RedFlow Limited Investor Presentation – August 2012 Chris Winter, CEO

For

per

sona

l use

onl

y

Cover images Main image

Part of Australia’s largest rooftop solar photovoltaic generation system, the 1.22 MW array at The University of Queensland.

RedFlow’s M-class prototype is being showcased there to show how large scale solar PV

electricity can be stored for use at night time.

Disclaimer

This is a document which has been prepared by RedFlow Limited (Company) to provide the recipient (Recipient) with information and a general understanding of the Company and its business. This document is provided to the Recipient on the conditions set out below.

This document is not a recommendation, offer or invitation

This document is not a recommendation, offer or invitation by any person or to any person to sell or apply for securities in the Company.

This document is not a prospectus

This document is not a prospectus under Australian law or under any other law. It is for information purposes only. Accordingly, this document neither purports to be exhaustive nor contain all of the information which a prospective investor or the Recipient may require to make an investment decision and it does not contain all of the information which would otherwise be required by Australian law or any other law to be disclosed in a prospectus.

Exclusion of representations or warranties

The only representations or warranties in relation to the preparation of this document and the information in it (such as its accuracy, reliability, completeness or reasonableness of any assumptions) are those which are implied by law and which cannot be excluded by law. Otherwise, all such representations or warranties are excluded and the Recipient releases the Company, its advisers and the officers of each of the aforementioned persons from any liability or responsibility for this document.

Events after date of this document

The Company and its officers have no responsibility or obligation to inform Recipients of any matter arising or coming to their notice, after the date of this document, which may affect any matter referred to in this document.

No reliance

The document is provided to the Recipient on the basis that the Recipient must rely on their own inquiries and seek appropriate professional advice in relation to the information and statements in relation to the proposed prospects, business and operations of the Company.

Distribution

The distribution of this document in jurisdictions outside Australia may be restricted by law. Any Recipient who receives this document outside Australia must seek advice on and observe any such restrictions.

RedFlow M-class energy storage prototype on

demonstration at the UQ array

RedFlow Generation 2.0

zinc-bromine battery module (ZBM) 5kW / 10kWh

RedFlow R510 energy storage trial systems being assembled for

shipping to demonstration sites

globally

2

Disclaimer F

or p

erso

nal u

se o

nly

Introduction to RedFlow

3

RedFlow (RFX) is an ASX listed, energy storage company based in Brisbane, Australia. RedFlow's key asset is its zinc-bromide battery module (“ZBM”), a leading energy storage device. The ZBM is a 10kWh flow battery with deep continuous cycling characteristics, ideally suited to the load shifting of electricity on a daily basis, including shifting energy from off-peak to peak demand periods and to supplement and smooth renewable energy generation. Key strengths of RedFlow include:

• Technology Leadership – RedFlow's ZBM has been independently tested, with initial performance confirmation by Sandia National Laboratories. A number of major global corporations are negotiating with RedFlow to include our ZBM in major demonstration projects which provides external validation of our leading position.

• Market – There is now wide recognition of a very substantial world energy storage market is

developing for flow batteries. • Route to Market – RedFlow’s pathway to market is now clearly focused on working in conjunction

with major global system integrators, and RedFlow is in advanced negotiations with a number of such companies planning to commercialise their Energy Storage Systems in 2014 and beyond.

• People – RedFlow founders the Winter Brothers, and other key RedFlow staff are internationally

recognised as global leaders in flow battery technology.

RedFlow has recently undertaken a business restructure to focus its strategy, with a new board and refocused management team, with the Founder Chris Winter back as CEO.

For

per

sona

l use

onl

y

Corporate Overview

4

Howard Stack Chairman

Previous directorships of listed companies include Bow Energy, Flight Centre, Data#3 and Australian National Industries. A partner of Allen, Allen & Hensley until 2001, and corporate advisor to one of Australia’s largest electricity generators until 2011

Chris Winter Founder & Executive Director

Previously a petroleum engineer with companies such as Schlumberger and Wintershall AG with extensive international business experience having lived and worked in Germany, Oman and Venezuela

Richard Aird Non Executive Director

RedFlow’s Chief Operating Officer from early 2010 until July 2012. A professional operations manager with over 20 years' experience in commercial development and operations in construction and rural industries

Bruce Brown Independent Non Executive Director

Previously Managing Director and Chief Executive of Campbell Brothers Limited, a director of Campbell Brothers and Transpacific Industries Limited, and previously Chairman of Flight Centre Limited

Patrick Mackey Independent Non Executive Director

Co-owner of PTE Hydraulics Pty Ltd. A Chartered Accountant and previous Treasurer and Commercial Manager of Utah Mining Australia, Global Finance Director of DHL Business Systems, and Commercial Manager of the Oilmin/Moonie Oil Group

Board Profiles

Role Name Previous Employment

CFO Paul Clarke Ex KPMG, EY

Chief Engineer Dr Alex Winter Ex Schlumberger

Sales & BD Bruce Ebzery Ex Energex

SI Support Tim MacTaggart Ex Solar Systems &Lend Lease

Management

Shares 81.7 million

Market capitalisation $6.9 million (as at 13/08/2012)

Options 5.9 million (7.3%)

Major shareholders

Richard Serisier & Associates 14.7%

Chris Winter 10.8%

Alex Winter 10.8%

Capital Structure

For

per

sona

l use

onl

y

Our core product – the RedFlow ZBM

Key advantages:

High energy density zinc-bromide chemistry compared with other flow battery chemistries → smaller & potential for lower cost

Lightweight → compared to most competitors

Full discharge / recharge with minimal degradation on a daily basis, unlike other batteries → no need to oversize battery

Primarily made of plastic → take advantage of the plastics industry manufacturing capability in future product development

Safe and recyclable electrolyte

Scaleable for different applications up to planned MW capacity

Electrical performance:

• Delivers 10kWh of energy with a peak power rating of 5KW • 100% capacity available on a daily basis → less CAPEX to user • Charge and discharge over a several hours → matches

applications • 48 volts DC nominal → matches standard electrical systems • Round trip efficiency approx.70% (DC-DC) → good business case • Tolerates up to 45ºC → no shelf-life problems • Target life of 1,500+ full cycles → good business case

400+ RedFlow ZBM’s manufactured since 2009

Example of an Energy Storage System (ESS) using a ZBM 5

For

per

sona

l use

onl

y

Market Opportunity

6

The principal application of RedFlow's ZBM is load shifting of energy. This involves storing electricity that is produced when demand is low, and offloading energy when demand is high. This application has benefits in four key areas in the modern world.

1. Transmission and Distribution (“T&D”) investment deferral – The ZBM has the ability to shift electricity from the off-peak period to the peak period (early evenings) and so defer the need for expensive upgrades of the wires, poles and substations that make up the electricity grid.

2. Renewable integration – One issue with renewable generation is the lack of control around the timing of generation – we cannot control the wind or the sun. The ZBM has the ability to shift renewable energy generation from when it is generated to when it is required, increasing utilisation of renewable energy sources and stabilising electricity networks.

3. Energy Management – At the residential and commercial level, managing electricity demand from the grid by using the ZBM as an electricity buffer is an opportunity that is now generating significant interest because of the potential to reduce electricity bills. The Smart grid trial with Ausgrid in New South Wales, which RedFlow is part of, is an example of how this can change the way we use electricity.

4. Remote power opportunities - Electrification of remote areas not currently connected to the electricity grid is a large potential opportunity. The ZBM combined with renewable energy sources has the ability to power these remote sites, and so reduce the use of diesel generators. Powering the large number of mobile phone towers needed to support the growth in mobile phone usage in remote areas is also an attractive niche market.

For

per

sona

l use

onl

y

Market #1- Case Study: Ergon Energy Trial Reducing Peak Demand on Single Wire Earth Return Network

Trial designed with Ergon Energy to demonstrate that a number of RedFlow batteries on an electicity

network can reduce the level of peak demand on that part of the network.

Reducing the level of peak demand provides the ability to defer a significant amount of CAPEX for a

number of years.

Charge at night and feed into the evening peak.

One 5kW/20kWh battery per 6-8 residential customers gives 15-25% peak load reduction.

Strongest business case for distributed batteries is in rural areas with few customers per mile of wire.

Owner: Ergon Energy

Flow Battery (Zinc Bromine)

Location: Brisbane, Australia

For

per

sona

l use

onl

y

Market #2 - Case Study: University of Queensland Renewable Integration: Shifting Solar Energy to the Evening Peak

Demand Period

Trial at the University of Queensland of RedFlow 90KW

M Class battery designed to demonstrate that the

RedFlow batterty can be charged during the day from a

Solar PV array and discharge power into electicity grid

during the evening peak.

Charge the battery during the day and feed power into

the grid in the evening.

As the penetration of renewables reaches 30-40% then

shifting energy becomes critical for the business case of

renewables.

RedFlow Battery deployed with a PV array at the

University of Queensland

For

per

sona

l use

onl

y

Market #3 - Case Study: Ausgrid Trial Energy Management: Residential and commercial customers –

Smart Grid features

Trial designed with Ausgrid in Newcastle and Scone to demonstrate how Ausgrid can use multiple

distributed energy storange systems to support their network and to potentially assist households.

This trial is ongoing and results from RedFlow products are encouraging to date.

The ZBM can be used to buffer electricity and reduce demand on the electricity grid at customers sites.

Managing when and how electricity is used can reduce electricity bills.

RedFlow‘s battery system and on-site generation systems are

demonstrating in this trial that they can significantly reduce the

amount of time that residents are charged for power from the grid

when time-of-use metering is used.

For

per

sona

l use

onl

y

Market #4 - Case Study: Energy Safe Victoria (ESV) Remote off-grid power: Electrification of remote areas

This study with ESV in Victoria

demonstrates that RedFlow‘s batteries can

be used to provide power in off-grid

applications in combination with solar PV

and back up diesil generators

In off-grid applications the ZBM can

manage the intermittent generation of

Solar PV and wind energy to make it

available when required.

It is usually combined with a back-up

generator for periods when insufficient

renewable energy has been generated

(e.g. overcast periods)

RedFlow remote power site in rural Victoria

For

per

sona

l use

onl

y

Lux Research estimates that 19% of a $113.5 billion revenue opportunity by 2017 is available for zinc-bromide batteries “Grid Storage under the microscope: Using local knowledge to forecast global demand” https://portal.luxresearchinc.com/research/report_excerpt/10114.

Source:EPRi 1022261 Program 94, December 2010

RedFlow’s ZBM performance envelope

Estimate of US market for (grid-connected) electricity storage

$8.4 billion at 6 GW at $1400/kWh

$16.1 billion at 23 GW at $700/kWh

Market opportunities and competition

11

Source: Electric Power Research Institute 2010

This slide highlights the size of the market and the potential opportunity for RedFlow to provide leading flow battery technology to facilitate energy storage.

“75% of the time 25% of wind farm output is curtailed in northern Germany, because of congestion ” F

or p

erso

nal u

se o

nly

RedFlow ZBM (zinc-bromide flow batteries)

Vanadium Redox Flow batteries

Lead-acid batteries Lithium-ion batteries Molten sodium batteries

Direct competitors

a) ZBB (USA) b) Premium Power (USA) c) Primus Power (USA)

a) Prudent Energy (CHN) b) Cellstrom (Austria) c) Various others

Large number of suppliers globally

Various incl. a)SK Innovation b)Samsung c)A123

a) NGK (JPN) - NaS b) GE (US) – NaNiCl c) FIAMM (Italy) –

NaNiCl

Maturity Developed from 2001 and in the field since 2009 RedFlow has a roadmap for: a)Ongoing performance improvement; and b)Continued cost reductions.

Initial systems being deployed

Mature Mostly mature Mature – NaS Demonstration - NaNiCl

Key applications

Stationary electricity storage Stationary electricity storage

Car starting Some energy storage with advanced lead-acid

Laptop, cell-phones Electric vehicles, 15 minute MW storage

Large scale (1 MW) stationary energy storage

Issues when applied to heavy-duty electricity storage

Ideal application: Suits hard work of full 100% cycling on a daily basis High energy density

Low energy density leading to large systems

Short life if fully discharged or not treated carefully

Acid and lead

Multiple small cells Favours high power

rather than high energy applications

High temperature Need continuous

operation Long delivery time

Cost Significant downward potential: RedFlow has commenced outsourcing for large-scale production Product development & improvement

Highest cost per kWh of all systems for daily cycling due to high overall size and weight

Market leading: Little scope to reduce costs Application disadvantages

High cost: Mature product, less scope for cost improvements

Moderate : Only suits large scale (NaS)

Best market niche

High energy, daily cycling applications, Time shifting Supporting renewables

High energy daily cycling applications where •>6 hours support is required each day

High power, low energy applications •UPS & standby •Short Backup

High power short duration applications Frequency stabilisation •<1 hour discharge

NaS - Large scale applications (+ 1 MW) •6 hour discharge

RedFlow ZBM versus competing battery technologies (for stationary electricity storage)

No one battery chemistry suits all applications. Each type has merit in a particular market application. 12

For

per

sona

l use

onl

y

ZBM’s currently deployed with

Independent testing through:

Sandia National Laboratories

University of Queensland

The University of Arizona

Ausgrid (Electrical utility)

Large Electrical conglomerate

Large Military contractor

Powerco (NZ)

440+ ZBMs manufactured since 2009 (including all product development units)

Key partnerships developing

Large Military contractor

Large Global Electrical conglomerates

PowerCo (NZ)

Singapore Technologies

Outsourced component manufacturers

Demonstration system installations – current and past

Australia

60 ZBMs installed in Ausgrid network (Australia’s largest urban utility) as part of the Smart Grid Smart City Trial.

30 ZBMs trialled with Ergon Energy, Queensland’s second largest distribution utility. Further trials anticipated.

State Government of Victoria (20 ZBMs - completed demo)

The University of Queensland (24 ZBMs supporting large PV solar array)

Global Change Institute at University of Queensland. Contracted for installation in October 2012. (36 ZBMs powering green building demonstration)

New Zealand

Powerco – NZ – Evaluation of 1 R510 RedFlow Energy Storage System

USA

Sandia National Laboratory – Owned by Lockheed Martin Corporation contracted to US Department of Energy (2 ZBMs under ongoing testing)

Trial systems deployed for evaluation with four other potential US partners .

Key suppliers

RedFlow operating history

13

For

per

sona

l use

onl

y

Strategic review and business restructure – April 2012

14

The strategic review confirmed:

1. Significant market opportunity exists in MW scale systems globally in addition to already identified kW scale opportunities

2. Large commercial orders are dependent on successful demonstration at larger scale - with longer lead times than expected

3. Lower volumes through the demonstration phase and so will not be able to take full advantage of Jabil this year, therefore delay to 2013+

4. Need to accelerate outsourced component manufacturing – in-house production has proven ZBM manufacturability, however cost reduction and product quality will be driven via transfer to experienced well-resourced offshore manufacturing facilities

5. Outsourced manufacturing - to be progressed via a programmed progressive transfer of component and sub assembly manufacture to selected partners over the next 12 months following a review of our existing manufacturing processes

6. Need to focus on ZBM battery module production and leave systems integration to international specialists. This simplifies and de-risks RedFlow's business going forward leaving resources to focus on the core strength of the company – its ZBM battery module

The prior strategy was too ambitious and complex, and RedFlow's ZBM was not at a stage of development that warranted the scale of operations that were in place. RedFlow also lacked the appropriate expertise to facilitate a smooth transition to the outsourcing of manufacturing. Interested parties continue to approach RedFlow, on the back of our industry leading technology behind RedFlow's ZBM, and the relatively advanced nature of testing relative to international peers.

For

per

sona

l use

onl

y

Revised manufacturing strategy

15

RedFlow’s ZBM battery module was not ready for commercial release or for transfer to offshore manufacturing when we hoped it would be. We have taken a step back and looked hard at where we were and as a consequence have refined our manufacturing and also marketing strategies. The battery, and the way it is made, is unique. We underestimated what this meant and the need to redesign and refine some manufacturing processes before moving to commercial manufacture. We have engaged internationally experienced manufacturing advisers who are developing a detailed plan with us. This will correct the mistakes made in getting our product ready for commercial manufacture. We have also put our agreement with Jabil on hold. Notwithstanding this, Jabil remains very supportive of RedFlow and our growth plans. We now know we need third party help to take our battery to the world. The parties we are in discussion with have the capital and name necessary to market and commercialise our technology globally . Future arrangements with large partners will substantially de-risk execution of RedFlow’s business plan.

For

per

sona

l use

onl

y

End users buy ESSs from global SIs

RedFlow

Commercial ZBMs

&

Next generation ZBMs

System Integrators with channels

to market

Commercial electricity storage systems (ESS)

End users

kW to MW scale applications

Utilities Renewables

Telcos C&Is etc.

ZBMs ESSs

Demo trials with new System

Integrators & end users

data data

RedFlow sells ZBMs to System Integrators (SI) who have channels to market or licences or JVs with

vertically integrated ESS companies

These SIs produce Energy Storage Systems (ESS) to their customer

specifications globally

New “System Integrator” business model

16

RedFlow’s business model is based on selling commercial ZBMs to System Integrators (SI) who use

them in their own Energy Storage Systems (ESS), which they then on sell to end users. RedFlow has

developed a 36 month plan to fully achieve this by incorporating an “Intel Inside” business model.

The SI model allows RedFlow to focus on its core competency – the ZBM battery – and allow

multinational System Integrators to develop commercial electricity storage systems based on our ZBM,

to suit separate markets and needs of specific customers.

This business model is an effective way of leveraging the relative uniqueness of RedFlow’s ZBM, which

is continually attracting potential System Integrators to RedFlow.

For

per

sona

l use

onl

y

New team and structure in place to execute

17

Following the strategic review, a number of personnel changes have been made at all levels of RedFlow, including board, management and operationally. New board appointments have been made to strengthen the commercial, strategic and professional expertise of the board. Management has been similarly restructured to recognise that RedFlow is still in an early growth phase, and the appropriate management team is in place to ensure that the new strategy is manageable. Key to this has been the reorganisation of the business to transition the company to offshore manufacturing, and support systems integrators. Ongoing development and improvement of RedFlow's ZBM remains a core goal of RedFlow to maintain its technical leadership. Operationally, the workforce has been reduced to match the company’s core business objectives and conserve financial resources. Accordingly, staff numbers have been reduced from 120 to 47 currently. The staff reductions have not reduced RedFlow’s ability to deliver on the current strategy.

For

per

sona

l use

onl

y

RedFlow milestones during the next 12 months

1. The first M-class containerised battery system deployed in support of a large solar PV array at the University of Queensland in Q2 2012

– Completed June 2012

2. Agreements in place to develop systems with major system integrators and customers using RedFlow ZBMs

– Currently in negotiations with potential system integrators (Asian, US & EU based)

3. Outsource manufacturing of most of the ZBM battery elements

– This is being restructured with the support of external outsourcing experts, with the ultimate aim of outsourcing the complete commercial ZBM before the end of 2013

4. An agreement in place to install US or Asia based M-class demonstration system – Discussion with two potential customers underway

5. Long-term testing to demonstrate >1000 cycles from the ZBM by the end of 2012 – >1000 cycles demonstrated to end July 2012 (at lower discharge levels)

6. Generation 3 ZBM prototype to undergo first tests by the end of 2012, as part of ongoing cost down and performance targets

– Gen3 prototype now under initial testing in August

7. Strategic investments by major industry player to provide ongoing funding into the future.

– Currently taking early interest from a number of international parties, regarding future funding sources to bring RedFlow's ZBM to market in scale either by way of JV or licensing and equity investment.

18

For

per

sona

l use

onl

y

RedFlow Limited headline financials

30 June Year End Audited Audited Unaudited3

(AUD ‘000’s) 2010A 2011A 2012F Income Statement

Revenue 1 691 1,777 2,650 Loss before tax and impairment charges 2 (1,060) (7,293) (13,211)

Assets Cash 3,414 Other Current Assets 2,440 Fixed Assets 1,951

Total Assets 7,805

Liabilities (1,522)

Net Assets 6,283

19

Notes: 1. Excludes Interest received and other revenue

2. Loss is stated before Impairment Charges.

3. Figures for 2012 are subject to audit and board approval

RedFlow expects to receive a cash payment of approximately $3m before the 31st October 2012

from the Research and Development Tax Incentive

For

per

sona

l use

onl

y

More sustainable cost base

Cash Burn Rate per month

Monthly cash burn has be materially reduced following the strategic review and subsequent restructure. Staff headcount has been reduced from 120 down to 47 currently to bring the business down to a spending rate more appropriate for our revised market strategy.

Key staff at RedFlow have been retained to ensure the company can adequately carry out its development plans, and ensure progress is made, in R&D, business development, system integrator support, and the outsourcing of manufacturing.

Going forward RedFlow is targeting cash burn of $690k per month, down from $990k in June which was impacted by once off redundancy payments, and ~ $1,450k per month prior to the strategic review.

0

500

1,000

1,500

2,000

2,500

AU

D$

Th

ou

san

ds

Monthly Cashflow (Actual to June 2012)

Monthly Cashflow3 Month Average

For

per

sona

l use

onl

y

Summary

1. RedFlow’s products work

– 3rd party - Sandia Phase 1 test – (see RedFlow website)

– Field trials ongoing - (USR510, UQ M90, Ausgrid)

– Cumulative experience to date – (>12,000 cycles from all ZBM’s)

2. Development at least as advanced as main competitor offerings with strong commercial/market acceptance

– Four multi-billion dollar companies have performed global due diligence on RedFlow’s solutions and we are working with/short listed with all

– vs. Sodium-sulphur, Lead-acid & Lithium-ion batteries – RedFlow’s ZBM has the best performance envelope for our targeted applications

3. RedFlow has planned a clear path to competitive pricing point with products to be made consistently in mass production

– Two industries help RedFlow’s ZBM be competitive– the innovative plastics industry and the rapidly growing power electronics industry

– Contract Manufacturer expertise will also contribute to cost reductions

– And through ongoing product development

4. RedFlow’s solutions are expected to fulfil all reasonable market requirements

– The ZBM sweet spot is the 2-6 hour discharge application requiring daily deep cycling

– Focussing on this market results in a strong business case in a large potential market

21

For

per

sona

l use

onl

y

Thank you……

22

For

per

sona

l use

onl

y