Off-Grid Power Markets 26 May

22 The off-grid market consists of some of the largest industrial enterprises on the planet, operating in remote and often extreme environments 2 Off-Grid Markets High fuel delivery costs – battlefield, remote locations, at sea High maintenance costs – dangerous, harsh or remote locations, at sea, highly technical equipment, mission-oriented power systems High generator utilization rates – where gensets provide prime power, where engineers factor in excess capacity as a rule Emissions restrictions/incentives – European markets tax carbon emissions, in-port vessels, harbor dredging Silent and low vibration power – military operational security, luxury yachts, highly instrumented equipment Clean, high quality power – sensitive instrumentation Mission-critical power – uninterruptible power supplies RELIABILIT Y RELIABILITY RELIABILITY

333 Generator Dependency and Inefficiency The area under this curve quantifies generator inefficiency Electrical generators in off-grid power systems are highly inefficient, resulting in exponentially higher Fuel consumption Emissions Maintenance costs Physical depreciation of the generator In off-grid markets, inefficiency is expensive and customers pay a premium for reliable power Fuel logistics Maintenance Equipment replacement Emissions mitigation Approximately 8,600 MW of small generator capacity in Iraq and Afghanistan today Approximately $3.7 billion Market Size 3,697 tank barges (U.S) 3,932 tugs (U.S.) 6,890 bulk carriers 4,170 containerships 18,982 general cargo 1,600 drilling rigs 1,083 offshore platforms Annual Cost of Generator Inefficiency $129 million $137 million $6.1 billion $12.3 billion $6.7 billion $944 million $638 million Most operators think they operate at 50-80% load Most actually operate at 10-25% load, where energy costs are 20-50% higher

444 Expeditionary Market - Fuel Drivers Headquarters Marine Corps P&R, PA&E The U.S. military has established a price signal called the “Fully-Burdened Cost of Fuel” (FBCF) to stimulate development of alternative energy and energy efficiency systems on the battlefield The FBCF quantifies the costs associated with transporting and securing fuel in the battlespace Delivery/Security to FOB (35Miles) FBCF Fuel ($/gallon)* FBCF Fuel ($/gallon/mile) Convoy Delivery/Security$ $11.81$ $0.34 Convoy Delivery/Air Security$ $18.59$ $ 0.53 Air Delivery/Security$ $30.78$ $0.88

55 Oversized power generation capacities for mission-critical systems and redundancy at sea 24/365 utilization rates and generally low load profiles, especially while in port Highly variable cost of generator maintenance depending on location of vessel and urgency of repair Additionally, because the maritime industry is a heavy polluter, it has become the target of intense environmental regulations from a variety of overlapping local, national and international regulatory bodies, particularly focused on air quality and emissions Representative Regulatory Tightening IMO MARPOL Annex IV, 2010 North American Emissions Control Area (ECA) In 2020, emissions from ships operating in the ECA are expected to be reduced annually by 320,000 tons for NOx, 90,000 tons for PM2.5, and 920,000 tons for SOx. The overall cost of the North American ECA is estimated at $3.2 billion in 2020, while its benefits are expected to include preventing as many as 14,000 premature deaths* California Harbor Craft Rule Existing California Harbor Craft must repower with new diesel engines per a sliding compliance schedule based on the age of the existing engine and home port Operators may avoid repowering if they demonstrate that the engine operates <300 hours per year PA NY NJ Harbor Deepening Project Requires operators to offset all NOx emissions so that dredging in NOx net-zero 5 Commercial Maritime Market – Emissions Drivers * Designation of North American Emission Control Area to Reduce Emissions from Ships: Regulatory Announcement, EPA-420-F , March 2010 Area of the North American ECA *

66 Why Now? Renewables, energy storage, and large-scale power conversion technology have benefitted from 5+ years of significant government and private investment resulting in lower costs and improved performance, reliability, and safety In off-grid markets, the costs of hybrid power are now competitive with traditional power systems 6 Increasing Operating Costs Fuel Emissions Environmental Regulations Safety Reliability Maintenance Time $ Hybrid power is economically compelling today in off-grid markets… … and will improve in the future Decreasing Hybrid Power Costs Renewables Energy Storage Power Electronics Specialized Engineers

77 Thank You Josh Prueher Office: Mobile: