1. Clint Wheelock President Distributed Energy Generation for Homes March 22, 2012

2. Copyright © 2012 Pike Research 2 Pike Research Introduction Residential Energy Use in the United States Introduction to Micro Renewables, Residential CHP, and Residential Energy Storage Connecting the Dots in Residential Smart Energy Current Market Size State of Commercial Availability Incentives and Barriers Business Models Sample Forecast: resCHP Discussion Agenda

3. Copyright © 2012 Pike Research 3 Pike Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets. The company’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Smart Energy ecosystem. Sector Focus: Smart Energy Smart Grid Smart Transportation Smart Industry Smart Buildings Research Services: Research Reports Subscription Advisory Services Consulting & Custom Research Go-To-Market Strategy Custom Market Analysis Market Sizing & Forecasts Primary Research Technology Evaluation Commercial Due Diligence Competitive Benchmarking Strategic Advisory Sessions Introduction

4. Copyright © 2012 Pike Research 4 Smart Energy Ecosystem

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7. Copyright © 2012 Pike Research 7 Overview of Current U.S. Residential Energy Use Residential energy consumption varies by region with climate greatest influencer of energy consumption Most areas of energy consumption in the home are reducing, but with the increased “gadgetification” in the home, energy demand from electronics is on the rise 2009 energy demand from the U.S. residential sector: 11.26 quadrillion BTUs (Quads) and rising According to the EIA, from 1950 to 2009, both the amount of CO 2 emissions associated with residential use and the total amount of energy associated with households more than tripled (Source: Lawrence Livermore National Lab) Residential Energy Consumption by Sector, United States: 2009

8. Copyright © 2012 Pike Research 8 Best known and most “traditional” of all the home energy systems Distributed PV installed capacity in the United States has jumped from 326 MW to 984 MW in just 2 years (2009 to 2011) Costs are dropping for both solar and wind, but deployment is limited by climate Easiest to understand and has the clear “green” label when installed Micro Renewables PV Installation Costs: 2009-2015 Three of the top 5 small wind power companies are located in the United States (Southwest Windpower, Northern Power Systems, and Bergey Wind Power) (Source: Pike Research)

9. Copyright © 2012 Pike Research 9 resCHP specifically refers to CHP systems that are designed to be sited in a residential location. They either provide baseload power to the home or are used as distributed grid micro-generators. resCHP units range in size, at present from 700W e up to 30 kW e. resCHP systems come in 3 main flavors: fuel cell; Organic Rankine Cycle (ORC) engines; and Stirling engines. Japan, South Korea, and Germany are already deploying thousands of resCHP systems per year. Residential CHP resCHP Systems Shipped, World Markets: 2009-2011 (Source: Pike Research)

10. Copyright © 2012 Pike Research 10 Of the three areas, resES is the one that is still most in the demonstration phase Key variable is duration of storage available, developers are still testing configurations Utilities are still determining what the value of residential storage is to the system Li-ion battery technology currently leading the development Residential Energy Storage ProjectLocationTechnologyMWDuration (h)EnergyVendor SMUD Smart Energy Homes CaliforniaLi-ion0.0543.80.204Saft Southern California Edison CaliforniaLi-ion0.0042.50.010LG Chem ElectrovayaJapanLi-ion0.0043.00.010Electrovaya Field TrialsAustraliaFlow Battery0.0052.00.010RedFlow Duke EnergySouth Carolina Li-ion0.0481.00.048Kokam Sol-ionGermanyLi-ion3.7503.011.25Saft (Source: Pike Research)

11. Copyright © 2012 Pike Research 11 Some companies are moving now to join up the different technology pieces to provide integrated solutions  ClearEdge Power (United States) – combining resCHP and resES to provide islanded systems for homes  Some Japanese firms – including Panasonic – now building technology integrated homes, instead of residential technology  Opportunities for “one-stop shop” type firms Connecting the Dots Enabling technologies include home energy management systems and smart grid communication technology.

12. Copyright © 2012 Pike Research 12 Current Market Size Current market size for residential energy in the United States is approximately 10% of the global market at 1 GW Of this, 97% in the United States is from solar Looking forward, Pike Research forecasts the U.S. home energy power market will increase to 1.6 GW Without resCHP and resES take off, the home energy market will remain limited to low GWs per year Note: The U.S. DOE is increasingly interested in resCHP systems (Source: Pike Research)

13. Copyright © 2012 Pike Research 13 Through targeted government and company RD&D, Japan is now deploying fuel cell resCHP systems at $35k each (before subsidy) Following Fukushima, developers are now integrating energy storage into systems to allow operation during grid blackouts Goal is to deploy over 80,000 systems per year by 2015 with cost down to under $10k NB: Systems grid connected but do not feed into the grid, as there are no interconnection standards in place Case Study: ENE-FARM (Japan) resCHP Fuel Cell Systems Installed, Japan: 2002-2011 (Source: Pike Research)

14. Copyright © 2012 Pike Research 14 Outside of micro renewables, availability in the United States is very limited ResCHP systems available (2011) from:  ClearEdge Power (California only)  Cogen Microsystems  Marathon Engine Systems Coming Soon (2013 – 2015):  Ceramic Fuel Cells  Trenergi ResES systems coming soon from:  Sony  LG Chem  RedFlow Commercial Availability in the United States

15. Copyright © 2012 Pike Research 15 Feed-In Tariff for ALL distributed residential energy systems, or none Clear grid interconnection standards Utility involvement, or aggregators – it is unfeasible for each homeowner to become a micro-generator and deal directly with the grid companies Rollout of ability for third parties to charge tenants for electricity generated Clear subsidies for adoption based on efficiency, not pet technology Homeowner buy-in! Market Drivers and Barriers

16. Copyright © 2012 Pike Research 16 Distributed Generation at a residential level is a nightmare for grid operators if each homeowner becomes an independent power producer The grid operator needs power at a known time, a known quantity and a known price – each U.S. grid operator is unique There is no system in place to deal with potentially millions of producers, each producing and selling on different amounts – aggregation and smoothing is key If mass rollout is take place, grid balancing, energy storage, and power production technology will need to be very carefully aligned Residential Power: The Downside

17. Copyright © 2012 Pike Research 17 Virtual Power Plant  IPP or ESCO leases space of each homeowner to produce power which all gets fed into the grid. Homeowner is given cheaper electricity rates and any waste heat (as hot water) as a thank you. In place in Germany with the independent utility Lichtblick In place in the United Kingdom with the “rent-a-roof” scheme IPP becomes community energy provider  Larger units (e.g., 100 kW) are installed by IPPs to power multiple homes. Agreed quantities of excess power are sold into the grid. Two Possible Market Plays

18. Copyright © 2012 Pike Research 18 Sample Forecast – Global resCHP Roll Out resCHP Adoption by Key Countries: 2012-2022 Under the Pike Research BAU model for resCHP (all tech types), we see a global annual adoption of 3.9 million systems, generating $41 billion annual revenue (Source: ?)

19. Copyright © 2012 Pike Research 19 Discussion

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