Nel Hydrogen presentation

January 2019

Jon André Løkke, CEO

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Renewable hydrogen becoming relevant across multiple sectors

Electrification of transport sectorHydrogen = true zero-emission technology covering all forms of mobility

Renewable hydrogen beating fossil fuels on a TCO basisCost reductions of renewables and hydrogen tech. leads to Total Cost of Ownership competitive w/fossil alternatives

Increased deployment of intermittent renewable energyShifting energy in time and place with hydrogen – can be used as an energy carrier & within industry

Industries like fertilizer/steel making moves toward zero emissionsExchanging natural gas and coal with renewable hydrogen – can potentially reduce global CO2-emissions by ~10%

Several Norwegian hydrogen companies ready for fast roll-outOpportunity for Norway to show the way & set the pace

Nel in brief

Nel in brief

• Global pure-play OSE listed hydrogen company, w/facilities in Norway, Denmark and US

• A leading company within hydrogen electrolyzers and fueling – strong performance and track-record

• More than 3,500 hydrogen solutions delivered in 80+ countries worldwide since 1927

• Significant foothold in fast-growing markets with several breakthrough contracts

• 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

BUSINESS OVERVIEW

Hydrogen Electrolyzers Hydrogen Fueling Hydrogen Solutions

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REVENUE SPLIT

NEL GROUP REVENUES

2017*

298.4 MNOKCombined 2017**

~390 MNOKLTM Q3 2018476.1 MNOK

* Figures include Proton OnSite from the acquisition date, 30 June 2017; ** Combined Nel and Proton OnSite figures on 2017 full-year basis. Note that these numbers only represent a simple combination of the two companies’ revenue numbers and hence do not represent pro forma figures with the potential adjustments that such numbers would require. Combined figures are not audited

Thre

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34 %

66 %

Hydrogen fueling

Hydrogen electrolyser

BY SEGMENT*

BY GEOGRAPHY*

46 %

33 %

3 % 18 %

EuropeNorth AmericaAsiaRoW

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Hydrogen Fueling Hydrogen Solutions

..of hydrogen technology

experience and excellence

90 years

Hydrogen gaining momentum -global industry leaders moving

Automotive industry has hydrogen on the top of their agenda

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78%

Fuel Cell Electric Mobility is seen as the number one trend toward 2025

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17

20

18 #1

of executives absolutely or partly agree that FCEVs will be the real breakthrough for electric mobility

Automotive executives also project a split by 2040 for BEVs (26%), FCEVs (25%), ICEs (25%) and

hybrids (24%)

International leaders stepping up effort on hydrogen and fuel cells

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Established in January 2017 by 13 industry leading companies, the Hydrogen Council has grown to 33 members & 21 support members throughout 2018

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Hyundai is investing $ 6.7 billion to increase fuel cell manufacturing by >200x by 2030

• Will deploy 4,000 FCEVs in South-Korea during 2019

• By 2030, annual fuel cell production will be 700,000 per year, 233x

current manufacturing capacity (3,000/year)

• 500,000 fuel cells dedicated for passenger vehicles (cars & buses)

• 200,000 fuel cells dedicated for other vehicles & applications:

• Drones, ships, trains, forklifts and power generators

• Hyundai predicts a TCO reduction of 10% over conventional means

of transportationHyundai NEXO – latest fuel cell electric

vechicle from Hyundai~666 km range & highest NCAP safety

score of SUVs in 2018

Hyundai Motor Company strengthening fuel cell efforts

Yara & Nel initiates Green Fertilizer project

• Target to develop next generation green(renewable) ammonia and

fertilizer production

• Will utilize Nel’s next generation electrolyzer, developed in Norway

• Technology tailored for large scale hydrogen production w/direct

connection to renewables

• Ammonia production accounts for >50% of total hydrogen market,

>95% fossil energy based

• ~400 GW electrolysis market opportunity, equal to NOK 1200 billion

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Nel & Yara awarded grant from the PILOT-E scheme for development of green fertilizer project

Renewable hydrogen outcompeting fossil

solutions=

FOSSIL PARITY

Global hydrogen market

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Global hydrogen market, by end-use:

Ammonia Refineries

Methanol Other

• ~56 million ton/year market

• 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 electrolyzer CAPEX

• Special focus on refineries and green ammonia

• Account for ~80% of market

• If entire market would be served by electrolysis would represent a market potential of NOK 1 800 billion

Large opportunities for electrolysis within existing hydrogen market

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Chemical vapor deposition

Thermal processing

Chemical Industry

Power IndustrySteel Industry

Food Industry

Glass Industry

Polysilicon Industry

Laboratories

Life support

CONVENTIONAL INDUSTRY MOBILITY POWER-TO-X

• Conventional industries represents “traditional” hydrogen markets

• Steady demand for hydrogen

• Key market going forward – both within hydrogen production and fueling/dispensing

• Heavy duty sector developing faster than anticipated – hydrogen now relevant fuel for all forms of mobility

• Decreasing cost of renewables and electrolyzers is accelerating market

• Vast opportunities within existing and new sectors

Mobility(transportation)

Power-To-X(renewable hydrogen)

Steady growing market Markets expected to see fast growth going forward

Hydrogen is expanding its areas of application…

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• Hydrogen has potential to become a preferred fuel alternative in the future:

− True zero emission from production to use

− Can beat fossil fuel applications on a TCO-basis

− Low weight (compared to e.g. batteries), especially relevant in the heavy duty segment

− Fast recharging (fueling) time

− Long driving range

− Low/no need for electric grid upgrades

− Not dependent on rare metals (e.g. cobalt, lithium)

− Global standards for fueling established

− Same quality fuel used for small to large applications

• Initial development highly affected by policies and subsidies

PA

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…with growth expected to be accelerated by transportation…

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Power-To-Xapplication

• Wide variety of existing and new markets where electrolysis can play a major role

– Exchanging fossil hydrogen with renewable hydrogen (f.ex fertilizer)

– Exchanging coal with renewable hydrogen (f.exsteel manufacturing)

– Oxygen & heat from electrolyzer adds value

• Electrolysis “bridges the gap” between the power and industry sector, increasing the value of electrons

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

…and all forms of Power-To-X

Cost of wind and solar has dropped by 69% and 88% during the last decade – renewable hydrogen follows the same path

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$ 135$ 124

$ 71$ 72 $ 70$ 59 $ 55 $ 47 $ 45 $ 42

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ 359

$ 248

$ 157

$ 125

$ 98$ 79

$ 64 $ 55 $ 50 $ 43

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Wind and solar is on a trajectory to become the cheapest form of electricity

Wind LCOE Unsubsidised levelized cost of energy ($/MWh) 2)

Solar PV LCOEUnsubsidised levelized cost of energy ($/MWh)2)

• With falling LCOE1) of wind and solar prices,

renewable hydrogen follows the same path,

as electrical power constitute 70-80% of the

total cost of hydrogen

• Record low auction prices for solar PV and

wind has seen prices as low as $17.7/MWh

and $17.86/MWh respectively (as of 2017) 3)

• Prices are expected to drop further, LCOE of

solar PV and onshore wind are expected to

fall by 71% and 58% respectively by 20504)

• At $50/MWh renewable hydrogen is

becoming competitive with fossil fuels and

at $30/MWh renewable hydrogen is

becoming competitive in all markets

Note: 1) LCOE = Levelised cost of energy, which is a way of calculating the total production cost of building and operating an electricity-generating plantSource: 2) Lazard; Renewables Now, 3) IRENA (International Renewable Energy Agency); 4) BloombergNEF New Energy Outlook 2018

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200

300

400

500

600

700

800

historic under construction future scale up

Large scale natural gas reformers Nel large scale alkaline electrolysis

$/kW

SMR – capex range

Hydrogen production - capex price

Fossil parity at $500/kW

capex level

Source: Nel

With current ongoing expansion

Historic Future large scale(New products/ technology development)

Growth in renewable hydrogen will accelerate with reduced capex for electrolyzers....

• SMR – “steam methane reforming” is dominating

hydrogen production today, using natural gas and

steam

• Nel is establishing a new manufacturing plant

targeting a >40% cost reduction

• Expect to see further reduction in capex with increase

production volume, and further size scaling of

products

• Nel targets capex to drop below SMR over time

• Electrolysis expected to be the preferred

production method if opex (i.e. power prices) are

low enough (or at parity) with the alternative

production methods

Establishing the world’s largest electrolyzer manufacturing plant in Notodden, Norway

• Highly automated and designed according to lean manufacturing

principles

• Industrial scale production, the most efficient electrolyzers in the

market at a game changing cost

• Accommodating the multi-billion NOK order from Nikola

• Capacity of 360 MW/year is equal to ~4x today’s global market

• Operational in 2020 with ramp-up aligned to customer requirements

• Targeting >40% cost reductions

• Will enable Nel electrolyzers to compete head-to-head with steam methane

reformers (fossil hydrogen)

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Name plate capacity of 360 MW per year, ~10x current annual production

New facility located right next to existing plant

8-cluster electrolyzer solution, produce 8 tons of hydrogen per day

EXAMPLE:

Showcase in Norway

Fossil parity on fuel achievable in Norway today

• Regional hydrogen production, use of low cost renewable energy

• Possible to integrate with central heating grid

• Parity with taxed diesel possible already from 4-8 ton per day

0.40 NOK/kWh 25 NOK/kg + 13 NOK/kg 11 NOK/kg+ = 50 NOK/kg

Large scale Central production

20 MW / 8 tons per day

High pressuredistribution

1,000 – 1,500 kg/truck

Efficient dispensing

100% availability

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Centralized production close to power or heat source enables business case

H2 distribution example – Akershus Energi have multiple sites along Glomma

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Large scale hydrogen production (hydro power available at numerous sites)

Trucked-in in pressurized tanks, 500 bar in a 40ft container, 1,300kg of hydrogenH2Station cars

H2Station buses

H2Station ferry

Semi-centralized production reduces costs, outcompeting fossil alternatives

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• Applying low cost industrial solution to transport

applications, driving down cost

• Install an 8-stack electrolyser, produces 8 ton of

hydrogen per day at full production – fully scalable

• Offers low cost hydrogen, grid balancing services as

well as heat for district heating

• Can produce to and supply multiple applications,

bus, truck, car, ferry, train, etc.

• Can support a large number of vehicles within each

application

Vehicle # Kg/d/unit Total kg/d

Bus 100 25 2 500

Truck 100 30 3 000

Car 2000 0.5 1 000

Ferry 4 250 1 000

Train 2 250 500

Total (kg/d) 8 000

Hydrogen infrastructure Oslo/Akershus – shared infrastructure between multiple applications

8 ton/day electrolyser

• Grid balancing• Excess power• District heating

Ruter10+++ busses at Bekkestua, other

H2 TrainKongsvinger-Elverum-Koppang

LDV fueling station700 bar, 5 kg in 3 minKjørebo, Hvam, Ås, etc.

Norled / RuterFast ferry (Oslo/Drøbak)

OSL GardermoenElectrification airport internal traffic

Potential Funding partners:

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Trucked-in in pressurized tanks (500 bar)• 1,000-1,500 kg H2 per

trailer

HDV/Nikola demo1 000 km in 10 min

HDV – Hyundai/SCANIATrucks, forklifts, cars

Hydrogen supply from semi-centralized production

H2Hub 1

Central large scale production (H2Hub), distribution and fueling

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Green hydrogen Production:

• 8 – 24 tons / day from Hydro/Wind

Efficient hydrogen distribution:

• 1,100-1,500 kg pr. truckload

Efficient hydrogen distribution:

• 2.5 hour travel distance for optimal distribution cost

• H2Station capacity can easily be added or expanded

• Fuel with 100% renewable hydrogen at attractive price

Radius of circle corresponds to ~2.5 hour driving

2.5 hoursradius

E.g.: In Norway, hydrogen electric (FC) buses can reach fossil parity already

Assumptions:

• Bus price: 3.3 MNOK (350 k€/bus)

• Hydrogen: 47 kr/kg (5 €/kg)

• O&M: 2.8 kr/km (0.3 €/km)

25Source: *Ruter estimates for 2025, **Nel numbers for 2020

• Hydrogen electric buses have the

lowest cost per km, lower than

diesel and battery electric

Hydrogen electric buses have the lowest Total Cost of Ownership (TCO), i.e. NOK/km

E.g.: In Norway, hydrogen trains competitive with diesel

• Trønder- & Meråkerbanen (120 & 102 km)

• Rørosbanen & Solørbanen (384 & 94 km)

• Raumabanen (114 km)

• Nordlandsbanen (731 km)

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Major opportunities along Norwegian railroads

Single-track line, 731 km About 3000 train movements/year CO2 emissions: 37 800 t/year

SINTEF study, example: Nordlandsbanen

0 10 20 30 40 50 60 70 80

Hydrogen

Full battery

Catenary

Diesel

Equivalent annual cost (M$/year)

Cost comparisons 2020

• Total of ~1 550 km not

electrified in Norway,

El-Wire investments

would amount to NOK

>20 billion

DieselEl-WireBattery

Hydrogen

Summary/conclusion

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Summary/conclusions

Electrification of transport sectorHydrogen = true zero-emission technology covering all forms of mobility

Renewable hydrogen beating fossil fuels on a TCO basisCost reductions of renewables and hydrogen tech. leads to Total Cost of Ownership competitive w/fossil alternatives

Increased deployment of intermittent renewable energyShifting energy in time and place with hydrogen – can be used as an energy carrier & within industry

Industries like fertilizer/steel making moves toward zero emissionsExchanging natural gas and coal with renewable hydrogen – can potentially reduce global CO2-emissions by ~10%

Several Norwegian hydrogen companies ready for fast roll-outOpportunity for Norway to show the way & set the pace

Number one by nature