Strictly confidential for discussion with PTIT only

RENEWABLE ENERGY ASIA 2012 6 JUNE 2012

Dr. Chodechai Suwanaporn Executive Vice President

AGENDA

1. Formulating strategy on Renewable Energy 2. Potential Investment Opportunity

2.1 Biofuel 2.2 Renewable Energy Power

3. R&D’s Role in Renewable Energy

2

11TH THAILAND ECONOMIC AND SOCIAL DEVELOPMENT PLAN

1. Farmer Product promotion to produce Alternative

Energy 2. Food & Fuel stabilities by Thailand in house production 3. Use agriculture waste to produce Alternative Energy

3

Three modes of THAILAND Alternative Energy Development

9,335 KTOE

40,199 KTOE 9,189 MW

98,264 KTOE 40 mm.LIT/DAY

ALTERNATIVE ENERGY TARGET

4

Government Policy on Nation Alternative Energy 10 years Plan

GOVERNMENT TARGET

25 % REPLACEMENT TO NATION ENERGY CONSUMPTION IN 2022 ( 3 MODES : THERMAL ELECTRICAL AND BIO FUEL )

PTT 5 + 2

mm.LIT/DAY

PTT PTT

THERMAL 9,335 KTOE , 9.5 %

25 % IN

2022

5

Green Growth Strategy for PTT

6 RTI as close collaborator to support Green growth research

Opportunity / Problem

OPPORTUNITIES CHALLENGES

1. INCONSISTENCY IN GOVERNMENT POLICY

2. SCARCE R&D TECHNOLOGY 3. INADEQUATE LAND RESOURCES 4. VAGUE IMPLEMENTATION PLAN

1. CREATE NEW BUSINESS MODEL 2. INNOVATE IN HOUSE

TECHNOLOGY 3. CREATE SUITABLE MANAGEMENT TOOLS 4. CHANGE HUMAN THINKING

7

AGENDA

1. Formulating strategy on Renewable Energy 2. Potential Investment Opportunity

2.1 Biofuel 2.2 Renewable Energy Power

3. R&D’s Role in Renewable Energy

8

FEED PRODUCER

COOP FACTORY MARKET Contract Contract

Feed stock deliver

By product value added

Feed stock net back Pricing

Product deliver

Main Success Factors Driving THAILAND to be Bio Hub

PRODUCTION CLUSTER

9

1. UTILIZE RAW MATERAIL TYPE

SUGAR CANE / CASSAVA

COOP MARKET / PTT

ETHANOL PRICING : 1. Yield Value

Calculation Basis 2. Ethanol Fund

COOP INSTALLATION 1. COOP Contract WITH

MEMBERS ( Contract Farming ) 2. Factory contract with COOP

Ethanol Factory Investor

Vehicle Type: 1. FFV 2. ECU kit

ETHANOL CLUSTER

10

LOCAL COMMUNITY

POWER PLANT

MARKET SELLING CONTRACT

Success Factors Driving THAILAND to be Bio Hub

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2. FROM UNLIMITED RESOURCES

AGENDA

1. Formulating strategy on Renewable Energy 2. Potential Investment Opportunity

2.1 Biofuel 2.2 Renewable Energy Power

3. R&D’s Role in Renewable Energy

12

Renewable Power Facts

Type Adder

(THB/kWh) Durations

(yrs)

Biomass 0.3-0.5 7

Biogas 0.3-0.5 7

MSW 2.5-3.5 7

Wind 3.5-4.5 10

Small Hydro 0.8-1.5 7

Solar 8.0 10

Changed to 6.50 THB/kWh

Adder Incentives currently in place in Thailand New Renewable Power Target as in AEDP : 2012-2021

3630

600

160

1200

1608

2000

Target by 2021 (MW)

Biomass

Biogas

MSW

Wind

Hydro

solar

39%

6%

2% 13%

17%

22%

13

Technical Challenges

Limited wind energy Limited available area

High Investment cost Some technology not proven with long track records

Difficulties in case project area is in natural park zones

Community acceptance issue Feedstock issue

Relatively high investment cost Feedstock management

Wind

Solar

Small Hydro

Biomass

Biogas

Community acceptance

issue especially with incineration technology

Waste

14

Project Status – Solar & Wind status

1200 1313

0

500

1000

1500

MoE Target All Capacity in pipelines

2000

3526

0

500

1000

1500

2000

2500

3000

3500

4000

MoE Target All Capacity in pipelines

1073

96 2246

111 Under MoE Consideration

MoE accepted, waiting for PPA signing

PPA signed, under construction

In operation

370

584

358

0 Under MoE Consideration

MoE accepted, waiting for PPA signing

PPA signed, under construction

In operation

Sola

r W

ind

MW

MW

28% 27%

45%

3%

30%

3% 64%

Unit : MW

Unit : MW

SOURCE : EPPO

SOURCE : EPPO

15

From

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

2009 2010 2011 2012

Opportunity in Solar Business

PTT Positioning • Waiting for clearer picture

regarding new licenses

• PTT R&D researching on solar technology trend and solar modules performance in Thailand

• PTT and IRPC targeting to co-invest in a solar farm in the South

• PTT also exploring other solar investment opportunities

PV Module price decreasing more than 40% in the past year

Euro/Wp

-40%

- MoE currently not accepting new solar farms proposal - Uncertainty about new incentives to be announced

SOURCE : SolarServer

To

16

Opportunity in Wind Business

From

PTT Positioning

• PTT R&D researching on potential of wind energy in Thailand

• Exploring possibility to jointly develop or co-invest with experienced developers

- Adder Incentive attractive for wind farm investment in some locations - Experienced wind developers exploring opportunities to develop wind farms in Thailand - Lenders becoming more familiar and keen on supporting wind farm investment - New wind turbine manufacturers especially in China creating competitive wind turbine market

- Limited potential area in Thailand - Unpredictability on wind resource assessment - Currently no wind farms in operation in Thailand - PTT currently has no experience in the business

To

17

Other Renewable Energy

Biomass

– MoE targeting 3,630 MW

– PPA approval for only around 2,300 MW

– Still room available for private sector investment

– PTT now exploring opportunity

Geothermal

– Joint study with DEDE and DGR for Potential of geothermal energy in Thailand

18

Uncertainty for Renewable Energy

• Government changing incentives for renewable power from Adder scheme to Feed-in-Tariff scheme

• Doubt for Declining investment cost

• New technology emerging

19

PTT Renewable Power

• Supporting TAGNOC aspiration for Technology and Green aspects

• Enhancing performance of PTT in Down Jones Sustainability Index (DJSI)

20

AGENDA

1. Formulating strategy on Renewable Energy 2. Potential Investment Opportunity

2.1 Biofuel 2.2 Renewable Energy Power

3. R&D’s Role in Renewable Energy

21

cassava sugar cane oil palm napier grass water hyacinth rice straw jatropha algae

Sugar/Starch Plants Fast Growing Crops Agricultural

Wastes Food Oil

Crops Non-food Oil Crops

Ethanol Cellulosic Ethanol

FT Synthetic Diesel

FAME

BHD

• Ethanol fermented from sugar/starch extracted from plants

• Ethanol fermented from sugar/starch hydrolyzed from cellulose

• Oil extracted from non-food crops

• Oil extracted from food crops

1st Gen. 2nd Gen. 1st Gen. 2nd Gen.

Ethanol Feedstock Biodiesel Feedstock

Highlight R&D : Biofuel Feedstock

22

Existing Products

Blue Diesel

Blue Diesel B5 • Technology Trends • Market Needs • Regulation • National Policy

Fuel & Lube Formulation

Physical Property Testing Material Compatibility Testing

Screening Test

Engine Test for HD Field Test for LD

OEM Approval

Commercialization

PTT Fuel & Lube Product Development Scheme Biodiesel Challenges:

- FAME ratio limit - Feedstock availability Biodiesel Solvers: - Hydrogenation - FT Synthetic Diesel

Highlight R&D : Biodiesel & Gasohol

Future Products

Premium B5

BHD

Existing Products

Blue Gasohol 91

Blue Gasohol 95

Blue E20

Blue E85

Gasohol Challenges: - Food v.s. Fuel Issue Gasohol Solvers: - Cellulosic Process

Bio

die

se

l G

aso

ho

l

23

• Bi-Fuel ECU

ECU for NGV Engine

ECU (Engine Control Unit): A type of electronic control unit that determines the amount of fuel, ignition timing and other parameters an internal combustion engine needs to keep running.

• DDF (DF-PCCI) ECU

• Dedicated CNG ECU

R&D Targets:

Power and drivability equivalent to conventional engines

More fossil fuel replacement ratio

Meeting Euro III emission standard or further regulations

Highlight R&D : NGV Applications

24

Anaerobic

Digestion

Biogas

Upgrading

Product

Distribution End Uses Raw

Materials

Key Drivers

for

Development

Environmental

The methane slip is limited to 1%

up to 2011 and later 0,5%

At present, only chemical

absorption and cryogenic processes

fulfill this threshold value without

post-treatment of the off-gas

Cost-Competitiveness

Reduce CAPEX and OPEX

Eco-friendly technology is generally

expensive

Water

Scrubber

PSA

Membrane

Absorption

Cryogenics

Technology Development

Trends

Highlight R&D : Bio-NGV

25

THANK YOU FOR YOUR ATTENTION

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