Stirling DK Introduction

March 2012

Introduction to Stirling DK

Stirling DK (SDK) is a provider of Stirling engines and integrated combined heat and power (CHP) solutions based on Stirling engines fuelled by wood chips, biogas from anaerobic digestion, other low-grade biological fuel sources

In addition to the Stirling engine technology, the company has also developed its own proprietary technology to utilise biomass in an updraft gasification and combustion system, a technology ideally suited for the Stirling engine

Stirling DK Value Proposition

3

Central Value Proposition

Stirling DK’s technology enables the conversion of low-grade fuel into high-value, clean heat and power in small-scale applications* *35-500kWe / 140-2,000 kWth

Summary of Stirling DK Technology

To sum up, SDK’s onsite renewable energy generation technology has several distinct advantages: Extremely low dust emission levels not

achievable by alternative biomass technologies;

Ability to use a range of low-grade and low-cost fuel types, such as fresh wood chips or low-methane biogas, not suitable for internal combustion engines;

High plant efficiency levels of approx. 90%

Technology Description Conversion of Solid, Liquid, or Gaseous Low-grade Fuel into Electricity and Heat

SOLID FUELS

WOOD CHIPS

WASTEWOOD

OTHER

LIQUID FUELS

PYROLYSIS OIL

OTHER

GASEOUS FUELS

LANDFILL GAS

SEWAGE GAS

UPDRAFT GASIFIER

COMBUSTION CHAMBER

STIRLING ENGINE

ELECTRICITY

HEATING

GRID CONNECTED

ONSITE GENERATION

DISTRIBUTED GENERATION

COOLING

WATERBORNE HEATING

DIRECT COMBUSTION

DESALINATION

Technology Package Three Product Configurations Serving Differentiated Market Needs

Stand-alone Engine Stirling engine Interface to boiler Control system

Engine with CoC Stirling engine Combustion chamber Burner system Control system

CHP Plant Engine with CoC Updraft Gasifier Plant Control system Interfaces to end user

OEM delivery to boiler manufacturers

Plants constructed by distributors/integrators

OEM delivery to producers of gasifiers/biogas/LFG systems/pyrolysis oil

Market Segmentation Prioritization of Markets – Primary Focus on Biomass CHP in Europe

Market Solution Substituting Estimated annual

market size

Europe Global

Primary Biomass CHP in Europe for large buildings or district heating networks

Boilers for ”heat only” Gas CHP systems €5bn >€10bn

Secondary

CHP from gaseous or liquid fuels (e.g. AD or pyrolysis oil based on engine with combustion chamber

Flaring Boilers for ”heat only” Internal combustion

engines with pre-treatment of fuel

>€1bn >€10bn

Tertiary ”Power-only” generation in rural/remote areas and developing countries

I/C engines with pre-treatment of fuel / diesel gensets

-- >€20bn

Integrated Updraft Gasification Plants

1: Process flow of an updraft gasification plant

Existing installations

Target vs. Operating Performance Technical Specifications Target specification DTU reference plant actual

Fuel type Wood chips Wood chips Fuel input 200kW 205kW Heat output 140kWth 145kWth Power output 35kWe 30kWe Electrical efficiency 17.5% 15% Overall plant efficiency 88% 85% Dust level < 5 mg/Nm³ CO emissions1 < 150 mg/Nm³ NOX emissions2 < 200 mg/Nm³ Total organic compound (TOC) emissions < 10 mg/Nm³

Fuel for Updraft Gasification The SDK updraft gasification CHP plants use moist, fresh wood chips as fuel, in contrast with conventional gasification plants, which require dried wood chips. SDK updraft gasification plants specify the use of

ÖNORM M7 133, G50, Moisture content >35% (W40 or W50) from the Austrian Standards Institute. A 1-engine plant uses roughly 70 kgs of wood chips an hour (at a moisture content of 42%), corresponding to roughly 490 tonnes for 7,000 hours of operation

Engine with Combustion Chamber for Gaseous and Liquid Fuels

Existing Installation

SDK currently has one operational installation involving a biogas-fuelled engine with combustion chamber configuration. This installation is in operation at a wastewater treatment plant in Germany managed by Westsächsische Umweltdienste AG (WUDAG), a company specialising in anaerobic digestion from wastewater treatment plants.

Customer Location Energy output Fuel type Comment

WUDAG Niederfrohna, Germany

35kWe + 140kWth

Methane from anaerobic digestion

Direct combustion of biogas Customer specialises in anaerobic digestion

from wastewater treatment plants Plant in operation since mid-2010

The Stirling DK solution benefits from the following key commercial advantages in comparison to conventional internal combustion based technologies for low-grade liquid or gaseous fuel applications: Emissions and noise levels from internal combustion engines are significantly higher Internal combustion based solutions require capital intensive and energy consuming pre-

treatment processes and involve frequent servicing

Customer Economics

Income from investment into an SDK plant comes from two main sources; 1. Sale of heat and electricity to local networks

or national grids and/or own consumption of heat and electricity, substituting alternate energy sourcing (cost avoidance)

2. Local or national policies promoting the use of onsite generation, combined heat and power generation or energy generation from renewable energy resources, e.g. feed-in tariffs for electricity

Example income for a 4-engine plant

Type of Income Germany (2012 prices) UK (2012 prices) Value of Heat: - Annual - Per kWh

- €187,000 - €0.045

- €125,000 - €0.03

Value of Power: - Annual - Per kWh

N/A (Power sold to grid via Feed-In Tariff)

- €43,800 - €0.052

Heat Subsidy: - Annual - Per kWh

N/A - €129,000 - €0.031

Power Subsidy: - Annual - Per kWh

- €182,600 - €0.22

- €64,000 - €0.077

Total Annual Income - €369,600 - €361,800

The table below gives the returns to investment for the owner of a 4-engine updraft gasification CHP plant installed in 2011:

Return on Investment Germany UK

Simple Payback Period < 10 years < 9 years

Post-tax IRR 9% 11%

LCOE without subsidies (Retail Electricity Price)

- €127.3 - (€128.8)

- €162 - (€108.2)

Customer Case Studies Updraft Gasifier Plants Sold to High-profile Customers in the UK and Germany

Customer Description / opportunity

High-profile energy centre at Waitrose supermarket in the Isle of Wight, UK

Tri-generation plant providing power, heating and cooling through absorption chiller technology

4-engine updraft gasifier plant (140kWe/560kWth)

Commissioning: Q1 2012

Sale via MITIE (energy delivery contract with Waitrose)

Innovative project represents substantial opportunity for further orders from Waitrose/MITIE – evidenced by recent follow-up order for 4-engine plant at Waitrose store at Bracknell (Waitrose HQ)

Municipal spa/wellness centre in Tabarz, Germany

4-engine updraft gasifier plant (140kWe/560kWth)

Commissioning: October-November 2011

Will provide heat and power to spa

Sale via Siemens Building Technologies Division, providing technical quality guarantee for project

Stirling DK Market Model

Stirling DK Market Model Potential Partners in the Energy Services Market

ENERGY SERVICES

Consulting Firms

Certification Specialists

Integrators / Equipment

Manufacturers

ESCO’s

Energy Utilities

FM Companies

CONSULTANCIES SPECIALIZING IN ENERGY SERVICES/EFFICIENCY

CERTIFICATION SPECIALISTS, SUCH AS

BUREAU VERITAS, HAVE A STAKE IN THE ENERGY EFFICIENCY

MARKET

SOME EQUIPMENT MANUFACTURERS OFFER

ENERGY SERVICE CONTRACTS BASED AROUND THEIR

PRODUCTS

SEVERAL LARGE ESCO’S ARE ACTIVE IN THE MARKET

MOST UTILITIES NOW OFFER ENERGY SERVICES IN THEIR

PRODUCT PORTFOLIO

FACILITIES MANAGEMENT

COMPANIES OFFER ENERGY SERVICE

CONTRACTS ALONGSIDE OTHER FACILITY MANAGEMENT