NHA Conference 2010 - Long Beach, California 20 September 2018 Best Practice for Technology Qualification - from Business Idea to Commercial Product NHA Conference 2010 - Long Beach, California

Integrity at the core Independent foundation established in 1864 20 September 2018 Integrity at the core Independent foundation established in 1864 Self-owned with no shareholders Stakeholders are represented in our governing bodies and committees We use profits to continuously develop our people and our research and innovation Solid financial background No single majority group can have control of the foundation

Highly skilled people across the world 20 September 2018 Highly skilled people across the world 300 offices 100 countries 9,000 employees, of which 76% have university degree DNV has more than 9,000 employees in close to 300 offices in about 100 countries. These are approximate figures for DNV in May 2009. 50% in Europe. We want to stand out by being a trusted and highly competent partner for our customers. That is why we keep a very high level of highly educated staff in DNV, and we put a our resources in ongoing training for our employees. Background. The historical growth of DNV followed the coastline, then gradually expanded.

The new risk reality 20 September 2018 We live in a world, where businesses, and society at large, is confronted with a set of risks that are not the same as the ones we were facing a few decades ago. We call it the new risk reality.

your most critical risks 20 September 2018 It’s how you manage your most critical risks ELIMINATING RISK IS NOT AN OPTION Companies and society are forced to deal with this new risk reality. Eliminating the risks is not an option, but there are ways to manage these risks

risk identify assess manage DNV’s core competence 20 September 2018 DNV’s core competency is to identify, assess and manage risk. This competency can be applied in many industries and sectors. Managing risk is more than mitigating risk. It is also about seizing opportunities and turning risks into rewards.

What we do - Build and share knowledge 20 September 2018 What we do - Build and share knowledge We invest 6% of our revenue in research and development Hydrogen has been a research topic in DNV since 2001 DNV has been active in National, European and International hydrogen projects and networks. We take a lead role in joint industry research and development projects Through our standards, rules, recommended practices and software solutions we share knowledge with the industry Our independent nature, broad involvement with the industry, and our own leading research give us the opportunity to collect and build new knowledge – and not the least to share it. One of DNV’s core activities is to codify our accumulated knowledge and experience in the form of new standards and recommended practices, and provide both software tools and training for capturing and applying knowledge. Pictures illustrate: 1) Cooperation on HRS safety related user interface issues in cooperation with Statoil – as presented at this conference in 2009 2) DNV participated in Norwegian expert group for hydrogen in the transport sector that gave input to the development of a national hydrogen programme 3) In the European Integrated Hydrogen Project, DNV cooperated with Hydro (now Statoil) on safety issues for the pioneer hydrogen refuelling station on Reykjavik.

20 September 2018 Challenges Development of and introduction of new technological solutions introduce uncertainties and new risks Further pre-normative work required - input to harmonised regulations, codes and standards for hydrogen Limited availability of hydrogen specific experience, data and information Users demand safe, reliable and user friendly solutions at a competitive price New demands introduce new challenges: Higher storage and filling pressure Requirements for fast(er) filling Increasing station capacity requirements Challenges – we are not quite there yet .. (bullet 1..3) We have come a long way, here exemplified by the DNV Fuel Fighter, a prototype H2FC car that last year set an impressive world record – 1246 km on the energy equivalent of 1 l petrol at Shell Eco Marathon in Germany. But we want more… (last two bullets..)

The challenge The solution 20 September 2018 The challenge How to introduce new technological solutions that works, at minimum cost? The solution Reduce risk exposure and cost by introducing a structured approach to qualifying the new technology.

Technology Qualification 20 September 2018 Technology Qualification DNV’s definition of Technology Qualification: The process of providing the evidence that the technology will function within specific limits DNV’s definition of the term Qualification is: <read the text> To put this into a context there are in particular two parts of the definition that should be emphasised: “providing the evidence” implies that technology qualification confines all work done to create the necessary documentation. This differs from DNV’s 3rd party services (verification / certification / classification) which are to confirm that already available documentation complies to given specifications, codes and standards. “function reliably” tells that technology qualification should focus on functionality, not primarily on compliance. Codes and standards do not necessarily address the functionality of the technology, but primarily concern safety aspects. Compliance to codes and standards do therefore not guarantee the success of the technology. For new technology, in particular, we usually lack relevant codes and standards. Qualification according functional requirements is then the only rational approach.

Qualification in the Commercial Picture 20 September 2018 Qualification in the Commercial Picture $ New Technology First production REVENUE Risk exp. CAPEX OPEX Time development projects are motivated by the potential of profit. <click now to display “effect” of New Technology> The objective introduction of New Technology may be to enable the development project, but also to maximise the profit by increasing the revenue and reducing the CAPEX and OPEX. <click now to display “Risk Expences”> However, New Technology implies a risk of profit loss due to unforeseen events. click now to display “Risk Expences”> So, the aim of Technology Qualification is to reduce this risk to an acceptable magnitude. Technology Qualification Profit = Max {Revenue - CAPEX - OPEX} Profit = Max {Revenue - CAPEX - OPEX – Risk expenses}

Qualification Procedure for New Technology – DNV RP-A203 20 September 2018 Qualification Procedure for New Technology – DNV RP-A203 The first, industry-recommended practice for qualifying new technology Statoil: Implemented as standard for technology qualification Chevron and Exxon: Basis for development of own technology qualification approach Applied by DNV on project basis with a series of companies for qualification of new technology DNV guideline report for qualification of hydrogen production value chains Based on the generic RP-A203, with focus on wind-hydrogen and natural gas-hydrogen systems DNV RP-A201 (2001)

20 September 2018 Technology Qualification – Decision support for investment in new technology Why Technology Qualification (TQ)? No standards or procedures are available for new technology (Class 2, 3 & 4) TQ - a systematic approach ensuring that new technology meets defined level of safety and functional requirements Reduce the time to market Reduce the development cost Ensures that functional requirements are met Increase the market confidence in the new technology Reduce maximum potential loss – reduce risk exposure Applicat’nArea Technology category Proven Limited history New or unproven Known Class 1 Class 2 Class 3 New Class 4 Outcome Good Bad Good Bad Decision Lucky man As deserved… Skill Bad luck … 1: Proven Technology 2,3,4: New Technology

Statements from DNV Qualification Work Process DNV deliverables 20 September 2018 Statements from DNV Qualification Work Process DNV deliverables Qualification Basis Technology Assessment Report Statement of Feasibility Technology Assessment Failure Mode Identification & Risk Ranking Technology Qualification Plan Statement of Endorsement Selection of Qualification Methods Data collection (Analysis and Testing) For new technology, relevant standards and procedures to ensure an acceptable level of safety and functional reliability are generally not available. The purpose of this Qualification Basis is to define the expectations and limits of the technology. The Qualification Basis is prepared at the beginning of the Qualification Process and will be updated on a regular basis. DNV’s deliverables at each of the milestones are (unless agreed otherwise): TA: Technology Assessment Report + Statement of Feasibility TQP: Technology Qualification Plan + Statement of Endorsement TQ: Technology Qualification Report + Statement of Fitness for Service For economical reasons technology owners often needs to gain interest from potential buyers before a decision to fully develop and qualify the technology can be made. To gain such interest, it is necessary to convince the buyers that the technology will provide a commercial benefit, but also that the there are no potential “show stoppers” that may prohibit a successful qualification. The major costs for a complete qualification (maybe 90%) are relate to the Analysis and Testing activities. However, already after having conducted the first steps in the Qualification Work Process, including Selection of Qualification Methods, one will have the necessary insight to identify possible “show stoppers” and eventually carry out the necessary work to eliminate them. At that stage the technology is considered conceptually feasible, and DNV can issue the formal document “Statement of Feasibility”. After having completed the whole qualification process DNV can issue the formal document “Statement of Fitness for Service”. Certificate of Fitness for Service Technology Qualification Report Functionality Assessment Technology Deployment

Benefits of Technology Qualification 20 September 2018 Benefits of Technology Qualification The main benefit of qualifying new technology is to bring the technology faster to the market. Systematic identification of failure modes Identify need for design changes at an early stage Opportunity to improve system design Optimize qualification testing and analysis Uncovers interface issues between manufacturer and sub-vendors Increase the likelihood of delivering on time. Reduce the risk and cost during operation by reducing uncertainties and increasing reliability. Improve the end users confidence in the system. Traceability of qualification efforts. Allows quicker re-qualification for new operating conditions.

Summary The risk of introducing unproven technology can be high 20 September 2018 Summary The risk of introducing unproven technology can be high The risk exposure can be greatly reduced using a structured approach in qualifying new technology Decision gates – for “go / no-go” decisions Independent statements of confidence - attract investors Reduced development costs Reduced time to market DNV has issued a guideline report for qualification of hydrogen production value chains Technology qualification is today applied by leading international players

Safeguarding life, property and the environment 20 September 2018 Safeguarding life, property and the environment www.dnv.com