Wello Oy Technology to Unlock the Power of Wave text January 2018 - PowerPoint PPT Presentation

Wello Oy – Technology to Unlock the Power of Wave text January 2018 Investor Presentation

The Problem The world faces serious challenges in energy production. Currently more than 60% of electricity is produced from fossil fuels. The growth of population and industrial need will worsen the situation during the years to come. The Paris Agreement strengthens the global climate effort by requiring all countries to set climate goals and by establishing new mechanisms to hold countries accountable and to build ambition over time. The wind and solar power address to that problem. However wave energy has a wider peak range, less fluctuation and fewer periods without generation and thus complements them. Variety of different sources of renewables result to stable production and thus increases the value of all of them. Ocean waves provide an endless resource of clean energy. The market is practically unexplored yet.

Waves -Endless Resource World Ocean Review estimate the annual generating potential to 1,7 TWh • Predictable • Constantly available • More stabile than wind and solar Reliable renewable energy economically

Wave Energy Waves provide higher stability in energy production compared to wind and solar 1 Wind and wave data from Orkney station 2 • 1 waves and wind increase relatively linear. Waves have • Wave energy compared to wind and solar has a wider a slower fade-out trend peak range, less fluctuation and fewer periods without generation • • The combination of wave and wind represent a 2 demonstrates the constant source of energy that waves strong and stable generation source traveling across the ocean represent • Availability of wave energy doesn’t fluctuate as much as availability of wind energy.

Wave Energy Markets Europe in the lead, Asia follows and expected to overtake North America has Canada European market estimated to China has a desire to in front with a roadmap for develop 100MW by the mid 2020’s develop 3MW. Japan has 2GW by2030 an initial target of 350MW and long term target of 12GW Australia has a defined renewable energy target of 4GW by 2020 where wave In south America Chile, energy will be a contributor. Argentina and Brazil has a Pacific islands have a peak massive potential and demonstrated willingness to demand of 350MW of which 80% is supplied by diesel. invest in renewableenergy Conversion to wave saves cost andemissions Sources:Caprity Advisory research, ARENA ”2014 Clean Energy Week ARENA and Ocean Energy”, E&Y “Ocean energies, moving towards competitiveness: a market overview “ , Ocean Energy Forum ‘ocean energy strategic roadmap building ocean energy for Europe’

Wave Energy Converter (WEC) and Power Module Core technology enables two product lines The Wave Energy Converter (WEC) Penguin – ready for commercialization • The WEC Penguin will generate energy from 3000 to 6000 hours per year depending on site • The Hull is shaped to optimize energy conversion based on local site wave conditions • All critical and moving components are safely encapsulated by the hull and are not in contact with water The Power Module – development phase • The Power Module utilizes the same working principles as the power take off in the Penguin • Installed on a vessel the Power Module helps stabilize the ship, reducing need for other ballast/stabilizing systems • It generates power. In favorable conditions each 50 kW Power Module can generate up to 198 MWh 1) 1) Depending on vessel operation area and hours of operation, 198 MWh is equal to 66 000 liter of diesel if generated with a genset

Wello target group WEC Penguin Power module • • Customers are: Customers are: • • site developers ship-owners • • utility companies ship yards • • fish farms fish farms • • governments oil and gas companies • algae cultivation companies • offshore mining

Customer project rewiew Cefow project in Orkney, Scotland • In 2015 the European Commission’s research and innovation program Horizon 2020 granted 17 meur for Clean Energy From Ocean Waves (Cefow) research project. Wello’s share is 13 meur, out of which EU funding is 9 meur. • Cefow aims to demonstrate advanced ocean wave energy converter (WEC) technology to increase the speed of wave power development and decrease the levelized cost of ocean energy by 30%. • The Cefow consortium spans the full value chain including research organizations, marine service providers and a large multinational utility company. • The first of three Penguins was deployed in winter 2017, has survived very harsh conditions since then and is currently producing energy to the grid.

Customer project review SME project to commercialize Power Module SME instrument: EU funding and support for breakthrough innovation projects with a market- creating potential, which is rolled out as part of the European Innovation Council (EIC) pilot. The EIC SME instrument will boost fast company growth and market-creating innovation thanks to staged funding and ramped up business acceleration services. • Wello received 2,5 meur EU funding for developing the Power Module. • Two year project. First tranche received in 2017

Customer project review Commercial Co-operation Agreement with GEU Commercial Co- operation Agreement worth approx. 20M€ was signed in 21.11.2017 with Gapura Energi Utama, daughter company of Bangun Tjipta Sarana, Indonesia: First phase: • To establish and run a demonstration project in the coast of Penida Island, Indonesia Second phase: • To deploy a power park of 10 MW in the coast of Penida Island, Indonesia Other projects will follow. GEU will act as a distributor of Penguins in Indonesia. The potential for wave energy in the coast of Indonesia is estimated to be billions of euros.

Customer projects Pipeline for WEC Penguins Projects under negotiation 2018 2019 2020 (meur) • GEU, Power Park, Indonesia 1,8 2,7 4,6 • ESB, Power park, West Wave, Ireland 3,0 2,0 11,0 • ENI Teknomare, Pilot & power park, Adriatic Sea, Italy 1,0 2,0 10,5 • Royal Caribbean Cruises, Power park, Labadee, Haiti 2,2 5,2 8,5 TOTAL PIPELINE 54,6 meur Letters of intent: • BSR Korea • Royal Caribbean • Rolls Royce • Fjord Maritime

Sale and Distribution Sales strategy is two-fold: 1. Identifying the easiest markets where some of the following applies: • Good wave climate • Cost of energy is relatively high • Challenges for other renewables (e.g. No cranes available to install wind mills) • Favourable government policies to wave energy • Feed-in-tariff or other support for renewables 2. Penetrate the other markets later once the competitiveness of the technology has increased further. • This is expected to take place in 2 years. Distribution channels: Search for distribution channels is ongoing. Some partners have already been identified in Asia: BSR in Korea, GEU in Indonesia. Partners in USA are yet to be found. Europe is considered home market which will be taken care of Wello itself.

Competition Other renewables, other companies • Other renewables, especially off shore wind, can be seen as competitors to Wello. • On the other hand all renewables benefit on the existence of others. • Together these sources form a continuous and more valuable and important part of energy production. • Wello is the only wave energy technology provider publishing LCOE (Levelized cost of energy) figures. • Other wave energy converter providers (Carnegie, OPT, AW-Energy) have not yet managed to prove survivability or realistic LCOE figures unlike Wello.

WEC Penguin superiority Wello's WEC has several advantages compared to competing solutions • Ongoing multi-device pilot with Scandinavian utility company Fortum. • Wello's technology is the only technology that has proven survivability in harsh ocean conditions. It is the only full scale device that has been operational on site with over 12 meter waves, and still, five years later has original components inside. • It is the only technology that does not have any moving parts touching sea water. This guarantees durability. • Wello is the only wave energy technology provider publishing LCOE (Levelized cost of energy) figures. • The nominal power of WEC1, that is currently deployed in Scotland, is 600 KW (the average nominal power for offshore wind turbine is 3,6 MW) • WEC2 will be build during 2018. The nominal power for that is 1 MW.