1 Megawatt Bloom Energy Fuel Cell System

Agenda

Xilinx Inc.

Fuel Cell Basics

Self Generation Economics

Economic Incentives

Financial Analysis

Construction

Gas Purchase

Operation

Economic results

Fuel Cell Basics

Fuel Cell Fed With Natural Gas

Hydrogen derived from natural gas is utilized in a chemical

reaction which produces electricity in the fuel cell

How a Fuel Cell Works

(Basic) Economics for Natural

Gas Fueled Self Generation

Constant Electrical Production

o 24x7 constant operation

o Sized to offset as much load as possible

Minimize Cost of Generating Equipment

Sparkspread

o Best economics when natural gas prices are low

and electrical prices are high

Electrical Use- 24hrs

• Approx cost of utility electricity: $0.14

• Approx cost of fuel cell electricity: $0.11

Economic Incentives

Self Generators Incentive Program ($3.15M)

Federal Incentives

o Investment tax credit ($2.7M)

o Accelerated Depreciation (MACRS)

Natural Gas Resource

Natural gas is plentiful & cheap

Many options for the purchase of natural gas

o Spot market

o Long term purchase contracts

o Hedging options- physical/financial

Contractual arrangements- NAESB

PG&E delivers 3rd party gas

Electricity Future Cost of Electricity

o Electricity costs will rise, in part, driven by California Law mandating

increasing renewable electricity generation and restrictions on

greenhouse gas emissions

o The utilities can’t tell you how much

• 3%-?% annually

• No hedge for future elec costs

Bloom Energy Customer

Economic Payback Model Capacity

Equipment & installation costs

Cost of gas

Cost of electricity

Federal and State taxes

Fed tax credit, incentives & depreciation

Cost of capital

Warranty & service

Project Economics Overview

Cost of Electricity (COE) Using BE’s SOFC

Co

st

pe

r

kW

h

Grid COE

$0.225

$0.075

$0.300

$0.150

$0.000

2022 2016 2014 2012 2020 2018

Bloom

Capital

Purchase

3 - 5 year payback

Financial Model Results

Multiple versions of model with various combos

Simple payback in the fourth year of operation

Positive NPV (net present value)

Approval Hurdles

Bloom Energy as a “going concern”

Confirm conservative case for electrical cost

escalation

Understand the gas market

Confirm “baseload” for 10 year project life

Implementation Proposed Location

Implementation

Demo some fencing & ½ basketball court

Trenching, compaction, below grade utilities

Precast concrete pads

Set down fuel cell modules

Tie into electrical main

Natural gas supply

Communication

Interconnect and start up

Operation

Operating for 13 months

Exceeding the performance guarantee

Monthly gas purchase

Routine maintenance & service

Internal effort to validate the gas hedge and

qualify for “hedge accounting”

Economic Results

First 10 months net savings ~$810k

Projected net savings going forward~$580k/yr

o Net of fuel and warranty & service costs

Performance reflecting amortized cost of system

o $3.15M incentive easy enough to understand

o Tax benefit is baffling

o Depreciation benefits

Appendix

Economics- Future Costs of

Electricity

Monte Carlo simulation

assuming a 3% annual

escalator shows that a

zero NPV event is 11.85

standard deviations from

the mean