Transformational Energy Futures Efficient and clean energy for the world Helen Millicer, I&PR Manager

Who is CFCL? Based in Noble Park (Melbourne), Australia Established 1992 IPO July m 2 of R&D and prototyping facilities Pilot SOFC production plant 100 employees European subsidiary established September 2004

Summary of Presentation Trends in world energy market New challenges of efficiency and emissions Disruptive technologies: 1. Micro-CHP and distributed generation 2. New energy for the future - fuel cell generators

World Energy Market Trends Challenges: Increasing population and industry activity Pressures and mandates on efficiency, greenhouse and particulate emissions Increasing price of fuels and electricity Falling supplies of conventional fuels Ageing energy infrastructure Solutions: More efficient and cleaner systems New energy sources

World Energy Trends – Government Actions UK’s Prime Minister plans to raise energy performance target in 2005 to 50% for new buildings, and 60% cut in carbon emissions by 2050 Australia NSW adopts BASIX 5 Star program – 40% less greenhouse emissions for all new residential development by mid-2006 New York State to have 25% electricity supplied by renewables, including biogas fuel cells, by 2013 German Government provides subsidies for fuel cell technologies powered by biomass German Government passes Law providing subsidy incentive of 5 € cents for energy from small combined heat and power systems

Regional Energy Costs

Comparing stationary power systems Centralised power: Coal – 25-40% efficiency, high emissions, constant power Nuclear – 40% efficiency, highly toxic long life waste, constant power Gas – 30-50% efficiency, moderate CO2 emissions, generally peak demand Localised (decentralised) power: Solar – no emissions, intermittent power Wind – no emissions, intermittent power CFCL’s micro-CHP unit – 85% efficiency, variety of fuels, low emissions, continuous power

CFCL’s sweet spot CFCL’s market and product alignment Market drivers: Price for electricity and fuel – Europe very high Fuel scarcity – Europe (importer of fuels) Efficiency imperative – regulations and Kyoto on users and utilities - Europe Natural gas penetration – Europe extensive Industry framework and interest – horizontal integration and government incentives - Europe Product solution: 1kW micro-CHP domestic generator for Europe

CFCL path to market 1995 Technical review, 2 yr plan to progress from small to bigger cell stack technology funded by existing investors, reach 5kW 1997 Technical review, further investment, Fed Govt R&D Start Grant progress to 25kW stack, aiming at < 200kW generator, problems with thermal cycling of large metal stack 1999 CFC becomes Co Ltd, Woodside and Energex grow to be major investors, move to all ceramic smaller stack 2003 CFCL recognises market shift to micro-CHP and adjusts business model to being provider of 1kW stacks to domestic appliance manufacturers 2004 CFCL lists on ASX, IPO and cap raising $25M

Disruptive Technology “Micro-CHP has a predicted capacity of similar order of magnitude to the existing nuclear generating capacity in the emerging liberalised energy markets in Europe. It has the potential to substantially disrupt the established electricity supply industry both economically and technologically.” EA Technology Ltd, UK, 2003.

Micro-CHP + fuel cell generator CFCL 1kW micro-CHP

Existing micro-CHP Products Sales: 13,000 in 2004 Market value: €112 million Six products: 4 x 5kW, 2 x 1kW Markets: Japan, Germany, catching up UK Best Opportunities: countries with widespread natural gas, high retail electricity prices, long heating season* * Fuel cells may reach 1:1 power to heat ratio, existing micro-CHP reach 1:5 ratio

Efficiencies in Electricity Generation Solid oxide fuel cells are recognised as potentially the most efficient electricity systems in the world

Comparing electrical efficiency

Energy Waste: CFCL’s CHP vs conventional power plant and hot water unit Save 44% energy using CFCL’s CHP unit instead of a conventional electricity power plant and domestic water heater Wasted heat 2.15 kW, 66% Outlet Transmission losses 0.1kW, 10% Conventional power station Electrical energy for use on site 1 kW, 30.8% Electrical energy 1.1 kW, 33.8% Plus Energy used to power CHP system.5kW, 20% Actual heat recovered used for hot water 1kW, 40% Actual electricity generated for use on site 1kW, 40% CFCL’s CHP unit – heat and power delivered to site Transmission losses 0 kW, 0% Source: ABARE 2004 Domestic gas hot water unit Heat energy 1 kW, 82% Wasted heat energy.2 kW, 18%

Emissions: CFCL’s CHP vs Conventional centralised power plant and hot water unit Emissions (per kW energy output) Option 1 VS Option 2 CFCL’s CHP combined home electricity generator and hot water unit alone saves 54% CO2 emissions CO2 534 g NOx 0 g (Neg) SOx 0 g CO2 900 g Conventional centralised power plant NOx 4 g SOx 10 g Conventional home gas hot water unit CO2 261 g NOx.5 g SOx 0 g Plus Solid Wastes Ash/Gypsum 50 g Chloride/sulphate 20 g Source: ABARE 2004 Australian Government

European Market Opportunities for CFCL Existing and growing EU market for new gas boilers (000 units sold p/a) CFCL market calculations

Benefits of using fuel cell CHP units Have own reliable constant energy system, end risk of blackouts Potentially reduce fuel bill and energy consumption Sell surplus electricity to grid Replace two units with one – gas powered generator and hot water unit Utilities defer cost of power station and networks Utilities and governments meet emission requirements of Kyoto Protocol and legislation

Energy Business Models with micro-CHP Residents in Tokyo, Japan, have the opportunity to provide power and hot water for their homes using a fuel cell cogeneration system developed by Tokyo Gas, Ebara Ballard Corp and Matsushita Electric Industrial Co Ltd. Cost: about US$9,550 (1 million yen) Power: 1-kilowatt fuel cell system Period: 10 years Deal: customers also earn a 3 % discount on their gas bills for 3 yrs and bills capped at about $90 per month (9,500 yen).

How CFCL’s micro-CHP operates

The building blocks - CFCL’s fuel cell

CFCL’s CHP Competitive Advantage Not limited to hydrogen, own internal gas reformer Able to use a number of gas fuels natural gas methane LPG * higher hydrocarbons : light napthia, low sulfur diesel Able to use renewable fuels biomethane (dairy, sewage) * ethanol (from sugar, starch, cellulose) * biodiesel * coal seam methane * hydrogen * capacity identified

Fuel cell industry growth Source: Fuel Cell Today, Dec 2004 CFCL operates in the SOFC field

Automotive fuel cells Size range: kW Fuel: Hydrogen (compressed, liquid): refueling infrastructure very limited to date (about 70 stations globally) Demo cars - Toyota, GM, Honda Commercial series:

Portable/miniature Fuel Cells

Distributed Generation PAFC 200 kW PEMFC 200 kW MCFC 1 MW SOFC 100 kWSOFC CC 250 kW MCFC 300 kW

Conclusion The paradigm shift and deep cuts in energy and emissions via micro-CHP and fuel cells: 1.Distributed energy – no transmission losses 2.Reduced capital cost 3.Efficient use of fuel ~ nearly 50% improvement 4.Cleaner air with nearly zero particles 5.Reduced CO2 greenhouse gas emissions ~ > 50%

Thank you, Helen Millicer