1 Fuel Cells By, David Sell Energy Sector

2 Industry Definition –Fuel Cells Hydrogenics Corporation (NASDAQ: HYGS) Quantum Fuel Systems (NASDAQ: QTWW) FuelCell Energy (NASDAQ: FCEL) Ballard Power Systems (NASDAQ: BLDP)  Firms in this industry manufacture and develop solid oxide or molten carbonate fuel cells, which are used as commercial energy utility sources.  These goods are used as an alternative energy source. Often they are used by firms for distributed generation or backup power, helping diminish their reliance on a centralized facility or grid, causing lower environmental impact.

3 Energy Fuel Cell Sector Breakdown Industry Breakdown By Market Cap ($BLN) Stationary Fuel Cells $ M (.027%) Fuel Cells $ M (.038%) Alternative Energy $2.01 Trillion (14.9%) Energy Sector $13.41 Trillion (100%) X$ B WOR$ B

Revenue Breakdown Fuel Cells Contracts Material Products

5 Grid Parity Locations by 2015 Grid Parity

6 Fuel Cell Revenue Generation DesignManufactureSell Install and Service (20.1%) of Revenue(103.9%) of Revenue93.9% of Revenue(13.3%) of Revenue Customer uses Fuel Cell for Distributed Generation or Backup Power Manufacturing outsourcing expected to increase Design / R&D continues to decrease as Rev % Manufacturing outsourcing expected to increase Design / R&D continues to decrease as Rev %

7 Trends Fuel Cell costs Lower Grid Power costs Higher Distributed Generation / Going Green Transition to Commercial Industry

8 Fuel Cells affordable in more Areas Low natural gas prices = lower fuel cell price Grid parity in cities increases every year Electricity prices have decreased once in 11 years Fuel cell technology continues to lower costs Projections Elec CAGR = 3.62% Gas CAGR = 6.02%

9 Distributed Generation Increasing Rapidly Japan, South Korea, and Germany main locations Fuel Cell growth could expand quicker w/ more manufacturers Most manufacturers are subsidies Green is a trend including minimizing grid power Projections FC CAGR = 78.9% NFC CAGR = 58.9% FC CAGR = 78.9% NFC CAGR = 58.9%

10 Corporation Buyouts Show Transition Sign of transition from R&D to Commercial Industry New Synergies emerging showing profitability Companies buyout others for vertical integration Others from strategic partnerships for future profits Ex. BIC buyout of Angstrom Energy -Google and Ebay hold major equity positions in FC comps -All companies discussed have min 2 strategic partnerships Ex. BIC buyout of Angstrom Energy -Google and Ebay hold major equity positions in FC comps -All companies discussed have min 2 strategic partnerships

11 Key Financials Symbol Market Cap (M) % of 52 high Closing PriceP/EEPS EV/EBIT DA Debt/Equ ity Debt/EBIT DA R&D/EBIT DA FCEL BLDP HYGS QTWW High Low Mean Median

12 Stationary Fuel Cell Manufacturing Recommendation: Positive Operates with trends Signifying: 1.Costs are decreasing and competition prices increasing 2.Long-time R&D industry transitioning to commercial base Must Combat key risks of: 1.Solar or Wind becoming more widely used 2.Smart-grid may get cheaper eliminating grid- parity