The pathway towards fossil parity for renewable

hydrogen Bjørn Simonsen

VICE PRESIDENT MARKET DEVELOPMENT AND PUBLIC RELATIONS

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Hydrogen Fueling Hydrogen Solutions

..of hydrogen technology experience and excellence

90 years

Nel ASA

• Global, listed, pure-play hydrogen company – facilities in Norway, Denmark and the U.S.

• Significant foothold in fast-growing markets & a solid backlog

• World-leading on hydrogen electrolyzers and fueling equipment – unrivalled performance and track-record

• Complete range of products optimally positioned for large market opportunities

• Capable of delivering solutions to produce, store and distribute hydrogen from renewable energy – serving industry, energy and gas companies

• >3500 hydrogen solutions delivered in ~80 countries world wide since 1927

Hydrogen Electrolysers Hydrogen Fueling Hydrogen Solutions Thre

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Fossil parity Renewable hydrogen outcompeting fossil hydrogen in the industry

sector and fossil fuel in the transportation sector

Global hydrogen market General market update

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Global hydrogen market, by end-use:

Ammonia Refineries Methanol Other

• ~55 million ton/year market (~150 BUSD) • 15% merchant market (5 – 15 $/kg) • 85% on-site (~2$/kg)

• Only 1% from water electrolysis today, rest from SMR/gasification • Large potential for growth, driven by increasing focus on:

• climate and renewable energy • decreasing electricity prices • decreasing electrolyser CAPEX

• Special focus on refineries and green ammonia • Account for ~80% of market

• Assuming that total market is supplied by electrolysis, the market potential would be >200 B$

Large opportunities for electrolysis within the already existing hydrogen market

Overall hydrogen market set to grow 10x by 2050

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General market update

If high share of RE, electrolysis market can potentially grow ~2000x

The pathway towards fossil parity for renewable hydrogen General market update

~2015 ~2020 ~X-years

Nel electrolysis (large scale alkaline) [$/kW] <700 <500 <350

Solar (utility scale) [$/kW] ~1,500 ~700 <500

Solar PPA [$/kWh] 0.04 – 0.06 0.02 – 0.04 0.015 – 0.02

Total hydrogen production cost [$/kg] 2.7 – 4.0 1.3 – 2.7 1.0 – 1.3

• Large electrolyzer facilities from Nel already at CapEx parity with medium scale SMR1

• Nel targets to reach CapEx parity with large scale SMRs in foreseeable future

• Solar PV at utility scale has today reached a price of < 1 $/W

• LCOE from solar expected to drop by another 66% by 20402

• At 0.04 $/kWh renewable hydrogen is reaching fossil parity on an OpEx basis

1: SMR – steam methane reformer 2: Bloomberg New Energy Outlook 2017

Cost split of H2/Kg

CapEx OpEx

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Electrolysis off-grid/50% util. leads to 10 – 20% higher cost General market update

• 2020-numbers used in graph to the right

• Green line is off-grid/renewable

• Due to CAPEX accounting for low share of TCO, price sensitivity not very high on capacity utilization

Cost of H2 closely tied to cost of electricity Off-grid reduced utilization, increased H2 cost

~85% (on-site)

~15% (merchant)

1%

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0.2 0.7 1.2 1.7 2.2 2.7 3.2 3.7 4.2 4.7 5.2

Elec

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[$/k

Wh]

Hydrogen production cost, including depreciation [$/kg]

Hydrogen cost

Power-to-X General market update

Power

POWER-TO-GAS

POWER-TO-FUEL

POWER-TO-POWER

POWER-TO-LIQUID (BIOFUEL)

POWER-TO-NH3 (GREEN AMMONIA)

POWER-TO-CH3OH (GREEN METHANOL)

POWER-TO-CH4 (GREEN METHANE)

CO2-FREE STEEL/TITANIUM SLAG

• Hydrogen from electrolysis will be key in producing large quantities of sustainable energy in various forms

• Ability to adapt to diverse and intermittent renewable energy sources becoming increasingly important

Unparalleled position of electrolysis in producing other green energy forms

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H2

POWER-TO-OTHER (REFINERIES)

+ CO2

+ CO2

Hydrogen is becoming relevant in all forms of transport

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General market update

Recent survey increases the importance of hydrogen as a fuel

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“There will not be a single solitary drivetrain technology: Executives project a similar split by 2040 for BEVs (26%), FCEVs (25%), ICEs (25%) and hybrids (24%).”

“Fuel cell electric vehicles have replaced battery electric vehicles as this year’s #1 key trend until 2025”

#1 KPMG Global Automotive Executive Survey is the compound input from 1000 executives from the automotive industry

Fossil parity in the transport sector is achievable

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• Centralized production can use low cost RE and achieve high scale – Onsite prod. eliminates costs for distribution

• Centralized vs Onsite depends on power availability and pricing in the specific market

• <40€/MWh is needed for central production together with 50/70MPa trailers | <60€/MWh is needed for onsite

General market update

What we do

Nel Hydrogen Electrolyser

• Global leader in electrolysis based hydrogen production plants

• highest uptime, lowest conversion cost, robust and reliable

• Unrivalled track-record with >3500 hydrogen solutions delivered in >80 countries world wide since 1927

• Scalable production capacity for industrial and energy/transport applications – small scale to large scale solutions

Small scale turn-key modules Up to 600kg/day

Large scale plant solutions Up to any capacity size

Nel Hydrogen Electrolyser Production and installation of water electrolysers for hydrogen production

Alkaline and PEM electrolyzers Scalable and modular

Solar Grid Wind

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Markets served by water electrolysers

Renewable hydrogen opportunities

Chemical Industry Power Industry Steel Industry

Food Industry Glass Industry Polysilicon Industry Transport Sector

Historical market New markets

Laboratories

Life support

Nel Hydrogen Fueling

• Global leader within hydrogen fueling solutions for vehicles, first to adapt the newest fueling standards

• Manufactured ~40 stations & delivered to 8 countries across Europe since 2003, ~20 currently in order

• Highest reported availability and innovative, in-house developed innovative technologies

High capacity, smallest footprint 200 kg/day, 10m2

Flexible installation, smallest footprint 50 m from station, 1/3 size of normal dispenser

Largest manufacturing facility 300 station per year capacity

Nel Hydrogen Fueling Production of hydrogen fueling stations for cars, buses, trucks, forklifts and other applications

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Station Module Dispenser Hydrogen Fueling storage

Hydrogen supply storage

H2Station®

• Compact modular turn-key system with flexible site integration

• Designed for volume manufacturing for EU & USA

Fueling station modules – designed for volume manufacturing Nel Hydrogen Fueling

70MPa

35MPa

35MPa

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Nel Hydrogen Solutions

• Unified delivery of complex renewable hydrogen solutions, efficient system integration, project development and sales across segments

Nel Hydrogen Solutions Utilizing market opportunities across the Nel group and offers complete solutions to customers

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• Sole provider of integrated solutions along the entire value chain:

1. Fueling Networks

2. Renewable Hydrogen & Storage Solutions

Project examples

Delivering megawatt PEM electrolyser systems for FC-buses in China Project examples

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● Delivered MW-systems under agreement between Nel/Proton and Synergy in China ● Synergy also cooperating with Ballard on fuel cell technology

● Total agreement covers up to 13 MW-systems with a total value, including installation and associated services, of more than USD 22 million

Providing sustainable fuel for the growing FC-bus population

PEM electrolyzer and H2Station® for bus fueling in California

● First integrated Nel/Proton product offering

● One M-400 2 MW Proton PEM electrolyzer

● Two H2Station® for buses

● Total contract value of USD >8 million

● Delivery during 2018

Project examples

High capacity station for 25 buses in CA

Hydrogen storage Station module Dispensers 1 MW PEM electrolysis

35MPa

35MPa

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Supplying fueling stations to Shell in California

• Nel has exclusive framework contract with Shell (in partnership with Toyota and Honda) for supply, construction and maintenance of hydrogen stations San Francisco CA • Initial purchase order received Q1’17 with value of NOK ~140 million

• Received additional purchase order with value of NOK ~50 million during Q3

• H2Station® modules expected to ship in H1-2018

• Shell has issued an RFI for additional 100 hydrogen stations to California • Visibility on deliveries will help the industry to reduce costs

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Project examples

Locations where Shell receives CEC grants from current round of funding

Shell hydrogen stations in Northern CA Exclusive framework contract with Shell

• Potential project of ~20 MW electrolysis

• Renewable hydrogen for multiple purposes: • Replace fossil hydrogen used in refinery process

• Energy storage and power generation

• Hydrogen used for transportation purposes

• Other value streams: • Oxygen used locally within refinery

• Heat used for city district heating

• Solution relevant for oil refineries across the globe

Multi-value stream project in Denmark

Potential large scale energy storage project in Fredericia, Denmark Project examples

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Shell oil refinery in Fredericia, Denmark

World’s largest power-to-gas project planned for France

• H2V PRODUCT (FR) will inject hydrogen into natural gas grid in France • In dialogue with French government on incentive scheme to

realise the project

• Largest power-to-gas project in history • 700 MW | 380 M$ project • Direct injection of hydrogen and biogas in natural gas grid

• Design is ready & land secured

• Project phase during 2018 – 2025

• Location: Les Hauts and Normandie-regions in France

Project examples

700 MW electrolyser plant for power-to-gas in Northern France

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Delivering mega-scale hydrogen fueling stations for Nikola

• Sole equipment supplier to create the largest hydrogen fueling network in the world

• 16 mega-scale stations covering 2000 miles & up to 450 ton/day

• Signed PO for first two demo stations (each is 1 ton/day)

• Remaining 14 stations will have a capacity ranging from 8 – 32 ton/day

• Installation during 2019 – 2021

Project examples

Entered into exclusive partnership with Nikola Motor

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Additional support from Enova to Uno-X Hydrogen fueling stations

• Uno-X Hydrogen received support to establish 2 new hydrogen fueling stations in Ås & Hvam, Akershus

• After installation, JV will operate 5 HRS in Southern Norway

• Åsane, Bergen opens formally 26th of January 2018

• Currently ~90 FCEVs in Norway, annual sales growth of >2x

• Total of 4 HRS in Norway in 2017, 8 HRS in 2018

Project examples

20 MNOK support for establishment of 2 additional HRS in Akershus in 2018

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Hyon is equally owned by Nel ASA, Hexagon Composites ASA and PowerCell Sweden AB, and utilizes each partner’s respective world-leading technologies and competencies to manage and develop projects for effectively integrating and optimal zero-emission power solutions

for the customers

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1927 ..back to start?

2027

Thanks for the ride, dinosaurs! We’ll take it from here.