PERFORMANCE AND ECONOMIC OUTLOOK MI Gillespie DemcoTECH Engineering, Modderfontein, Johannesburg, 1645 South Africa malcolm.gillespie@demcotech.com +27 11 608 4355 F van der Merwe & RJ Kriek Electrochemistry for Energy & Environment Group, Research Focus Area: Chemical Resource Beneficiation, North-West University, Private Bag X6001, Potchefstroom, 2520 South Africa PERFORMANCE AND ECONOMIC OUTLOOK OF A MEMBRANELESS ALKALINE ELECTROLYSER

Technology Principle DEFT TM “Divergent-Electrode-Flow-Through”. A liquid alkaline technology utilising the flow of solution through porous electrodes to create a mechanism for gas separation Flow is the only necessary requirement for high purity gas separation (H2 purity ~99.83% @ 3500mA.cm-2 and 2.5mm Electrode Gap) Technology Reference:- M.I. Gillespie, F. van der Merwe, RJ Kriek, Performance evaluation of a membraneless divergent electrode-flow-through (DEFT) alkaline electrolyser based on optimisation of electrolytic flow and electrode gap, Journal of Power Sources (2015) 293, 228 - 235

Technology Comparison – Capabilities Broad comparison of membrane separation and membraneless separation Membraneless Technologies (DEFTTM) Capabilities: High current density capability (±3500mA.cm-2 increased alkaline technology threshold limit) Compact stack volume High purity separation Inexpensive stack materials Low operating costs (replace electrodes only) Compatible with renewable energy sources (flow is only requirement) Membrane Technologies Capabilities: High current density capabilities (±2000mA.cm-2) Compact stack volume Ultra high purity separation Efficient performance

Technology Comparison – Challenges Broad comparison of membrane separation and membraneless separation Membraneless Technologies (DEFTTM) Challenges: 1. Improvement in pump parasitic load (CFD Optimisation) 2. Improvement in operating cell potential (Catalyst Research Focus) Rapid knock-out of product micro-bubbles (Solution Found) Raising operating temperatures and pressures (Commercial Pilot Plant Focus Membrane Technologies Challenges: Expensive technology Membrane longevity and stability Reduction in PGM materials and stack cost High back diffusion of gas (specifically at high current densities)

Concept Demonstration Test-rig constructed for the purpose of demonstrating proof of concept and initial optimisation of technology In operation since 2013 Specification Unit Value Volumetric Flow Output NL/hr 63.6 Number of Electrode Pairs # 6 Electrode Diameter mm 30 porous circular Electrode Gap Range 0.5-5.5 Variable Flow Velocity Range m.s-1 0.03-1 Variable Temperature Range °C 40-80

Experimental Results Relationship of Electrode Gap, Current Density and Flow Velocity: AS: Electrode Gap CONSEQUENCE: Cell Potential or Current Density but Flow velocity Reference:- M.I. Gillespie, F. van der Merwe, RJ Kriek, Performance evaluation of a membraneless divergent electrode-flow-through (DEFT) alkaline electrolyser based on optimisation of electrolytic flow and electrode gap, Journal of Power Sources (2015) 293, 228 - 235

Lower potential range detail Experimental Results A comparison of tested catalytic combinations Lower potential range detail Reference:- M.I. Gillespie, F. van der Merwe, RJ Kriek, Performance evaluation of a membraneless divergent electrode-flow-through (DEFT) alkaline electrolyser based in optimisation of electrolytic flow and electrode gap, Journal of Power Sources (2015) 293, 228 - 235

Performance Comparison Current performance data in comparison to existing technologies Stable performance demonstrated at 20 000 mA.cm-2 Reference:- M.I. Gillespie, F. van der Merwe, RJ Kriek, Performance evaluation of a membraneless divergent electrode-flow-through (DEFT) alkaline electrolyser based in optimisation of electrolytic flow and electrode gap, Journal of Power Sources (2015) 293, 228 - 235

Technology Scalability Scalability easily achieved by means of the conventional filter press design assembled into stack modules. Commercial Scale Electrolysis Stack: Electrode Cross Sectional Area:- 633 cm2 Design Current Density:- 3 500 mA.cm-2 Hydrogen Mass Flow Rate:- 2 kg H2/ 24 hrs Hydrogen Volumetric Flow Rate:- 24 183.8 NL/ 24 hrs Electrolytic Volumetric Flow Rate Required:- 5 L/s Pressure Drop (Simulated & Confirmed):- ~3.62 kPaç

Commercial Feasibility Construction of a “commercial output” pilot plant to determine the membraneless technologies operation in conjunction with: Fully automated operation at pressure (10 Bar) DynaSwirl® Vortex Gas-liquid separation system New non-noble catalysts for improved efficiencies Gas purities at low flow velocities (±0.03 m.s-1) as initially simulated with Ansys® CFD software and demonstrated experimentally Higher reactive area and flow friendly porous electrodes High operational potential at enhanced pressures and temperatures

Pilot Plant Specifications Comparison of current specifications and near term future targets PARAMETER UNIT CURRENT SPECIFICATION TARGET SPECIFICATION Operating Current Density mA.cm-2 3500 ±3500 Operating Cell Potential VDC 3.0 - 3.5 2.0 - 2.5 Volumetric Flow Requirement L.s-1 5 2.5 (DEFTTM CONCEPT) 0.017 (IMPROVED CONCEPT) Current Pump Parasitic Load (72% pumping efficiency) % of Total Power @ HHV% 13% @ 35 HHV% 16% @ 58.9 HHV% (DEFTTM CONCEPT) 8.7% @ 70.7 HHV% (IMPROVED CONCEPT) Electrolytic Fluid System Capacity L ± 77.06 ± 40 (DEFTTM CONCEPT) ± 10 (IMPROVED CONCEPT)

Current and Future Costs Comparison of current costs and near term future estimates NREL (2009) H2 cost for a 2009 state-of-the-art forecourt system cost: $4.90A. to $5.70A. / kg H2 ($3.32A. /kg H2 electrolysis production cost) NREL (2004) H2 cost for a small neighbourhood system (~20 kg H2/day): $19.01B. / kg H2 Cost (CAPEX+OPEX) estimates for a membraneless plant capable of producing 2 kg H2/day operating for a 10 year life of plant running on a renewable source of energy: PARAMETER UNIT CURRENT PLANT COST FUTURE PLANT COST Cost per H2 US $ / kg H2 11.071. < 6.622.(DEFTTM CONCEPT) < 5.362. (IMPROVED CONCEPT) Operational Cost Inclusions: Frequent Electrode Replacement De-ionised water production Electrolyte solute annual replacement Consumables for pump maintenance Gas Conditioning Maintenance Inclusion of CAPEX, OPEX and R&D Additional Costs Inclusion of CAPEX and OPEX costs calculated on a mass production scale and method Reference: A. Independent Review Panel, Current (2009) State-of-the-art hydrogen production cost estimate using water electrolysis, National Renewable Energy Laboratory, 2009,INREL/BK-6A 1-46676 B. J. Ivy, Summary of Electrolytic Hydrogen Production, Milestone completion report, National Renewable Energy Laboratory, 2004, NREL/MP-560-36734

System Capital Cost Comparison Comparison of capital costs of similar production output electrolysis systems available on the market TECHNOLOGY SUPPLIER TECHNOLOGY TYPE HYDROGEN OUTPUT (kg H2/day) HHV% EFFICIENCY CAPITAL COST1.(US $/kg H2) Current Commercially Available Neighbourhood Generators (3 Quotations) PEM / Advanced AWE 2.1 - 2.4 38.7 - 48.1 9.79 - 11.05 DEFT Membraneless and Future Concept Membraneless 2 35 (CURRENT DEFTTM) 58.9 (DEFTTM TARGET) 70.7 (IMPROVED CONCEPT TARGET) 9.55 (CURRENT CAPEX) 5.101. (DEFTTM FUTURE CAPEX) 3.271. (IMPROVED CONCEPT CAPEX) 1. Capital costs only, with cost per mass unit hydrogen calculated by amount of hydrogen generated in a 10 year life of plant

Project Outcomes Target goals for research and development Successful demonstration of technology in a “commercial scale” application (In Progress) Unlimited potential for technology to be investigated for use in alternate industries involved in purification and for the electrolysis of salt water at a wide range of elevated temperatures and pressures using renewable energy Improved concept development (Future work) Global partnership with a corporation for the commercialisation of affordable and simple yet effective hydrogen generators for low cost hydrogen production

on our commercial development Thank you For updates on our commercial development and research please visit www.hydroxholdings.co.za