Corporate Presentation redT energy plc (AIM:RED) 1 Executive - PowerPoint PPT Presentation

Corporate Presentation redT energy plc (AIM:RED) 1

Executive Summary  Energy storage to enable cheap baseload renewables  Trusted energy storage expert with 20 years in the sector  In-house proprietary, heavy-cycling flow machine technology  Energy storage solutions (including finance) in key sectors; C&I, Grid, Large Solar  Business model; product margin and 20 year asset management contracts 2

Sector Opportunity Macro trends in global energy and the role energy storage will play in our future energy system 3

A changing generation mix  Low-cost renewables are replacing gas and coal power from the merit order  Drives increasing volatility in the wholesale power market, opening up new opportunities for energy storage 4

Solar + Storage: Tipping Point Price of Energy Power Price Volatility Grid Service Revenues Peak Prices Rising USA, UK + others coming online Tending to $0/kWh Free abundance of energy Energy storage is enabling more renewables to come online Cheaper, cleaner energy, globally 5

Maximise Use of Cheap Solar Power 1. Utilise circa. x2 as much cheap solar 2. Average peak energy cost in UK ~12-14p Source: redT 6

Stationary Energy Storage Market GW Pumped Hydro 99% Bespoke Li-ion New market driven by economics Projects 1% Renewable + storage Freq. ( currently 0.1%) Power Resp Flow = pumped hydro in a box MW Small Grid Services (All) solar (<2 hours) Renewable Firming (4 hours – 24 hours) Back-up Network Reinforcement Energy Trading & Arbitrage Domestic kW Application Duration 1 hour 6 hours 12 hours 24+ hours 7

Company Overview redT energy – key differentiators, technology and position within the sector 8

Who we are and what we do Trusted experts 20 years in energy sector – detailed client models  Our experts are based in: London, Edinburgh, Denver,  Munich, Johannesburg, Melbourne and Bangkok. Solutions and finance Technology  Low risk infrastructure – 20+ year assets  IP proven, patents, know how and 3 rd party validated  Energy storage machines and Lithium batteries  Financed solution available  >1.8 million machine operating hours  Bankable with Product insurance  Gen 3 functionality 9

Our experience and track record Recent Contract Wins Anglian Water: Collaboration agreement and initial 4 unit order for pathfinder site  Awarded framework contract to supply the NHS and UK Public Sector  German grid storage 700MWh of projects  Australian largest commercial BTM system Lithium + Flow 1MWh  10

Our energy solutions and finance Pre-tax returns Business model redT advantage (unlevered) (1) C&I sector 1. Low risk infrastructure Infrastructure modelling UK/Aus returns (~50% energy expertise and proprietary 10%+ cost reduction) “Flow” technology 2. Grid service upside (2) Grid Storage Experience of hybrid systems Grid services and trading Germany/UK combining “Flow” with other using a flexible asset 12-20% technologies (3) Solar/Wind + Storage 1. Baseload power [LCOE: Proprietary USD90/MWh] 10%+ “Flow” technology 2. Grid service and trading upside 11

How redT Technology Works 12

redT – Flow Machine Technology Differentiation within the energy storage sector High cost of degradation – Single application use Pumped Hydro in a box - Doesn’t degrade High Levelised cost, requires regular replacement Lowest Levelised cost, financeable, infrastructure asset 25 year Short life Cheap Power Regular maintenance Cheap Energy No Degradation infrastructure Disposable & management Low Maintenance Safe Disposal 0–50% Fire risk 100% depth Low LCOS Fully reusable High LCOS No fire risk issues depth of discharge Must be managed of discharge 13

Our flow machine technology Pure Vanadium redox flow machines Gen 3 Technology with embedded functionality to enhance customer returns Simple Durable Low-Risk Flexible energy infrastructure 14

redT - Business Model Year 1 20+ Year Annuity Stream Product Operation Capex Warranty 1-2% capex p.a. Product model Value Service & Maintenance 1-2% capex p.a. based pricing Asset Management Services Energy finance model margin Energy Trading 10-30% revenues p.a. % Margin Up to 20% revenues p.a. Grid Services Revenues Finance SPV performance Carry Leasing Returns above debt Product model Electrolyte Rental Up to 10% rental p.a. 15

Development Map Commoditise Scale Development 2014-2017 2017-Present 1999 - 2014 Manufacturing commoditisation  Functional, performing team Stack technology proven   Gen 3 launch (Margin product) –  System prototyping & testing  embedded functionality, improved power output, efficiency and capacity Gen 1 market seeding, case studies  Product IP Development  & ambassadors Gen 3 orderbook & delivery  Gen 2 launch – Commercially viable, Solutions and Finance   Gen 1 design finalised  economic business models Gen 2 commercial sales  16

Market Opportunity Core Customers: 1. Commercial BTM C&I 2. Grid Storage 3. Large Solar + Storage FTM 17

Sector 1: Distributed energy infrastructure Distributed energy storage infrastructure is now open for business This is real, economic, distributed infrastructure Av 50% Distribution cost Peak >10p+/kWh Purchased energy Centralised Type Levelised Cost (UK) Coal 13.7p – 17.1p / kWh 50% + Nuclear 8.5p – 12.3p / kWh Gas (Peaker) 18.2p – 19.8p / kWh Solar 5.5p – 7.6p / kWh ~50% reduction in energy costs Wind 4.6p – 7.4p / kWh Behind the meter distributed energy infrastructure Source: BEIS (commissioning in 2025) 18

Sector 1: Commercial BTM C&I redT PV + Energy Storage Infrastructure Sector facts : Energy costs core to business (water sector 50%  Upside more revenues of site costs) Low risk infrastructure investment  Perform all services, Pressure due to rising energy costs remain flexible  Flow Machines: All Services Desire to reduce carbon impact – harness 2x PV  Save more on energy bills Renegotiate supply contracts Access wholesale power prices Sector Opportunity Use more solar 5-10 year ~15% Firming solar : 24/7 solar power Project Payback IRR (Unlevered) Simple energy solution: PV + Storage + Energy supply Requires 4-8 hours of storage  billing Market : 5,000+ sites & $500m capex in the UK Recent Contract Wins Anglian Water: Collaboration agreement & Initial 4 unit order for pathfinder site. (August 2018)  Awarded framework contract to supply the NHS and UK Public Sector (September 2018)  19

Sector 1: Case study – Anglian Water Anglian Water: Installed to date 15% renewables (106GWh)  30% renewables by 2020  redT solution can accelerate decarbonisation by doubling  renewables by site 7,000 sites in the UK  redT and Anglian Water collaboration agreement to optimise solar & energy storage, ideally financeable structure across Anglian sites Initial site – 300 kWh redT machine and 700kWp solar redT machine: Increase site solar from 240kWp to  700kWp (~3x more PV) Reduces energy costs by up to 50%  Unlevered pre-tax IRR 10+%  20

Sector 2: Grid Storage Market Value: $bn’s – initial markets UK, Australia & Germany Hybrid Lithium: 40MW, 40MWh Flow: 10MW, 50MWh ~5-7% ~10%+ IRR (Unlevered) IRR (Unlevered) Single revenue Diversified asset risk Source: redT Sector Opportunity Sector Facts Flexible Diversified Asset for trading advantage Grid assets subject to policy and market risk   Asset can be worked hard for returns due to no degradation Current market: bespoke, inflexible assets   Bankable infrastructure asset redT hybrid provides flexible diversified asset for 20+   years Recent Wins Exclusivity on 700MWh portfolio of German grid projects (July 2018)  21

Sector 2: Case Study - German Grid Storage Further Phase Initial project  2nd project identical to initial project + further project  8MWh (200 redT units) hybridised with 32MW Gas expansions turbines  Total exclusive project portfolio ~700MWh  Heavy cycling flow machines (>30% load factor) enable addition of low cycling gas generation to maximise project returns German SCR Market – Energy storage 2.0  4 hour service to balance grid – true balancing of grid  redT first project 1% of current SCR market  Current services by Coal – 5 minute ramp time  Coal will phase out – renewables will create more SCR market  Deep market 2GW+ Secondary Control Reserve 22

Sector 3: Solar/wind + storage Long duration Wind Solar energy storage Baseload Energy Future < $50/MWh Now < $90/MWh 23

New sector in UK: Energy storage + EVs Long duration EV charging energy storage infrastructure Cheaper connection costs for EV chargers Smaller connection size required when storage used  Ability to implement ‘flexible’ DNO connections for the site  Ability to create arbitrage opportunities More cost effective procurement of energy  Additional revenues for charging station operators  Cheaper “cost of charge” to end customer  24