Status of Proton Power

Proton Power, Inc.487 Sam Rayburn ParkwayLenoir City, Tennessee 37771

Tel: (865) 376-9002Fax: (865) 376-1802

www.protonpowerinc.com

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Overview

• Outstanding active bids: > $ 4 Billion• Outstanding orders: $320.5 Million• FY 2012 Sales: $6,147,000• FY 2012 Profit: $473,000• Facilities: 4 locations with 90,000 square feet on 125 acres• Personnel: 54 people• Sales Reps: 40 people• Patents: 9 applied for, 1 granted

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Financial History and Projections

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Electrical generation

• Commissioning of Wampler plant– Plant has 1 MWe capacity with natural gas– 2 twin CHyP units. May be capable of 2-4 MWe– Would need more gensets for increased capacity– Wampler’s released PPI for production on June 17, 2012

• Recapture of tars major breakthrough• Natural gas genset costs skyrocketing• Order coming for fuel cells• Major competition (Nexterra) having problems

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Lessons Learned-Wamplers

• Better communication– Wamplers contract signed-end of December 2011– Released for production by Wampler June 17, 2012

• Changed to flexible feedstock processing system– Initial design-delivery only of preprocessed switchgrass– Design changed to add complete processing of feedstock– Concerns of reliability of supplier

• Supplier changed organizational structure from University to stand alone• New leadership• After 15 months still no contract with Wampler

• Redesigned CHyP to be a more efficient dual chamber system.

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Wamplers lessons learned-Cont.

• Added buffer between CHyP and gensets– Redesigned a second time to move away from electrical

distribution as a safety step.– Added a small structure around it to prevent mischief

• Added natural gas backup as contingency• Added recapture as preferred method of gas cleanup

– Eliminates waste stream– Improves gas generation efficiency– Required a special patented design to work properly

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Next Generation Electrical

• Design will be generally fixed from lessons learned with Wamplers.– Faster Design cycle– Faster Build cycle

• Add 20 kWe Cool Energy Stirling Engine(s) for waste heat recovery power generation.– Same $/W cost with increased net efficiency – Overall efficiency in the 45% range– Reduces fuel consumption, the major cost to customers– Most efficient of all conversions except combined cycle systems.– Reduced complexity and operating costs compared to Organic Rankine Cycle.

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Liquid Fuel Future

• $320 Million in orders• Anticipate another $1Billion in orders when Demonstration plant is running.• Rockwood-$25 Million installs

– Demonstration plant-1 Million gal/yr– Trucking firm-5 Million gal/yr– Room for another 10 Million gallons/yr

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Hydrotreated Bio-oil

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Distilled product

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Status of bio-oil

• Can get a reliable yield of 52% by weight of feedstock.• Yield of 58% by weight of bone dry biomass.• Production rate of 125 kg/day(125 liters/day)• Began hydrotreating steps.• Modified UT equipment to do test single step

production/hydrotreating.

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Best Results to date

• Yield: 64.5%• pH: 5.9• High heating value:9666 BTU/lb• Ash content: 0.03%• Moisture content: 5%• Density: 0.97 (Diesel 0.78-0.86)• H/C ratio: 0.176 (Diesel midpoint: 0.177)

– Range: 0.17-0.18

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First hydrotreating run with significant diesel molecules

• Comments from PPI chemical engineer:• Hydrotreating Run 018 bio-oil• Starting material from Condenser 3 • GC results - various phthalates, carboxylic acid, furfural,

and phenols• Following the Parr reactor hydrotreating - heptane, hexane,

cyclohexane all with methyl groups attached; octane, dimethyl decane, and phenols.

• We did remove some oxygen and break some bonds!

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Environmental Life cycle analysis

• Impact category• Ozone depletion -1.4E-05 kg CFC-11 eq • Global warming -820.572 kg CO2 eq • Smog -33.3361 kg O3 eq • Acidification -3.60469 kg SO2 eq • Eutrophication -24.8522 kg N eq • Carcinogenics -6.1E-05 CTUh • Non carcinogenics -0.00062 CTUh • Respiratory effects -0.22115 kg PM2.5 eq • Ecotoxicity -10776.5 CTUe• Fossil fuel depletion -14.28201 MJ surplus

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Definitions

– Eutrophication: The increasing of nutrients to fresh water. The most well known example is nitrogen fertilizer causing the depletion of oxygen where the Mississippi River flows into the Gulf of Mexico causing a huge dead zone.

– Ecotoxicity: refers to the general environment stress caused by the process.

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Scale up requirements

• Manufacturing requires about 4 people/$Million• Scale up plans to 1000 people if have adequate funding• Significant staffing

– Knoxville is high tech area• ORNL• UT• Eastman • Alcoa• CTI-Pet scanner

• Requires additional investment for equipment and operations• Current goal: Additional $10 Million Investment

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Potential issues you may face

• Biochar sequestration concerns: volatiles– Torrefaction biochar is very poor having a volatile component as high as 70%– PPI biochar has 2% volatiles

• Carbon debt argument: cut down a full grown tree and have a carbon debt until it grows back.– False argument because chose t0 = end of tree life.

– If choose t0 = time tree is planted, always have a carbon credit.

– Actual correct t0= average tree life.

• CHyP process is carbon negative