Lancaster Wind Systems1108 – 5 StreetNisku, AB.T9E 8B6780-979-9965

1

2

Wind Energy has major flaws

•Not a replacement for other sources of energy as it is not predictable or reliable. •Low Capture rate of Wind Energy•Wind Power requires a power backup when the wind is not blowing. •Low Revenue

LWS has solved the problem that Wind Energy cannot be captured efficiently and can not generate power when the wind does not blow. In effect we can control the wind!

The LWS technology:•Stores Wind energy for use anytime•Increases energy capture efficiency•Ensures energy is available all the time and effectively controls the wind energy•Supplies modern reliable power as it is stored and available on demand The LWS Wind Energy System invented in Alberta is the next generation in Wind Energy System technology!

3

•29 Wind Farms in Alberta of varying capacity (Total 900MWHR)

• Can’t serve as a base load, need storage

• Low capture rate ~ 30-35%

4

•LWS Wind Energy System 2.55MWHR•9585 Ton GHG Reduction/year•66% Efficiency

•MacGrath Wind Farm 30MWHR• 55073 Ton GHG Reduction/year•32% Efficiency

•Chin Chute Wind Farm 30MWHR•58327 Ton GHG reduction / year•34% Efficiency

The LWS Energy System is TWICE as efficient than current wind farms!

Date Source:Chin Chute GHG Offset Report February 2011Macgrath GHG Offset Report February 2011

Wind Farm Efficiency

Fluid flow of hydraulic oil

Nitrogen flow

5

• Invented in Alberta

• Step change innovation

• Stores Wind energy for use anytime

• Increases energy capture efficiency

• Ensures energy is available all the time and effectively controls the wind energy

6

Taber ProjectThe LWS energy system will be implemented in the Taber area of Alberta.

•Three wind turbines 2.55MWHR, 1100HP capacity (no generators)•Six Hydraulic Pumps•Two miles of 48” and Qty 3- 34” pipe for storage•Storage potential of 1.2 MWHR in Four hours or 4.8 MWHR•Compensator Transformers

•Nine Compression•Twelve Decompression

•Two Nitrogen Boosters•Eight 300 kVA generators •Eight Hydraulic Motors•One Cryogen Unit (N2 production)

7

8

•LWS Wind Energy System•2.55MWHR•$11.6 Million(2011)•95850 tons /10 Years•$121.50/ton

•Chin Chute Wind Farm•30MWHR•$60M(2006)•$73M(2011 Dollars)•583270 /10 years•$125.85/ton

•MacGrath Wind Farm •30MWHR•$48M(2004)•$79M(2011 Dollars)•550730 /10 Years•$144.08/ton

Inflation based on http://www.economica.ca/cpi_ab.htm for Alberta

LWS believes that based on economies of scale and adding additional Wind Turbines they can further decrease the cost per ton

Cost per ton of GHG Reduction -10 Years

•The proposed project can generate 2.55MWHR

•Create a GHG reduction of 9585 tonnes of CO2 per year. Over the next ten years the total GHG Reduction would be 95,850 tons.

•The project life is expected to be greater than 20 years and the addition of more turbines and generators can also increase this reduction.

•LWS System is DOUBLE the efficiency of current Wind Farms in Alberta in the creation of GHG reductions.

•Lowest cost of GHG reduction per ton as compared to Wind Farms in Alberta

9

10

•Williams Engineering Canada staff completed the Environment Canada Verification Training using ISO14064 , Part 2 and 3. Williams Engineering is involved in tracking an monitoring projects in British Columbia and was involved in the design and operation of gas and fuel fired boilers for more than 30 years in both British Columbia and Alberta

“Based on the proponents assurance that GHG emissions reduction from the project activity will be 9585 tonnes CO2e per year, it is our opinion that there is a reasonable level of assurance that the project will meet, or exceed, the stated emission reductions according to the ISO14064 , Part 3 Standards”

“It is accepted that the emissions reductions from March 1, 2012 to February 28, 2017 should meet or exceed 47, 825 tonnes CO2e“- Assurance Statement Williams Engineering Report February 23, 2011

•This amounts to 95850 tonnes CO2e over 10 years.

“In the opinion of Williams Engineering Canada, the proponents Project Plan Document and the assertions within, are fair and reasonable” - Williams Engineering Report February 23, 2011

11

•The market for LWS technology that continues to grow and in fact doubles every 3 years which is unheard of in any other industry.

•Wind power supplies approximately 1.1% of Canada's electricity demand, with 99 wind farms representing approximately 3,249 MW of generating capacity

•It is predicted wind energy that would reach a capacity of 55,000 MW by 2025, meeting 20% of the country’s energy needs.

•LWS technology is positioned to capture a large portion if not all the current market.

• A 20% share of the current Canadian market would increase the GHG offsets from a total of 1.3 million tons(35% efficiency) to over 2.4 million tons using LWS technology (66% efficiency)1. http://www.canwea.ca/farms/index_e.php 2. http://www.canwea.ca/images/uploads/File/Windvision_summary_e.pdf

•As mention another problem faced by wind turbines is the low revenue generated by them. LWS has solved this problem!

•Current Wind Farms are price takers. That is, they bid into the market at $0.00 and accept the settlement price at the end of the hour.

•Installation of the LWS or retrofitting an existing farm would allow the wind producer to sell energy into the market when they want.

•Pool Prices over a one-year period (August 1, 2008 to July 31, 2009) were analysed and during that period, there were 126 instances where Pool Prices were in excess of $500 per MWHR. The average hourly Pool Price was $54.31 MWHR.

•LWS can take advantage of high Pool Prices using the stored energy generating substantial additional revenue.

•Rather then sell Energy at a few cents a Wind Farm with the LWS system can sell when demand is at its peek at up to $500 per MWHR. This is why LWS believe all Wind Farms will desire this technology!

12

13

LWS will ensure that the applicability criteria, identification of sources and and quantification methodologies for this Project will be determined in accordance with the Alberta Offset System Quantification Protocol for Wind Powered Electricity Generation (AENV, 2008).

GHG emission reductions are calculated following the Alberta Quantification Protocol for Wind-Powered Electricity Generation (March 2008).

Offset Project Reports will be produced yearly which outline the activities and procedures and provides a detailed description of the project’s adherence to the requirements of the quantification protocol and demonstrate that:

1.The metering of net electricity production must be made at a point downstream of both generation and any storage system, typically to where generated electricity is connected to its loads; and 2.The quantification of reductions achieved by the Project is based on actual measurement and monitoring as indicated by the proper application of this protocol.

14

ID Task Name

1 LWS Energy System

2 Project Management

3 Planning

4 Monitoring and Controlling

5 Engineering

6 Design Definition

7 Regulatory Requirements

8 Process Design

9 Tabor Site Design

10 Mechanical Design

11 Hydraulic Design

12 Electrical Design

13 Controls Design

14 Structural Design

15 Storage System

16 Procurement

17 Contracts

18 Hardware

19 Hydraulics

20 Electrical

21 Mechanical

22 Controls

23 Storage System Components

24 New/Used Skeleton Turbine

25 Phase I

26 Construction

27 Taber Site Construction

28 Road

29 Utilities

30 Site Construction

31 Turbiine Setup

32 Landcaster Wind System

33 LWS Wind Turbine with Hydraulic Pump (2.55 MW)

34 Foundation

35 Hydraulic Pumps

36 Compensator/Transformer

37 Compression

38 De-compression

39 Nitrogen boosters

40 Electrical Generator, 300 kVA

41 Hydraulic Motors

42 Vales piping, control, header etc.

43 Building and other structures

44 Storage System

45 Install (1) 40 inch OD pipes charged to 1440 PSI (2 miles)

46 Install (3) 34 inch OD charged to 150 PSI (2 miles)

47 Safety devices, pop valves, flow valves

48 Cyrogen unit

49 Install two (2) pipeline capacitors,

50 Approval from the Alberta government agencies

51 Backfilling

52 Storage Integration

53 Testing & Approvals

54 Grid Connection

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15

The Taber project has a 14 month schedule from project start.

•5 Months Engineering Design

•6 Months Procurement

•9 months –Construction and Testing

15

LWS plans to seek the required funding over and above the CCEMC grant from private investors

LWS currently does have written commitment letters for non-specific amounts of funding.

In addition, many companies and investors including Enbridge have expressed interest and instructed LWS that on receipt of CCEMC funding they may be prepared considering offering additional or new investment or bridge financing.

Funding TotalLWS Funding

Private Investors and Financing 7,062,624.13$ CCEMC Funding 7,062,624.13$ Total Project Cost 14,125,248.25$

16

The LWS management and Team have over 200 Years of combined experience and are experts in the fields of Project Management, Wind Energy, Oil and Gas technology and fabrication

The management team includes Professional Engineers(P.Eng), Program Management Professionals (PMP), Certified Engineering Technologists (CET) and Chartered Accountants(CGA) all experts in there fields.

17

Description Qty Unit Cost Total Cost

LWS Wind Turbine with Hydraulic Pump (2.55 MW) 3 620,000.00$ 1,860,000.00$

Foundation 3 70,000.00$ 210,000.00$

Hydraulic Pumps 6 150,000.00$ 900,000.00$

Compensator/Transformer

Compression 9 40,102.38$ 360,921.44$

De-compression 12 40,102.38$ 481,228.56$

Nitrogen boosters 2 42,425.00$ 84,850.00$

Electrical Generator, 300 kVA 8 12,000.00$ 96,000.00$

Hydraulic Motors 8 35,000.00$ 280,000.00$

Vales piping, control, header etc. 1 200,000.00$ 200,000.00$

Building and other structures 1 55,000.00$ 55,000.00$

Sub Total 4,528,000.00$

Land Lease

10 year and Lease w/ expansion 1 600,000.00$ 600,000.00$

Sub Total 600,000.00$

Storage Pipe, 2 mile length

High pressure, 48" O.D., 2 miles, 1440 psi maximum 1 1,600,000.00$ 1,600,000.00$

Low pressure, 3 @ 34" O.D.2 miles, 800 psi maximum 1 2,400,000.00$ 2,400,000.00$

Sub Total 4,000,000.00$

Cyrogen unit 1 431,000.000$ 431,000.00$

Sub Total 431,000.00$

Startup Costs 1,878,548.25$

Construction Costs 2,687,700.00$

TOTAL COSTS 14,125,248.25$

Lancaster 3 Wind Turbine with StorageLancaster Wind Systems Inc.

Salaries $750,000

Rent $64,000

Legal Fees $50,000

Share Issuance $104,648

Consultants $689,900

Computers $25,000

Travel $50,000

Off ice Supplies and Furniture $15,000

Insurance $100,000

Stationary, Brochure, and Catalog $5,000

Utilities $25,000

Total Start-up Expenses $1,878,548

Equipment Purchases $9,559,000

Construction Costs $2,687,700

Total Assets $12,246,700

Total Requirements $12,246,700

Start-up Expenses to Fund $1,878,548

Start-up Assets to Fund $12,246,700

Total Funding Required $14,125,248

Non-cash Assets from Start-up $12,246,700

Total Assets $12,246,700

Project Liabilities and Capital

Private Investor $7,062,624

Grant Funding $7,062,624

Total Planned Investment $14,125,248

Project Total Funding Required $14,125,248

Project Capital

Project Start-up Expenses

Project Start-up Assets

Project Start-up Funding

Project Assets

•As this is a design (R&D) and implementation project a combination of Cost Engineering and Cost estimating was required. The cost estimates were prepared using qualitative cost drivers like quality, complexity, material, and manufacturing processes.

Contingency•30% of the capital budget for the cost of construction and engineering which standard practice shows that this should range form 15-25% in this industry, minimum 5% above the norm.

•The capital budget total is $2,867,700 based of the equipment costs of $9,559,000. Minimum $478,000 as contingency @5%.

•Allowed for $689,900 for consultants to ensure that risks can be managed through technical knowledge.

•Assumed 2 miles of storage is required which is very liberal and we believe the during final design the storage requirement can be reduced as efficiency are realized which will reduce the amount of volume (storage) required and therefore substantial reducing this cost driver which could be alternative used in other areas.

•The storage is based on a cost of $4,000,000. A linear cost by each foot of install pipe and the cost of each foot of pipe. In LWS initial designs calculations we believe that the project requires 1.8 miles of storage which allows us a 10% contingency of $400,000

18

The LWS Energy Storage solution though complex, uses proven existing process and techniques familiar in the Oil field sector of Alberta.

Estimates from those companies and individuals familiar with this field such as Hyduke, TNT Engineering, Willow Glen Engineering, and Fortress Engineering

As the quality of this project is regulated by many regulator boards this played a major factor in the cost of the project and factored into all estimates and costs based on oil field industry standards. LWS approached many companies for project materials and manufacturing:

19

RHK of Edmonton, Alberta Manufacturer of the compensator transformer for metallurgy and warranties.

National Oilwell- Varco of Houston, Texas and Edmonton, Alberta. Manifolds, pulsation dampers, cryogen and accumulators Hydac International Corp. of Edmonton, Alberta Installation, control systems, firing mechanism, flow controls, hydraulic and nitrogen safety procedures.

Commercial Solutions of Nisku, Alberta Mechanical thrust bearings and pillow blocks

CRC Energy ServicesElectric Generators

Hagglunds of Sweden and Toronto, Ontario, Supply the large prime-mover pumps in e nacelle.

Acciona of Spain in Chicago, Illinois. Supplying skeletal wind turbine, bare nacelle, bare tower

Corvet Construction of Red Deer, Alberta The installation and construction of pipeline

Wainbee of Edmonton, Alberta Denison gold cups, hydraulic motors to drive the generators.

Construction Company Medicine Hat and Lethbridge, AB Rebar, cement, attach bolt and foundation infrastructure

LWS maintains that, Costs don't just happen, and with a pro-active approach toward costs, and use of key resources including accountants and certified project managers ensures these costs are identified and mitigated.

LWS has three primary objectives for the Taber Project:• Produce predicted GHG reduction.• Demonstrate that the LWS can increase the capacity of an existing Wind Energy Facility.• Demonstrate the ability of LWS to arbitrage the Alberta Electricity Energy Market.

STRENGTHS:•Over 200 years of combined experience in LWS management Team including PMP’s, P. Eng, CGA’s.•Currently producing Scale model to reduce project risk•Completed Land Use Agreement for Taber Project

WEAKNESSES:•Technical risk based on new design on large scale

OPPORTUNITIES:•Increase Efficiency of design•Lower costs during design and recapture contingency•Increase GHG Reduction•Massive Market adoption potential•Increased efficiency for other Renewable Energy solutions such as solar power

THREATS:•Financial risk if unable to raise capital funding to complete project

20

LWS continues to move the project forward and continues to reduce risk thru the building and testing of scale models. This will ensure that the Taber project is the lowest technical risk possible.

Original bench model

Proof fit Model (April 2011)

Taber Project21

22

•The wind sector in 2009 was a $70 billion USD market

•Wind power showed a growth rate of 31.7%, the highest rate since 2001 and doubles every three years.

•Export of technology to the rest of Canada and Globally

•Alberta Manufacturing opportunities for components to the rest of Canada and Globally.

•The wind sector employed 550,000 persons worldwide. In the year 2012, the wind industry is expected to offer 1 million jobs.

•Increase in jobs and additional revenue to Alberta and enhance communities and increase the quality of life and capacity-building through the training of highly skilled personnel in Wind Energy.

•Based on this massive market the LWS technology could put Alberta at an advantage to lead this technology

23

•Alberta Technology that can be exported globally

•Huge global market requiring energy storage solution

•Increase efficiency of Wind Farms DOUBLE current solutions

•Lowest cost per ton GHG reduction as compared to current wind Farms

•Increase Wind Energy Revenue by selling Energy when its needed

•Over 200 Years of Experience in management team

•Supplies modern reliable power as it is stored and available on demand

•Technology not limited to Wind Energy. Can be used with other Renewable energy sources

LWS Wind Energy system consists of multiple parts:

The LWS Wind Turbine

The Compression Side –Compensator Transformers –Second Closed Loop System

Energy Storage

The Decompressions side –Compensator Transformers –Third Closed Loop System

Storage Bypass -to be used when storage is not required and energy can be put right on the grid. The Bypass includes 4 Generators and 4 Hydraulic pumps

24

LWS wind turbine is different from the current wind turbines as it has no generators in the nacelle. The LWS nacelle has dual hydraulic pumps are connected to the blades shaft on the nacelle in order to generate hydraulic pressure.

25

•46% lighter due to generator not in nacelle•Built in crane for Maintenance -7 tons

At ground level, the Hydraulic High Pressure line from the nacelle is connected to one side of the Compensator transformer. As the High Pressure line injects fluid into the ‘primary’ end of the hydraulic cylinder, the driving force of the fluid pushes the piston to the other side of the hydraulic cylinder compressing the nitrogen. Low Pressure fluid is returned to the nacelle.

26

There are two storage transmission lines in the storage system the High Pressure transmission line and the other is the Low Pressure transmission line.

The storage required is based on the number of hours the generators will operate without wind. At 1.2 MW, 4 hours of operation, the stored nitrogen at 1440 psi is 113,300 cu.ft., this pressure and volume will be regulated to 540 psi and injected into the decompression CT nitrogen cylinders which will be exhausted and stored in the low pressure pipelne (188,500 cu.ft.,540 max.psi).

27

The regulated High Pressure nitrogen from the transmission line is injected into the cylinders. The force created by the gas moves the piston to the other end of the cylinder compressing hydraulic fluid which then flows into the hydraulic motors. This back and forth movement of the pistons provides steady supply of pressurized fluid to the hydraulic motors which are coupled to the generators that produce electric power which is the final part of the LWS wind energy solution.

28

Lancaster Wind Systems plans to start the “Taber Project” to begin in May of 2011 were a full operational energy producing system will be built in the Taber area of Alberta. The project includes three wind turbines, 1100HP (x 3) capacity, with a power producing potential of 1.2 MW in Four hours or 4.8 MWHrs along with two miles of 48” and Qty 3- 34” pipe for storage will be installed.

At the electric power production end, eight 300 kVA synchronous +/- 0.9 pf generators will be installed. There will be four for the storage and four additional for direct bypass when storage is at full and power can be used without storage.

29

30