S C A L I N G G L O B A L O P P O R T U N I T I E S. Investor Presentation March

Transcription

1 S C A L I N G G L O B A L O P P O R T U N I T I E S Investor Presentation March

2 Safe Harbor Statement This presentation contains "forward-looking information," within the meaning of applicable Canadian securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as "forward-looking statements"). Forward-looking statements can be identified by the use of words, such as "plans," "expects," or "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations of such words and phrases or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. These forward-looking statements relate to, among other things, our future results, levels of activity, performance, goals or achievements or other future events. These forward-looking statements are based on current expectations and various assumptions and analyses made by us in light of our experience and our perceptions of historical trends, current conditions and expected future developments and other factors that we believe are appropriate in the circumstances. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in our forward-looking statements. These risks, uncertainties and factors include, but are not limited to: our inability to execute our business plan, or to grow our business; inability to address a slow return to economic growth, and its impact on our business, results of operations and consolidated financial condition; our limited operating history; inability to implement our business strategy; fluctuations in our quarterly results; failure to maintain our customer base that generates the majority of our revenues; currency fluctuations; failure to maintain sufficient insurance coverage; changes in value of our goodwill; failure of a significant market to develop for our products; failure of hydrogen being readily available on a cost-effective basis; changes in government policies and regulations; lack of new government policies and regulations for the energy storage technologies; failure of uniform codes and standards for hydrogen fuelled vehicles and related infrastructure to develop; liability for environmental damages resulting from our research, development or manufacturing operations; failure to compete with other developers and manufacturers of products in our industry; failure to compete with developers and manufacturers of traditional and alternative technologies; failure to develop partnerships with original equipment manufacturers, governments, systems integrators and other third parties; inability to obtain sufficient materials and components for our products from suppliers; failure to manage expansion of our operations; failure to manage foreign sales and operations; failure to recruit, train and retain key management personnel; inability to integrate acquisitions; failure to develop adequate manufacturing processes and capabilities; failure to complete the development of commercially viable products; failure to produce cost-competitive products; failure or delay in field testing of our products; failure to produce products free of defects or errors; inability to adapt to technological advances or new codes and standards; failure to protect our intellectual property; our involvement in intellectual property litigation; exposure to product liability claims; failure to meet rules regarding passive foreign investment companies; actions of our significant and principal shareholders; failure to maintain the requirements for continued listing on NASDAQ; dilution as a result of significant issuances of our common shares and preferred shares; inability of U.S. investors to enforce U.S. civil liability judgments against us; volatility of our common share price; and dilution as a result of the exercise of options. Readers should not place undue reliance on our forward-looking statements and are encouraged to review the section captioned "Risk Factors" in our regulatory filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission for a more complete discussion of factors that could affect our future performance. Furthermore, the forward-looking statements contained herein are made as of the date of this presentation, and we undertake no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this presentation, unless otherwise required by law. The forward-looking statements contained in this presentation are expressly qualified by this. 2

3 Our Company Technology Geographies 145 (Patents & Applications) Extensive Know-How Wide Experience Canada, Belgium, Germany, US, SE Asia, Russia, China, Korea Canada Financial Snapshot Corporate LTM Revenue: $35.9M Backlog: $93M 1995 Start 2000 IPO HYGS NASDAQ; HYG TSX 12.5M basic 13.1M fully diluted Germany Belgium 3

4 Our Strategy: Many applications on two standardized platforms Impact: We scale volume in one, to the advantage of others Clean Continuous Power Generation in Korea Extended Range Electric Rail Transport for Europe Utility Scale Energy Storage for Germany Nuclear Waste Water Treatment in Japan HYDROGEN Clean Electric Public Transport in California & China Many applications on two standardized platforms (Growth) (Simplicity & Cost Reduction) 4

5 What Do We Do? 65+ years experience developing hydrogen gas technologies World-wide technology leader with 145 patents & applications Stable $25M+ base revenue industrial electrolyzer business Scaling technology to address massive global themes Renewables proliferation and integration Decarbonization and distributed energy CURRENT SOLUTIONS Mobile Fuel Cells Power to Gas (P2G) Onsite Generation KEY APPLICATIONS High horsepower Range extension Bulk energy storage Hydrogen production Clean distributed power production Gaining Rapid Momentum with Tier 1 Customers 5

6 How Do Our Products Work? Fuel Cell (Power Systems) Takes Hydrogen and creates electricity Hydrogen Air Fuel Cell Electromechanical Engine Electric Power Water Electrolyzer (Onsite Generation) Takes electric power (often from renewables) and creates Hydrogen fuel for bulk energy storage Water Electric Power Electrolyzer Gas Generation Hydrogen Fuel Oxygen 6

7 What does COP21 Paris Mean? Global commitment to carbon emission action Major themes will accelerate Off diesel (China) Increased renewable power generation (Germany) Energy storage as an enabler (EU, China) Hydrogen systems are carbon free therefore big impact Support for larger scale projects and more projects Carbon tax, Cap and Trade and other regulatory actions already triggering major asset reallocation (EU, California, Canada) 7

8 Bulk Energy Storage Energy storage is the enabling technology to allow for the proliferation of solar and wind (intermittent renewable energy) Renewable Energy Growth (2) There is no one size fits all for the energy storage race multiple winners will be born Hydrogenics Power-to-Gas solution is highly competitive in bulk storage market Batteries, regardless of chemistry, are not economically viable for large utility scale projects Energy Storage Landscape (3) Other P2G advantages over batteries related to discharge length, cycle, & rates $14 billion estimated market for P2G by 2030 (1) Multiple conversion outlets for the hydrogen we produce: natural gas pipeline, fuel cells, and compressed storage Over $80M in active P2G pipeline E.ON reference customer, one of the largest utilities in the world 8 1. Commercialization of Energy Storage in Europe FCH-JU supported by McKinsey analysis 2. IEA 2014 Renewable Energy Outlook 3. Fraunhofer Institute Germany

9 Q Highlights Revenue $11.3M; gross margin 14.8% Signed 4 Certified Integrator Agreements for mobility applications in China Progress as major opportunities mature with Kolon, Kurion and Power-to-Gas Stronger deliveries for OnSite Generation Closed significant financing to strengthen balance sheet for 2016 growth 9

10 The Size of the Prize Segment TAM Where we are now? Trigger/Accelerator Industrial Hydrogen $200 Million 1 p.a. Foothold Market Market Leader Recurring Industrial Rev Specialized Applications CAPEX reduction Renewable Energy Inputs Power-to-Gas Energy Storage Electric Mobility Range Extension Stationary Power Generation $80M Pipeline Prospects $14 Billion 2 Global Leader E.ON 2 units operating $2 Billion 3 2-3X battery range Same fueling experience Alstom Rail 50M Euro Waste refinery hydrogen $200 Million 4 Continuous Power plant Kolon Partner Renewal Energy Production EU Renewable Fuel Quality Directive Battery Range Limitation Fueling Infrastructure China Growth Success of 1MW Pilot Next step 50MW Fuel $400 Million 5 50 (6) Fueling Stations Built Vehicle Rollout in Europe and North America Hydrogen Bus Fleet Rollout 1 Visant Strategies inc Hydrogen Markets 2006 report along with total competitor sales from key competitors (Teledyne, NEL, Proton and excl China) 2 Commercialization of Energy Storage in Europe, McKinsey/FCH JU, 2015 Global Extrapolation using ave prices for GW storage equivalents Global EV Outlook, IEA 2013, and from reports issued by US DOE, Navigant Consulting, EU Automotive Assoc. and the Green Car Congress 4 Calculated based on surplus H2 gas capacity at the three main refining sites in South Korea 5 Calculated based on publically stated figures from H2Mobility Germany, UK and France, citing 400 to 600 H2 fueling station deployments 6 Hydrogen fueling station databases for EU and NA LBST H2stations.org 10

11 Cost Reduction is the Accelerator: We ve Come a Long Way, and We re Not Done Yet Innovation Done Next Electrolysis - 50% - 50% Fuel Cell - 90% - 50% Cost $/kw Standardize Appl. Exp. -90% TODAY Supply Chain Scaling Mass Production - 50% 11

12 Recent Critical Milestones Achieved Mobile Fuel Cells May M Order Fuel Cell Mobility Applications Scale Commercially Fuel Cells Sept MW Plant Commissioned 50MW (greater than $100M in value) in Near-term Potential Power to Gas (P2G) Oct MW Plant Official Opening $80M Pipeline of Qualified Leads Starts to Move 12

13 Our Strengths: Why Do We Win? We are the best in the world at what we do Our solutions are unique and our partners are top tier Our products and people are easy to work with Safety Value Reliability 13

14 Application: Continuous Clean Power Initial 1MW pilot plant running well and meeting targets Next step for 50MW in final planning stages Detailed legal agreements, project financing and set-up of customer special purpose corporation under development Greater than $100M opportunity nearterm Production must start in 2016 to meet customer timing - significant lift to backlog Overall two year site development Korea remains committed to fuel cell power generation 14

15 Application: Energy Storage Critical reference sites continue to perform well with high visitor traffic Geographic reach of project pipeline and prospects now spans 8 countries $14B Energy Storage Market for Power-to- Gas by 2030 $80M pipeline of qualified leads continues to mature Recent announcements of funding support for 15M project in Denmark and new 5MW project in Canada Broad recognition of hydrogen contribution to renewable energy integration is emerging in Europe and Asia Only Hydrogen has the capacity to meet the needs E.ON Gregor Szielasko,

16 Application: Removing Tritium from Contaminated Water Feb Kurion announced it is being acquired by French water treatment giant Veolia for $350M Kurion public announcement Feb 29 th on successful progress of pilot testing Fukushima, Japan: Currently 800,000 cubic meters of contaminated water ~ 16,000 swimming pools (six more pools per day) Proprietary technology from partner Kurion supported by HYGS electrolysis to concentrate water volume 100,000 times Kurion chosen from international competition 180 proposals > 30 plans > 3 pilots Next major milestone March 2016 pilot report Full-scale plant would be over 100MW of electrolysis Detritiation process has a global market Hydrogenics MW PEM Electrolyzer 16

17 Application: Fuel Cell Mobility First deliveries have now been made to Alstom for the development of rail application in Europe Further proposals filed for significant projects in California Four Certified Integrator Agreements in China supporting significant demand for product $3M in firm orders in hand, with $7M pending 2 Prototypes integrated next block orders anticipated Chinese policy support for 1.0M RMB of 1.6M RMB cost for buses 17

18 Scaling Global Opportunity Done Next Steps Power Generation 1MW building block in Korea commissioned Sept 2015 Confirmation of 1MW performance 50MW planned at same site (>$100M near-term potential) MW market in Korea Power-to-Gas Mobility Nuclear Waste Treatment 1.5MW E.ON P2G site commissioned June 2015 Alstom Rail first proto New Energy Cars, Buses & Trucks $20M proprietary propulsion contract Scalable block pilot plant delivered Process experimentation complete Funding & EU policy support 80MW pipeline (~ $80M) 50M backlog - Alstom Market support in NA, EU, & China ($10-$25M near-term potential) $64M remaining in propulsion program Base process block confirmation; full scale building block design; then decision on full scale ops. 18

19 Significant Traction Across Multiple Markets Energy Storage Strong relationship with E.ON and Enbridge, proven technology, and global leadership in hydrogen-based storage to drive additional orders in 2016 and beyond Fuel Cell Power Generation A nascent market driven by Korea, where HYGS partnership with Kolon positions the Company for much higher revenue going forward Mobility Key sales to industry leaders such as Alstom, with products that span the mobility space buses, trucks, trains, airplanes, etc. should lead to growth in China, Europe, and North America Fueling Stations Leader in electrolyzer stations across the globe New Applications Water purification, propulsion contract, and unannounced opportunities leveraging both electrolyzer and fuel cell technology Industrial Base Business Number one in hydrogen electrolyzers worldwide for industrial applications 19

20 Summary: Sound Management, Many Growth Avenues Pursuing multiple market opportunities to drive top line growth Focused on path to profitability Managing costs effectively Leveraging strong, global relationships A proven leader across the hydrogen technology space Scalable business with opportunities for recurring revenue Key reference sites in operation Cost Discipline Differentiated Growth Platform Multiple Ways to Win 20

21 YTD Results (in $ millions) Twelve months ended Dec. 31 Change $ % Revenue $ 35.9 $ 45.5 (9.6) (21)% Gross Profit (5.2) (47)% Gross Margin % 16.6% 24.6% Operating Expenses Selling, general and administrative (excluding stock-based compensation, amortization and depreciation) (0.6) (6)% Research and product development % Adjusted EBITDA $ (7.9) $ (2.5) $ (5.4) 210% Notes Adjusted EBITDA is defined as net loss excluding: cash settled long term compensation indexed to share price, share settled stock-based compensation expense, net finance income and expenses, depreciation and amortization. Adjusted EBITDA is a non-ifrs measure and may not be comparable to similar measures used by other companies. Management uses Adjusted EBITDA as a useful measure of ongoing operational results. Refer to slide 25 for a reconciliation of this measure to net loss. 21

22 Consolidated Balance Sheet Highlights ($M) Dec. 31, 2015 Dec. 31, Change 2014 $ % Cash and cash equivalents and restricted cash $ 24.9 $ % Trade, other and grants receivable (2.5) (19)% Inventories (0.4) (3)% Operating borrowings % Trade and other payables (4.0) (34)% Financial liabilities % 22

23 23

24 24 APPENDIX

25 Order Backlog As of December 31, 2015 ($M) Oct. 1/15 Backlog Orders Received FX Orders Delivered Dec. 31/15 Backlog OnSite Generation $ 22.8 $ 2.9 $ (0.5) $ 8.1 $ 17.1 Power Systems (1.8) Total $ 98.9 $ 8.0 $ (2.3) $ 11.3 $ 93.3 Of the above backlog of $93.3 million, we expect to recognize $22.3 million in the following twelve months as revenue. In addition, revenue for the year ending December 31, 2016 will also include orders received and delivered in

26 Q4 Revenue Three months ended December 31, 2015 $M Revenue 11.3 Power Systems $M Revenue by Business Unit OnSite Generation OnSite Generation 3.2 Power Systems Notes Revenue was $11.3 million, a 28% decrease year-over-year, reflecting the impact of the weakening Euro yearover-year against the US dollar, combined with reduced order volume in both the Power Systems and OnSite Generation groups. 26

27 YTD Revenue Twelve months ended December 31, 2015 $M Revenue Power Systems OnSite Generation $M Revenue by Business Unit OnSite Generation Power Systems Notes Revenue was $35.9 million, a 21% decrease year-over-year, primarily reflecting the impact of the weakening Euro year-over-year against the US dollar, combined with reduced order volume in both the Power Systems and OnSite Generation groups. 27

28 Q4 Gross Margin Three months ended December 31, % Gross Margin % 30 Gross Margin By Business Unit Power Systems OnSite Generation OnSite Generation Power Sytems Notes Gross margin was 14.8% of revenue for the quarter, versus 19.1% in the prior-year period driven by the decrease in revenue during the quarter bringing production capacity down from normal levels. Also contributing to the decrease was the delivery of several key first-of-a-kind projects that had a lower margin profile, changes in product mix (including a lower proportion of custom projects, including engineering services), as well as gross margin compression as a result of the weakening euro and Canadian dollar relative to the US dollar. 28

29 YTD Gross Margin Twelve months ended December 31, 2015 % 40.0 Gross Margin % 35 Gross Margin By Business Unit Power Systems OnSite Generation OnSite Generation Power Sytems Notes Gross margin was 16.6% of revenue year-to-date, versus 24.6% in the prior-year period driven by the decrease in revenue during 2015 bringing production capacity down from normal levels, several key first-of-a-kind projects that had a lower margin profile, changes in product mix (including a lower proportion of custom projects, including engineering services), as well as gross margin compression as a result of the weakening euro and Canadian dollar relative to the US dollar. 29

30 Q4 Cash Operating Costs Three months ended December 31, 2015 $M R&D Notes SG&A Cash operating costs increased 32% primarily reflecting an increase in net R&D expense. Cash operating costs are defined as the sum of selling, general and administrative expenses ( SG&A ) and research and product development ( R&D ), less amortization and depreciation, stock-based compensation expense and compensation costs indexed to our share price. This is a non-ifrs measure and may not be comparable to similar measures used by other companies. Management uses this measure as a rough estimate of the amount of fixed costs to operate the Corporation and believes this is a useful measure for investors for the same purpose. Refer to the reconciliation of this measure to loss from operations. 30

31 YTD Cash Operating Costs Twelve months ended December 31, 2015 $M % increase R&D SG&A Notes Cash operating costs were $14.1 million, versus $13.9 million in The year-over-year change primarily reflects higher costs a result of an increase in R&D expenditures partially offset by lower SG&A expenses. Cash operating costs are defined as the sum of selling, general and administrative expenses ( SG&A ) and research and product development ( R&D ), less amortization and depreciation, stock-based compensation expense and compensation costs indexed to our share price. This is a non-ifrs measure and may not be comparable to similar measures used by other companies. Management uses this measure as a rough estimate of the amount of fixed costs to operate the Corporation and believes this is a useful measure for investors for the same purpose. Refer to the reconciliation of this measure to loss from operations. 31

32 Q4 Results (in $ millions) Three months ended Dec. 31 Change $ % Revenue $ 11.3 $ 15.7 (4.4) (28)% Gross Profit (1.3) (44)% Gross Margin % 14.8% 19.1% Operating Expenses Selling, general and administrative (excluding stock-based compensation, amortization and depreciation) % Research and product development % Adjusted EBITDA $ (1.8) $ 0.2 $ (2.0) N/A Notes Adjusted EBITDA is defined as net loss excluding: cash settled long term compensation indexed to share price, share settled stock-based compensation expense, net finance income and expenses, depreciation and amortization. Adjusted EBITDA is a non-ifrs measure and may not be comparable to similar measures used by other companies. Management uses Adjusted EBITDA as a useful measure of ongoing operational results. Refer to slide 24 for a reconciliation of this measure to net loss. 32

33 YTD Results (in $ millions) Twelve months ended Dec. 31 Change $ % Revenue $ 35.9 $ 45.5 (9.6) (21)% Gross Profit (5.2) (47)% Gross Margin % 16.6% 24.6% Operating Expenses Selling, general and administrative (excluding stock-based compensation, amortization and depreciation) (0.6) (6)% Research and product development % Adjusted EBITDA $ (7.9) $ (2.5) $ (5.4) 210% Notes Adjusted EBITDA is defined as net loss excluding: cash settled long term compensation indexed to share price, share settled stock-based compensation expense, net finance income and expenses, depreciation and amortization. Adjusted EBITDA is a non-ifrs measure and may not be comparable to similar measures used by other companies. Management uses Adjusted EBITDA as a useful measure of ongoing operational results. Refer to slide 25 for a reconciliation of this measure to net loss. 33

34 Order Backlog As of December 31, 2015 ($M) Oct. 1/15 Backlog Orders Received FX Orders Delivered Dec. 31/15 Backlog OnSite Generation $ 22.8 $ 2.9 $ (0.5) $ 8.1 $ 17.1 Power Systems (1.8) Total $ 98.9 $ 8.0 $ (2.3) $ 11.3 $ 93.3 Of the above backlog of $93.3 million, we expect to recognize $22.3 million in the following twelve months as revenue. In addition, revenue for the year ending December 31, 2016 will also include orders received and delivered in

35 Consolidated Balance Sheet Highlights ($M) Dec. 31, 2015 Dec. 31, Change 2014 $ % Cash and cash equivalents and restricted cash $ 24.9 $ % Trade, other and grants receivable (2.5) (19)% Inventories (0.4) (3)% Operating borrowings % Trade and other payables (4.0) (34)% Financial liabilities % 35

36 Q4 Reconciliation of Non-IFRS Measures Cash Op. Costs ($M) Three months ended December 31, 2015 Three months ended December 31, 2014 Cash operating costs $ 3.6 $ 2.7 Less: Gross profit (1.7) (3.0) Add: Stock-based compensation (0.4) 0.1 Add: Deferred compensation plans indexed to share price 0.2 (0.4) Add: Amortization and depreciation (Income)/Loss from operations $ 1.8 $ (0.3) * Note certain figures have been adjusted for rounding 36

37 YTD Reconciliation of Non-IFRS Measures Cash Op. Costs ($M) Twelve months ended December 31, 2015 Twelve months ended December 31, 2014 Cash operating costs $ 14.1 $ 13.9 Less: Gross profit (6.0) (11.2) Add: Stock-based compensation Add: Deferred compensation plans indexed to share price (0.2) 0.1 Add: Amortization and depreciation (Income)/Loss from operations $ 8.3 $ 3.8 * Note certain figures have been adjusted for rounding 37

38 Q4 Reconciliation of Non-IFRS Measures Adj. EBITDA ($M) Three months ended December 31, 2015 Three months ended December 31, 2014 Net loss (income) $ 2.1 $ (0.6) Finance (income) loss, net (0.3) 0.3 Amortization and depreciation (0.2) (0.2) Compensation indexed to share price (0.2) 0.4 Stock-based compensation expense 0.4 (0.1) Adjusted EBITDA loss (income) $ 1.8 $ (0.2) * Note certain figures have been adjusted for rounding 38

39 YTD Reconciliation of Non-IFRS Measures Adj. EBITDA ($M) Twelve months ended December 31, 2015 Twelve months ended December 31, 2014 Net loss $ 11.4 $ 4.5 Finance loss (3.1) (0.7) Amortization and depreciation (0.6) (0.7) Compensation indexed to share price 0.2 (0.1) Stock-based compensation expense - (0.5) Adjusted EBITDA loss $ 7.9 $ 2.5 * Note certain figures have been adjusted for rounding 39

40 How Does Our Technology Lead? Platform 1 New Engine Standard Fuel Cell Power Module Low Pressure Dry-Dry Compact Simple Low Number of Parts Safe Reliable Durable Platform 2 New Fuel Hydrogen Electrolyzer World s Most Compact Single Stack Unit Low number of Connections Safe Reliable Highly Scalable 40

41 Energy Storage: Big Theme Worldwide A $30B emerging opportunity at 14,000 megawatts by Like data storage, many needs many solutions E.ON Only Hydrogen has the Capacity 2 California 1,325 MW procurement call Germany 1,500 MW government funding Ontario IESO/OPA 35 MW (400 bids) At approx $1M/MW BIG INDEED We bottle the Wind & Sun 1 Navigant. 2 E.ON Quote 41

42 Hydrogen Provides for Multi-Day and Seasonal Storage GWh Scale Cannot be Matched by Pumped Hydro or CAES 42 42

43 Power-to-Hydrogen Conversion Has Many Paths to Value. Thus a Strong Business Foundation. POWER GRID SURPLUS OR LOW-COST ELECTRICITY Power-to-Chemicals Wind turbine Solar PV Power-to-Power Power-to-Hydrogen Electrolysis H 2 O O 2 H 2 H 2 storage (optional) Chemical plants Industry Ammonia Speciality chemicals Gas turbines Refineries Power-to-Fuels Fuel cells Low C0 2 fuels CHP Refuelling stations Methanol Heat Power-to-Gas CNG CO 2 Methanation Blending Power-to-Mobility Hydrogen Vehicles (FCEV) GAS GRID Hydrogen network Power network Gas network Liquid fuels network 43

44 Future Mix of Energy Storage Solutions Batteries? Power-to-Heat? Power to Hydrogen? FCH-JU study supported by McKinsey examined the role and commercial viability of energy storage in enabling increasing levels of intermittent renewable power generation Key Conclusions Demand for Power-to-Power (P2P) storage technologies (batteries, pumped hydro, compressed air) will grow by up to 10x Conversion of electricity to hydrogen through water electrolysis can productively utilize nearly all excess renewable energy in the high-res scenario Germany Scenarios High Renewables 2030 High Renewables Reference Renewable Generation Power-to-Gas (MW) Power-to-Gas ($B) 85% 170, % 46, % 18,

45 Numerous Third Party Reports Lend Credibility to Our Solution Publication Study of the requirement for electricity storage in Germany Agora Energiewende Reduction of CO2 emissions by addition of hydrogen to natural gas by Haines, Polman and de Laat, in IEA Greenhouse Gas Control Technologies Volume 1 Study of hydrogen and methanation as processes for capturing the value of excess electricity Report by ADEME GRTGaz and GRDF, France The role of power-to-gas in the future Dutch energy system ECN and DNVGL for TKI Gas, 2014 Potential for water electrolysis (P2G) GER: 16 GW (2023), 80 GW (2033) and 130 GW (2050) UK: 23.5 GW of electrolysis in 2050 FR: GW of P2G plant in France by 2030 and up to 24 GW by 2050 HOL: 20 GW of installed P2G capacity if deep CO 2 emission reduction targets in the energy system (-80% to -95% by 2050) NREL Hydrogen Energy Storage workshop proceedings February 2015 Commercialization of Energy Storage in Europe FCH-JU (McKinsey) March 2015 GER: 18GW (2030), 46GW (2030 High RES), and 170GW (2050 High RES) 45

46 EU Fuel Quality Directive After significant lobbying, the European Parliament passed a resolution on April 28, 2015 to adopt amendments to the Fuel Quality Directive relating to the quality of petrol and diesel fuels. Fuel Quality Directive defines the renewable content of fuels; the omnibus resolution covers many facets of fuel production Recognizes hydrogen under classification of renewable liquid and gaseous fuels of non-biological origin -- for the first time covers hydrogen produced by electrolysis from renewable power / Power-to-Gas Amendment also places greater restrictions on production of bio-fuels (land use) Renewable hydrogen used by a refinery in production of conventional fuels will be counted at 2x as a result it is expected that it will be cheaper than bio-diesel to meet Fuel Quality Directive; business case is to be confirmed For resolution to become law, it must be passed by each EU member country; German government is expected to pass FQD Amendment in Q This is the door opener to commercial Power to Gas Projects 46

47 OnSite Generation: Hydrogen Fueling Stations Toyota, Honda, Daimler and Hyundai launch mass production fuel cell vehicles Hydrogenics has delivered 45 stations 9 wins in 2014 (most for shipment in 2015) California, USA Hamburg, Germany Stuttgart, Germany 47

48 OnSite Generation: Industrial Electrolysis 65 years of technology leadership Application spectrum Glass Steel Solar Silicone Food Power Plant Positioning Megawatt Scale Top Performance +500 Reference Sites Company sales database

49 Fuel Cell Mobility Application on the Move Celerity platform continues to attract significant international interest for bus, truck, train and other mobility applications in NA, EU & Asia CEC awarded $4.7M in funds for Hydrogenics Celerity platform in two California projects New Flyer 40ft battery transit bus operated by SunLine Transit Port of LA class 8 drayage truck to be used on the Alameda Corridor as well as ports of Long Beach and Los Angeles. Interest growing in China for Hydrogenics Heavy Duty (HD) Fuel Cell Products 49 49