinking
2010 DOE Fuel Cell Targets
Auto - $45/kWe
DG System - $750/kWe
40,000 hours
40% electrical efficiency
Hydrogen Facts
4 times higher concentration of hydrogen than gasoline vapor is required to ignite (4% LFL for H2 vs. 1% LFL for Gasoline)
Hydrogen is the lightest element
• 14 times lighter than air (LP and gasoline are heavier than air)• Very high diffusion rate• Extremely buoyant• Dissipates 10 times faster than gasoline vapor and almost 4 times
faster than methane (natural gas)• Hydrogen rapidly disperses when released in air, so a leak is quickly
diluted and rendered harmless
Gasoline has 22 times the explosive power per volume than liquidhydrogen
A hydrogen flame radiates very little heat compared to a petroleum fire
FUEL CELL TAX CREDITS IN THE UNITED STATES
GenCore List Price: $19,490
State Federal GenCore
Tax Incentive Amount Amount w/Incentive
Federal 30% tax credit capped at $1000 per kW $5,000 $14,490
Connecticut Local option property tax exemption $405* $5,000 $14,490
Florida 75% tax credit of capital and operating costs, up to $12,000 per unit $12,000 $5,000 $2,490
Sales tax exemption (6%) $1,169*
Maryland 30% tax credit or $1,000/kW if fuel cells serve a green building $5,000 $5,000 $9,490
New York 20% tax credit up to $1,500 per unit; includes installation costs $1,500 $5,000 $12,990
Washington Sales tax exemption (7% - 9.3%) $1,364* $5,000 $14,490
*Tax cost avoided
EUROPEAN COMMISSION SUPPORT TO FUEL CELL AND HYDROGEN RTD IN IN FRAMEWORK PROGRAMMES
0
50
100
150
200
250
300
M Euro
FP2(1986-1990)
FP3(1990-1994)
FP4(1994-1998)
FP5(1998-2002)
FP6(2002-2006)
Source: US DOE Hydrogen, Fuel Cells and Infrastructure Technologies Annual Merit Review, Arlington, May 16, 2006
WHAT’S NEXT: SYSTEM
Systems Integration – Pristine Conditions
High Temperature System Concept
• 30% fewer parts >> Lower capital cost
• Simpler system >> Increased reliability
• CO tolerant MEA >> Increased life
• Water independent >> Market acceptance
• Increased efficiency >> Reduced fuel consumption
• High quality heat >> Drive thermally activated devices
High temperature fuel cell technology offers significant improvements over existing PEM technology.
FUEL CELL TECHNOLOGY CHALLENGES
Fuel Processing• De-sulfurization Cost• Heat exchanger Cost• Reformate Composition and Concentration • Rapid Start Up
Fuel Cell Stack• System (FP)-Stack-MEA Interactions• Life (Degradation) of MEA• Operational Stability• MEA Cost• Plate Cost
S. Cleghorn, W.L. Gore, 2003 Grove Conference
FUEL CELL TECHNOLOGY CHALLENGES
System/BoP• System Cost• Reliability of Components
• (pumps, valves, instrumentation)• Subsystem Cost
– (water management, humidification)
Power Conditioning• Inverter Topology• $/kWe• Super Capacitors
0.0
0.2
0.4
0.6
0.8
1.0
0.0 0.5 1.0 1.5 2.0
Time (normalized)
Rel
iabi
lity
B3 B4 B5 B6
B3 B4B5
B6
WHAT’S NEXT: INDUSTRY
Collaboration
Consolidation
Value proposition• Customers determine value• Value drives price• Price drives cost
SOLAR POWER
Photovoltaics
Solar Heat-thermal
Solar Heat-electric
Solar Fuel-biomass
Passive Solar Lighting
Building HVAC
Solar Detoxification
The amount of solar energy reaching the earth’s land areas in 1 hour is enough to supply the U.S. energy needs for 1 year (~100 Quads/yr)
Tom Stoffel & Steve Wilcox, NREL Hydrogen & Electric Technologies & Systems Center, 2004
Wind PV (Solar)
Electrolysis (water)
e- H2e-
e-e-
Hydrogen Storage
Commercial Consumer
ResidentialConsumer
H2
CH4
e-e-
e-e-
e-e-
Biomass (methane)
Automotive
THE H2 ECONOMY END GAME
Fuel Cell
“We’ve made progress …
We see the challenges …
It’s an exciting place to be!”
HEADQUARTERS968 Albany-Shaker Road Latham, New York 12110 Phone: (518) 782-7700 Fax: (518) 782-9060
WASHINGTON, D.C. 499 South Capitol Street, SW Suite 606 Washington, D.C. 20003 Phone: (202) 484-5300 Fax: (202) 554-2896
EUROPE, MIDDLE EAST & AFRICA7301 BC Apeldoorn P.O. Box 880 The Netherlands Phone: 31 55 53 81 000 Fax: 31 55 53 81 099
www.plugpower.com
