Midwest Energy Policy Series Series 3: Economic Development ZAF - PowerPoint PPT Presentation

Midwest Energy Policy Series Series 3: Economic Development ZAF Energy Systems Inc. 8165 26 th Street Joplin, Missouri, 64804 12/3/2018 1

The Energy Storage Dilemma Battery demand to see historic growth rates: • Electric Vehicles – PHEV, EV, start/stop, hybrids • Utility Infrastructure – distribution, renewables integration, UPS • Microgrids – distributed power in developing countries • Consumer Electronics – increasing power/energy demands • Industrial – data centers, robotics, trucking, UPS, etc. “Performance Gaps” exposed as technology evolves } • Capacity – longer run times in smaller packages Lead-acid • Power – more power required for commercial and industrial users shortcomings • Life – demand for longer cycle life and shelf life Source: Avicenne Energy, 2018 } • Safety – customers in key markets place a premium on safety Market expected to exceed Lithium-ion • Complexity – operations require advanced electronics (BMS) 1 TWh by 2025 problems • Cost – widespread deployment of storage requires < $200/kWh 12/3/2018 2

ZAF’s Message • The way we use energy is changing dramatically and rapidly and electricity storage is enabling this change. Today lead acid dominates and lithium-ion is gaining. Our message is simple; tomorrow nickel-zinc changes the game. • Our technology is sound, the market is ready, our solution economical, and in an era where we need to really be focused on caring for our planet, we make a positive difference to the environment. • After thirty plus years in high-reliability/high-quality manufacturing and nearly a decade in the battery business I’m as excited about ZAF’s prospects as I’ve ever been about any product launch with which I’ve ever been involved. Randy A. Moore 12/3/2018 3 President & CEO ZAF Energy Systems, Inc.

Nickel-Zinc Batteries • Zinc batteries have been around a long time. • NiZn for ~120 years. • Most chemistries take 20-30 years from feasibility to commercialization. 12/3/2018 4

Nickel-Zinc Batteries • Nickel Zinc Battery patent first awarded in US to Thomas Edison in 1901. • Zinc-based batteries - > 1900’s for EV’s. • Railroad locomotion - > 1930’s - 40’s. • Fell out of favor due to low cycle life. • Resurrected - > 1970’s - 80’s again EV’s. • Again fell out of favor, due to cycle life, with the onset of Lithium-Ion popularity. Historic Problems Limiting Cycle Life: Electrolyte Dry Out – Zinc “Shape Change” – Dendrite Growth 5

ZAF IP: Novel NiZn Battery Technology • Four methods for Zinc stabilization, leading to long life batteries: • Patent pending bulk additives for stabilizing shape change • Trade secret nucleation site additives for growing zinc evenly and suppressing zinc dendrites • Patent pending electrolyte for stabilizing zinc and suppressing morphology (shape) changes • Trade secret separator for suppressing dendritic shorting • Recombinant battery technology enabling long cycle life • Patent pending low-cost recombination coil designed to recombine hydrogen and oxygen generated during charge to prevent dry-out • Electrodes engineered for best in class manufacturability, power, and capacity • Multiple trade secret recipes and processes to provide optimal power, capacity and manufacturability 12/3/2018 6

Why Nickel-Zinc Batteries, Why ZAF - Electrolyte dry out Technology: ZAF’s nickel -zinc battery design - Zinc migration solves historic problems… - Dendrite growth BETTER VALUE ZAF NiZn Products Designed for either: More Power 1x +2x Lead Nickel Zinc Acid Performance 2x Capacity 2-3x Cycle Life OR 50% Weight Cost Reduction 1x +1x Lead Nickel Zinc Acid 50% Size SAME Reduction Performance 12/3/2018 7

NiZn G31 Capacity and Power Comparison ZAF G31 Odyssey ZAF G31 Battery Data Unit NiZn Capacity G31 AGM NiZn Power 177 155 Capacity (C/20) 100 Ah 170 Capacity (C/3) 84 151 Ah 28 Mass 35.3 26 kg 700 Cycle Life (80% DOD) 400 700 Cycles 850 CCA Current (30s) 1150 1200 A 73 Specific Energy (C/3) 27.4 69 Wh/kg 140 Energy Density 70.9 124 Wh/L Capacity ••• Power 8

When “Recycling” Isn’t a Good Thing . . . and, When It Is ZAF’s nickel -zinc battery. Lead-acid batteries are the most recycled commodity in the history of mankind — about 99% of all lead acid batteries are recycled. Experts say that The world’s the recycling of lead batteries is the #1 world’s worst pollution problem with greenest battery. TM the lead smelting that follows being the #3 world’s worst problem. • No battery can be successful without a recycling solution — it is one of the A man in Indonesia uses an axe to break largest barriers to commercializing new battery technology. up old batteries by hand in order to extract • The NiZn chemistry starts out environmentally safe and remains so. the valuable lead within. In the “breaking” • NiZn battery recycling has an economically positive value proposition. process toxic lead is spilled everywhere • NiZn systems do not require large decommissioning costs. and spills into the water table. (#1) • The recycling process does not require smelting. • The recycled nickel output is “battery - grade” Non- Source: “2016 and ready for use in a new battery. recoverable World’s Worst 15% Pollution Problems” Other Recoverable 16% Zinc/Nickel/Copper 54% A child pours lead into an open-air crucible for smelting. Lead particle emissions drift Plastics 15% into the air where some are breathed in and some come back down to pollute the ground surface. (#3) 85% Material Recovery Yields 40% Reduction in Battery Cost 9

Safety Matters Li-Ion Ni-Metal Hydride Nickel, el, KOH RoHS Restricted Lead Acid Lead, Substance , HSO SO 4 Ni-Cadmium Cadmium, KOH ZAF NiZn Nickel, Zinc, KOH ZAF ZAF Zinc Zinc-Air Air Zi Zinc, , KOH 10

Introduction - ZAF Energy Systems • Disruption Opportunity - ZAF’s nickel zinc (“ NiZn ”) technology targets the $50 billion lead -acid battery market • Performance - ZAF’s NiZn battery dramatically outperforms lead-acid batteries in every metric including power output, size, weight, environmental friendliness, recyclability, and cycle count • Market Acceptance - Early adoption from trucking and equipment OEM plus testing by top battery manufacturers indicates market readiness • Framework - ZAF’s Research and Development facility is located in Bozeman, Montana and ZAF is finalizing construction of its Low Rate Initial Production (“LRIP”) facility in Joplin, Missouri • Proven Leadership – President, CTO, VP Manufacturing, VP Engineering, and founders represent decades of experience in manufacturing business and transitioning technology introduction • Proprietary Technology - The company has a robust intellectual property and patent portfolio 12/3/2018 11

Markets: Lead-Acid (Nickel Zinc Replacement) Current Targets Medical Aircraft Future G31 - Universe Military Targets Stationary Profitability (Data Emergency Centers/ Vehicles Telecom) Marine Behind Heavy Industrial the Trucking Meter ESS Automotive $50B in 2017 – 7% CAGR Predicted Market Size 12/3/2018 12 Markets sizes and profitability placements estimates August 2017

Priority Target Market - Trucking Trucking • Over $1.2 billion market billion market in the United States alone • Commercial trucks make up 12.1% of all registered vehicles • Regulations forcing change: New anti-idle requirements • Initial acquisition cost equal: 4 NiZn for $2,400 vs. 8 AGM for $2,400; five year operating cost lead-acid $7,200 vs. NiZn $2,400. • For the tractors, 4 NiZn batteries replace 8 AGM batteries (GR31) with estimated weight savings of 400 lbs. battery and 50 lbs. structure • Fully supports 10-hour cycle for mandatory rest periods, regenerative braking, eliminates need for engine driven accessories. • NiZn has greater than two times the projected life versus AGM reducing operational expenses. • NiZn is ideal for lift gates, refrigeration and safety lighting applications. 13

Data Centers NiZn is a Clear Winner • Lowest Cost solution over 20 year life • HALF the cost of lead acid • 33% lower cost than new pure lead acid • 20% lower cost than lithium • Operates at higher temperatures reducing air handling and safety requirements • Reliable – 10 year warranty • SAFE – non-toxic, non-combustible, non- explosive, RoHS compliant, fully recyclable • Highest IRR – Combination of performance, reliability and cost provides the best value • Increased White Space Revenue 14

Naval Underwater Power • Naval underwater batteries are a $50M+/yr market • Submarines have particularly astute problem • Formerly flooded lead acid batteries lasted 7 years • Now VRLA lead acid batteries last 3-4 years • New Columbia- Class submarine’s systems too much load for lead acid • US Navy looking for NiZn replacement for Columbia-Class and the rest of the fleet • NAVSEA worked with major lead-acid company • Using competitor’s NiZn technology • Reportedly, not adequate to accomplish mission • NAVSEA reached out to ZAF – asked regarding performance • ZAF currently meets or exceeds current specifications