1. Hydrogen at the Crossroads: The Critical Success Factors
Hank Habicht Managing Partner, SAIL Venture Partners Vice Chairman, Global Environment & Technology Foundation The National Hydrogen Association Conference San Antonio, TX March 22, 2007

2. Current Perspective
SAIL Venture Partners: Cleantech focus, based in Costa Mesa, California; Five Partners; 6 current portfolio companies (
GETF: developing clean energy and water projects globally (
Commissioner, National Commission on Energy Policy (
Steering Committee, Energy Future Coalition ( ACORE,
and 25x25

3. Premises
The need for a domestic, low or zero carbon fuel is compelling
The supply-demand imbalance has a structural demand component
More than 2 billion vehicles by 2050
At risk: US economic leadership, national security, global environment
Economics, politics, and technology lining up for alternative energy (trillion dollar markets)
Market penetration and growth of hydrogen requires alignment of entrepreneurs, finance, government, NGO’s

4. Where Policy Impacts Business Models
RD3: Including Department of Defense
Finance
Production tax credits
Tax-exempt financing, loan guarantees
Emission trading, including CO2
Goals/Mandates: RPS, 25x25, Utility Green Pricing, Climate, Clean air and water
Integrated Sector Strategies: transportation, buildings, development assistance, hydrogen collaborative

5. The Promise and Reality of Hydrogen
A compelling vision – Even in 2007
Doubts: Time frames, pollution,competition
Positives: Accommodate multiple inputs/ Model of World-class collaboration
Still “need on-ramps and off-ramps”
Benefits from Convergence: air/energy, transportation/the grid, EE/RE

6. A Venture Capital Perspective
We look for
Huge TAM (Total Available Market)
“White Space” = Unmet Needs
Team + Technology = Unfair Advantage
Time Frames
Near term beachheads
Visibility to exits
We are near finish line with at least one H2 deal

7. The Drivers Climate Imperative--Stern Report/IPCC/ UN 2007 report
China and India: Double Digit GDP/3X Demand Growth
2.7 billion people in poorest emerging economies
SAFE: Energy Security an unprecedented priority
Water: Changes in Hydrologic Cycle/Water Scarcity
The drive for transformation in energy sector will intensify by 2008 – climate legislation likely

8. Technology Deployment Targets (EPRI, 2007)
EIA 2007 Base Case
EPRI Analysis Target*
Efficiency
Load Growth ~ + 1.5%/yr
Load Growth ~ + 1.1%/yr
Renewables
30 GWe by 2030
70 GWe by 2030
Nuclear Generation
12.5 GWe by 2030
64 GWe by 2030
Advanced Coal Generation
No Existing Plant Upgrades 40% New Plant Efficiency by
150 GWe Plant Upgrades
46% New Plant Efficiency by 2020; 49% in 2030
Carbon Capture and Storage (CCS)
None
Widely Available and Deployed After 2020
Plug-in Hybrid Electric Vehicles (PHEV)
10% of New Vehicles Sales by 2017; +2%/yr Thereafter
Distributed Energy Resources (DER) (including distributed solar)
 0.1% of Base Load in 2030
5% of Base Load in 2030

9. H2 Models and the coming Energy Transformation
Biggest Companies are Invested (Defensive?)
Defense still Focused (DSB Task Force)
Partnerships Abound
States – TX, MA, CA, PA, NY, “Coalitions”
Industry – e.g., Dow and GM
Stationary Fuel Cell, IC , Low Carbon H2 Models Moving Forward

10. Critical Success Factors
Production
Carbon Free – using RE, CCS
Low Cost (<$3kg?)
Distributed
Beachheads – revenue generating applications
Regional
Stationary/small fuel cell

11. Path Forward Drive down carbon footprint of H2 production Renewables
CCS
Prove the case for distributed production
Focus: States; Traditional Hydrogen Users; Special Adopters (Defense/Community/Business)
Demand consistency/predictability from Feds
Partner – across, electricity, transport, and water in all global markets
Cast the Vision while Putting Points on the Board