The Benefits of Renewable Energy From Biomass. Traxys Power Group, Inc.

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1 The Benefits of Renewable Energy From Biomass Traxys Power Group, Inc.

2 Closed Loop Biomass A closed loop process is defined as a process in which power is generated using feed stocks that are grown specifically for the purpose of energy production. Closed loop biomass is the entire process, which includes planting, harvesting, transportation, conversion to electricity, and returning the ash for fertilizer in the planting process. Traxys Power Group has been working on testing closed loop biomass for the past three years We have mainly been working with hybrid willow and poplar

3 Closed Loop Biomass Emission Reduction vs. Coal Potential LWEC has seen a reduction in emissions from the conversion. For example, at LWEC particulate emissions were reduced by 40 tons per year, fines particulates reduced by 46 tons per year, NOx and SO2 are reduced by a combined 1,700 tons per year. Overall LWEC saw greater than a 50% reduction in emissions from the potential emissions from burning coal.

4 Closed Loop Biomass Benefits & Incentives 2.2 cent kwh for closed-loop biomass as part of a Production Tax Credit for generation facilities for the first ten years of operation (LWEC utilized 1603 option 30% payment in lieu of tax credits) RPS program requires Michigan utilities to buy Michigan green energy. The Upper Peninsula has thousands of acres of unused land available for planting closed loop biomass. We are not competing for high value land used for corn or soybeans. Gives the end user price surety of the final product and product is insurable Doesn t impact the high end value of chips for the paper industry Higher BTU values if the wood is staged for usage Creates jobs in the UP

5 Traxys Power Group, Inc Working with Michigan State University professor Ray Miller, testing hybrid willow and poplar in White Pine and Escanaba, MI areas. The hybrid willow and poplar farms will provide the fuel needed for a closed loop biomass facility.

6 Traxys Power Group, Inc. & MSU Testing with hybrid willow and poplar has been proven to be successful in the White Pine, Marquette and Escanaba areas anticipated first harvest will be in 2013.

7 Traxys Power Group, Inc. Wood Heating Values

8 Traxys Power Group, Inc. Wood Heating Values

9 The Power of Wood Recent reports are showing that the cost of renewables continues to trend downward. Michigan shows reports that levelized pricing of $98.94/MWh for Consumers and Detroit Edison Biomass Power vs. the $107 - $133/MWh for new coal In April 2012, the U.S. Senate Committee on Agriculture, Nutrition and Forestry adopted an amendment that restores $800 million in mandatory funding for the Biomass Crop Assistance Program (BCAP). It still has to pass the Senate and House. LWEC was an approved Biomass Conversion Facility under the first round of the BCAP program that allowed its fuel suppler to receive matching funds from the Feds and is committed to future utilization of BCAP. BCAP provides incentives to providers of biomass feedstock as a means to increase material available for bioenergy production.

10 Traxys Power Group, Inc. & Double A Willow Double A Willow is the sole licensee for the propagation and distribution of 18 patented high-yield disease resistant varieties of shrub willow Double A Willow has developed innovative nursery harvesting equipment and has installed state of the art handling and storage facilities for willow nursery stock Projects are professionally managed, from the leasing of the land resources to the delivery of willow chips in fulfillment of long term off-take agreements Projects sized over 10,000 acres on the east coast Double A Willow has more than 10 years of experience growing willow and over two decades managing commercial agricultural acreage Double A Willow has teamed up with Traxys Power Group to grow and harvest needed biomass fuel supply for closed loop power generation

11 Traxys Power Group, Inc. Significant amount of farmland is available in Marquette County and within 100 mile radius for closed loop biomass production

12 Traxys Power Group, Inc - WPEP White Pine Electric Power, LLC 40 MW coal-fired power plant MISO Market Participant 20 MWs of on-site generation behind the meter Capacity contract with Michigan utility for 17.5 MWs through 2014 In negotiations with industrial clients in the Upper Peninsula for 2 to 4 MWs, which would be sold via our AES arm (UPPM) Preliminary engineering has been completed on conversion from coal to biomass (40 MWs gross, 36 MWs net available for sale) In discussion with Michigan utilities for the 20-year Renewable Power Purchase Agreement.

13 Traxys Power Group, Inc WPEP Conversion White Pine Electric Power, LLC New CFB (circulating fluidized bed) boiler to be installed behind the power plant This type of boiler will be able to burn lower grade fuels than L Anse sawdust, bark, railroad ties, TDF (Tire Derived Fuel), C&D (construction and building debris) New emission equipment will be installed Both turbines would be rebuilt

14 Traxys Power Group, Inc - LWEC L Anse Warden Electric Company, LLC 20 MW biomass facility MISO Market Participant 40,000 lbs per hour of process and heating steam First biomass plant to come online in Michigan since the passage of Senate Bill #213 (Renewable Energy Portfolio and Energy Efficiency Act) Awarded the Industry Conservation Award in 2010 from the State of Michigan for converting to biomass from coal Serving a 20 year Renewable Power Purchase Agreement with a major Michigan utility.

15 Traxys Power Group, Inc - LWEC L Anse Warden Electric Company, LLC 20 MW biomass facility that burns about 500 tons of fuel on a daily basis The majority of the wood is low grade biomass, diseased wood and non-marketable species LWEC diverts about 65,000 tons from landfills every year The fuel consists of railroad ties, construction debris waste, stumps and TDF (tire derived fuel)

16 LWEC Railroad Tie Grinding and Storage Operations Grind about 500 tons daily Recycle the S-clips and plate spikes (about one ton per day) Approximately 600 tons is in covered facility Capacity to store about 60,000 tons of ties on-site of whole ties.

17 LWEC Fuel Building Operations Walking floor trailer deliveries of biomass to the plant In 2012 completed a blower system to reduce trucking from Fuel Aggregation Facility to plant.

18 LWEC Biomass Storage Yard Truck dumper on site Carry about 10,000 tons in inventory

19 LWEC - MUCC 2010 Award L Anse Warden was awarded the 2010 Industry Conservation Award for converting the coal facility into a biomass facility.

20 Summary Significant incentives for closed loop biomass Enhanced Production Tax Credit Consistent feed stock supply Reduced vulnerability from outside market fluctuations Constant high yields Higher BTU value An insurable crop Adequate land availability within close proximity University research product Experienced in growing willow/poplar and managing commercial agricultural acreage Extensive background research in local crop/soil capabilities A reduction of the open loop biomass needed to fuel Traxys Power group biomass plants in the UP Traxys Power Group is interested in working with UP BioFuels and landowners cooperative as a Biomass Conversion Facility for future BCAP opportunities.