1. Biofuels - Systems Integrator Perspective Lockheed Martin Helping shape our energy future Stephen Klotz, PhDApril 21, 2011 Copyright © 2011 by Lockheed Martin Corporation as an unpublished work. All rights reserved.

2. 2 State of the Commercial Market Renewable Fuels/Energy have a higher initial cost then fossil fuels –Incentives / enabling legislation required initially US Federal Investment Tax Credit (ITC) and grant in lieu Feed-In Tariffs used in Canada, Spain, Germany, Israel, India Pending Federal Renewable Portfolio Standard (RPS) –Renewable market dominated by Special Purpose Vehicles (SPVs) Limited System Engineering in the market –Need broad, long-term view and sustainability Project financing slow to start –Global capital market slow down has not helped –Banks have not taken many technology risks Bankable company required to wrap project –Long term PPA/FPA required for bank financing Incentives and Enabling Legislation Required for Renewable Energy Market Growth

3. 3 Leadership is Key to Making Market a Reality Why Lockheed Martin in Energy Generation? Two Perspectives Experience Managing Large Projects Experience Managing Large Projects LM Corporate Alignment Perspective #1 Utility / Bank Market Alignment Perspective #2 Energy Security Green Initiatives Carbon Tax/Trade New Political Alignment RPS Mandates National Imperatives Systems Engineering Rigor Systems Engineering Rigor Supply Chain Management Value-Added Technology Discriminators Value-Added Technology Discriminators Financeable U.S. Based Company Faith of Execution National Security Imperative LM Brand Recognition Provides Growth Opportunity

4. 4 Energy Generation Systems Integration Needs Technology R&D Systems Engineering & Program Management Modeling & Simulation Sourcing / Procurement Information Systems Process Optimization Tools to Partner with Industry to Deliver Affordable Energy

5. 5 Concept and inventions Bench-scale R&D Feasibility Evaluations Scale-up to Pilot Pilot EPC Commercial Project Feasibility Scale-up to Commercial Commercial EPC Start-up & Commissioning New Technology Path to Commercialization Requires “Technology Developer - Integrator - EPC” Team ConceptPilotDeploy Value Chain Analysis Value Chain Model Complete feasibility analysis Technology evaluation Process models Performance analysis Technical feasibility Process data package development Economic evaluation Capital investment O&M Engineering economic analysis Commercial evaluation Supply, demand, and price Competition Sustainability (policy, social, environmental) Technology Development Technical (TRL) advancement Pilot development and testing Scale-up technology vetting System Integration Project management & controls plans Requirements development Requirements validation and verification Trade studies Process optimization Process Hazard Analysis Reliability analysis Engineering Conceptual Design Preliminary Design Detailed Design Procurement Subcontractor management Supply chain management Construction Management Cost & schedule management Quality management Safety management Commissioning Testing & documentation O&M Spare parts Operator training Operations modeling

6. 6 Department of Defense Critical Need for Biofuels DoD is the Largest Single Purchaser of Fuel in the World –$16B+, Purchased through the Defense Energy Support Center Navy – “Sail the Green Fleet” –Demonstrate a Green Strike Group by 2012, Sail it by 2016 Air Force –2011, test and certify all aircraft and systems for 50/50 fuel blend –By 2016, acquire 50% of domestic aviation fuel via alternative fuel blends “More Fight Less Fuel”

7. 7 Summary Energy and fuel supply are national security issues Renewable energy is here to stay Biofuels solutions provide clean, renewable power, jobs and economic growth Lockheed Martin brings –Systems engineering rigor –Proven lean production techniques –Program management –Technology agnostic approaches –Affordability –Financeability Making Renewable Energy a Reality … …Reliable Energy Affordable and Efficient and … Safer than Ever!