Title

Building Momentum

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We will cover...

• Fuel Cells• Why Alkaline Fuel Cells?• Markets and Applications• Manufacturing• Independent Review• Intellectual Property • Road to Commercialisation

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… it’s a bit like a battery that works continuously generating electricity without combustion…

HYDROGENHYDROGEN

AIRAIR

HEATHEAT

WATERWATER

ELECTRICITYELECTRICITY

What is a Fuel Cell?

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Schematic of the original fuel cell

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Fuel Cell TechnologiesFuel Cell type

Alkaline

Molten Carbonate

Solid Oxide

PEM(Proton Exchange

Membrane)

Direct Methanol

Phosphoric Acid

There are many chemistries that can

generate electricity...

...all involve reacting hydrogen with oxygen to form water, electricity

and heat in the presence of a catalyst

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Fuel Cell TechnologiesType Operating

Temp

Alkaline 70oC

Molten Carbonate

600 - 700oC

Solid Oxide600 - 1000oC

PEM50-100oC

Direct Methanol 60 - 90oC

Phosphoric Acid 150 - 200oC

Industrially pure water is a product of the

reaction, so an operating temperature above 100oC generates

steam...

...which requires additional product

safety engineering and increases

manufacturing costs

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Fuel Cell TechnologiesType Operating

TempElectrical Efficiency

Alkaline 70oC 55 – 60%

Molten Carbonate

600 - 700oC 45 - 47%

Solid Oxide 600 - 1000oC 35 – 43%

PEM 50-100oC 25 - 35%

53 – 58%

Direct Methanol 60 - 90oC 30 – 35%

Phosphoric Acid 150 - 200oC 40 – 50%

Fuel cells generate

electricity directly without

combustion or mechanical steps

such as do engines or turbines ....

... this makes fuel cells the most

efficient devices for generating electricity from

fuel

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Fuel Cell TechnologiesType Operating

TempElectrical Efficiency

Applications

Alkaline 70oC 55-60%Industrial Stationary

SpaceMilitary

Molten Carbonate

600 - 700oC 45 - 47% Large utilityLarge distributed

generation

Solid Oxide 600 - 1000oC 35 – 43% Auxiliary power

PEM 50-100oC 25 - 35%

53 – 58%

Back up power

Transportation

Direct Methanol 60 - 90oC 30 – 35% Portable power

Phosphoric Acid 150 - 200oC 40 – 50% Industrial Stationary

Different fuelcell types aresuitable for differentapplications...

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Fuel Cell TechnologiesType Operating

TempElectrical Efficiency

Applications

Alkaline 70oC 55 – 60%Industrial Stationary

SpaceMilitary

Molten Carbonate

600 - 700oC 45 - 47% Large utilityLarge distributed

generation

Solid Oxide 600 - 1000oC 35 – 43% Auxiliary power

PEM 50-100oC 25 - 35%

53 – 58%

Back up power

Transportation

Direct Methanol 60 - 90oC 30 – 35% Portable power

Phosphoric Acid 150 - 200oC 40 – 50% Industrial Stationary

Of all the fuel cell types Alkaline is the most efficient and does not have to be engineered for higher pressures that result from steam

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Fuel Cell TechnologiesFuel Cell type

Alkaline

Molten Carbonate

Solid Oxide

PEM

Direct Methanol

Phosphoric Acid

Alkaline fuel cells are a proven technology...

...used in manned US and Russian space missions and in submarines to provide power and drinking

water

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Historically......historically alkaline fuel

cells have also been demonstrated in a wide variety of applications...

... but were unable to compete against low fossil fuel costs

because...

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Fuel Cell TechnologiesType Operating

TempElectrical Efficiency

Applications

AlkalineTraditional platinum

70oC 60% SpaceMilitary

Molten Carbonate

600 - 700oC 45 - 47% Large utilityLarge distributed

generation

Solid Oxide 600 - 1000oC 35 – 43% Auxiliary power

PEM 50-100oC 25 - 35%

53 – 58%

Back up power

Transportation

Direct Methanol 60 - 90oC 30 – 35% Portable power

Phosphoric Acid 150 - 200oC 40 – 50% Industrial Stationary

...Platinum catalysts added significant cost and also required pure oxygen as

well as hydrogen... which is essentially rocket fuel

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Fuel Cell TechnologiesType Operating

TempElectrical Efficiency

Applications

AlkalineAFC Energy

non-platinum70oC 55 – 60%

Industrial stationary

Distributed energy

AlkalineTraditional platinum

70oC 60% SpaceMilitary

Molten Carbonate

600 - 700oC 45 - 47% Large utilityLarge distributed

generation

Solid Oxide 600 - 1000oC 35 – 43% Auxiliary power

PEM 50-100oC 25 - 35%

53 – 58%

Back up power

Transportation

Direct Methanol 60 - 90oC 30 – 35% Portable power

Phosphoric Acid 150 - 200oC 40 – 50% Industrial Stationary

...AFC Energy has re-engineered the proven alkaline technology removing cost. Platinum has been replaced with ceramic

based catalysts at less than 5% of the cost of platinum...

...and oxygen is taken from air...

... This opens up the market for large-scale industrial

power generation....

TitleTitleLow risk business model

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... Our proto-type system was tested in the field and led to...

... Our first market is the surplus hydrogen generated from the production of chlorine and caustic soda. Our first customer is Akzo Nobel.

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Electronics/ Fluid controls

Alkaline electrolyte tank

Cartridge docking

Cartridge assembly

... the Beta System: Modular Power

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Fuel cell stack in cartridge

TitleTitleBeta System Design

... the Beta System is designed for low lifetime cost of ownershipIt is easily mass produced, assembled and installed.

It operates continuously and is controlled remotely, hot swapping” means the Beta System does not have to be shut down even when electrode cartridges are changed.

It is modular and designed for heat recovery

...the result is a low cost per MWeh over the lifetime of the installation

CHP = Combined Heat and PowerMWeh = Megawatt hours of Electricity

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Beta System: Fuel Cell Development

At the end of their useful life cartridges are removed and disassembled. Electrodes are cleaned and reused…

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... a refurbished cartridge is only a third of the cost of a new cartridge of the same power.

TitleTitleBeta System:

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...Designed for easy containerising or skid mounting...

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Multi-megawatt Power Plant (6MW)

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...Designed for large-scale installations...

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Markets

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TitleTitleMarkets

....for this reason AFC Energy is focussed directly on the chlor-alkali market where waste hydrogen is readily available and the electricity is required on site ... Other sources of hydrogen usually require an intermediate step... Several countries such as Korea, USA and Germany offer financial incentives for electricity produced from fuel cells, making them more attractive.

...essentially AFC Energy’s alkaline fuel cell generates electrical power from hydrogen fuel at the lowest unit cost...

...the economics of any particular application depend upon the cost of the fuel and the value of the outputs, principally the electricity....

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Installations successfully trialled by AFC EnergyInstallations currently planned by AFC Energy

Municipal Waste

Natural Gas

Biogas

Coal

Waste H2

Feedstock Fuel Processing

Plasma Gasification

MethaneReforming

Underground Coal Gasification Water

Power

Heat

Gas

Sol

id

Utilised Output

Low OxygenAir

H2

Ammonia Cracking

AFC

Water Gas Shift

H2 Purification

Raw Syngas(Mainly H2+CO)

Mainly H2+CO2

H2 + N2

Syngas Clean

Clean Syngas

Markets: Sources of Hydrogen

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Chlor-alkali: AkzoNobel

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...two commercial systems were installed at AkzoNobel’s Bitterfeld plant in Germany, Q4 2011...

...an agreement is in place for further supply...

AFC Energy works closely with AkzoNobel to demonstrate the commercial fuel cell system

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... Our primary market is Chlor-alkali, where hydrogen availability is plentiful...

...it consumes 1% of the world’s electricity…

…and produces 1.65 million tonnes of hydrogen a year as a by-product...

…Globally this industry can support more than 3000 MWe of generating capacity

Chlor-alkali Market

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• Ordinary household waste can be converted into hydrogen.

• UK generates 60 million tonnes of carbon-based waste every year… equivalent of 15,000 MW of electricity.

• Fuel cell increases output efficiency of Waste to Energy plants by c.40%.

• AFC Energy is accessing this market through Waste2Tricity Limited (W2T)

• W2T is gaining commercial traction and positioning WtE facilities so that they are fuel cell ready...

Waste to Energy Market

WtE = Waste to EnergyAFC Energy owns 25% of Waste2Tricity Limited

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...with planning permission now in place Air Products' Tees Valley Renewable Energy Facility will generate 49MW of renewable power. In the longer-term, Air Products' plant has the potential to produce renewable hydrogen and is being considered for a demonstration of AFC Energy’s fuel cell technology. This would involve alkaline fuel cells generating power, alongside more conventional CCGT, using hydrogen separated from the syngas stream.

Waste to Energy Market: Tees Valley

CCGT = Combined Cycle Gas Turbine 25

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…AFC Energy has partnered with Linc Energy...

…gasification underground using Linc Energy’s technology largely eliminates the ecological impact of coal…

…coal gasification enables CCS whilst producing hydrogen…

…alkaline fuel cells increase power generation efficiency from 30% to c. 50%...

Market: Clean Coal

CCS = Carbon Capture and Storage 26

TitleTitleSteel Making

Coke Oven Gas released from coal during the coking process is c. 55% hydrogen which can be separated for use in fuel cells.

It is also possible to generate hydrogen using the hot (1500

oC) slag to break water

molecules apart.

Companies including Nippon Steel, POSCO and Tata Steel are actively working on hydrogen generation projects.

...AFC Energy is in discussions with potential partners

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TitleTitleOther Applications

There are a range of other potential applications, including:

• distributed energy from reformed natural gas or biogas

• in association with intermittent renewables where electrolysers generate hydrogen from surplus power

• UPS for applications such as telecoms and data centres

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Q. How will AFC scale up production?

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TitleTitle• AFC Energy is Investing in automated

production and assembly.

• Lower Cost production• Develop production team• Drive cost reduction and quality

• Volume Ramp• Using standard industrial technologies• High volumes

Manufacturing

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2012 2013 2014 2015 2016 2017

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£1.0•Longevity

•Power Density

•BoM saving

•Manufacturing economies of scale

•Automated Production

•Value engineering

Anticipated Beta system cost profile

Factors affecting stack costs

BoM = Bill of MaterialsFC = Fuel Cell

Applications like FC vehicles and replacements for domestic boilers, which need 100,000’s units to achieve target costs... AFC Energy needs just two customers!

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Q. How do investors know what technical progress is being made?

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CPI Independent Review - highlights

... unlike any other company developing fuel cells AFC Energy’s technical and manufacturing progress is regularly reviewed by an independent assessor and a summary of the review is published.

... The Centre for Process Innovation has been carrying out the review and is given unrestricted access to AFC Energy’s work and people.

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Q. What protection does AFC Energy have for its Alkaline fuel cells?

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...present IP portfolio includes 12 families of patents... to ‘ring-fence’ unique aspects of AFC’s technology. More patent applications in the pipeline......

Intellectual Property (IP)

...AFC Energy is the first in its field to re-engineer alkaline fuel cells using modern materials, process, modelling and manufacture.

... there had been little patenting of anything to do with alkaline fuel cells since the 1960’s...

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Road to commercialisation

Commercial System Sales

ESCo installations

Commercial Demonstration & Early Adopter

Licence fees/royalties

Grant Funded projects

Q1/2012...

ESCo = Energy Supply Company

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Experienced Board

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Tim Yeo - chairman Ian Williamson - CEO Ian Balchin – CSO Dr Gene Lewis - CTO

David Marson - FD Mitchell Field - NED David Smith – NEDLinc Energy

Sir John Sunderland - NED

CSO = Chief Strategic OfficerCTO = Chief Technical Officer

TitleTitleSummary

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• AFC Energy is re-engineering proven fuel celltechnology to compete with conventional power generation• First contracts, licences and grants secured• First market, waste hydrogen from the chlorine industry• Second market waste to energy – where alkaline fuel cell systems are being

designed into WtE power stations• Capable of rapid scale up with automated assembly• progress is independently monitored and published• Intellectual property secured• ESCo is the preferred route to market - selling electricity not plant.

AFC Energy’s alkaline fuel cell systems will enable a transformation to a hydrogen economy

TitleTitleLegal

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• This document and the information presented verbally to you (together, “the Presentation”) does not constitute an admission document, a prospectus or listing particulars relating to the Company, nor does it constitute or form part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Company nor shall this Presentation or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract thereof.• The Presentation is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly to any other person or published in whole or part, for any purpose.• Recipients of the Presentation who are considering trading in the Ordinary Shares of the Company are reminded that no reliance may be placed for any purpose whatsoever on the information, representations or undertakings contained in this Presentation nor their completeness; no liability is accepted for any such information, representation or opinions and this Presentation should not be considered a recommendation by the Company or Allenby Capital or any of their respective affiliates.• Information in this Presentation must not be relied as having been verified, authorised or approved by the Company. Neither the Company, nor the directors, officers or employees, nor other person makes any guarantee, representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this Presentation, nor does the Company accept any responsibility or liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith.• Certain market data used in this Presentation has been obtained from industry reports. Industry reports generally state that the information contained in them has been obtained from sources believed to be reliable. The Company has not independently verified such data. Whilst the Company has complied and extracted market