Paladin SmartGrid Marketing Plan Rev 04c

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Paladin® SmartGrid™ Marketing Plan Revision 04c Prepared by Kenneth Wood Smart Grid Business Development Executive EDSA Micro Corporation

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Table of Contents

I. Corporate Mission and Objectives ............................................................................... 3 II. SmartGrid Market Assessment ...................................................................................... 4 III. EDSA Micro Business Review ........................................................................................ 7 IV. Paladin® SmartGrid™ Marketing Objectives and Strategies ......................... 8

A. Product à Solution Strategies .............................................................................................. 8

B. Pricing à Value Strategies .................................................................................................. 11

C. Promotion à Information Strategies ............................................................................. 14

D. Placement à Access Strategies ........................................................................................ 17 V. Business Development Strategy ................................................................................ 18 VI. Paladin® SmartGrid™ Unit Forecast and Revenue Projection ...................... 21 VII. Paladin® SmartGrid™ Projected P&L Statements ............................................ 23 VIII. Next Steps (30/60/90 Day Milestones) ............................................................... 26 Appendix A: Illinois Institute of Technology (IIT) Intelligent “Perfect Power” System (“Master”) Controller Requirements .............................................................. 28 Bibliography & Endnotes ..................................................................................................... 31

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I. Corporate Mission and Objectives EDSA Micro is the market leader in power analytics, the science of scrutinizing electrical power infrastructure to determine if it is performing properly, utilizing energy efficiently and in a manner that ensures no operational problems are on the horizon. EDSA Micro’s power analytics technology is comprised of two platforms which are focused on the optimal design and operation of electrical power systems: Paladin DesignBase and Paladin Live. Paladin DesignBase is a highly specialized design and modeling product built using Computer-Aided Design (CAD) related technologies. Paladin Live is a real-time power and energy management system that reanimates a DesignBase model to provide unprecedented levels of both availability and energy management. Given EDSA’s recent Renewable Energy Secure Communities solicitation (RESCO) win with the University of California at San Diego (UCSD), the Electric Power Research Institute (EPRI), and Viridity Energy, a logical market extension for the Paladin Live product (hereafter referred to as Paladin “SmartGrid”) is the µGrid space. This key win uniquely positions EDSA to expand its industry presence and leverage an opportunity of increasing interest in the µGrid space and technology. Market indications are EDSA is five years ahead of anyone else in the space. EDSA Micro is committed to realizing the “Perfect Power” vision as defined by the Galvin Electricity Initiative (GEI) by integrating its Paladin SmartGrid technology into a total solution that achieves unsurpassed power delivery system reliability and availability. Moving forward, SmartGrid system integrators will fully appreciate how the Paladin SmartGrid technology directly and positively impacts the “Perfect Power” value proposition. “Perfect Power” is defined by1: • Nine-sigma reliability of the power delivery system achieved through digital control and

automation of the SmartGrid that anticipates and corrects disturbances before they occur • Creation of a “smart Infrastructure” that automates the power distribution system and allows

for instantaneous exchanges of information and electricity between the SmartGrid and the supply market

• Creation of a smart user portal that allows price signals, decisions, communications, and

network intelligence to flow back and forth through the two-way energy/information portal. • Seamless array of locally distributed power sources (including solar, wind, fuel cells, UPS,

and generators) which allows users to supply as well as purchase power. This capability also facilitates the reduction of the user’s carbon footprint.

The core value proposition of “Perfect Power” (and hence, Paladin SmartGrid) is to enable consumers to manage their electricity use so as to optimize the convenience, cost, and reliability of electricity service at all times.2 While the terms “power analytics” and “µGrids” are relatively new, the concepts they embody are extensions of proven, tried-and-true power methodologies that have existed for some time. EDSA’s Power Analytics™ and Paladin Live ™ technology have already been proven in self-sustaining, “µGrid-like” environments, with the most demanding requirements imaginable.

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II. SmartGrid Market Assessment

According to Pike Research, the µGrid market will grow over the next six years in 5 distinct vertical markets (Paladin SmartGrid targets are highlighted in blue): • Institutional/Campus: Key advantage of common ownership, best near-term opportunities • Commercial/Industrial: Second best market for near-term • Community/Utility – Implies a geographical region that includes residential customers.

Most observers predict that this class of µGrids will not achieve widespread commercial acceptance until standards are in place and regulatory barriers are removed.

• Remote off-grid – this segment represents the greatest number of µGrids currently

operating globally, but it has the smallest average capacity. While many systems have historically featured diesel distributed energy generation (DEG), the largest growth sector is solar photovoltaics (PV). Small wind is projected to play a growing role as well.

• Grid-tied Communities • Military - smallest market segment, these µGrids are just now being developed. They are

integrating Renewable Distributed Energy Generation (RDEG) as a way to secure power supply without being dependent on any supplied fuel.

Fig.1: µGrid Capacity by Deployment Type, World Markets: 2010-20153

(Pike Research)

0

500

1000

1500

2000

2500

3000

3500

2010 2011 2012 2013 2014 2015

CA

PAC

ITY

(MW

) Institutional/Campus (Single Owner)

Commercial/Industrial (Multiple Owner)

Off-Grid

Grid-tied Community

Military

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Figure 2 below delineates the expected number of µGrid deployments in each of the five major growth markets. The selected target markets for Paladin SmartGrid are highlighted in blue. Fig. 2: µGrid Segmentation by Deployment Type, World Markets: 2010-2015

(Courtesy of Pike Research)

Units 2010 2011 2012 2013 2014 2015 CAGR

Year 0 1 2 3 4 5 North America Institutional/Campus (Single Owner) Sites 20 24 30 36 43 52 20.84% Commercial/Industrial (Multiple Owner) Sites 1 45 116 226 392 637 263.82% Off-Grid Sites 3 8 16 27 45 70 87.72% Grid-tied Community Sites 14 17 20 23 27 31 16.94% Military Sites 5 6 6 7 7 7 5.90% Subtotal Sites 43 100 188 319 514 797 79.27% Europe Institutional/Campus (Single Owner) Sites 2 7 21 70 230 751 227.29% Commercial/Industrial (Multiple Owner) Sites 1 1 2 2 3 4 34.95% Off-Grid Sites 0 0 1 2 4 7 90.40% Grid-tied Community Sites 5 5 6 6 6 6 5.37% Military Sites 0 0 1 2 4 7 90.40%

Subtotal Sites 8 13 31 82 247 775 149.66% Asia Pacific Institutional/Campus (Single Owner) Sites 1 3 9 27 81 241 199.62% Commercial/Industrial (Multiple Owner) Sites 6 11 20 37 67 123 83.02% Off-Grid Sites 6 7 9 11 13 16 22.08% Grid-tied Community Sites 4 5 6 7 9 11 22.54% Military Sites 0 0 1 2 4 8 102.54%

Subtotal Sites 17 26 45 84 174 399 88.10% Rest of World Institutional/Campus (Single Owner) Sites 0 0 1 2 4 7 90.40% Commercial/Industrial (Multiple Owner) Sites 0 0 1 2 4 7 90.40% Off-Grid Sites 1 1 1 1 1 1 8.30% Grid-tied Community Sites 0 0 1 2 4 7 90.40% Military Sites 0 0 1 2 4 7 90.40%

Subtotal Sites 1 1 5 9 17 29 96.24%

Grand Total Sites 69 140 269 494 952 2000 96.11%

Total Potential Sites (TAM) Sites 35 96 202 403 820 1,811 Paladin SmartGrid Wins (10% of market) (SAM) Sites 3 9 20 40 82 181

An initial 10 percent share of market is forecasted for Paladin SmartGrid due to the following assumptions:

1) Approximately 14 percent of the TAM will actually have a Master Controller opportunity and funding to purchase a solution.

2) Approximately 75 percent of the opportunities serviced by EDSA will result in an order for Paladin SmartGrid.

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Because the Paladin SmartGrid product is a scalable solution, the market price must be based on the actual size (in MW) of a µGrid deployment. In order to forecast revenue projections for Paladin SmartGrid, it is important to understand the size of a “typical” deployment. Fig. 3: Average µGrid Size by Deployment Type: World Markets, 2010–2015

(Courtesy of Pike Research) Region/Segment Units 2010 2011 2012 2013 2014 2015

Year 0 1 2 3 4 5 North America

Institutional/Campus (Single Owner) MW/site 18.254 18.577 18.068 18.211 18.329 18.094 Commercial/Industrial (Multiple Owner) MW/site 1.000 1.113 1.109 1.108 1.107 1.108 Off-Grid MW/site 3.363 3.354 3.300 3.409 3.338 3.360 Grid-tied Community MW/site 11.523 11.332 11.407 11.628 11.468 11.381 Military MW/site 17.662 16.703 18.540 17.103 17.591 16.801

Subtotal MW/site Europe


Subtotal MW/site Asia Pacific


Subtotal MW/site Rest of World

Institutional/Campus (Single Owner) MW/site - - 0.054 0.065 0.058 0.053 Commercial/Industrial (Multiple Owner) MW/site - - 0.036 0.043 0.039 0.035 Off-Grid MW/site 1.000 1.000 1.295 1.381 1.449 1.490 Grid-tied Community MW/site - - 0.036 0.043 0.039 0.035 Military MW/site - - 0.018 0.022 0.019 0.018

Subtotal MW/site

Grand Total MW/site

Conclusion: Typical µGrid deployment size is approximately 18 MW. This will provide a benchmark for determining market pricing (in $/W) and projected revenue for Paladin SmartGrid.

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III. EDSA Micro Business Review Since its founding 25 years ago, EDSA Micro has been the leading innovator in electrical distribution systems design and simulation solutions. Today, the Company's products are used by thousands of customers in virtually every industry in which electrical power serves as the "central nervous system" of customers' most mission-critical operations. EDSA Micro is a company in transition opportunistically seizing the emerging marketplace it created, “Power Analytics.” In response to this opportunity, the Company has evolved from developing a small desktop design software product (Paladin Design Base) to creating the world-leading power and energy management system (Paladin Live and Paladin SmartGrid.) The corporate team has also evolved from a small group of engineers to a professional blend of management and engineering. The Paladin Design Base product is well positioned, well respected and a solid cash engine; however, Paladin Live and Paladin SmartGrid are the growth vehicles for EDSA. Paladin Live and Paladin SmartGrid are enterprise energy and power management systems for critical power infrastructure. EDSA has assembled a core management team that has the ability to grow and expand the company, with a plan to significantly grow sales and share over the planning horizon.

Fig. 4: EDSA Micro SWOT Analysis

Strengths Weaknesses

– FAA install base

– Commercial install base and visibility

– Market awareness

– Patents to protect technology

– Core Management Team

– Patents filed for IP

– Lack of commercial sales infrastructure and distribution

– Dependence on Eaton

– Lack of International presence

– Lack of critical mass

Opportunities Threats

– Unique green strategy model based on decision support for energy management

– Leverage of FAA success throughout Government

– Continue to expand into Datacenter and Oil and Gas Markets especially with a second platform

– Develop strategic partners outside of Eaton

– Future of Eaton development and support for Foreseer

– Limited resources to support Paladin early adopters

– Introduction of perceived competition with greater market awareness or resources

– Inability to attract and retain talent

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IV. Paladin SmartGrid Marketing Objectives and Strategies A familiar methodology for approaching a customer-focused marketing strategy is known as SIVA (Solution, Information, Value, Access). The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.

Product → Solution

Price → Value Promotion → Information

Placement → Access A. Product à Solution Strategies The distinguishing characteristics of a µGrid include4

• A community-scale power network consisting of interconnected loads and distributed energy resources which act as an integrated system that can operate in parallel with the public utility grid or in an intentional “island” mode.

• Integrated distributed energy resources that are capable of providing sufficient and continuous energy to a significant portion of the internal load demand, even in “island” mode.

• The µGrid possesses independent controls and is able to “island” with minimal or no service disruption.

Fig. 5: Overview of a µGrid Architecture5

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In early 2009, EDSA teamed with the University of California at San Diego (UCSD), and Viridity Energy in a proposal to the California Energy Commission (CEC) for a demonstration site at the UCSD campus for a µGrid. The Paladin Live platform was proposed to become the “Master Controller” for the campus µGrid. The team was verbally notified in June 2009 that they had been selected and would receive a grant from the CEC to proceed with the demonstration project. The Master Controller is at the heart of a market-aware µGrid enterprise which enables “customer preferences for electricity utilization to be expressed and automatically implemented in a no-fail power system.” The key characteristics of the Master Controller6: • Provides the interface between the system controller and the individual loads, generators,

energy storage, and power conditioning equipment within the µGrid • Provides the local optimization function for the loads, generation, storage, and power

conditioners within the µGrid based on the economics of local vs. system conditions. • Provides monitoring and control functions for real-time conditions (including risk

assessment) • Acts as the primary communication conduit between the µGrid components and the System

Controller to coordinate the resources of the µGrid with the power Grid to improve system reliability

• Provides an interface for µGrid users to review conditions within the µGrid Paladin SmartGrid meets the requirements imposed by the Master Controller specification because it: • Enables µGrid users to leverage EDSA Micro’s ‘Power Analytics’ technology to diagnose the

real-time “health” of the µGrid by using the original design model as an operational benchmark

• Provides µGrid users with a powerful method to perform risk assessments using the Paladin

BlackBoard feature, which enables the simulation and testing of real-time µGrid configurations, maintenance, repair, and other procedures before attempting them live.

• Monitors, controls, and optimizes all transactions between public utility service and the

µGrid infrastructure by looking ahead at possible contingencies and optimizing the µGrid configuration. This functionality will be deployed within Paladin SmartGrid in conjunction with Viridity Energy as a part of the RESCO grant with UCSD.

• Maintains and analyzes rate and pricing information for management of private-public

exchange to virtually eliminate risk (facilitating “perfect” power quality and reliability) and ensure optimal economics. This functionality will be deployed within Paladin SmartGrid in conjunction with Viridity Energy as a part of the RESCO grant with UCSD.

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Paladin SmartGrid Technology Roadmap A technology roadmap for Paladin SmartGrid is included as a part of this business plan to ensure that the short-term and long-term goals relative to specific technology enhancements are met. Currently Available Technical Features of Paladin SmartGrid 1.0

• Set point load control – RESCO grant o HVAC and lighting

• High Penetration Solar – RESCO grant o Deployment

Technical Features to be incorporated in 2010 – 2011

• Renewable Biofuel o 400 VDC Modular Data Center

• Solar Power o Resource analysis (tied California Solar Initiative for 2011)

• Real time power system optimization o Market based pricing optimization

• Unbalanced load flow • AC 3phase Real-Time Transient Stability • AC and DC Real-Time Reliability and Availability • Real time power modeling

o Market based optimization Technical Features for Future Releases (schedule TBD)

• Data historian neutral architecture • Scalable architecture from 1 megawatt on up • Open source platform

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B. Pricing à Value Strategies

The following paragraphs outline a methodology for determining the market price for Paladin SmartGrid.

1) As EDSA Micro kicks off its marketing and sales campaign and engages with its target customers (page 19), a line of questioning will be employed where EDSA extracts customer-incurred costs due to a lack of a Perfect Power µGrid. Using this information, EDSA can perform a routine ROI analysis for that particular customer which will typically offer a compelling case for Perfect Power. Additionally, through this analysis, EDSA can put together a strong business case for the value (i.e., market price) of Paladin SmartGrid for each opportunity.

2) The questions below would be typically asked at an initial interview (either by telephone

or face-to-face) with a potential customer. These questions would also be posed to key µGrid system integrators based on experiences with their clients:

a. What direct and indirect costs do you incur because of poor power quality and peak demand utility pricing? Can you delineate these costs?

b. Are you considering deploying a µGrid or SmartGrid within the next year? Will your application require a Master Controller in order to achieve “Perfect Power” reliability and optimized economics? What would be the value to you to be able to analyze the effects of power disturbances on your particular installation based on data collected in real time?

c. What other solutions have you investigated? (This information can be used to enhance EDSA’s understanding of the competitive landscape for Paladin SmartGrid).

3) Developing a compelling case in the customer’s mind that he should invest in “Perfect

Power” (and hence, Paladin SmartGrid) is achieved by quantifying the value proposition in terms of return on investment (ROI). A value-based pricing strategy for Paladin SmartGrid results from this analysis.

a. ROI Assumptions:

i. Cost of capital: 7 percent ii. Payback period: 3 – 5 years depending on actual savings iii. 7-year IRR needs to exceed cost of capital

4) Value Proposition Quantification (Illinois Institute of Technology example, 12MW installation)

Paladin SmartGrid facilitates the reduction of customer direct and indirect costs through unsurpassed power availability/reliability and optimized economics. A good illustration of the potential value of Paladin SmartGrid is to use a case study example from the Illinois Institute of Technology (IIT) as presented in Endurant Energy’s final report on the IIT “Perfect Power” prototype.7

a. Projected yearly savings from optimized economics: $750K - $2.0M b. Cost of 2 hour blackout at a typical university installation: (approximate

frequency of 2x per year)

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c. Cost breakdown of a 4-hour power outage:8

Cost Impact Monetary Value Lost Productivity 3000 people @ $30/hr for 4 hours $360,000

Restoration & Recovery

Temporary power equipment and staff resources $100,000

Recovery of Research Experiments

5 experiments, 400 hours each, $30/hr $60,000

Total $520,000 Therefore the approximate annual savings realized by Perfect Power range is the sum of optimized economics savings and power outage cost avoidance:

Min: $750K + $520K = $1.27M Max: $2.0M + $520K = $2.52M

This does not include the $7M capital expenditure cost avoidance for sub-station and power network distribution upgrades that would be required if Perfect Power was not deployed.

The functional cost breakdown for the four fundamental Technical Areas of the IIT Perfect Power Solution is presented below. The functionality offered by Paladin SmartGrid is highlighted in blue:

Function Percentage of Total Cost Digital control and automation of power delivery system 5% Smart infrastructure 5% Smart metering 40% Locally-distributed power sources 50%

SmartGrid ROI - Illinois Institute of Technology (12 MW) Annual Savings ($M) Yearly

7-year IRR Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Savings Rate

($/W) -8% (12.00) 1.2 1.2 1.2 1.2 1.2 1.2 1.2 0.10 1% (12.00) 1.80 1.80 1.80 1.80 1.80 1.80 1.80 0.15 7% (12.00) 2.20 2.20 2.20 2.20 2.20 2.20 2.20 0.18 9% (12.00) 2.40 2.40 2.40 2.40 2.40 2.40 2.40 0.20

16% (12.00) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 0.25 µGrid infrastructure cost ($/W) $1.00 Capacity (MW) 12 Total Cost $12.00 M

Analysis adding in the $7M capital expenditure savings (Approximately $1M or $0.08/W per year) Annual Savings ($M) Yearly

7-year IRR Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Savings Rate

($/W) 7% (12.00) 2.2 2.2 2.2 2.2 2.2 2.2 2.2 0.18

14% (12.00) 2.80 2.80 2.80 2.80 2.80 2.80 2.80 0.23 21% (12.00) 3.40 3.40 3.40 3.40 3.40 3.40 3.40 0.28

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Recalling the Four Fundamental Technical Areas of "Perfect Power" Innovation…

Function Multiplier

Function Cost ($M)

Digital control and automation of power delivery system 0.05 0.60 Smart infrastructure 0.05 0.60 Smart metering 0.4 4.80 Locally-distributed power sources 0.5 6.00 Total 1 12.00

Conclusion: Based on this analysis, the ROI for Perfect Power at IIT is compelling when yearly savings exceed $2.2M. A functional cost breakdown indicates the market price for Paladin SmartGrid is approximately $0.05/W of SmartGrid system capacity.

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C. Promotion à Information Strategies

With the launch of Paladin SmartGrid, EDSA will be introducing an existing successful product (Paladin Live) into a new market for the company, namely SmartGrid. As such, the promotion portion of the marketing strategy should be structured around the following goals:

A. Formal introduction of EDSA Micro to the SmartGrid industry B. Declaration of EDSA Micro’s commitment to the Perfect Power vision C. Establishment of EDSA Micro as the premiere (and exclusive) supplier of µGrid Master

Controller solutions D. Formation of deep relationships with SmartGrid industry thought leaders and

influencers E. Creation of a marketing “buzz” around EDSA Micro and Paladin SmartGrid within the

space through a continuous stream of press releases and white papers that convey a strong sense of activity, investment, and involvement

1. Industry Trade Shows There are several SmartGrid-oriented trade shows being organized for 2010. Initially, EDSA personnel will attend some or all of these shows to establish contact with industry thought leaders and influencers along with the gathering of potential customer leads. A follow-on strategy will be for EDSA (in possible conjunction with Viridity Energy?) to formally exhibit at those shows that yield the maximum ROI. As new trade show information is made available, it will be incorporated into this plan.

a. IEEE Power & Energy Society (PES) Conference on Innovative Smart Grid Technologies – NIST, Gaithersburg, MD Jan. 19-21, 2010 (Ken Wood attending)

http://ewh.ieee.org/conf/isgt/2010/

b. SmartGrid Summit – Miami Beach, FL Jan. 20-22, 2010 http://smart-grid.tmcnet.com/conference/east-10/e-10-why-attend.aspx

c. SmartGrid & Overhead Distribution Reliability Conference – Columbus, OH Feb. 9-11, 2010 http://www.exacterinc.com/conference.html

d. National SmartGrid Forum – Sydney, NSW, Australia Mar. 23-25, 2010

http://www.smartgridsevent.com.au/Event.aspx?id=246238 2. Internet Marketing à EDSA Micro Web-site The EDSA Micro website should serve as the primary tool for Paladin SmartGrid inbound and outbound marketing. Inbound marketing tactics will focus on the task of helping prospective customers “find” EDSA Micro and Paladin SmartGrid, while outbound marketing tactics will facilitate a steady flow of company and product information to prospective customers.

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a. Inbound Marketing Activities

• Search engine optimization (suggested keywords: microgrid, smartgrid, master controller, perfect power, power analytics)

• Banner advertising with EDSA link on sales partners websites (Viridity Energy, select µGrid system integrators)

• Banner advertising with EDSA link and press releases on industry trade websites b. Outbound Marketing Activities

The Paladin SmartGrid web page should clearly communicate the value proposition of Paladin SmartGrid (in both technical and non-technical terms) and demonstrate EDSA Micro’s commitment to the “Perfect Power” vision. The complete message needs to include:

• Press Release Archive • Perfect Power ROI Business Case Analysis • White papers • Downloadable videos or link to YouTube (EDSA Micro corporate overview, Paladin

SmartGrid product demo) • Links to select industry websites (GEI, EPRI, etc.) • Link to Viridity Energy website

All of these tasks could and should be completed by the end of Q2CY10.

3. Internet Marketing à Press Release Topics and Schedule a. “EDSA introduces Paladin® SmartGrid™, the first Micro Grid Master Controller for

management and control of micro grids using alternative energy sources” – January 5, 2010

b. “EDSA enters into strategic relationship with Viridity Energy to supply “Perfect Power”

solution to University of California at San Diego” (PROPOSED)

c. “EDSA attends IEEE PES Conference on Innovative Smart Grid Technologies” (PROPOSED)

d. “EDSA hires seasoned business development professional to expand market demand

for Paladin SmartGrid” (PROPOSED)

e. Press Release about potential business agreements between EDSA and IIT, EDSA and Texas A&M, etc. (PROPOSED)

4. Internet Marketing à Industry Web-sites

As stated previously, a portion of EDSA Micro’s inbound marketing strategy should include an evaluation of industry trade websites (especially with respect to target audience) for suitable banner advertisement placement opportunities. The banner advertisements would contain an embedded link to the EDSA website which would gather e-mail address contact information.

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Fig. 6: SmartGrid Industry websites SmartGridNews.com http://www.smartgridnews.com/index.html SmartGridToday.com http://www.smartgridtoday.com/ SmartGrid-TMC.net http://smart-grid.tmcnet.com/Default.aspx Galvin Electricity Initiative http://www.galvinpower.org/ Uptime Institute http://www.uptimeinstitute.org/ SmartGrid Careers http://www.smartgridcareers.com/ GreenGrid.org http://greengrid.org/ Electric Power Research Institute http://my.epri.com/portal/server.pt? IEEE SmartGrid http://smartgrid.ieee.org/ieee-smartgrid-news Prefabricate http://www.refabrica.com/ Future Renewable Electric Energy Delivery and Management Systems Center

http://www.freedm.ncsu.edu/

Sustainable Industries http://www.sustainableindustries.com/

Industry website evaluation and candidate selection for banner advertising should be completed by end of Q1CY10.

5. YouTube Videos

A portion of EDSA’s outbound marketing strategy should include an offering of short videos (to be available for viewing on YouTube) on the following subject matter:

a. EDSA Micro Corporate Overview

b. Paladin SmartGrid webinar demo – useful for customers and as a sales tool 6. White Papers

White papers, in the outbound marketing sense, are technical communication documents designed to promote EDSA Micro and its products/solutions. White papers generated for Paladin SmartGrid will be written by EDSA Micro technical personnel and used to generate sales leads, establish thought leadership, make a business case, or educate customers. White papers written for Paladin SmartGrid will most likely fall into three main categories: • Business-benefits: Make a business case for Perfect Power and the Master

Controller concept • Technical: Describe how Paladin SmartGrid meets the requirements of the GEI

“Master Controller” specification • Hybrid: Combines high-level business benefits with technical details in a single

document If possible, the launch of any white paper should coincide with the timing of an industry trade show (possible presentation) or important press release.

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D. Placement à Access Strategies

1. End Customer Profile

Earlier in this document, it was established that the three target vertical markets for Paladin SmartGrid were academic institutions, commercial/industrial clusters, and military installations. Generally speaking, a potential End-Customer Profile in each of these markets would contain the following attributes:

a. Installation size of > 10 MW (assumption based on Pike Research) b. Uses a mix of alternate energy sources (UPS, generator, wind, solar, fuel cells, etc.)

in conjunction with the utility to facilitate a continuous “Perfect Power” grid. c. The alternate sources are NOT just used during an emergency situation such as a

loss of utility. d. The value proposition of high power availability/reliability coupled with optimized

economics (branded as “Perfect Power”) is clearly understood and valued. e. Desires the ability to perform “what if?” scenarios in real time based on actual

system parameter measurements.

2. Selling Channel Strategy

In most cases, the µGrid user will be sourcing his Perfect Power solution components through a variety of direct and indirect procurement/service channels; hence EDSA Micro will need to incorporate a selling strategy that addresses both of these channels. a. Direct channel – EDSA Micro personnel independently identify and pursue Paladin

SmartGrid opportunities within the target markets. This channel offers EDSA Micro the maximum amount of control over the sales process but least amount of market coverage. Typical end-customers in this channel (although not for every opportunity) would include: • Universities/academia • Commercial/industrial clusters • Global OEMs (e.g., Lockheed Martin, Honeywell) • Military installations • Utilities

b. Indirect and/or partner channels – This strategy can take on two different forms:

I. EDSA Micro partners with select SmartGrid system integrators to pursue Perfect Power opportunities as a cohesive team

II. EDSA Micro licenses Paladin SmartGrid to select SmartGrid integrators

Both of these scenarios allow EDSA Micro to significantly increase its market coverage for Paladin SmartGrid by leveraging the existing relationships between SmartGrid system integrators and potential µGrid end customers. However potential pitfalls exist because of a lesser degree of control over the sales process and a higher possibility of channel conflict or penetration from Paladin SmartGrid’s perceived competitors.

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V. Business Development Strategy 1. Paladin SmartGrid Target Customer List (next page)

In their “Perfect Power” book, Bob Galvin and Kurt Yeager provide an extensive list of industry “Institutions and Companies to Watch” which conveniently serves as a suitable directory of SmartGrid influencers and system Integrators. The stratified target customer and strategic partner list for Paladin SmartGrid provided in Fig. 7 was mined from this information along with additional leads uncovered from EDSA Micro independent research. Stratification rankings range from “A” to “D” to indicate overall priority for pursuing Paladin SmartGrid opportunities.

2. Sales Methodology

EDSA’s Paladin SmartGrid business development professional will contact each company on this list and perform the following:

a. Introduce EDSA Micro b. Determine if a potential Master Controller opportunity (including funding) exists c. Convince potential customer to participate in a web-based or live demo of Paladin

SmartGrid. d. Convince potential customer to provide µGrid deployment details and request a

Paladin SmartGrid quote. e. Perform all required customer engagement and follow-up to obtain order for Paladin

SmartGrid.

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Fig. 7: Stratified Paladin SmartGrid Target Customer List

Company/Organization Classification Potential EDSA Relationship Stratification Web-site Contact

BPL Global, Ltd. Smart Grid integrator Partner A www.bplglobal.net Current Group Integrated smart-grid solutions Partner A www.currentgroup.com

Electric Power Research Institute SmartGrid Thought Leader Partner A www.epri.com

Energy Control Inc. Smart Grid integrator - intelligent buildings Partner A www.energyctrl.com Jack McGowan

Enspiria Solutions Smart Grid integrator Partner A www.enspiria.com Galvin Electricity Initiative SmartGrid Thought Leader Partner A www.galvinpower.org Kurt Yeager

Illinois Institute of Technology Academic institution End-customer A www.iit.edu Dr. Mohammad Shahidehpour

Intelligent Power Partners Distributed energy assets for commercial office buildings Partner A www.endurantenergy.com John Kelly

Lockheed Martin

Engineering and business services deliver state-of-the-art technical innovations designed to modernize the nation’s utilities. End-customer A

http://www.lockheedmartin.com/products/energy-solutions/index.html

Texas A&M University Academic institution End-customer A http://www.ece.tamu.edu/ Mladen Kezunovic

UC - San Diego Academic institution End-customer A www.ucsd.edu Byron Washom

Ventyx Business solutions provider to energy and utility markets Partner A www.ventyx.com Jay Jenkins

Accenture Management consulting Partner B www.accenture.com Maura Rudolph

Boeing Aerospace - St. Louis military grade cyber security project End-customer B www.boeing.com

CASNE Engineering Inc. System Integrator - Paladin Live Partner B www.casne.com Nick Wiley

Chevron Energy Solutions Consulting firm to international energy companies Partner B www.chevronenergy.com Roy Mulvaney

Comverge Inc. DR solutions Partner B www.comverge.com Scott Sullivan Delta Controls Building automation systems End-customer B www.deltacontrols.com DST Controls System Integrator Partner B www.dstcontrols.com Greg Dumas

Enernex

Consulting firm specializing in the development and application of new electric power technologies Partner B www.enernex.com

EnerNOC Inc. DR and energy management solutions Partner B www.enernoc.com

General Electric (GE) Energy products and services End-customer B www.ge.com GridPoint Inc. Clean technology End-customer B www.gridpoint.com Paul Duncan

Horizon Energy Group LLC Value-added services to energy industry Partner B

www.horizonenergygroup.com

IBM Global Business Services Business consulting services End-customer B www.ibm.com/services/us/gbs/bus

Optimal Technologies Optimal energy usage solutions End-customer B www.otii.com

PCN Technology

PCN designs, develops and commercializes Grid MicroCircuits™ End-customer B www.pcntechnology.com

Pecan Street Project - Austin, TX

Hub of clean energy development in Austin End-customer B www.pecanstreetproject.org

Power Secure

End-to-end provider of resilient DG solutions for utilities, municipalities, and commercial customers Partner B www.powersecure.com

Rovisys System Integrator Partner B www.rovisys.com Joe Maukonen

Silver Spring Networks DR software Partner B www.silverspringnetworks.com Edward Quick

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Company/Organization Classification Potential EDSA Relationship Stratification Web-site Contact

Automated Logic Inc. Building automation systems End-customer C www.automatedlogic.com Scott Kolkebeck Babcock & Wilcox Energy products and services Partner C www.babcock.com Doug Johnson

Balance Energy

End-to-end provider of resilient DG solutions for utilities, municipalities, and commercial customers Partner C

www.balanceenergysolutions.com

Cooper Industries Electrical distribution and control products End-customer C www.cooperindustries.com Scott Feldbush

Cooper Power Systems Medium- & high-voltage electrical equipment End-customer C www.cooperpower.com Derek Schwarz

Invensys Industrial, commercial, and residential automation controls End-customer C www.invensys.com

Johnson Controls Battery controls for PHEVs Partner C www.johnsoncontrols.com

S&C Electric Company Electric power systems equipment and services Partner C www.sandc.com

Siemens - Building Technology Division (SBTD)

Home comfort infrastructure products Partner C

www.buildingtechnologies.siemens.com Bill Stayart

AEP - Ohio Utility End-customer D www.aepohio.com American Electric Power (AEP) Utility - OH End-customer D www.aep.com Kurt Wissner

Ausra Inc. Utility-scale solar thermal power technology End-customer D www.ausra.com

Austin Energy Utility - Austin, TX End-customer D www.austinenergy.com Consolidated Edison Utility - NYC End-customer D www.coned.com Duke Energy Utility - NC End-customer D www.duke-energy.com Kansas City Power & Light Utility End-customer D www.kcpl.com Nstar Utility - Massachusetts End-customer D www.nstaronline.com Progress Energy Utility - Carolinas, Florida End-customer D www.progress-energy.com/ Becky Harrison Southern California Edison Utility - Los Angeles End-customer D www.sce.com

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VI. Paladin SmartGrid Unit Forecast and Revenue Projection The following common assumptions were made in compiling the Best, Typical, and Worst Case Scenarios for the Paladin SmartGrid unit forecasts and revenue projections:

• Average deployment size: 18 MW • Paladin SmartGrid market price will increase 5 percent per year due to inflation • Paladin SmartGrid revenue is not realized until customer is invoiced

Best Case Scenario EDSA wins 18% Share of Pike Research Forecasted Market Average Deployment Size: 18 MW Paladin SmartGrid Market Price of $0.05/W Paladin SmartGrid Units Invoiced 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H CY10 CY10 CY11 CY11 CY12 CY12 CY13 CY13 CY14 CY14 CY15 CY15

SmartGrid Deployments Total

CY2010 6 1 2 3

CY2011 17 2 6 9

CY2012 36 4 16 16

CY2013 72 5 13 27 27

CY2014 123 8 35 40 40

CY2015 100 15 85

Sub Totals 1 2 5 6 13 21 29 27 35 35 55 125

CY 2010 2011 2012 2013 2014 2015 Paladin SmartGrid Units Invoiced 3 11 34 56 70 180

ASP ($M) 0.90 0.95 0.99 1.04 1.09 1.15

Revenue ($M) $ 2.7 $ 10.4 $ 33.7 $ 58.3 $ 76.6 $ 206.8

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Typical Case Scenario EDSA wins 10% Share of Pike Research Forecasted Market Average Deployment Size: 18 MW Paladin SmartGrid Market Price of $0.03/W Paladin SmartGrid Units Invoiced 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H CY10 CY10 CY11 CY11 CY12 CY12 CY13 CY13 CY14 CY14 CY15 CY15 SmartGrid Deployments Total

CY2010 3 1 2

CY2011 9 3 4 2

CY2012 20 7 7 6

CY2013 40 12 12 16

CY2014 80 25 25 30

CY2015 120 60 60

Sub Totals 1 2 3 4 9 7 18 12 41 25 90 60


ASP ($M) 0.54 0.57 0.60 0.63 0.66 0.69

Revenue ($M) $ 1.6 $ 4.0 $ 9.5 $ 18.8 $ 43.3 $ 103.4

Worst Case Scenario EDSA wins 10% Share of Pike Research Forecasted Market Average Deployment Size: 18 MW Paladin SmartGrid Market Price of $0.01/W Paladin SmartGrid Units Invoiced 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H CY10 CY10 CY11 CY11 CY12 CY12 CY13 CY13 CY14 CY14 CY15 CY15 SmartGrid Deployments Total

CY2010 3 1 2

CY2011 9 3 4 2

CY2012 20 7 7 6

CY2013 40 12 12 16

CY2014 80 25 25 30

CY2015 120 60 60

Sub Totals 1 2 3 4 9 7 18 12 41 25 90 60


ASP ($M) 0.18 0.19 0.20 0.21 0.22 0.23

Revenue ($M) $ 0.5 $ 1.3 $ 3.2 $ 6.3 $ 14.4 $ 34.5

Documents

Paladin SmartGrid Marketing Plan Rev 04c