1. ©2006 Rolls-Royce Fuel Cell Systems Limited. This document contains information which is proprietary and confidential to Rolls-Royce Fuel Cell Systems Limited which may not, without the prior written consent of Rolls-Royce Fuel Cell Systems Limited, be used or reproduced, in whole or in part, or communicated to any person not employed by Rolls-Royce Fuel Cell Systems Limited. This information is given in good faith based upon the latest information available to Rolls-Royce Fuel Cell Systems Limited, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce Fuel Cell Systems Limited or any of its subsidiary or associated companies. Barriers to the Commercialization of Stationary Fuel Cells Monday, March 12, 2007 (Cleveland, Ohio) David K. Nichols, U.S. Market Development Manager, RRFCS

2. Insert filename Rolls-Royce data-strictly private; Confidential 2 Energy Supply Challenges Set the Scene

3. Insert filename Rolls-Royce data-strictly private; Confidential 3 Ohio Energy Supply Challenges Reliability Transmission Congestion Supply Security, Vulnerability to Terrorism Quality and Cost of Service Reduced Green House Gases Fuel Conservation Fuel Cells can help

4. Insert filename Rolls-Royce data-strictly private; Confidential 4 Rolls-Royce

5. Insert filename Rolls-Royce data-strictly private; Confidential 5 Rolls-Royce Key Businesses 35,200 employees – 8,000 in North America, 1000 in Ohio Operating from 50 countries 4 sectors: Civil Aerospace, Defence Aerospace, Marine and Energy (headquartered in Mt. Vernon, OH) Marine Civil Defence Energy

6. Insert filename Rolls-Royce data-strictly private; Confidential 6 Rolls-Royce Fuel Cell Systems is Developing Megawatt-Scale High Efficiency Solid Oxide Fuel Cell Systems: l Challenge Recip engines on lifetime costs l Efficiency of circa 53% (Gen I) to 67% (Gen II) in simple-cycle operation l Very low environmental impact, quick wins on air quality

7. Insert filename Rolls-Royce data-strictly private; Confidential 7 Central PlantStep-Up Transformer Distribution Substation Receiving Station Distribution Substation Distribution Substation Commercial Industrial Commercial Residential Gas Turbine Recip Engine Recip Engine Photo voltaics Micro- turbine Batteries Fuel Cells Gas Turbine Initial Applications Distributed Generation Grid/Substation Support

8. Insert filename Rolls-Royce data-strictly private; Confidential 8 Fuel Cell Requirements ….. to help meet energy challenges Low Cost – equipment, operations and infrastructure Energy Efficient – the most power for the least fuel with low emissions Functional – meet Energy Power System and energy performance requirements Flexible – the ability to l use the fuels available locally l connect to the grid or operate independently

9. Insert filename Rolls-Royce data-strictly private; Confidential 9 Barriers to Fuel Cell Commercialization Develop l Costs, costs, costs l Performance Demonstrate – partnership between supplier, end-user (utility or customer) Deploy l Codes & Standards; siting & permitting – interconnect, fire, building,fuel handling, explosive atmospheres l Business As Usual Economic models l Regulatory matters – ownership, rate base, metering, standby and exit charges, performance incentives, sell back rates, gas rates

10. Insert filename Rolls-Royce data-strictly private; Confidential 10 Accelerants to Fuel Cell Commercialization Develop l Supply chain l Increased volumes Demonstration – need multiple demonstrations to validate technology readiness and business model l Grants l Cost offset Deploy l Government push, market pull l Appropriate & fair regulatory rules, new business models l Incentives, subsidies, new rate design

11. Insert filename Rolls-Royce data-strictly private; Confidential 11 Rate Design Considerations l Appropriate economic incentives for - Supply side energy efficiency - GHG reduction - EPS improvement, premium power - Public Benefits - Congestion relief

12. Insert filename Rolls-Royce data-strictly private; Confidential 12 Customer /Energy Provider Reliability Quality of Service Stability Energy Efficiency (cost) Asset Deferral New Load Growth Price Volatility Society Enhanced supply security l Outage l blackout Grid Modernization Environmental impact Global warming Energy Efficiency (sustainability) Land Usage Who Benefits from Fuel Cells?

13. ©2006 Rolls-Royce Fuel Cell Systems Limited. This document contains information which is proprietary and confidential to Rolls-Royce Fuel Cell Systems Limited which may not, without the prior written consent of Rolls-Royce Fuel Cell Systems Limited, be used or reproduced, in whole or in part, or communicated to any person not employed by Rolls-Royce Fuel Cell Systems Limited. This information is given in good faith based upon the latest information available to Rolls-Royce Fuel Cell Systems Limited, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce Fuel Cell Systems Limited or any of its subsidiary or associated companies. Thank You… Monday, March 12, 2007(Cleveland, Ohio) David K Nichols, RRFCS