Alberta Power Generation Opportunity

August 2019

PROJECT DEVELOPMENT BY

KALINA DISTRIBUTED POWER LIMITED

KALINA POWER LIMITED

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Disclaimer

• This presentation contains certain forward-looking statements that have been based on current expectations about future acts, events and circumstances

• These forward looking statements are, however, subject to risks, uncertainties and assumptions that could cause those acts, events and circumstances to differ materially from the expectations described in such forward-looking statements

• KALiNA Power Limited accepts no responsibility to update any person regarding any error or omission or change in the information in this presentation or any other information available to a person or any obligation to furnish the person with further information

• The distribution of this document in various jurisdictions may be restricted by law. Any recipient of this document must seek advice on and observe any such restrictions

• The information contained in this presentation is for general information purposes only and does not constitute an offer to issue, or arrange to issue, securities or other financial products

• All amounts including ‘$’ are in reference to Canadian dollars unless stated otherwise

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• KALiNA Power Limited, is an ASX listed company (“KPO”, “KALiNA”) that owns the KALiNA Cycle technology (“KCT”) for converting low temperature heat into electricity. Primary applications include geothermal markets and the burgeoning waste heatto power market in energy intensive industries. Multi-billion international market – estimated at USD$38B in the US alone.

• To secure a meaningful market share KALiNA’s CEO and chairman has led a focused strategic re-organization in which international power industry veterans have joined the Company who successfully deployed over 50 GW of power projects in NorthAmerica and throughout Asia.

• Includes former board members from companies such as China Light and Power (a leading Asian independent power generator with a US$25Bn market cap) and Pristine Power (formerly one of Canada’s most active IPP Producers before being sold), and senior executives from Meiya Power (formerly the largest IPP in China before being sold).

• KPO has established a fully owned subsidiary KALiNA Distributed Power Limited (“KDP”) as an Independent Power Producer to pursue identified opportunities in Alberta estimated at $1B.

• KDP has developed a program for specially designed 21MW combined cycle power plants that are configured to incorporate a 6MW KALiNA Cycle® utilising exhaust gases from a 15MW gas turbine.

• Projects will be located in markets requiring small scale generation in a way that provides grid efficiencies and meets growingindustrial demand. Select markets qualify for incentives to encourage such distributed power generation.

• To fund the deployment of its initial 5 projects, KPD is now seeking CAD$300M in project financing.

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Introduction and Background

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Blue-Chip Power Team

Ross MacLachlan

Managing Director and CEO• Former Director and early investor with Pristine Power

(Canada’s fastest growing Independent Power

Producer prior to its sale to Veresun in 2010)

• 40 years of experience in technology development

and project funding

• Raised over US$100M in both the conventional and

alternative energy sectors and engaged in over

US$400M worth of M&A and financings

Jeffry Myers

Director• Currently a Senior Operating Partner at Stonepeak

Infrastructure Partners (US$15Bn infrastructure

fund)

• Co-founder and former Chairman, President and CEO

of Pristine Power

• Over 30 years of experience in the development,

financing, execution and operation of over 3 GW of

independent power projects

Peter Littlewood

Director• Former Group Director of Operations at China Light

and Power Group (CLP) Asia-Pacific region (market

capitalization: AU$34Bn)

• Development and implementation of projects across

Asia-Pacific using coal, natural gas, nuclear and

several renewable energy technologies

• Advisory Board for Bloomberg New Energy Finance

Nigel Chea

President Greater China• Former Chief Operating Officer and President - Greater China of Meiya Power overseeing 17

GW portfolio

• Extensive senior management experience across corporate strategy, operations development,

as well as China State Owned Enterprises in the Asian power and energy sector

• Currently the Vice Chairman of the China Investment Association

Mark Mirolli

Chief Technology Officer• The leading international expert on the KALiNA Cycle® system with over 35 years of

experience in thermal power generation system design and construction

• Former Director of Technology Development for ABB Combustion Engineering, responsible for

R&D engineering functions relating to utility steam generation technology

• Over 35 major published papers on power plant design

Ken Spinner

EPC and Project Management• Co-founder of Pristine Power and Vice President of Engineering & Construction at Pristine

Power and its acquiring company Veresen

• Over 28 years of experience managing EPC Power projects

• Instrumental in the delivery of numerous power projects including the York Energy Centre,

Island Cogeneration and East and West Windsor Cogen developments and two Waste Heat

Projects on the Westcoast Natural Gas Pipeline in British Columbia

Board

Senior Power Management

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Peter Myers

Director of Project Management• Professional Engineer (Mechanical)

• Managed projects up to $65m including for Suncor and ATCO Power

• Significant project management and consulting services to organizations such as Amazon,

Schneider Electric, TC Energy and Alliance Pipelines

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KDP’s Mission

To immediately capitalize on the opportunities in Alberta and establish a portfolio of ten 21MW power plants for regional, distributed power generation, laying the foundation for KDP to become a meaningful player in the Alberta power market.

The Alberta power market is characterized with low cost natural gas inputs together with rising power prices, growing, high levels of industrial demand for power, carbon regulations and scarcity of supply due to legislated shut down of coal fired power plants.

• KDP’s projects will be engineered with a standardized package design, such that ongoing replication and deployment will deliver lower CAPEX, reduced construction costs, improved operational efficiencies and reduced risk.

• Attractive, double digit unlevered ROI’s with the expectation of higher returns and reduced risk from ongoing replication.

• Opportunity to tailor gas supply deals to balance the risk/reward tolerance of investment partners

• KDP ready now to move forward with initial five 21MW projects representing CAD$300mm project equity by 2022.

• Growing pipeline of additional sites in KDP’s program as well as other Alberta opportunities that have been identified for industrial waste heat to power.

• Success in Alberta will serve as a platform for a major breakthrough and Kalina becoming an international player in the wasteheat to power market.

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KDP in Alberta – Opportunity Beckons

• The Alberta market represents a confluence of positive circumstances which has resulted in growing demand for local distributed gas fired power generation that can be enhanced with KCT zero emissions power to deliver very attractive financial returns.

• 5.7 GW of coal to be retired between 2019 and 2029 with no universally accepted plan for replacement of this generation capacity.

• Strong user demand growth and legislative uncertainty in Alberta has contributed to higher energy prices with prices tripling from $22 to $70 per MWh since 2017. Long range forecasts also show further significant increases.

• Numerous other factors underpin KDP’s program for multiple KALiNA CCGT plants:

• Alberta has the highest industrial capacity factor for electricity on any North American grid with strong demand growth driven by petrochemical and oil sand sectors including new oil pipelines and new LNG plants

• Alberta has an available abundance of the lowest cost natural gas in North America

• Strong push by natural gas producers to price on “anything but AECO (the Alberta gas spot price)”. Some producers looking to find other value for their gas such as power so they can diversify their risk from simply selling to the pipeline.

• Carbon costs are increasing the minimum cost of power generation; federal government announced a legislative push for carbon taxincreases on larger than 50MW projects. This could increase Alberta power prices by $25 per MWh

• Distribution tariff incentives have been in place for 15 years for small and local electricity generation (below 25 MW) that does not burden transmission lines.

• Eligible for transmission location incentives of 12% over energy prices

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KDP’s Alberta Program – Standardized Approach

• KDP’s program involves deployment of multiple 21MW KALiNA CCGT plants that incorporate a bottoming 6MW KALiNA Cycle® power package to utilize the exhaust gases from a 15MW gas turbine.

• Designed to operate during the full range of ambient air temperatures in Alberta. Ammonia concentration of the working fluid can be changed from a low of 50% for the extreme summer ambient case to a high of 85% for the extreme winter ambient case.

• This ability to change the concentration is unique to the KALiNA Cycle technology, enabling it to optimize the efficiency andpower output of the power plant at various ambient conditions. Concentration changes can also be made to optimize the cycle’s performance due to changes in the heat source temperature if necessary

• Capital costs; Heat Rate; O&M Costs Comparison to conventional gas fired combined cycle (“CCGT”) large plants;

• The capital costs of the KALiNA CCGT modularised plant of C$2.8mm per MW is competitive with conventional large scale CCGT plants in the range of C$2mm to C$2.5 mm per MW (Ref: ENMAX Shepard 800 MW gas fired plant)

• The relatively low heat rate of 8.2 GJ per MWh for a KALiNA CCGT plant compares well to that of 7.5 GJ per MWh for a large gas fired CCGT plant.

• O&M costs for a KALiNA CCGT plant is generally competitive with a large CCGT plant. Large CCGT plants requires full time attendance with high cost staff certified to work with the high pressure steam conditions, while a KALiNA CCGT benefits from the absence of high pressure steam and can operate with minimal staffing levels.

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KDP’s Work in Alberta Program – Ready to fund projects

• KALiNA has completed the project development work necessary to now proceed with funding of its initial projects.

• This work has resulted in a well optimized power plant design package with a good understanding of costs and schedules. Workcompleted to date includes:

• Process design and extensive preliminary engineering.

• Pricing on major equipment confirms modelled assumptions

• Cost estimating completed with two independent engineering using different construction methods have provided CAPEX estimates within 20% of each other:

• One estimate is from an acknowledged leader in oilfield facility modularization with extensive experience estimating and managing field construction in Alberta for shop fabricated major equipment and electrical module packages

• The other estimate is from one of North America’s leading EPC firms for power projects using conventional “stick built” construction.

• Evaluation and negotiation with key vendors of major equipment

• Close engagement with partners for engineering, construction and deployments.

• Comprehensive plan developed with regulatory consultants for ongoing site identification, evaluation, and market analysis.

• Identification and understanding of key financial drivers, merchant energy pricing and non-market revenues.

• Development of base case and optimized scenarios for fuel pricing and risk management strategies.

• This body of work has been used to generate the financial model, underpinning the decision to now seek financing and move forward with funding of the Alberta program.

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Individual Plant Fundamentals

9NOTE: Various assumptions were made concerning the financials and numbers are for illustrative purposes only

• CAPEX ~C$62 million per 21 MW plant, inclusive of cash development fee plus engineering fees to KDP .

• Double digit unlevered rates of return inclusive of technology royalty fees to KPO

• Assumes Alberta energy mid-case pricing forecast at P50 from EDC, Alberta’s pre-eminent forecasting firm.

• Returns can be locked in via hedging or bilateral gas supply arrangements indexed to power.

• Further reductions to capital costs expected by bidding key components and construction as well as repeatable, multiple deployments of the 21MW plant configuration.

• KALiNA proven cycle performance to be underpinned by cycle performance guarantee backed by an insurance product

• From Full Notice to Proceed to Substantial Completion estimated at 18 Months

• Site preparation and onsite construction will be timed for appropriate weather windows from April through September of each year

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• A key factor in the financial performance of KDP’s Alberta projects using the KALiNA CCGT is the multiple revenue streams that provide risk mitigation from single source revenue as well as risk mitigation across contracted revenue and merchant market pricing.

• DTS: 35% of total revenue

• derived by multiplying amount of distribution load served at peak 15 minutes per month

• philosophy is that small generators are paid same amounts that distributors would have paid to take from transmission system

• Loss Factor Credit: 4% of revenue

• generally 12% credit on energy price applied in Grande Prairie

• credit applied to all electrons not consumed on the distribution wires

• credit would apply on all generation if DTS revenue were ever revoked due to a regulatory decision

• Energy: 61% of revenue

• generators receive bid price or prevailing price for all generation delivered to distribution customers or the transmission system

• AESO prices in Q1 2019 have tripled over 2017, from $22 to $70 per MWh

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Multiple Revenue Sources

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Multiple Income Streams for Combined Revenue

Source Data: EDC Associates, Q2-2019 Quarterly Forecast Update

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• Regions with more demand than generation are net importer regions and are eligible for Distributed Generation (DG) credits when local distributed generators (DG) provide power close the loads, reducing the cost for the DFO and TFO to send power from distant generators.

• The Grande Prairie (AESO Planning Region 20) and Grande Cache (AESO Planning Region 20) are two such regions.

• There are 27 high voltage substations (144kv to 25kV) in the Grande Prairie and Grande Cache regions.

• Selection criteria across 27 locations considered the following in order:

1) Is there existing generation? Existing generation would have precedence on DG Credits and likely lower the economic potential of the site.

2) Is the substation capable of interconnection? For example In the case of Big Mountain, the facility is actually a switching yard and can not be tied into.

3) Is there a significant load? The key to high levels of DG Credits is the displacement of large local loads. If a site was deemed to have no industrial generation in the area, it is not considered.

4) Is it near houses? If the substation is close to houses, it may not be a deal breaker but land parcel location will be critical to minimizing potential noise mitigation expenses.

5) Is it near an existing high pressure gas meter? Substations that met the above criteria and were also close to an existing high pressure gas meter station guarantee minimal costs associated with running pipe to the sight ($400,000/km)

6) Is it near an alternative gas source? There are many gas producers in the region who may be interested in entering into a deal that would provide gas to Kalina at below market prices. These deals could be very attractive but have the potential to slow the completion of the first KDP plants

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Project Siting - Site Selection Process

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• Site visits were undertaken to assess eight locations and at least 2 land parcels from each location

• Gas service applications made on the top 5 sites for confirmation of delivery pressure and volume

• Following this process, Stage 1 AESO applications in relation to electrical feeder loads and substation interconnections have been made

• Intention is to proceed with securing site control at all 5 locations. This allows to keep all priority sites available

• The portfolio of project sites are ready to be deployed at a rate and time commensurate with the level of funding available resulting from KDP’s upcoming financing

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Project Siting – Top 5 Priority Sites

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Proposed Schedule for initial 5 projects

• Two projects completed over initial 2 years followed by three projects completed the following year

• Year 1 - In the months following FNTP:

• Interconnections for gas and electricity / longest lead order time of major equipment 13 months

• Site preparation crew prepares initial 2 sites so that construction commences efficiently the following year

• Year 2 - During April through September months (Spring through Summer):

• Construction crew follows the logical order of civil install, mechanical erection and electrical installations at site # 1 and then immediately on to site # 2.

• Site # 1 constructed, tested, and commissioned for commercial operations followed by Site #2.

• Site preparation crew prepares sites 3-4-5 so that construction commences efficiently the following year

• Year 3 - During April through September months:

• Construction crew follows the logical order of civil install, mechanical erection and electrical installations at site # 3 and then immediately on to site # 4 and then to site #5.

• Site # 3 constructed, tested, and commissioned for commercial operations followed by Sites #4.and #5

• Site preparation crew prepares further sites in the portfolio ready for construction the following year. .

• Using the same engineers and construction crews is expected to provide increasing efficiencies, faster timelines and lower costs to complete ongoing projects.

A portfolio of projects is ready to be deployed at a rate and time commensurate with the level of funding available

An example of a five project roll out over three years would be deployed as follows:

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Example Cash flow for Initial 5 Projects

(200)

(150)

(100)

(50)

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Portfolio Cash Flow from 5 Projects completed over 3 Years (100% of Projects)

Site 5 Site 4 Site 3 Site 2 Site 1

The portfolio of projects set out above may be deployed at a rate and time commensurate with the level of funding available resulting from KDP’s upcoming financing and as such the cash flow set out above may vary.

NOTE: Various assumptions were made concerning the financials and numbers are for illustrative purposes only

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Alberta

• The team is actively pursuing separate, third party commercial opportunities to deploy the KALiNA Cycle® in various Waste Heat to Power projects. At this time there are several opportunities being explored which are on a scale that would likely require further financing or a strategic funding partner for KDP to effectively exploit this business.

• When licensing the KALiNA Cycle to end users the revenues are targeted for recurring IP Royalty at $35,000 per MW per year for 20 years

International Licensing

• At this time KPO does not have any recurring revenue or liabilities with respect to previously licensed plants. All pre-existing exclusive licenses that predated KALiNA’s current management have been terminated. This opens the door for implementation of a new licensing regime worldwide.

• KPO terminated a longstanding Chinese licensee in 2018 for insolvency. This licensee had underperformed across a range of non KALiNA related engineering projects as well as mismanaging one KALiNA Cycle project it had contracted to build for Sinopec at the Hainan Petrochemical facility.

• This termination allows implementation of a business plan being developed by Peter Littlewood and Nigel Chea. It is intended to raise funds for this business plan from identified Chinese sources. Financing the business plan this will enable the Chinese company to operate independent of ongoing financial support from KPO.

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Licensing Opportunities

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Proven Technology with Years of Successful Operation

Fuji Oil (Petrochemical) Unterhaching (Geothermal)Sumitomo Metals (Steel)

• Location: Japan

• EPC partner: Ebara Corporation

• Commissioned: 1999

• Capacity: 3.5 MWe

• Steel mill: 98⁰C water

• Operated trouble-free with an

availability above 96%

• Performance tests conducted by

Japan’s MITI1 confirm that the

performance exceeds the design

specifications

• Location: Japan

• EPC partner: Chiyoda Engineering

• Commissioned: 2005

• Capacity: 4.0 MWe

• Petrochemical plant: 116⁰C

condensing overhead vapours

• Annual availability of 97%

• Able to perform continuously, safely

and reliably, despite fluctuating

conditions

• Location: Germany

• EPC partner: Siemens

• Commissioned: 2009

• Capacity: 3.4 MWe

• Geothermal power plant: 120⁰C

thermal water

• Dynamic system that responds to

changing heating requirements and

environmental conditions

• System allows for 100% constant

use of thermal water

• Exceptional solution for utilizing

low temperature geothermal

resource to deliver heating and

power

1. MITI: Ministry of International Trade & Industry

Attributes of Successful

Projects

Compliance with KALiNA’s

engineering design and equipment

specifications

Projects that utilized KALiNA’s

engineering team and world class

EPC firms

Key Focus for Future

Projects

Strict compliance with KALiNA’s

engineering design and equipment

specifications

Project delivery through world class

EPC firms

Select major equipment vendors to

provide high quality, standardised

equipment for high performance,

shorter lead times and better

inventory management

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KALiNA Cycle® vs. Organic Rankine Cycle

Key Advantages of the KALiNA Cycle® vs Organic Rankine Cycle

ORC KALiNA Cycle® KALiNA Cycle® Advantages

Working Fluid (“WF”)Pentane, butane,

refrigerant chemicals

Variable mixture of

water and ammoniaAmmonia is proven to be the most efficient refrigerant

Adjustable WFBoiling temperature of the working fluid adjusted for variations in source temperature

providing performance advantages

Non-Explosive WFWorking fluid is non explosive and can be installed on sensitive industrial sites. Organic

Rankine Cycle requires an oil loop, adding capital costs and lowering efficiency

Non ozone-depleting WFOrganic Ranking Cycle working fluids are ozone depleting. Ammonia used in the KALiNA

Cycle® is not a greenhouse gas

Low Cost, Reliable, Green Energy Sustainable process with zero emissions with similar low capital and operating costs

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Leading Organic Ranking Cycle (“ORC”) supplier, Ormat (NYSE: ORA), grew from a market

capitalization of approx. US$0.8Bn to approx. US$3Bn in 5 years

KALiNA Cycle® is competitive with ORC at all temperatures, and up to 40% more efficient at lower

and variable heat temperatures

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Company Overview

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DG Khan cement8.6 MW

Sumitomo Metals3.5 MW

Star Cement4.75 MW

Unterhaching3.4 MW

Husavik2.0 MW

Fuji Oil4.0 MW

GERD Matsunoyama50 kW

Bruchsal0.6 MW

Sinopec Hainan4 MW

2010 World Expo 50 kW

Taufkirchen4.5 MW

Canoga Park6.5 MW

Previous Kalina Cycle Power Plants - The learnings from the projects completed to date have been applied in understanding improvements

to the technical design, supplier engagement, partnering process and commercial benefits from utilising the technology.

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Contact Details

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KALiNA Power

585 Burwood Road, Hawthorn,

Victoria 3122, Australia

www.kalinapower.com

+61 3 9236 2800

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