SUSTAINABLE POWER SYSTEMS Investor Newsletter, Issue 2, November 2014

Welcome to Sustainable Power SystemsInnovation in Microgrid Automation

In this Issue

SPS opens series A round

Microgrids Part 2 – SPS Differentiated

SPS's CEO joins IEEE microgrid standards organization

SPS microgrid test lab gets a solar array

SPS's CEO speaks on remote military microgrid deployment in Barcelona

SPS's COO headed for Calgary

From the CEOThis month brings increasing momentumand excitement for the SPS team. We havejoined the international standards-settingbody for microgrid controllers, ourengineering team added a new solar arrayto our on-site microgrid test facility and weare finalists in another pitch competition. Iam grateful for the continued hard workand dedication of the SPS crew.

~ Steve

Sustainable Power SystemsOfficially Opens Series A Round

For the past two months, SPS's CEO, SteveDrouilhet and COO, Adam Cahn, have beenworking on SPS's investor package torespond to the interest generated duringAdam's pitches to potential investors inTexas, California, the east coast andColorado. Highlights of the package include anew market analysis, market segmentation,business plan, investor deck and best of all,some great-looking, bottom-up financials.We look forward to our follow-up meetingswith investors starting this month as well asnew meetings as a result of recentintroductions.

If you or an investor you know are interestedin learning more about the SustainablePower Systems opportunity, contactAdam Cahn at: Adam@SustainablePowerSystems.comor 303.880.2326.

Microgrids Part 2 –SPS Differentiated

As mentioned in our last issue, microgrids aresmall-scale, local power systems that canincorporate diverse types of power sources,such as wind, solar, batteries dieselgenerators, and controllable loads. The trickis getting these sources to work together toproduce reliable and stable electricity. Amicrogrid controller is responsible for doingexactly that and SPS has developed amicrogrid controller for the 21st century.

During our recent competitive analysis, wereaffirmed just how unique our UniversalMicrogrid ControllerTM (UMC) truly is andidentified several emerging markets that theUMC is particularly well-suited for. We sharea few key differentiators from our analysishere.

• The UMC is able to monitor, control, andoptimize the operation of a microgrid,

Company Confidential – Please do not distribute without written permission from Sustainable Power Systems LLC.© 2014 Sustainable Power Systems, LLC, All rights reserved.

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Sustainable Power Systems (SPS) staff stands behind the new test lab's solar array(left to right): Davin Ojala, Owen Edgerton, Adam Cahn (COO), Steve Drouilhet (CEO)

SUSTAINABLE POWER SYSTEMS Investor Newsletter, Issue 2, November 2014

precisely balancing many diversemicrogrid components including wind,solar, diesel generation, batteries,flywheels and all electric loads. This is notcommon in “off-the-shelf” microgridcontrollers and so many are custom-made, one-off solutions that areexpensive and challenging to deploy andmaintain.

• The UMC can deliver extremely highlevels of renewable energy penetration,well-beyond what most microgridcontrollers are capable of.

• The UMC is complemented by our line ofpower system stability components,which ensure high power quality on amicrogrid. Two of these products are ourSecondary Load Controller andSynchronous Condenser, each havingextremely fast reaction times to balancereal and reactive power fluctuations onthe microgrid, providing preciseregulation of frequency and voltage.When coupled with our UMC, theseproducts allow an SPS microgrid to out-perform our competition, especially in off-grid applications where high-penetrationlevels of renewable energy are essential.

• Our UMC is a flexible and scalable solutionthat is applicable to nearly all microgridtypes and customers. The UMC is a drop-insolution for both new microgrids and forretrofitting existing microgrids. The UMCis not a highly-customized, vendor-specific, one-off solution; it is trulyuniversal. Our customers represent themost diverse types of microgrids, and theUMC is the core component that keepsthem all running at optimal levels.

SPS's CEO Setting Standards

A few weeks ago, Steve joined the team ofmicrogrid industry experts and stakeholdersto launch the group that will define aninternationally-recognized IEEE standard formicrogrid design. IEEE P2030.7 addressesstandards for microgrid controllers thatenable flexibility and customization withoutsacrificing plug-and-play or limiting potentialfunctionality. The standard focuses ondefining functions and interfaceconfigurations that allow for modularity andinteroperability. SPS's participation in the2030.7 standards-making process ensuresthat SPS's products adhere to the standardas it is developed. It also ensures that thestandard is written to be compatible withSPS's long-term business interests.

SPS Adds Solar Array to Test Lab

SPS engineering staff members, Davin andOwen, have recently completed theinstallation of a solar photo-voltaic array onthe roof of SPS's offices in Boulder. This newarray is integrated into our on-site microgridtest facility and represents an importantextension of the test facility's capabilities.

The solar array complements the existingroster of components in the test facility,including a natural gas generator set, twobidirectional energy storage inverters, aVRLA battery, a lithium ion battery, a windturbine simulator, a community loadsimulator, an SPS synchronous condenser,an SPS secondary load controller, and a3-phase grid inter-tie. Our 1200 s.f. test labsupports the the development and testing ofour Universal Microgrid Controller™ andrelated components. It also enables us toconfigure and validate customer microgridcontrols in the lab before they ship,significantly reducing field testing andcommissioning time.

As a fringe benefit, the new solar array helpswith SPS's sustainability – it will offsetroughly 20% of our electricity use in the lab.Nice work, guys!

SPS's CEO Speaks in Barcelona on Remote Military Microgrids

Steve recently attended the 2014International Microgrid DeploymentWorkshop in Barcelona, where he spoke onthe challenges of deploying a remote militarymicrogrid. SPS is the microgrid systemintegrator for a US Navy project on SanNicolas Island, one of the Channel Islands offthe coast of southern California. The Navy'scurrent installation is powered exclusively bya 5 MW diesel power plant. The new SPSmicrogrid will incorporate seven 100 kW windturbines, an SPS 600 kVAR synchronous

condenser, and an SPS 160 kW secondaryload controller. This wind-diesel hybridmicrogrid is one of the many types ofmicrogrid projects that SPS's UniversalMicrogrid Controller™ and supportingmicrogrid products were designed for.

Steve stepped the audience through ourteam's approach, best practices and lessonslearned to overcome the challenges involvedin deploying a mission-critical microgrid thatis largely based on renewable energy. Headdressed the restrictions on remoteInternet connectivity to the power systemscomponents as well as commissioning theUniversal Microgrid Controller™ in anoperational environment that is intolerant ofboth planned and unplanned systemoutages.

SPS's COO headed to Calgary asFinalist for Energy New VentureForum with Innovate Calgary

Did you know that one out of every 13 jobs inAlberta is directly related to energy? Albertais also known for its Sustainable andRenewable Energy (SURE) sector, wherelocal innovations have led to the creation ofnew companies and made Calgary a leader incarbon capture and storage. In 2012, energycompanies invested $20B into Calgary'senergy sector and the city houses theheadquarters of major Canadian and globalenergy companies. Calgary has attractednational research initiatives focused ongreenhouse gas emissions, renewable energyand energy systems.

So what's the Calgary connection for SPS? InFebruary 2013, the Hunter Centre forEntrepreneurship and Innovation wascreated at the University of Calgary with thehelp of $8 million in donations from localentrepreneurs. Continuing in Calgary'stradition as a leader in the energy space, theuniversity launched the Energy New Ventureprogram to bring the top emerging energycompanies together to work with the bestand brightest entrepreneurs, investors andbusiness executives. SPS was just selected asa finalist and Adam heads to Calgary inJanuary to work with the ENV team andInnovate Calgary to learn, compete and pitchat the PROPEL Energy Tech Forum 2015.

Company Confidential – Please do not distribute without written permission from Sustainable Power Systems LLC.© 2014 Sustainable Power Systems, LLC, All rights reserved.

www.SustainablePowerSystems.com