Sugico Mok Plan 3

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Business Plan  

      OWNERS    Sugico Mök       3909 Easton Way      Columbus, OH 43219    USA        (614) 403‐8912  [email protected]           

Confidential Material   

       

       

Sugico Mök   Jl Iman Bonjol no. 68‐70  Jakarta  Indonesia 

 

 

[email protected]

   

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I.

Table of Contents 

I.

Table of Contents ................................................................................................... 2

II.

Executive Summary............................................................................................... 3

III.

General Company Description ............................................................................ 6

IV.

Products and Services.......................................................................................... 10

V.

Marketing Plan ..................................................................................................... 11

 

Confidential Material   

   

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II.

Executive Summary 

Sugico Mök (or the “Company” or the “Venture”) is a solar energy company in the oil and gas  business.  That’s because Sugico Mök uses solar power plants that produce clean electricity at a  cost  lower  than  any  other  generator  technology  in  history  to  convert  its  abundant  coal  assets  into oil and gas at very low cost.      The company’s solar power plants are based on a series of proprietary technology and process  innovations by Mök Industries and will be applied to a portion of Sugico Graha’s coal holdings  to double the reserve of petroleum products available to Indonesia while increasing the value of  the  underlying  coal  more  than  85  times  their  present  value.    If  in  time  Sugico  Mök  elects  to  convert  all  of  Sugico  Graha’s  coal  into  petroleum  products,  the  company  would  produce  an  amount  of petroleum  products  nine  times  greater  than  Indonesia’s  current  proved  reserves  of  petroleum.   This is enough petroleum to supply the nation of Indonesia until 2033, even with  6% compounded annual rates of growth.   Under this assumption per capita income and energy  use will be more than 4.8 times what it is today.     Sugico  Mök’s  solar  electric  energy  costs  are  so  low  that  for  the  first  time  in  history  it  makes  economic  sense  to  use  electricity  to  create  synthetic  fossil  fuels  directly.    It  is  by  selling  those  fossil fuels into existing oil and gas markets that will make money for the company.      Using electricity to produce synthetic fuels has always been technically feasible, but until Mök’s  innovations,  making  synthetic  fuels  from  electricity  has  always  been  too  costly.    Now  with  Mök’s  innovations,  this  simple  approach  of  using  electricity  to  make  high‐quality  synthetic  fuels  makes  economic  sense.    Mök  achieves  low  energy  pricing  by  extreme  concentration  of  sunlight onto low‐cost photovoltaic generators designed to operate at very high light intensities.     Large scale synthetic fuel production also requires an electrolysis facility capable of producing  massive quantities of hydrogen gas.  The production of hydrogen in the quantities envisioned  by the Venture will position the Company to take advantage of any future developments that  occur which displace oil with hydrogen.  At that point, the Company will simply sell hydrogen  to  those  developing  the  “hydrogen  economy.”  Hydrogen  will  be  produced  on  its  concession  lands after mining is completed and Sugico Mök actually improves its margins.     To power synthetic fuel production on the scale Sugico Mök envisions requires solar collection  arrays of unprecedented size.  Since current world capacity to produce old style solar collectors  is  limited  by  the  availability  of  surplus  silicon  from  the  consumer  electronics  industry,  Mök’s  planned  capacity  puts  the  Company  in  the  forefront  of  the  solar  electric  markets  in  its  bid  to  provide  even  a  small  fraction  of  the  world’s  petroleum  needs.    Sugico  Mök’s  cost  of  solar  electricity  will  be  so  low  that  the  Company  could  make  significant  money  on  just  the  sale  of 

Confidential Material   

   

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solar  electricity.    Therefore,  Sugico  Mök  will  create  a  range  of  alternative  markets  for  its  products in addition to producing high‐grade synthetic petroleum products.     Markets for Sugico Mök Products  • • •

Coal to Liquids  Carbon‐dioxide to Methane and Methanol  Solar Panel and Electricity  

  Coal to Liquids    Sugico  Mök  produces  high‐quality  petroleum  products  for  $15  per  barrel  using  simple  coal  hydrogenation  reactors,  the  same  type  that  make  margarine  from  vegetable  oil.    Sugico  Mök  achieves $15 per barrel pricing because it will produce hydrogen at $250 per ton from water and  sunlight.    That’s  because  the  Venture  generates  electricity  at  an  unprecedented  cost  of  $5  per  megawatt‐hour  by  concentrating  sunlight  with  low‐cost  optics,  which  reduces  the  area  of  the  costly photocells without increasing other costs.  Sugico Mök’s ability to make over six barrels  of  oil  from  a  single  ton  of  coal  using  nothing  more  than  sunlight,  water  and  hydrogenation  reactors  give  Sugico  Mök  the  ability  to  create  significant  value.    Coal  to  Liquids  is  the  ‘sweet  spot’  of  the  Venture’s  technology  and  coal  to  liquids  is  where  Sugico  Mök  will  create  the  greatest value, so this is where the Company will start its development.     The  Company  will  initially  convert  3,285  tons  of  low‐grade  coal  to  20,000  barrels  per  day  of  petroleum liquids by 2011. This will require an investment of $693 million and the installation  of 8.1 million Mök solar panels covering 3,250 ha of Sugico Mök lands.  Of this total $326 million  is  allocated  toward  the  production  of  solar  power  systems  while  $367  million  is  allocated  toward the production of coal hydrogenation and processing systems.  Once 20,000 barrels per  day is being produced, the company will expand production to 770,000 barrels per day by 2015  and will continue at this rate from its reserves until 2033.  After that time Sugico Mök will sell  hydrogen fuels and electricity produced from its solar panel array, or seek other coal reserves to  convert to petroleum products.     Although Sugico Mök consumes large amounts coal in making its high‐grade synthetic oil, the  company  is  dedicated  to  the  environment.    That  is  why  the  petroleum  products  Sugico  Mök  produces from coal have a dramatically lower environmental impact than traditional petroleum  based fuels.  This comes about because Sugico Mök  uses the coal as a feedstock and does not  burn it to produce petroleum.  This means there are no emissions from the Mök process.  Mök  even  uses  the  ash  and  tar  left  over  after  processing  to  create  a  new  source  of  asphalt  for  roadways.  In Sugico Mök’s process, nothing is wasted.     

Confidential Material   

   

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Carbon Dioxide to Methane and Methanol  Sugico Mök also makes methane with hydrogen and carbon dioxide.  Methane is the principal  component of natural gas.  Here, Sugico Mök takes carbon dioxide from the Natuna fields and  produces  methane  and  methanol.        Coal  fired  generation  plants,  steel  mills,  and  others  who  have significant carbon dioxide emissions are natural customers for our methane and methanol  production  process.    Sugico  Mök’s  new  source  of  natural  gas  breaks  pipeline  and  supply  bottlenecks  while  reducing  damaging  greenhouse  gas  emissions,  effectively  adapting  the  Company’s technology to create a clean coal technology for those customers who use or burn  coal. 

  Solar Panels and Electricity    Sugico Mök has structured its approach to this rich opportunity in a way that  maximizes return  on  investment.    Mök  has  already  identified  a  number  of  early  adopters  who  use  industrial  quantities  of  direct  current  electricity.    Direct  current  electricity  is  the  very  kind  of  electricity  produced  by  Mök  solar  power  plants.    The  Company  then  determines  if  electricity  is  a  major  component of those customers’ total cost of production.  These industries benefit the most from  Mök’s innovations:    • Aluminum producers – electrolytic production of metal  • Rare earth mines – electrolytic concentration of metal  • Electro‐plating operations – electrolytic plating of metal  • Brine Electrolysis—bleach, deodorants, disinfectants    In  addition  to  the  sale  of  direct  current  electricity,  which  will  bring  new  industrial  operations  and jobs to Indonesia, Sugico Mök will invert the direct current electricity to alternating current  and  still  produce  that  electricity  at  a  cost  which  is  more  competitive  than  conventional  generation.  Breaking into the merchant power market serves two direct purposes:  it delivers  significant return on investment and it reduces demand for steam coal to provide conventional  power  even  while  demand  for  electrical  power  increases.    The  Company  also  will  make  its  proprietary solar modules available for sale throughout Indonesia and license the technology on  an industrial, commercial, or residential basis, easing the nation’s electrical supply difficulties. 

Confidential Material   

   

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III.

General Company Description 

Sugico Mök is in the Coal to Liquids (CTL) business using land and coal resources in Indonesia  and technology developed in the United States.  Sugico Mök innovatively combines the energy  of  coal  with  the  energy  of  sunlight  in  a  brand‐new  way  to  create  high‐quality  petroleum  products at very low cost while producing zero emissions.  Over time, as coal deposits decline  and mine areas increase, the company will simply use its solar panel technolology to produce  hydrogen gas as a fuel.  So, over time, Sugico Mök will develop new markets for solar electricity  and  solar  derived  hydrogen  fuels  and  feedstocks  putting  Indonesia  at  the  forefront  of  alternative energy for the 21st century while meeting immediate national energy needs.  Sugico Mök creates long‐term energy solutions for a growing world economy by cost‐effectively  making  use  of  sunlight  to  meet  real‐world  energy  needs  at  competitive  prices  while  creating  profits for our shareholders.    PRIMARY PROCESS 

Sunlight 

Solar  Collector

Water 

Coal 

Electrolysis

Bergius  Reactor

1 ton coal yields  6.2 barrels  petrolelum  Petroleum 

     DC                            Hydrogen                  Electricity    Oxygen    Sugico Mök takes low cost solar energy and 900 million tons of low‐grade coal and creates 5,580  million  barrels  of  high‐quality  petroleum  products  over  the  next  25  years.    These  petroleum  products multiply the value of the underlying coal reserve over 85 times.  In creating this value  Sugico  Mök  takes  solar  energy  to  the  next  level.    Sugico  Mök  makes  solar  energy  directly  competitive with extracted petroleum products.  To achieve this Sugico Mök deploys thousands  of  hectares  with  solar  panels  in  less  then  five  years  at  costs  that  are  1/100th  the  cost  of  conventional panels.  Sugico Mok panels produce hydrogen from water at costs less than that  achieved  by  conventional  shift  reactions  while  producing  only  oxygen  by  product,  and  zero  carbon dioxide emissions.  Sugico Mök achieves costs 1/100th that of conventional panels by an  innovative  new  design  that  allows  volume  of  panel  production  to  increase  to  100x  that  of  the 

Confidential Material   

   

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world’s current production capacity.  This combination of unique features allows Sugico Mök to  make  use  of  solar  energy  to  compete  with  conventional  fuels  cost‐effectively  without  government  subsidy.    Sugico  Mök  will  release  Indonesia  from  supply  constraints  of  diminishing  supplies  of  extracted  fuels  by  replacing  those  fuels  with  fuels  derived  from  solar  produced hydrogen .      SECONDARY PROCESSES ADD VALUE 

Sunlight 

Water 

Coal 

Electrolysis

Solar  Collector

Bergius  Reactor

DC                                   Sabatier  Batteries &  Electricity    O2     H2  Inverters

Methane  Methanol

Carbon  Dioxide 

AC  Electricity 

Gasoline 

Fresh  Water 

Low cost hydrogen and electricity has other uses as well.  Hydrogen may be added to carbon  dioxide  to  produce  methane  and  methanol.    This  reduces  greenhouse  gases  while  producing  valuable  commodities,  avoiding  the  need  for  sequestration  altogether.        Direct  Current  Electricity  can  be  stored  in  batteries  and  inverted  to  produce  alternating  current  electricity  in  demand from inconstant sunlight.  All prosperous nations have growing energy demands.  All fuels extracted from fixed reserves  eventually  enter  a  period  of  decline.    This  is  the  reason  that  in  the  1970s  the  United  States  demand for oil exceeded its ability to supply that oil.  Europe and Japan also import more oil  than they make.  Since the 1970s the price of oil has steadily risen as world industry grew.  This  steadily  rising  price  has  slowed  the  world’s  economy  but  not  reversed  growth.    In  the  21st  century all prosperous nations will follow this same path followed by other industrial nations of  the 20th century.  All nations will need more oil than can be supplied by existing reserves in the  future.    Sugico  Mök  seeks  to  end  this  short  fall  in  Indonesia  using  new  approaches  to  petroleum  products.    By  tapping  the  unlimited  power  of  the  sun  at  a  price  that  is  competitive  with  oil 

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Sugico  Mök  will  establish  an  era  of  decreasing  fuel  prices  in  Indonesia  and  throughout  the  world, while creating huge value for our shareholders.  Lower fuel prices make all economies  stronger and create a world that is more prosperous and safer for us now and for our children  in the future.   Sugico Mök markets its petroleum products wherever petroleum products are now sold.  These  synthetic  petroleum  products  are  chemically  and  energetically  identical  to  existing  petroleum  products.    So,  Sugico  Mök  is  immediately  competitive  with  existing  petroleum  products  worldwide.    Petroleum products are a $1,800,000 million per year commodity.  Availability of product is the  determining factor in market success.  Quality and price are strongly correlated across a wide  range  of  products.    Due  to  limited  supplies  in  the  face  of  rising  demand  prices  have  risen  dramatically in recent years.  Demand for petroleum products in larger industrial nations like  the  United  States,  Europe  and  Japan,  grows  at  a  steady  4%  per  year.    Demand  for  petroleum  products  in  nations  with  a  growing  industry  like  Indonesia,  India,  and  China,  growth  can  approach  9%  per  year.    This  rising  demand  in  the  face  of  slowing  output  is  creating  upward  pressure on today’s petroleum product pricing.    Before the beginning of the industrial age the world possessed 2,000,000 million barrels of easily  recoverable  petroleum  reserves.    It  is  the  nature  of  the  recovery  process  for  these  naturally  occurring reserves to have increasing output until half the entire reserve is produced.  After that  time, there is a slowing and then a decrease in rate of production.  This is true for a single well,  for many wells, and for the entire world.  The world now possesses 1,200,000 million barrels of  easily recoverable petroleum reserves, with no new reserves known.  At current rates of use by  the  year  2012  the  world  will  enter  a  period  of  decreasing  petroleum  production,  at  that  time  costs are expected to be three times their current price.  Clearly finding easy to use alternatives  to extracted petroleum products is a good business to be in.  Sugico  Mök  uses  solar  derived  hydrogen  and  direct  coal  liquefaction  to  create  superior  petroleum  products  from  coal.    Since  Sugico  Mök  does  not  burn  coal  or  any  hydrocarbon  to  obtain the hydrogen it needs to convert coal to liquids, there are no carbon dioxide emissions.   Also,  since  all  the  carbon  in  the  coal  is  available  for  conversion  to  petroleum  products,  yields  are higher than competing processes.  And, because cost of production scale with the volume of  coal handled, costs are lower for Sugico Mök as well.  Finally, since the solar energy component  costs less than the coal component, that solar component can continue to create value as long as  the sun shines, even when the coal reserve is long gone.  Sugico  Mök  is  a  joint‐venture  agreement  between  Mök  Industries,  a  US  company  having  uniquely  efficient  solar  energy  technology,  and  uniquely  profitable  approach  to  using  solar  energy, and Pt. Sugico Graha, a group of Indonesian coal mines in South Sumatera Province. 

Confidential Material   

   

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Mök  Industries,  a  US  company,  has  perfected  its  unique  approach  to  low‐cost  solar  energy  production by continuous dedicated research efforts since 1996.  Mök has six patents pending  and a strong international intellectual property program for dozens more patents over the next  three years and a continuing R&D effort.    Since  2002  Mök  has  partnered  with  Boeing’s  Spectralab  Division  to  perfect  its  unique  PhotoVoltaic  Design,  and  also  with  CH2M  HILL  LTD,  Industrial  Design  Construction  Corporation  Division,  an  $8  billion  engineering  and  architectural  firm,  to  perfect  large‐scale  production  of  its  uniquely  cost‐effective  solar  panel  design.    Mök  has  also  partnered  with  Accenture  a  $15  billion  management  consulting  firm  to  develop  the  highest‐best  methods  of  creating the greatest value for its innovative products while achieving Mök’s long‐term vision  of replacing extracted petroleum products with solar energy on the scale needed and the price  needed to sustain growth of the world’s industrial economy throughout this period.  Pt. Sugico Graha is a group of mines operating in South Sumatera Province.  Sugico consists of  Sriwijaya  Bintangtiga  Energy  in  Muara  Lakitan  District,  Brayan  Dintangtiga  Energy  in  Rawar  Llir District, Brayan Dintangtiga Energy in Muara Lakitan District, Sugico Pendragon Energy in  Rawas  Llir  District,  Lion  Power  Energy  in  Gunung  Megang  District,  Tansri  Madjid  Energy  in  Muara Enim District, and Sugico Graha in Rambang Dangku District.  Total reserves of coal are  estimated to be 5,360 million tons and lands having an aera of 90,192 hectares.    Of  this  Mök  Industries  has  agreed  to  convert  and  Sugico  Graha  has  agreed  to  contribute  for  solar conversion, 900 million tons of coal which the companies expect to yield in excess of 5,000  million barrels of high‐quality petroleum products giving this venture reserves equal to that of  a major mega‐cap oil company.  Sugico  Mök  is  an  Indonesian  company  created  by  a  Joint‐ Venture  Agreement  between  Sugico  Graha  and  Mök  Industries.        

Confidential Material   

   

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IV.

Products and Services 

Sugico Mök makes synthetic petroleum products using a variant of the Bergius Process.  This  process first developed by Germany in the 1920s has never been cost competitive with extracted  oil due to the high cost of elemental hydrogen needed to sustain the process.  That is until now.   Mök’s very low cost solar electricity allows the production of low cost hydrogen This hydrogen,  when  combined  directly  with  coal  at  high  pressure,  produces  very  high  quality  synthetic  petroleum  products.    That’s  because  there  are  very  few  cross‐reactions.    And  since  the  coal  is  not burned in the process, no carbon‐dioxide is produced.  This makes the Sugico Mök process  very clean, efficient, and productive compared to other processes.  Also, the availability of low‐ cost  electricity  and  low‐cost  hydrogen,  provide  secondary  sources  of  revenue  that  grow  over  time as the world moves toward a future hydrogen economy.  Sugico Mök produces higher quality petroleum products than competing processes and does so  at lower costs.  This has an important impact on the underlying value of coal in the ground.  Mök’s solar‐assisted Bergius process produces high‐grade synthetic petroleum products at $15  per barrel, while Fischer‐Tropsch produces a lower‐grade synthetic petroleum products at $35  per  barrel.    Since  petroleum  products  now  sell  in  excess  of  $70  per  barrel,  both  products  are  profitable.  But looking at the impact these processes have on the underlying value of coal, the  story is quite different.  By  dividing  the  market  capitalization  of  a  company  by  the  total  reserves  controlled  by  that  company  the  value  of  reserves  in  the  ground  is  computed.    For  a  coal  company  this  value  is  approximately  $1.50  per  ton.    For  an  oil  company  this  value  is  approximately  $29  per  barrel.   Mök’s solar‐assisted Bergius process produces 6.2 barrel per ton of coal, while Fischer‐Tropsch  produces 2.5 barrels per ton of coal.  Thus the change in value of coal in the ground is the value  of the oil that may be produced minus the cost of producing it, so;     

Mök’s Solar‐Assisted Bergius     6.2 * ($29 ‐ $15) = $86.80  Fischer‐Tropsch     2.5 * ($29 ‐ $35) = ($15.00) 

Mök’s  process  creates  tremendous  value  while  Fischer‐Tropsch  reduces  value.    This  explains  why Fischer‐Tropsch requires large subsidies to be profitably implemented in today’s markets.   As  Fischer‐Tropsch  becomes  more  efficient  and  as  the  value  of  oil  in  the  ground  rises  Fischer  Tropsch at some point is expected to add value as well.  

Confidential Material   

   

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V.

Marketing Plan 

Sugico Mök will arrange off‐take contracts for its petroleum products at market rates with the  relevant  purchasers  of  petroleum  products  operating  in  Indonesia.    Sugico  Mök’s  petroleum  products  will  meet  all  relevant  standards  for  these  products.    Currently  Mök  has  shown  that  solar‐assisted  derived  Bergius  products  meet  US  ASTM  and  US  Mil‐Spec  standards  for  petroleum products such as jet‐fuel, diesel‐fuel, gasoline and fuel oil.  Availability of these products at the prices indicated is the relevant factor of our success. 

Economics  Table 1  Cost of 20,000 bpd Coal to Liquids Production  4.5  365.25  1643.625  1000000  1643.625   $             69,500.00  $7,937.8  $4.83  50  $241.47  4698   $     326,511,000.00    0.1  $24.15  6.2  $3.89   $                   49.32  $4.80  $35  $5.65  $14.34   $     366,904,109.59     $     693,415,109.59 

Sunlight hours per day  Days per year  Sunlight hours per year  Watts/MW  MWh/MW‐year  Cost per MW   Cost per MW‐year  Cost per MWh  MWh/ton Hydrogen  Cost per ton Hydrogen  MW installed Sugico Mök   Total Cost Solar Installation    Hydrogen per ton Coal  Hydrogen Cost per ton Coal  Yield Barrels Liquid per ton  Hydrogen Cost per Barrel  Capital Cost per Barrel  Annual Cost of Capital/bbl  Coal Cost per ton  Cost of Coal per Barrel  Total Cost per Barrel  Total Cost Petroleum Processing    Total Cost Installation 

 

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Facts about the petroleum products industry in Indonesia:   •

In 2002 Indonesia produced 372 million barrels per year of petroleum products from 4.7  billion barrels of proved reserves, while demand for petroleum products in Indonesia in  2002  slightly  exceeded  this  figure.    Additional  petroleum  products  were  created  from  gas condensates. 

•

Indonesian demand grew at 4.7% per year while production is fell at 3.8% per year.  

•

Sugico Mök will produce 7.5 million barrels of liquid fuels starting in 2011 reversing this  shortfall  and  grow  its  output  to  produce  250  million  barrels  of  petroleum  products  by  2015 providing nearly half of Indonesia’s need for petroleum products.   

•

Sugico  Mök  will  produce  nearly  1%  of  global  demand  today  when  it  reaches  design  capacity of this concession, but  that total is expected to be less than ¾% global demand  in 2015.   

•

Sugico Mök initial production account for 2% of Indonesian demand in 2011 and grow  to nearly ½ of total Indonesian demand in 2015. 

•

Sugico  Mök  will  bring  to  market  more  liquid  fuels  than  currently  exist  in  all  of  Indonesia’s  reserves  of  petroleum  products  and  produce  them  at  a  rate  to  allow  Indonesia to grow without shortages throughout 2033 and beyond. 

•

Additional  solar  panels  installed  throughout  the  country  over  time  will  produce  low‐ cost electricity for Indonesia easing electricity shortages and reversing rising electricity  prices  while  reducing  the  demand  for  coal  and  oil  to  generate  electricity  and  reducing  atmospheric pollution. 

•

In  2002  Indonesia  had  21.4  Gigawatts  of  installed  generating  capacity  that  produced  75  million  MWh  of  electrical  energy.    101  million  Mök  solar  panels  producing 58.7 Gigawatts when the sun shines will provide all this demand and  occupy 37,600 ha of land ay 100. 

•

Direct  sales  of  electricity  to  utilities  allows  Sugico  Mök  to  use  more  coal  to  produce  petroleum.  Additional coal reserves exist that may be converted to petroleum products  using solar hydrogen.  So in this way Sugico Mök expands the production of petroleum  products  for  export  while  reversing  rising  energy  prices  and  ends  energy  shortages  of  petroleum products in Indonesia.   

•

Sugico’s reserves in excess of 5,000 million tons of coal can produce more than 34 billion  barrels  of  synthetic  petroleum  products  using  Mök’s  advanced  solar  assisted  process.  

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This  is  a  total  amount  of  liquid  fuels  9x  greater  than  Indonesia’s  proved  reserves  of  petroleum products today.  •

With a compounded 6% economic growth rate 34 billion barrels is sufficient to supply  all of Indonesia’s energy needs through 2033 using Sugico Graha’s proved coal reserves  and Mök’s solar‐assisted Bergius process. 

•

Fully developing the concessions available to the Company give Sugico Mök the ability  to become one of the largest most successful energy companies in the world.   

 

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Product    Sugico Mök uses a new way to produce higher quality petroleum products from coal reserves at  a cost that increases the value of the underlying coal reserves in the ground.  While the process  used by Sugico Mök is more costly than drilling and extracting proved oil reserves there are  no  exploration costs or discovery risks associated with Sugico Mök’s production method.    Features and Benefits  Coal to Liquids  •

Quality  equivalent  to  conventional  oils  due  to  low  number  of  cross‐reactions  produced  with  higher  yields per ton of coal used. 

•

Creates  a  higher  value  petroleum  product  at  lower  cost. 

Obtaining  high  value  and  greater  yields  at  lower  cost  mean  the  value  of  the  underlying  coal  reserve  is  dramatically  increased in value.  This increase in value can be leveraged to  expand production quickly.   

     

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            APPENDICES 

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  William Mook, CEO   Mök Industries 

  Advances 1996 through 2006 

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Low‐cost Photovoltaic Panel Design & Construction    This  is  a  new  sort  of  concentrating  photovoltaic system that consists of arrays  of lenses similar to that shown here.  There  is  a  fish‐eye  type  wide  angle  refractive  imaging  lens  up  top,  a  non‐imaging  conical reflector in the middle, and a non‐ imaging compound parabolic concentrator  down  below.    In  the  exit  plane,  is  a  small  photovoltaic cell soldered onto conductive  copper foil, embedded in a plastic lattice.      The  lens  system  consists  of  thin  film  clear  plastic, such as PET, (the same material as  soda  bottles)  filled  with  ultra‐pure  clear  water.    Since  the  water’s  refractive  index  matches  the  refractive  index  of  the  plastic  used, any irregularity in the PET surface is  invisible.    This  is  why  water  bottles  filled  with  water  appear  to  be  far  clearer  than  water bottles that are empty.   

 

  The  plastic  film  holds  the  water  in  a  lens‐ like  shape,  and  the  water  itself  is  the  lens  medium.  This way the film can be molded  into lens shapes at far lower cost than with  an all plastic lens.  Also, only a very small  amount  of  plastic  is  used  for  a  given  lens  volume.      Large  volume  lenses  can  be  made  less  precisely  than  small  volume  lenses of the same capacity which reduces  manufacturing costs. 

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  The film is hot‐press molded in four layers.  The bottom‐most layer has copper foil imbedded in  it.  Photo voltaic cells are then soldered onto the foil.  Another layer is thermally joined to the  bottom layer to create a sparse array of photo‐voltaic cells.  The top two layers are formed and  joined to the completed bottom layer immersed in a water bath.  A lens array of artibtrary size  may be formed.    The  concentrating    photovoltaic  system  described  here  consists  of  panels  each  8  feet  by  4  feet  in  area  comprised  of  4,196  lenses.    Each  lens  has  one  square  inch  area.  Each lens illuminates a photovoltaic  cell  one  square  millimeter  in  area.    So,  in  each 8 foot by 4 foot panel there are 4,196  photovoltaic  cells  each  one  square  millimeter  in  area.    This  means  that  a  typical  300  mm  diameter  wafer,  costing  $140  for  first  run  commercial  crystalline  silicon,  with  typical  yields,  can  make  14  panels  each  8  feet  by  4  feet  in  area.    So,  the  cost  of  photovoltaic materials is only $10 per panel.  These same wafers if used to make a conventional  panel would cost $11,820 from the same wafers.  The power produced under illumination is the  same in either case.     The  plastic  film  which  contains  the  water  costs  $4.48  per  8  foot  by 4 foot panel.  The water costs  $0.30 per ton, and the water cost  is nil per panel.  The copper foil,  copper  wire,  and  structural  stainless  steel  cable  adds  the  most  cost,  nearly  $23.00  per  panel.    Overall,  the  cost  per  panel  is  less  than    $38.00  each.      Each  panel  produces  580  watts  under  full  illumination.    This  is  6.54 cents per peak watt.   

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Panels  may  be  produced  individually,  and  individually  placed  and  wired.    But  the  lowest  cost  method  of  installation  involves  pre‐wiring as many panels at the factory as  can  be  conveniently  handled.    Think  of  Christmas tree light strings.  Our panels are  built the same way.  One thousand one hundred 8 foot by 4 foot  panels  can  be  wired  together  into  110  separate  circuits,  presenting  55  separate  circuits at either end of the string.  The 1,100  panels  are  z‐folded  onto  a  53  foot  flat‐bed  trailer, to form a shipping volume of 12 feet  by  8  feet  by  53  feet,  and  conveniently  shipped  anywhere.    Thus,  a  single  tractor‐ trailer  combination  can  ship  0.638  MW  of  solar panels.      Installing  the  panels  involves  pulling  the  string with a special tractor from East to West after staking one end of the string to the ground.   Panels then unzip from their z‐fold arrangement, and the special tractor equipped with disks,  ‘plant’ the panels in an 8 foot wide strip that is nearly 1 mile long.    Electrical connections are made at either  end,  to  variable  load  electrolyzers,  or  variable load sodium‐sulfur batteries.  It  is estimated a crew of eight working one  shift  with  four  tractors  can  install  520  strings  covering  nearly  one  square  mile  of surface area every week.       

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Industrial  Design  Construction  Company’s  Pittsburgh office, a division of CH2M HILL LTD  worked  closely  with  me  detailing  every  manufacturing  step  involved  in  creating  a  plant  that  would  be  most  economical.    The  design  shown  above  is  for  a  specific  site  in  New  Castle  PA,  at  a  place  called  Millenium  Park.    This  $1.6  billion facility has the ability to produce 1 square  mile of solar panels at a cost of less than $0.07 per  peak watt installed every 2.8 days.  The plant can  produce  71  GW  of  panels  each  year.    It  employs  690  people  full‐time.    An  associated  silicon  foundry  is  also  planned  for  the  site  and  will  employ  an  additional  820  people.    This  silicon  foundry is typical of this type of facility.   

The land needed to operate hundreds of  square  miles  of  panels  is  obtained  from  large  surface  mine  operators  who  operate  surface  mines  in  sunny  regions.   Anglo  Ashanti  Gold  and  Newmont  Mining  both  operate  lands  leased  from  Union  Pacific  Railroad  in  Northern  Nevada.  These lands have a total area in  excess  of  4,400  square  miles  in  this  region.  This is an area greater than all the rooftops of all the buildings in the continental United  States.  Due to recent ‘brightfield’ legislation enacted in the past year, bonding companies have  expressed an interest in guaranteeing the reclamation of land that we cover with our low‐cost  solar panels for a premium that is a fraction of the current reclamation cost for these companies,  saving these companies billions of dollars.  Once I have a credible scale of production to cover  this  acreage  it  is  very  well  possible  that  I  could  receive  amounts  in  excess  of  the  cost  of  the  proposed factory described above to sign leases that take over this land and use them for solar  collector sites. 

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BREAKTHROUGH TECHNOLOGY  At  the  Earth’s  surface  direct  sunlight  posseses  850  Watts  per  square  meter.   That’s  850  micro‐ watts per square millimeter.  Converted at 15% efficiency to electricity by silicon PV cells  this  represents  a  power  of  127.5  microwatts  electrical  per  square  millimeter.  At  a  cost  of  $1.00  per  square inch for silicon a square millimeter costs 100/645.16 = 0.15 cents per sqare mm.  In terms  of power this is a penny for every 850 microwatts.  This is $11.76 per watt.  Which is 10x greater  than the cost of conventional generators.   However,  by  concentrating  sunlight  100x  to  500x  using  mirrors  or  lenses,the  energy  density  may be raised by the same factor as the concentration, reducing costs by the same factor.  So,we  can see that its possible by using low‐cost concentrators costs per watt can be reduced to a range  of $0.12 and as low as $0.02 per watt!   The  trouble  with  increasing  the  power  levels  is  the  existence  of  parasitic  losses  in  the  PV  device.  The parasitic losses arise from i‐squared R heating as the current increases.  This loss   mechanism grows as the square of intensity while the output grows linearly. Therefore,we have  a  situation  where  diminishing  returns  occur,  and  peak  output  is  achieved  with  any  further  increase in intensity resulting in lowered output.   The form of the equation is;               Pout = Vout * Rload –  I^2 * Rinternal   Where I is the current.    Since I is proportional to intensity (i) we can rewrite the equation;               Pout = A * ( Vout * Rload – i^2 Rinternal)   Typical photocells achieve peak intensity of 2 to 4 x ambient solar output.     There are two ways to reduce parasitic losses.      (1)     Reduce Rinternal and  (2)     Increase Vout (thus reducing I) 

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   The  reducing  Rinternal  was  first  done  by  Swanson  through  using  back‐junction  photocells.  Increasing  Vout  was  first  achieved  by  Sater  through  his  vertical  multi‐junction cell technology.   By  increasing  the  number  of  junctions  40x the voltage of the PV device increases  by 40x. This reduces the impact of I^2 by a  factor of 40x40 = 1,600x   Swanson  has  achieved  reductions  of  Rinternal  by  a  factor  of  100  –  thus  increasing  peak  intensity  by  a  factor  of  100.     The  object  of  the  following  design  is  to  combine  both  improvements  into  a  completely  new  innovation  and  essentially eliminating parasitic losses.   1.5  mm  x  1.5  mm  =  2.25  sq  mm.   5”  wafers  =  12,667  sq  mm,  implies  5,630  dies.   With  a  50%  yield,this  is  2,500  dies  per  wafer.   5  to  10  wafers  yield  12,500 to 25,000 dies.    Each  die  operating  at  150x  solar  intensity produces 43 milliwatts.  Each  wafer produces therefore 107.5 watts.   At 450x this triples to over 322.5 watts  per  wafer.   At  $20  to  $30  per  wafer  this  translates  to  $0.10  and  $0.20  per  watt.   Doubling yield would improve  pricing to $0.05 to $0.10 per watt.  Our  ultimate  target  for  PV  costs  is  $0.03  per watt at 500x intensity. 

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EVOLUTION OF PROTOTYPE TECHNOLOGY  An  important  aspect  in  creating  low‐cost  solar  energy  is  the  ability  to  collect  sunlight  at  a  reasonable  price  and  concentrate  it  to  high  intensity.    Mök  has  achieved  this  in  a  number  of  ways.    At  first  we  used  spun  aluminum  parabolas  coated  with  mylar  to  focus  sunlight.    This  proved  our  core  technology.    Next,  we  used  aluminized  PET  formed  into  fresnel  mirrors  as  shown.  Finally, we hit upon making low cost lens arrays from PET to create stationary lenses  that need not track the sun.  This final innovation has allowed Mök to build solar collectors for  less than three cents per peak watt.  This allows Mök to create energy for 1/5th cent per kilo‐watt  hour.   

  PENNSYLVANIA PRODUCTION PLANT AND CENTRAL COLLECTOR LAYOUT  This  1.2  million  square  foot  facility  will  employ  690  people  directly.    It  will  produce  a  square  mile of solar collectors every 2.8 days.  These  4’ x 8’ x 2” collector panels will be strung together  in strings of 1,100 forming a string 1 mile wide.  The string will be ‘z’ folded onto a 52’ truck for  shipment anywhere in the US.  The strings will be unfolded and planted by a special planting  tractor.  Five tractors and crew will install the output of the plant.  The strings will charge utility  scale  batteries.    These  batteries  will  drive  HVDC  power  lines  to  distribute  DC  power  to  wherever its needed. 

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BERGIUS PROCESS    During  World  War  Two  Germany  made  great  use  of  synthetic  fuel  –  this  was  based  on  its  extensive  deposits  of  bituminous  and  brown  coal.    High  quality  syntheteic  fuel  was  manufactured  mainly  by  two  processes:  Bergius  Hydrogenation  (developed  in  1926)  and  Fischer‐Tropsch (developed in 1923).   The  Bergius  process  involved  splitting  the  complex  molecules  of  coal  and  then  forcing  hydrogen into them under high pressure to produce liquid oil molecules. In the Fischer‐Tropsch  process,  molecules  of  hydrogen  and  carbon  monoxide,  obtained  by  breaking  up  coal  with  steam, were used to form oil molecules.  The Bergius hydrogenation was superior to Fischer‐Tropsch.  By 1944 Germany was producing  about  47%  of  all  it’s  oil  products  including  nearly  100%  of  its  aviation  fuel  using  Bergius  hydrogenation  for  this  reason.    The  high  cost  of  hydrogen  today  is  the  only  reason  Bergius  hydrogenation is not in wide use.  Mök’s low cost solar hydrogen changes this condition.  The  Mök  Process  uses  renewable  hydrogen  derived  from  sunlight  and  water  to  power  a  modified Bergius Process resulting in six barrels of oil from each ton of coal while producing no  emissions. 

 

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  Presentation   to  The Office of Science and Technology Policy  The Office of the President  of  The United States  By   William Mook  Mök Industries  Technology Overview & Implications    December 10, 2004    SUMMARY  Mök Industries seeks to sell to the United States Strategic Petroleum Reserve 250 million barrels  of synthetic oil produced from sunlight and coal at a selling price of $25 per barrel.  Mök needs  no money now, only a firm order for $6.25 billion giving Mök the ability to deliver synthetic oil  anytime it becomes available within the next eight years.  This synthetic oil will be light Texas  crude  oil  equivalent  and  made  from  solar  derived  hydrogen  and  US  coal  using  the  BERGIUS  PROCESS.    Along  with  an  initial  order,  Mök  also  seeks  the  right  to  use  up  to  20,000  square  miles  of  available  government  land  along  with  lands  surrounding  Union  Pacific  rail  lines  to  collect,  convert,  and  transmit  solar  power  on  a  scale  unprecedented  in  history.    This  much  land  converted to solar panels will make the United States dominant in energy production, not just  self‐sufficient.    To maximize growth of its solar infrastructure, Mök seeks to avoid fees and taxes for use of this  land  as  well  as  taxes  on  the  improvements  it  makes  to  these  lands.    Money  saved  will  be  reinvested in the growth of the company.  Mök expects to pay normal sales and income taxes on 

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its sales and profits.  Mök also expects to pay fees and taxes on improvements and land once it  grows beyond its initial 20,000 square mile plan.  Mök  Industries  LLC  has  developed  a  BREAKTHROUGH  TECHNOLOGY  that  produces  solar  electricity for as little as 1/5th cent ($0.002) per kWh.  Energy experts have described this advance  as a “revolutionary breakthrough” in energy technology.      Mök’s  energy  technology  is  dramatically  less  expensive  than  any  other  conventional  energy  source.   ENERGY COST COMPARISON  Mök Energy

$0.002/kWh

CONVENTIONAL ENERGY Coal $0.020/kWh Electricity $0.060/kWh PV Panel $0.040/kWh

10x 30x 200x

 

OPPORTUNITIES  Mök’s ability to generate electricity from sunlight at less cost than fuel costs alone permits Mök  to compete in ALL ENERGY MARKETS.  This includes;  1. 2.

Electricity – generated at a central solar station at a cost of $0.002 per kWh.  Renewable Hydrogen – generated from electricity and water  a. Synthetic Methane – generated from renewable hydrogen and carbon dioxide  via the SABATIER PROCESS at a cost of $1.30 per mcf.  b. Synthetic  Oil  –  generated  from  renewable  hydrogen  and  COAL  via  the  BERGIUS PROCESS at a cost of $8.57 per barrel. 

  STRATEGIC BENEFITS  The  United  States  currently  depends  on  overseas  sources  for  most  of  its  energy.    Using  Mök  solar collectors the United States will become the lowest‐cost energy producer in the world by  generating conventional fuels from  sunlight and domestic coal.  By making its own oil at low  cost  the  United  States  will  become  the  dominant  energy  supplier  world  wide,  changing  the  nature  of  international  relations  and  re‐establishing  the  geo‐political  climate  of  the  1920s  and  1950s.     

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Support  of  Mök’s  vision  provides  immediate  strategic  benefit.    OPEC  recently  announced  its  intention to raise the floor price of OPEC crude from $22 per barrel to $40 per barrel. The United  States  presently  has  no  recourse  but  to  comply  with  this  announcement.    However,  by  supporting  US  developed  synthetic  oil  production  capacity  at  $25  per  barrel  or  less  from  domestic coal and sunlight, the US undermines OPEC’s ability to maintain this new price.   Should the United States wish to take this action Mök would be willing to commit selling 250  million barrels of its synthetic crude to the US Strategic Petroleum Reserve for $25 per barrel.    A commitment of this magnitude would allow Mök to raise the capital it needs in the private  market  and  move  aggressively  forward  to  make  the  US  independent  of  all  foreign  sources  of  energy by 2015.  SYNTHETIC OIL  The United States consumed 6.76 billion  barrels  of  oil  in  2003.    To  create  this  much  oil  each  year  using  Mök’s  new  technology  requires  the  conversion  of  1.12 billion tons of coal to oil each year  along  with  the  creation  of  112  million  tons  of  hydrogen  from  water.  To  support  this  level  of  production  requires  7,958  square  miles  of  Mök  collectors.    This  area  of  collectors  is  sufficient  to  supply  all  US  oil  needs  from  domestic  US  coal  supplies.    Ten  manufacturing plants of the type Mök plans to build in Pennsylvania are sufficient to build up  this area of collectors in eight years or less.  The US possesses 245 billion tons of easily recoverable coal.  Converted to oil using hydrogen  produced from solar energy this coal makes 1,470 billion barrels of synthetic oil.  An amount of  oil  64  times  larger  than  America’s  current  proven  reserves  of  22.7  billion  barrels.    The  US  therefore may provide for all its oil needs for the next 200 years using Mök’s process.    Since  Mök’s  oil  relies  on  large  quantities  of  inexpensive  hydrogen  for  its  production,  Mök’s  process  naturally  produces  conditions  favorable  to  the  evolution  of  a  hydrogen  energy  economy.    The  development  of  a  hydrogen  economy  will  occur  as  a  natural  outcome  as  Mök  uses low‐cost hydrogen to make conventional hydrocarbon fuels.    

Confidential Material   

   

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ELECTRICITY   In 2003, the United States generated 3,848 billion kilowatt‐hours (Kwh) of electricity.  Coal‐fired  plants accounted for 53% of generation, nuclear 21%, natural gas 15%, hydroelectricity 7%, oil  3%, geothermal and ʺotherʺ 1%.  5,438 square miles of Mök solar collectors  are  required  to  meet  this  demand  from  sunlight  alone.    Six  additional  Mök  solar  plants  of  the  size  being  built  in  Pennsylvania  will  be  capable  of  producing 5,438 square miles of collectors  in eight years.    Using  solar  sources  of  electricity  reduces  and  eventually  eliminates  coal  as  an  electrical  energy  fuel.    The  demand  for  coal to generate electricity matches the demand for coal used to make synthetic fuel under this  plan.  So, there need be no change in the overall demand for coal as Mök grows, provided the  right mix of electricity and oil is generated from solar energy.    Mök  solar  collectors  generate  Direct  Current  (DC)  electricity.    High  Voltage  Direct  Current  (HVDC)  transmission  is  possible  over  long  distances.    Mök  intends  to  create  a  network  of  HVDC  transmission  across  the  US.    Mök  will  then  sell  electricity  to  utilities  at  a  cost  equal  to  today’s fuel costs alone.  This will cover Mök’s cost of generation and transmission and produce  profits for Mök.  Utilities will buy inverters and controls instead of generators at less cost per  watt than they pay for generators.  These controls will allow utilities to tap into the HVDC grid  and produce electricity more cheaply and with fewer emissions than they can today.    NATURAL GAS  Hydrogen  produced  by  Mök  solar  collectors  when  combined  with  carbon  dioxide  produce  methane,  the  principal  component  of  natural  gas.    Significant  quantities  of  methane  are  produced and significant quantities of carbon dioxide are absorbed using the Sabatier process  powered by Mök solar panels.  The US is self‐sufficient in Natural Gas so there is no significant  strategic energy benefit in using solar energy to generate natural gas.      Using  the  Sabatier  process  to  produce  methane  does  allow  Mök  to  make  a  profit.    Mök  will  absorb  carbon  dioxide  emissions  and  sequester  carbon  dioxide  already  in  the  atmosphere.   From this we will produce a saleable fuel. 

Confidential Material   

   

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 THE MÖK PLAN   

  Mök  collects  solar  energy  on  reclaimed  surface  mines  in  Nevada  to  produce  DC  electricity.   Mök then transmits HVDC electricity to Salt Lake, Utah.  There, we convert water to hydrogen  and oxygen using that electricity.  We capture the hydrogen and send it by pipeline to Powder  River  Basin,  Wyoming.    Mök  combines  the  hydrogen  with  coal  in  BERGIUS  REACTORS  to  create  a  high‐quality  synthetic  crude  oil.    We  then  send  the  oil  by  pipeline  to  Cushing  Oklahoma  where  it  is  distributed  to  buyers  such  as  the  Strategic  Petroleum  Reserve  in  Louisiana.    Expansion of the initial 200 square mile array to over 6,000 square miles will eventually displace  all US oil imports within 10 years.  Additional  solar  capacity  in  Nevada  will  be  added  to  provide  electricity  for  Northern  California.    Additional  solar  capacity  in  Arizona  will  be  added  to  provide  electricity  for  Southern California and US South West.      

Confidential Material   

   

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      VENDOR REPORTS     

Confidential Material   

   

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Accenture LLP 200 Public Square, Suite 1900 • Cleveland, OH 44114 Tel: (216) 535-5000 www.accenture.com October 28, 2003 Mr. William H. Mook Mök Industries, LLC 4449 Easton Way Columbus, Ohio 43219 Dear Mr. Mook: Accenture LLP (“Accenture”) is pleased to provide this addendum (“Addendum”) to Mök Industries, LLC (“Mök Industries”) which amends the Arrangement Letter by and between the parites signed on July 31, 2003 (“Arrangement Letter”) to extend Accenture’s services. The services described in this Addendum (“Services”) shall be provided subject to the Assumptions and Standard Business Practices set forth in the Arrangement Letter. All terms and conditions of the Arrangement Letter not expressly modified herein shall remain in full force and effect. This Addendum shall supercede the Arrangement Letter when in conflict. Background Accenture has supported Mök Industries over the last several months in planning and executing technical and economic validation, in conducting day-to-day operations, as well as in preparing Mök Industries business plan, financial models and logistics network strategy. In addition, Accenture has leveraged its network of executive contacts, subject matter experience, and its brand image in order to help facilitate external technical and economic validation, and to contribute to the credibility of Mök Industries. Mok Industries acknowledges that Accenture’s work has been satisfactorily performed. Mök Industries is now at the point where it desires to pursue capital funding, alliances and potential customers for its start-up operations. Mök Industries has asked Accenture to continue in its support role. Accenture agrees to continue supporting Mök Industries as described below for a period from October 28, 2003 through July 31, 2004 (“Project”). Mök Industries’ Project Objectives Mök Industries’ key objective in this Project are: • to initiate efforts to raise capital for start-up operations, from various sources including investor financing, government grants, strategic alliances, market making activities, etc. • to identify and establish agreements with a select number of potential alliance partners and/or customers which may facilitate start-up efforts

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Mr. William H. Mook Mok Industries, LLC October 28, 2003 Page 2

Project Approach, Organization, and Staffing Accenture will support Mök Industries by providing continued day-to-day operations support, program management and planning, and subject matter experience in various industries (e.g., oil and gas, semiconductor, market making, government, coal, utilities, etc.) as determined to be required by Accenture and Mök Industries. Further, we will endeavour to facilitate interactions with potential investors, government agencies, potential customers and alliance organizations. It is expected that the work related to the Project will be performed at Mök Industries’ offices in Columbus, OH, as well as in various Accenture offices as appropriate and as determined by Accenture. It is expected that the Project will start October 28, 2003 and end by July 31, 2004. At that time, Accenture and Mök Industries will determine whether and how to proceed together. If additional services are agreed upon at that time, those services will be addressed under a separate addendum or arrangement letter. The Project organization will follow a similar structure as the previous project between Mök Industries and Accenture. The Project organization will consist of an Advisory Panel and the Project Team, as that term is defined below. The Advisory Panel will consist of up to six Accenture appointees and up to three appointees of Mök Industries. The Advisory Panel will serve as a resource of knowledge and subject matter experience to the Project Team. The Advisory Panel will convene a minimum of two times during the Project term, or as required by the Project Team. The work will be performed by a blended team comprised of personnel from Accenture and Mök Industries (the "Project Team"). The composition of the Project Team is described below: • • • • •

Bill Mook Dave Abood Mike Craig Matt Haley, Tom Kelly, others TBD

Mök Industries Project Manager Accenture Lead Accenture Project Manager Accenture Subject Matter Experience Other Accenture Consultants

Mr. Mook will work with the Accenture team mainly through Dave Abood and the Accenture Project Manager, Mike Craig. Assumptions Accenture recognizes that the nature of this type of business start-up Project is such that tasks, deliverables, timing and priorities may change throughout the Project. Accenture will work with Mök Industries in a collaborative manner to help manage this volatility and facilitate the effort to

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Mr. William H. Mook Mok Industries, LLC October 28, 2003 Page 3

achieve the Project objectives. If substantial changes occur to Project scope or effort required, Accenture and Mök Industries will work together to determine the appropriate course of action, which may result in amending this Arrangement Letter. Project Compensation Accenture’s fees (“Project Fees”) for the Services hereunder will be made up a $25,000 consulting retainer payment due upon signing this Arrangement Letter, as well as several value-sharing components as described below plus out-of-pocket expenses and applicable taxes: 1. Relationship Leverage Fee For each introduction to a potential Mök Industries customer which Accenture facilitates by leveraging its relationships, and which results in an initial meeting with Mök Industries, Mök Industries will pay Accenture a $5,000 fee regardless of the outcome of the initial meeting. If an initial contact ultimately results in a signed agreement between Mök Industires and the customer, Mök Industries will pay Accenture $100,000 upon signing such agreement, but not to exceed the projected value of the 9% (for Accenture-facilitated revenues) value sharing component described in 3(b) below, nor to exceed the projected value of the 3% (for total revenues) value sharing component described in 3(a) below. This component of compensation will extend beyond the end date of this Arrangement Letter, as long as Accenture is engaged by Mök Industries. 2. Capital Value-Sharing For Services provided, Mök Industries agrees to pay Accenture an amount of 6% of all capital raised during the period Accenture is engaged by Mök Industries, to be paid monthly. This component of compensation will extend beyond the end date of this Arrangement Letter, as long as Accenture is engaged by Mök Industries. All sources of capital will be subject to this component of Accenture’s Project Fees, including capital from individual or institutional investors, market making activities, government grants, or other sources. 3. Revenue Value-Sharing a. Superceding the solar cell revenue sharing agreed by Mök Industries in the Arrangement Letter dated July 8, 2003, Mök Industries will pay Accenture 3% of all revenues associated with sales and licensing of solar units, photovoltaic cells, electricity, hydrogen, methane or any other products or services from which Mök Industries derives revenue other than liquid fuel products, for a period of 15 years from the date of first revenue recognition as defined by FASB guidelines, to be paid monthly. b. In cases where Mök Industries revenue is derived from a customer relationship facilitated by Accenture, the value-sharing payment in (a) above will be 9%, versus 3%. Page 33 of 159

Mr. William H. Mook Mok Industries, LLC October 28, 2003 Page 4

c. If at some point during the above outlined time period (15 years from the date of first revenue recognition as defined by FASB guidelines), Mök Industries or any part of Mök Industries is acquired by another company, Mök Industries will pay Accenture (i) 10% of the acquisition price if Accenture is involved in facilitating the acquisition, or (ii) the present value of all projected value-sharing royalties associated with the entity being sold, not exceed 15% of the acquisition price. d. At any time, Mök Industries may propose to pay Accenture a mutually agreeable amount in order to compensate Accenture for the future value of the above payments due. It will be at Accenture’s discretion as to whether to accept such payment in exchange for the future value of the above payments due, and all such agreements shall be documented in writing as an addendum to this Arrangement Letter. 4. Consulting Services Provided By Bill Mook Mök Industries reconfirms the agreement in the Arrangement Letter dated July 8, 2003 related to the commitment to provide the consulting services of Bill Mook. 5. Right of First Refusal and Commitment of Subsequent Services Mök Industries reconfirms the agreement in the Arrangement Letter dated July 8, 2003 related to providing Accenture with a Right of First Refusal as described therein. 6. Payment for Out-of-Pocket Expenses Mök Industries will reimburse Accenture for all out-of-pocket expenses incurred by Accenture. Based on the Project scope, resources and schedule described herunder, Accenture will make every reasonable effort to limit out-of-pocket expenses to less than $50,000. This does not include apartment expenses which are to be paid by Mök Industries directly. If changes to scope, resources or schedule are deemed to have an impact on the expense estimate, Accenture will notify Mök Industries of such impacts before incurring any further expenses. Any travel and related expenses incurred by Accenture will be invoiced and paid by Mök Industries on a monthly basis as incurred and within 15 days of receipt of invoice. Applicable taxes will be invoiced to Mök Industries as well. Accenture appreciates the opportunity to be of service to Mök Industries and looks forward to working with you on this engagement. I have provided you with two signed originals of this Addendum. If it is consistent with your understanding and acceptable to Mök Industries, please sign each of the two originals and return one to me while retaining one for your files. If you should have any questions or concerns, please do not hesitate to contact Dave Abood at (216) 5355005.

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Mr. William H. Mook Mok Industries, LLC October 28, 2003 Page 5

*** Very truly yours, ACCENTURE LLP

Partner, Accenture Inc. Acknowledged and Accepted: Mök Industries, LLC By: Title: Date:

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Sent: Subject:

Friday, March 19, 2004 9:23 AM RE: Valuations

Bill, First, I like the way you are thinking big picture. A scenario can be developed based on earnings projections for BP Solar selling Mök panels into a project or if they are the owner of the project (which I have not seen any examples of BP Solar owning a project, only supplying the panels for a project). We can also module this on a partnership approach as you suggest below. As you correctly point out, any analyst worth their salt does a valuation for a company looking at each division, then adding up the total. This means our valuation should only be on BP Solar, not BP as a whole using the $185 billion market capitalization number. The multiples on page 20 of the business plan are multiples of EBITDA, which multiples the EBITDA in 2008 as a proxy for what the future terminal value of the company could be. This is an alternative to taking the 2008 EBITDA and dividing by the discount rate to get a future value of the terminal value. Both are correct and can be used to compute a present value of a company… it just depends if future EBITDA is expected to increase (then you’d want to use the multiple) or if it is somewhat steady (then using the discount rate is alright) A Price-to-Earnings multiple (18.8 for BP as a whole) would be incorrect to use, as it is not a multiple of EBITDA, it’s a multiple of what the BP’s stock price is relative to their earnings. Also, it is for the whole company, not just BP Solar. We would use the P/E for BP Solar to estimate what our stock price could be based on our earnings, using BP Solar’s P/E as a proxy of what is possible. Alternatively, we can estimate what BP Solar could earn as a component of their EBITDA, which can then be used to calculate the effect on BP Solar’s contribution to BP’s overall stock price using a P/E from another solar company – one that just deals with solar as a proxy for what BP Solar’s P/E would be if they were a stand alone company. Then we would add this increase for the BP Solar division to the overall BP stock price. I think we should stick to only the effect of BP Solar. BP’s revenue for 200 was $236 billion with operating income of $14.1 billion. I suspect BP Solar’s revenue was less than $300 million (I was not able to find specific revenue or earnings information for BP Solar), which means even if we increased BP Solar’s earnings by 50%, the effect on BP’s earnings and subsequent share price is negligible as a percentage, when only dealing with electricity and panel sales. This can also be done for someone like Shell who has the Shell Hydrogen and Shell Solar divisions. It probably doesn’t make sense to do it for all the majors, as I haven’t seen the Exxon Mobil or Chevron Texaco have solar divisions, or even someone like Marathon or ConocoPhillips. Mike Michael P. Craig Accenture Global Natural Resources

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TABLE OF CONTENTS Section

Page

1

Executive Summary................................................................ 1-1

2

Project Goals and Scope of Work ........................................... 2-1

3

Product Description................................................................. 3-1

4

Assumptions and Design Considerations ................................ 4-1 Capacity Requirements .................................................. 4-1 Materials ......................................................................... 4-1 Process Alternatives Considered.................................... 4-1 Location of Manufacturing Facility............................... 4-2 Potential Locations for Panel Arrays ............................. 4-2 Cost Basis....................................................................... 4-2

5

Concept Design Review.......................................................... 5-1 General........................................................................... 5-1 Equipment Requirements ............................................... 5-1 Typical Cell.................................................................... 5-2 Area Requirements......................................................... 5-3 Facility Block Layout ..................................................... 5-4 Material Flow................................................................. 5-6 Raw Materials Handling................................................. 5-6 Finished Good Handling................................................. 5-6 Receiving........................................................................ 5-7 Shipping.......................................................................... 5-8 Storage............................................................................ 5-8 Utilities........................................................................... 5-9 Building Shell................................................................ 5-17 Office Area, Support Space, and Amenities ................. 5-17

6

Production Ramp Up, Organization, and Manpower.............. 6-1 Proof of Concept ............................................................ 6-1 Product Design............................................................... 6-1 Process Design ............................................................... 6-1 Production Rate.............................................................. 6-1 Production Ramp Up ...................................................... 6-2 Organization Recommendations .................................... 6-3 Staffing Ramp Up.......................................................... 6-11 Training Recommendations .......................................... 6-13

7

Milestone Schedule ................................................................. 7-1

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8

9

ROM Cost Estimate ................................................................ 8-1 Facility............................................................................ 8-1 Process Equipment ......................................................... 8-1 Operating Costs.............................................................. 8-1 Summary........................................................................ 8-2 Analysis and Preliminary Recommendations ......................... 9-1 General........................................................................... 9-1 Areas/Issues of Concern................................................. 9-1

APPENDIX Appendix 1.0 PV Circuit/Assembly Concept Bus Bar Screen Printing PV Application Appendix 2.0 Production Capacity Equipment Utilities Open Issues Plastics Cost Labor Cost Estimate-Manufacturing Operations “Simple” Cost Summary Appendix 3.0 “Sheet” Module Typical Cell Block Layout – Baseline Block Layout – Option Appendix 4.0 Master Plan – Building Appendix 5.0 Estimating Accuracy Curve Appendix 6.0 Materials Comparison Appendix 7.0 Planning for Success in Transitioning New Technologies into Economical Full-Scale Production

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Section 1

EXECUTIVE SUMMARY Mök Industries, Inc. is proposing to construct solar power plants that produce clean electricity at a cost lower than any other power generation method, using a series of proprietary technology and process innovations. The key element of Mök’s low energy costs is extreme concentration of sunlight onto photovoltaic generators designed to operate at extraordinary light intensities. The generator panel is comprised of an array of concentrating solar optics, each housing an advanced PV cell. To put its technology into large scale production, Mök desires to complete the design of the manufacturing process and establish the production tool set needed to produce the generator panel. Mök has commissioned IDC to assist in refining the conceptual product characteristics, determine manufacturing resources, and develop a facility concept to commercially produce the generator panels. To accomplish these objectives, IDC has teamed with its sister company, Lockwood Greene. This report identifies preliminary conceptual designs for the following: n

Product and manufacturing process.

n

Manufacturing facility.

n

Site plan, based on the Millennium Technology Park in Lawrence County, Pennsylvania.

n

Organizational and manpower requirements.

n

Milestone project implementation schedule.

n

Rough order of magnitude (ROM) opinion of probable construction and manufacturing equipment costs.

The concept developed for the panel is a 4- by 8-foot module composed of three plastic sheets that when formed, are bonded together to form the optical concentrator containing the PV cell. The finished module will be self-supporting and stackable. Throughout the development of the module, multiple design considerations were evaluated and assumptions made. Decisions made are based on experience and engineering judgement with cost always a primary influence. In order to establish the manufacturability of the conceptual product design, a work cell was developed to meet the production output targets. The work cell, consisting of a typical equipment set, can then be duplicated to achieve full-scale high volume production of 97GW/year. The space and utility requirements for the manufacturing equipment were used to determine the overall area and utilities required for the facility. The arrangement of the facility accounts for support areas as typically necessary for general manufacturing. A site

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plan and architectural rendering is included, as well as preliminary facility support system schematics. The report addresses organizational staff, manpower, workforce training, transportation, permitting, and ramp-up issues. A conceptual schedule and rough order of magnitude opinion of cost is also included for the purpose of establishing a realistic timeline and budget for the project. From an economic development viewpoint, in addition to the new jobs created by Mök, this project will have a significant multiplier effect on job creation, including the possibility that the PV cell manufacturer would build a fab adjacent to the Mök plant. Key findings are summarized as follows:

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Product and manufacturing process: The conceptual process described in this report is feasible, yet challenges remain to prove the manufacturing process and achieve the ramp-up to meet the large production volumes targeted.

n

Manufacturing facility: The building is relatively simple in comparison to the process challenges. A crucial and somewhat ironic discovery is very high power consumption resulting from the quantity and characteristics of the manufacturing equipment.

n

Organizational and manpower requirements: Staffing levels at full productions are projected to be 659. This includes a corporate staff of 105 and manufacturing staff of 555 spread over three shifts. While the staff ramp should be achievable, establishing an effectual organizational structure, attracting a competent management team, and developing effective training programs for manufacturing staff are critical to the success of the enterprise.

n

Milestone project implementation schedule: The conceptual schedule shows the first work cell, as a pilot line, going into full scale production approximately 2 years after project initiation. This could be accelerated by phasing the building construction to allow an earlier start for installation of the pilot line.

n

(ROM) opinion of probable construction and manufacturing equipment costs: Total project capital costs are projected at $1.24 billion. For construction of a facility capable of supporting the full-scale production volumes, cost is projected at $416 million, with manufacturing equipment comprising the balance of $830 million.

1-2

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Section 2

PROJECT GOALS AND SCOPE OF WORK Mök Industries LLC has developed solar energy conversion technology to cost effectively produce electricity. Mök Industries has successfully tested this product concept and now needs to quickly refine product characteristics, determine manufacturing resources and develop a facility concept to commercially produce these products. As a first step in this process, IDC has undertaken the effort of developing a preliminary concept design to refine the following issues: n

Product and Manufacturing Process

n

Manufacturing Facility

n

Site Plan

n

Organizational and Manpower Requirements

n

Milestone Project Implementation Schedule

n

Rough-Order-of-Magnitude (ROM) Cost Estimate

In order to accomplish this, IDC has completed the following services:

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Analyzed product design for manufacturability.

n

Developed a concept for the manufacturing process concept based on Lockwood Greene’s recommended product concept and forecasted capacity requirements.

n

Determined site requirements – size, containment, road access, rail access options, traffic management, and parking.

n

Determined what support functions will be required, approximate labor requirements, and developed a recommended organizational structure for the startup operations.

n

Developed a milestone implementation schedule, including production and manpower ramp up.

n

Developed a ROM cost estimate and capital spending schedule.

n

Estimated up-front equipment costs, ongoing labor cost, and transportation costs for manufacturing operations.

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Section 3

PRODUCT DESCRIPTION Mök Industries LLC has developed an environmentally friendly product that will provide low cost electricity through the conversion of solar energy. This process is achieved by focusing sunlight through an optical concentrator using a water-filled vessel and a clear lens arrangement that provides optimum internal reflection. This Compound Parabolic Concentrator (CPC) configuration captures incident solar radiation over a wide angle and concentrates the light onto a photovoltaic cell (PV). The PV cells, designed to absorb virtually the entire spectral distribution of solar energy, converts the solar energy into electrical energy. The water-filled vessels will be incorporated into a series of panels that are arrayed over a tract of land and wired to strategically placed batteries that will store the electrical energy. This innovative approach for the conversion of solar energy will enable the Mök product to produce electricity with significantly higher efficiency than has previously been made commercially available. The basic product concept is reflected in the following schematic (a larger illustration is included in Appendix): “Sheet” Module Concept 3 Piece Approach TOP

MIDDLE

BOTTOM

Legend

PV Wiring Sealer/weld Anchor Tab

COMPLETE

submersion fill

General Process Steps

General Equipment Set

(1) (2) (3) (4) (5) (6) (7) (8)

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Hot Press Mold the top (better precision for lenses). Hot Press Mold middle (punch hole) and bottom (add dimple). PV install/wiring on bottom (screen print, filament wiring). Ultrasonic weld top to middle. Fill CPC assembly (upside-down, submersion). Insert and chemically seal CPC assembly to bottom. Flash test. Stack to bundles and load to trailer.

Hot Press Molders Stringers (screen print? wiring?) Ultrasonic Welders Fillers Chemcial Sealers Flash Testers Stackers Conveyor and buffers Fork Lifts (loading)

Each solar module assembly is 4 feet wide by 8 feet long by approximately 2 inches thick and is comprised of 4,697 water vessels that are 1 inch in diameter and 1.5 inches tall. Each water vessel contains a lens that is able to capture sunlight from angles exceeding 60 degrees from the vertical. This design eliminates the need to incorporate a mechanical tracking 40111

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device to follow the path of the sun for maximum energy production. The remaining contour of the vessel is designed to direct and concentrate the light that enters the lens to the photovoltaic cell positioned at the bottom of the vessel. The resulting concentration of solar radiation substantially reduces the required area of each PV cell. In this case, a PV cell of 0.014-inch diameter produces 0.2 Wp . A typical terrestrial solar panel requires an area of 3 to 4 in2 to provide this level of power. Each module assembly will hold a total of 3.99 gallons or 33.3 pounds of water. The module will be assembled from three plastic panels that are first produced in sheet form and then contoured through a thermal forming process to form the vessels and support system. The top and middle panels will be produced from clear PET (Polyethylene Terephthalate) and, when thermally bonded together, will form the lenses and water vessels. This assembly will then be passed through a submersion tank where the vessels will be filled with water. The bottom panel will be produced from an opaque plastic such as ABS or PVC. The wire circuitry and photovoltaic cells will be applied to the bottom panel through a printing process. Once assembled, the bottom panel will be chemically bonded to the top/middle panel assembly and provide the watertight seal for the vessels. The contour of the finished assembly will enable each module to be self-supporting and will allow the modules to be stacked for shipping. The module will also incorporate lugs for securing the assembly to the ground. These lugs will double as shipping aids to facilitate panel nesting.

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Section 4

ASSUMPTIONS AND DESIGN CONSIDERATIONS CAPACITY REQUIREMENTS A planning model was developed to capture product assumptions, including expected output per module and production requirements to meet specific production targets. The appendix contains the planning model in its entirety. To minimize the amount of water needed for each module assembly, a concentrator size of 1-inch diameter and 1.5-inches tall was selected. This results in a water volume for each module of 3.99 gallons or 33.3 pounds. With the photovoltaic cell area per concentrator fixed at 0.00016 inch2 and 4,697 concentrators per module, this results in a power output of 952 watts per module peak. Obtaining the target production of 97 GW per year requires a production rate of 11,893 modules per hour as shown below. The following recaps the production rates required to meet the 3 output targets: Output Target >>>

5 GW/yr

30 GW/yr

97 GW/yr

Production Rate (modules per hour)

613

3,678

11,893

MATERIALS Clear, UV stabilized, PET (Polyethylene Terephthalate) was chosen for the top and middle panel due to its clarity, formability, availability and relative low cost. The bottom panel will be produced from PVC or ABS to add rigidity to the final module to support the weight of the water and enable stacking of the modules for shipping. Boeing will supply the photovoltaic cells that are installed onto the lower panel of the module. At the final solar collection site, the array of modules will be wired to batteries that will collect and store the electrical energy. It is anticipated that these batteries will be shipped from the battery supplier directly to the solar collection site. PROCESS ALTERNATIVES CONSIDERED Initial geometries for the light concentrator were in a range of 4 inches to 8 inches in height, resulting in a water weight of 70 pounds to 140 pounds per 4-foot by 8-foot module. This weight was deemed too great to allow economical shipment. The geometry of the concentrator was reduced to a 1.5-inch height (and corresponding 1-inch diameter lens) to provide a more reasonable water weight of 33 pounds per 4-foot by 8-foot module. Based on the revised geometries, the following processes were considered:

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Blow Molding: The original product concept was based on blow molding PET bottles, utilizing a cap for the PV attachment and wiring, and another structure to support and contain the bottles. Bottle blow molding rates were calculated to meet the production target of 400,000 acres of coverage in 5 years. To meet this production rate, approximately 1.2 billion bottles (1.5-inch height, 1-inch diameter) are required per day. Based on initial feedback from people knowledgeable in mass production blow molding, this quantity of bottles is not realistically achievable. Sheet Concept: Several sheet concepts were developed to meet the geometric requirements of the product and achieve a high throughput. The 3-piece approach outlined previously was selected as the baseline approach for this study based on its adaptability to molding, ease of filling, and surface on which to mount and wire the PV cells. Initially "traditional wiring" of the PVs was considered (such as used in the microelectronics industry for wire bonding die prior to packaging). An assessment of the sheer number of cells to be wired deemed this approach unpractical (4700 PV cells per module, or 56 million PV cells per hour to meet the 97 GW/yr target output). A screen-printing and poly-soldering approach was assumed for the baseline concept based on its potential to meet the required throughput. It is acknowledged that many technological hurdles need to be addressed in order to make the screen-printing approach viable. LOCATION OF MANUFACTURING FACILITY The proposed location for the Mök Industries solar panel fabrication plant is on a site in Neshannock Township, Lawrence County, Pennsylvania. The site is called Millennium Technology Park and consists of about 530 acres that lies between US Route 60 and the Shenango River. The development of this site is currently in the site design and permitting process. The Master Plan for this site showing the Mök Industries facility is included in the Appendix. POTENTIAL LOCATIONS FOR PANEL ARRAYS The product from this facility, solar panels, will be shipped initially to a few select locations. The first being some testing sites in Pennsylvania, and possible nearby areas. The purpose of this is to take advantage of the available water and coal to demonstrate the process of using solar power to fractionalize water to obtain hydrogen. The hydrogen would then be combined with coke (coal product) to produce synthetic oil. The other site these panels will be shipped to is in northern Nevada and this will be the initial main site at which many square miles will be covered with these panels. COST BASIS The estimated costs presented in Section 8 have been broken down into two areas. The first, called “Facility”, is the building and site amenities (parking areas, etc.). The building 40111

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estimate includes the steel framed, high bay building as well as the associated mechanical, electrical, etc. equipment for the building. The second, called “Process”, is the manufacturing and material handling equipment associated with producing the solar panels.

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Section 5

CONCEPT DESIGN REVIEW GENERAL The concept design for the manufacturing facility is presented in the order in which it was developed, and is summarized as follows: n

Equipment set developed to support the product/process concept and production rates.

n

Work cell developed based on equipment and flows.

n

Facility block layout developed based on work cell arrangement and flows.

n

Organizational structure, support functions, and site considerations to support the overall operation.

The following sections summarize the concepts developed regarding each of the areas of consideration. EQUIPMENT REQUIREMENTS The planning model in the Appendix contains the calculations used to determine the quantities of equipment required to meet the output targets. A summary of the equipment required for 1 work cell (roughly 10GW output) is as follows: Equipment Name

Quantity/Work Cell

Extrusion, Calendar and Cutter

3

Hot Press Molder - TOP & MIDDLE

1

Hot Press Molder - BOTTOM

1

Screen Print, PV Application, and Curing

30

Thermal Welder - TOP/MIDDLE

1

Chemical Sealer - BOTTOM

1

Flash Tester (sample only)

1

Material Handling - Water Fill - Vertical Buffer - Stacker - Stretch Wrap - Conveyor

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1 6 1 1 1 lot

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TYPICAL CELL Below is a typical Panel Fabrication & Test Cell (a larger illustration is included in the Appendix). 215 Feet

Vertical Buffer

BottomPanel Raw Material Input

Feeder & Extruder

Die,GearPump, Screen Changer

Roll Form, 3-Roll Stand with individualdrives

Accumulator,Preheat, Hot Press Mold, Cut, Discharge Vertical Buffer

Feeders & Extruder

Feeders & Extruder

Top Panel

MiddlePanel

Die,Gear Pump, Screen Changer

Roll Form, 3RollStand with individual drives

Roll Form, 3RollStand with individual drives

220 Feet

Die,Gear Pump, Screen Changer

Accumulator, Preheat, Hot PressMold,Cut, Discharge, Thermal Bond Top & Middle Sheet

Submerged Water Fill Station

Vertical Buffer

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Screen Print, PV Assembly, Cure

Vertical Buffer

Vertical Buffer Test Vertical Buffer ChemicalWeldBottomPanel

Flash Test

Shipping

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Raw plastic material enters the fabrication & test cell in bulk pellet form and is loaded into the feeders for each sheet line. The bottom panel sheet enters an accumulator where it is heated, press formed, cut and discharged into a vertical buffer. The panels are then screen printed with a wiring matrix, oven cured and the photovoltaic cells applied. The top and middle panel sheet lines are located side by side. The formed sheets enter an accumulator where they are then preheated, press formed, cut and thermal bonded to form the concentrator vessels. The top and middle panel assembly is then submerged in a water tank to fill the vessels and the bottom panel assembly is then chemically bonded to the assembly to complete the module. The module is then flash tested and moved to shipping. The size of each cell is 220 feet by 215 feet and is equipped to produce approximately 1200 modules per hour. AREA REQUIREMENTS Area requirements are detailed in the planning model contained in the Appendix. A recap of the summary requirements is as follows: 000 SF

1

4

10

Production Space

51.6

206.4

516

Receiving, Shipping

5.2

20.6

51.6

Stretch Wrap, Staging

5.2

20.6

51.6

Support (prep, labs, R&D)

15

30

60

Canteen/Break

2.3

4.5

10

Office

6

6

12

Central Utilities

17

57.6

140

SUBTOTAL

102

346

841

Contingency (15%)

15

52

126

TOTAL

117

398

967

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# of Work Cells >>

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FACILITY BLOCK LAYOUT Site Specific - A block layout was developed for the current building outline programmed on the Lawrence County site. The building outline was developed for the northern portion of the Millennium Technology Park site, allowing the center portion of the site to remain available for a semiconductor manufacturing facility – or wafer fab. The shape of the building is based on physical restriction of this part of the site such as wetlands, topography, and site vehicular circulation requirements.

Block Layout - Baseline

This layout arrangement provides for receiving at one end of the building and shipping at the other. Based on the output target, work cells would be installed starting at one end of the building (say the northeast corner) and built-out away from the first work cell (a larger illustration is included in Appendix).

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Optimized Block Layout - An alternative layout arrangement was develop to show a more optimum process centric arrangement, without regard to permissible building footprint constraints dictated by the present site considerations.

Block Layout - Option

This arrangement allows the receiving functions to be located closer to the work cells. It also allows the output from each work cell to be directed down a central aisle and routed to the stacking/stretch wrap area (a larger illustration is included in Appendix). Consequently, if there is an opportunity to utilize an alternate site, there are several points to consider for the Optional layout: n

n

Improved site and facility logistics by placement of receiving locations closer to process lines. -

Pneumatic conveying systems are shorter allowing more economic first cost and reduced operating cost due to smaller motor/blowers requirements.

-

Reduced truck traffic density for receiving once abandoning a central receiving operation.

Reduced internal material handling distances minimize material handling equipment and reduces non-value added material handling. -

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Fewer lift trucks.

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n

Shorter lengths of pallet conveyor.

Increased utility runs will require more expensive first cost for distribution.

MATERIAL FLOW Due to the extremely high production rate requirement of this project, the facility concept has been designed with a high degree of priority placed on the flow of material. Each Panel Fabrication & Test Cell is designed for the entry of bulk plastic pellets at a single point and individual sheets and panel assemblies moving in simple, continuous flow paths through the cell with no cross-over or switch-back paths. Final product exits the cell at the opposite end from the raw material entry point. The cells are arranged in the facility so that raw material entry points are easily accessed along the exterior walls and final product can flow out of the cells, down central aisles to shipping. RAW MATERIALS HANDLING Other than PET and PVC pellets, lift trucks are planned for the delivery of most material from Receiving to the work cells. Five lift trucks, separate from those dedicated to Shipping and Receiving, will be needed once full production is achieved. They will deliver the items listed in the palletized materials paragraph of the Storage section. These materials include rolls of stretch wrap. A lift truck roll handling attachment is provided for in the cost estimate. FINISHED GOODS HANDLING A conveyor system was selected for finished panel transport from the individual work cells to Shipping. Three modes of transport were considered: conveyors, transfer cars, and automatic guided vehicles (AGV). Two of these, conveyors and AGV Systems, can achieve the needed throughput. The conveyor needed to transport these unit loads with a 4by 8-foot footprint is not particularly economical; however, the conveyor system will still be more economical than an AGV System to accomplish the same transport volume. Transport cars were initially considered because of their relatively low cost; however, for this application they are too slow to achieve the needed throughput. The Conveyor system for the Baseline Layout is expected to have approximately 2,575 feet of conveyor. At an estimated $400 per foot installed, including all diverts, merges, and the control system; the conveyor system will require a $1 million investment. In contrast, an AGV system will require approximately 24 single deck or 14 double deck vehicles to achieve the needed throughput. Based upon budgetary information obtained from Jervis B. Webb, an AGV System would require approximately a $1.8 million investment.

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RECEIVING Receiving will be required primarily for PET pellets; however, a comparatively small amount of discrete raw materials will be received in palletized form. The receiving area will be composed of docks, unloading stations for trucks of PET and PVC pellets, silos for backup PET pellet storage, and a small amount of rack storage. PET Pellets The large quantity of PET and PVC consumed dictates bulk quantity delivery. Bulk delivery will be via truck. There is no rail service available on the preferred site. However, if an alternate site were considered in the future, rail service would be provide for more economical PET delivery and should be considered. Truck delivery for PET and PVC pellets will require unloading stations. A pneumatic system will be utilized to directly feed each extruder from the bulk truck. These stations are best located as close to the extruder serviced as practical to minimize blower sizes and system expense. Motors and blowers for the PET pellet pneumatic delivery system will be located adjacent to the unloading stations. A 6- by 6-foot pad should be adequate for a blower and motor; there will be three motor/ blowers per work cell. Motors and blowers for the pellet pneumatic delivery systems will be located adjacent to the unloading stations. An externally located 6- by 6-foot pad, located adjacent to the unloading station, should be adequate for a blower and motor; there will be three motor/ blowers per work cell. At peak production the weight of PET and PVC consumption will be somewhat in excess of four truckloads in an hour. However, since two types of resins (clear PET for the top two layers and an opaque PVC resin for the base layer) additional unloading stations are needed. For planning purposes, two stations are priced for clear PET and four stations for the opaque material. This will allow one truck to be staging for both clear PET and the opaque resin while the other stations are in operation. Two suppliers, Eastman Chemical and M&G indicated that the unloading stations would probably be provided without cost due to the high projected consumption rate of PET and PVC. Palletized Materials Lift trucks will be used to unload palletized loads from trailers. For the most part, these materials will be delivered directly to the work cells. However, these materials will be stored as necessary to maintain a small safety stock. Storage will be in racks located adjacent to Receiving and is more thoroughly discussed in the Storage section. For the Baseline Layout it is felt that approximately 20 docks in a centralized Receiving will be adequate for palletized materials. The large number of docks is required to assure the smooth operation of a JIT delivery philosophy. This will allow for a trailer of each high volume raw material to remain parked at the dock for the lift trucks to work out of, while simultaneously providing docks for the yard tractor to stage the next trailer of materials and to have the needed buffer to allow an empty trailer to sit at the docks for some time.

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SHIPPING Finished goods will be palletized in the work cells and subsequently stretch wrapped to facilitate handling and security. Palletized panels will be delivered to Shipping where they will be stretch wrapped. These unit loads will be automatically delivered to the stretch wrappers. Unit loads will be fed into the stretch wrapper on an automatic conveyor. No corner posts are required; the panel design will have strengthened corners that nest so as to provide a robust package once stretch wrapped. The wrapped load will be discharged onto a conveyor to await pickup by a lift truck. Lift trucks will load trailers at the docks. Approximately 30 docks are provided. STORAGE As with the dock areas, a “just-in-time” philosophy affects the storage area design. Storage quantities are based upon JIT deliveries. As such, only the smallest of safety stock is considered. Raw Materials The primary raw material will be PET and PVC pellets. While delivery is straight from the trucks to the extruders, with the trucks parked in the unloading station for the duration, silo storage is also recommended by resin suppliers as a backup to guard against delivery disruptions. The suppliers interviewed indicate that the cost of the silos will be borne by them as a service due to the anticipated large volume of PET and PVC consumption. To preclude mixing PET types, separate silos will be maintained for clear PET and opaque PVC. A 2-hour backup supply of PET and PVC is recommended. At peak production, this will be approximately 104,000 pounds of clear PET pellets and 312,000 pounds of opaque resin. This can be accomplished with a relatively small silo located adjacent to each of the bulk unloading stations. For the clear PET, 2 silos of approximately 8-foot diameter and for the opaque resin four silos of 10-foot diameter should be adequate. Palletized Materials As with PET and PVC pellet storage, the philosophy of design is that JIT deliveries will keep stored palletized materials at a minimum. For the most part, storage is a 2-hour buffer. It has been calculated that 62 pallet rack positions and 12 drive-in rack positions will hold the necessary materials. This amount of rack is small and will be installed adjacent to Receiving. The rack will provide three high pallet storage and will have a footprint of 915 square feet (425 square feet for pallet rack and 490 square feet for drive-in rack). The materials to be stored are:

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n

PVs – photovoltaic cells will be received in tubes for insertion, these will be in cartons and on pallets. Due to the extremely small size of the PVs, a lot of storage space will not be required. With just in time delivery, material flow will be primarily from the dock to the production floor. Storage space for 12 pallet loads of photovoltaic cells will be provided.

n

Empty pallets – the finished panels will be placed on pallets for secure handling; therefore, an ample supply of pallets will be required. Empty pallets will require more storage space than any other material placed in 5-8

July 2, 2004 Page 58 of 159

racks. These pallets will be a specialized 4- by 8-foot size. Where storage is necessary pallets will be stored in drive-in racks. The equivalent of two hours of pallets will be stored; otherwise, pallets will go directly from trailers at Receiving to the work cell stackers where pallet loads are formed. Space for storing 400 empty pallets will be provided; this will require approximately 12 drive-in storage slots. n

Stretch wrap – a considerable quantity of stretch wrap will be used to package the completed panels for shipping. The wrap will be received in rolls, the rolls are palletized, and the rolls weight no more than 1000 pounds. A roll handling attachment will be provided on one of the lift trucks that operate in Receiving. Twenty pallet loads of stretch wrap will be stored for backup.

n

Cement – the final assembly operation for the panels requires chemical bonding of layers. The glue utilized will be in liquid form, received in 55 gallon barrels, filled barrels will weigh approximately 450 pounds, the barrels will be palletized, and potentially with have hazardous storage requirements. Space for the storage of 10 barrels of cement will be provided.

n

Miscellaneous – numerous other unidentified materials in small quantities will be received that require storage. Twenty storage positions will be provided for miscellaneous items.

WIP The only work-in-process envisioned at this time will be due to exception conditions. Primarily this is thought to be units that need repair. Otherwise, there is no intermediate handling or accumulation planned for panels or panel components beyond that supplied internally by the process equipment and its interconnection conveyor system. Finished Goods (surge only) Completed product is shipped as soon as possible. Therefore, Shipping will only have a staging area for product. This will primarily be in the form of a conveyor queue of several unit loads at the output of each stretch wrapper. Research and Development The facility will have a Research and Design Laboratory equipped with essential prototyping equipment such as a drill press, mill, lathe, hydraulic and electrical test benches, microscopes and various hand tools. Basic shop lighting and utilities will be provided to this area. UTILITIES The following paragraphs describe the key utilities that will be required for the manufacturing facility and describe projected facilities equipment requirements. Electrical Each 51,000 square-foot manufacturing cell is projected to have an electrical demand of 13.4 MVA, which includes manufacturing equipment and associated facilities support equipment. See the attached Tool Utility Matrix – Estimates for Typical Work Cell for demand and connected load numbers. This demand load represents a high density 40111

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electrical load of 260 watts per square foot of manufacturing space. At ten manufacturing cells, the corresponding projected electrical load is 134 MVA, a significant number which requires multiple dedicated high voltage substations and transmission planning at the electrical utility level. A large portion of the electrical load is made up of electrical furnaces and heating equipment which are part of the manufacturing process. IDC has contacted equipment manufacturers to discuss the possibility of changing these furnaces to natural gas. The manufacturers responded indicating that some of the equipment components are not available in natural gas at this time and that some processes are better served with electrical heating components. First Energy has received connected and demand load forecasts along with a projected load timeline. First Energy’s previous study an alternate use for this site, which was commissioned in 2003, indicated that the 138 kV line can support 80 MW of additional load. 60 MW of this capacity was to be allocated for the Millennium Park industrial site and 20 MW was to be allocated to supporting regional businesses and residential uses. Because demand figures for a ten module factory presently indicate a demand of 130 MVA, First Energy has indicated that utilizing the existing 345 kV transmission line, located four miles from the proposed site, may be preferable. First Energy has an existing easement for the 138 kV line extension to Millennium Park, but does not have a similar easement for the 345 kV line. Utilizing the 345 kV transmission would require land to be purchased – very preliminary estimates indicate purchasing the land and constructing the four-mile 345 kV extension would cost $3-$5 million. First Energy has indicated that it would need to be commissioned to execute a three to four month duration electrical study to confirm the use of the 345 kV transmission line. One possible solution is to utilize the 138 kV transmission to provide power for the first five modules of the factory and, if necessary, utilize the 345 kV transmission line for the remaining five factory modules. Load projections are based upon demand figures gathered by IDC and Lockwood Greene across several different industrial plant types. Demand factors for industrial facilities of different types vary widely. As this facility is the first of kind, the actual loads seen after the first module is operational will be valuable in assessing the actual demand for the following modules. The actual demand factor for the first production module will be critical determining the size and cost of electrical substations and distribution equipment necessary for the following nine modules. See the Electrical Concept Drawing included in this report for a single line diagram indicating possible utility substation quantity/configuration and plant 15kV, 5kV, and 480V distribution. Electrical system design and cost is based upon N+1 redundancy.

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DI Water IDC believes that DI water would be required for filling the PV lenses. This requirement is based upon no bacteria or algae growth within the lenses for a period of seven years where the lenses are installed in an outside ambient condition. Calculations indicate that the flow for one production module is 95 gpm, with a corresponding flow rate for the ten module factory at 950 gpm. This flow would require a DI water production facility within the manufacturing facility with prefiltration, RO, continuous DI (CDI), filtration, UV sterilization, and degas. Water source will be municipal potable water - assume groundwater at 10 grams of hardness, 100 ppm calcium. Water quality will be low TOC (>50 ppb), 17 Megohm resistivity, gas content (all N2 and o2) less than 50 ppb. Membrane degas preferred in pilot system. Production level could use vacuum tower degas. Both w/o N2 purge. HVAC, Mechanical, & Exhaust HVAC, mechanical, and exhaust systems are required for removal of heat from production cells and space conditioning for operator comfort. Each 51,000 square foot cell has a heat load of 4,198 kW. That is a demand load of 80 watts per square foot of manufacturing space. The mechanical systems are designed to keep temperature at the plant floor between 75 and 80 degrees Fahrenheit. This requires a great amount of airflow to be induced and removed from the space. Mechanical system design and cost is based upon N+1 redundancy. See attached “Mechanical Equipment Summary” document for a list of projected mechanical components and their corresponding ratings. See attached “Mechanical Equipment Sizing” document for calculations performed to determine equipment quantities and ratings. Mechanical Equipment Summary FOR 1 CELL ONLY # of Units

Capacity

HP- kW / each

AHU

14

50000 cfm

60 hp

Chillers

3

1280 tons

535.4 kW

Boilers

2

15876 MBTU

500 hp

Cooling Tower

2

143500 cfm

40 hp

CHW Pumps

2

1590 gpm

60 hp

HW Pumps

2

815 gpm

30 hp

CW Pumps

2

1990 gpm

40 hp

Solvent EF

3

36000 cfm

40 hp

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# of Units

Capacity

HP- kW / each

3

72000 cfm

50 hp

General EF Assumptions n

n

n

n

n

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AHUs -

AHUs will maintain the work space between 75 F and 80 F.

-

Sensible cooling only at the cooling coils.

-

AHUs configured to operate in full economizer.

-

13 units are required, one extra for shutdown purposes.

Chillers -

There is 1300 tons of cooling for each cell. One chiller will operate.

-

One redundant chiller for shutdown purposes.

-

The chillers will operate at 55 F leaving water temperature.

Boilers -

During the winter months the space will go to minimum OSA and recirculate airflow back through the unit.

-

The boilers will only operate during the winter months.

-

One redundant boiler for shutdown purposes.

Solvent Exhaust -

Two Exhaust fans will operate at 18,000 cfm.

-

One redundant fan for shutdown purpose.

-

Assume high static for VOC abatement.

General Exhaust -

The two fans are operating at 36,000 cfm.

-

One redundant fan for shutdown purposes.

-

Assuming the general exhaust is not connected to any tools or static removal

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MECHANICAL EQUIPMENT SIZING Cooling Load calculations for Airflow & Chillers Givens: Room Temperature

75 F - 80 F

OSA Summer Temp

85 F DB / 70 F WB

OSA Winter Temp

11 DB

1 Cell Heat Load

14,336, 170 BTU

Air Handler Calculations CFM = 14,336,170 / 4.5 (34-29) = 637,163 CFM Q = 50,000 * 1.08 (85 - 64) =1,134,000 BTU/H GPM = 1,134,000 / 500 (75-55) = 114 GPM 14 Air Handling Unit @ 50,000 CFM Total GPM = 1590 GPM Chiller Calculations 1 Cell Requires 1304 Tons ( cell calculations attached) For Sensible cooling the operating Temperatures: Entering Water Temp

75F

Leaving Water Temp

55 F

1 - 1280 Tons Chiller @ 535.4 kW / 1 Chiller for redundant 2 - Primary Pumps 1590 gpm @ 110 ft w/ 60 HP 2 - Condensing Pumps 1990 gpm @ 60 ft w/ 40 HP 2 - Cooling Towers Heating load calculations for Airflow & Boilers OSA = 20% @ 11 F

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RA = 80% @ 75 F MA = 100% @ 62 F Q = 1.08*50,000 ( 83 - 62) = 1,134,000 BTU GPM = 1,134,000 / 500 (160-120) = 57 GPM Total GPM = 800 GPM Total BTU/hr = 15,876,000 BTU Operating Temperatures: Entreating Water Temp = 120 F Leaving Water Temp = 160 F 1- 500 HP Boilers Required Plus One redundant Boiler 2 Primary Pumps 800 gpm @ 80 ft w/ 25 HP Solvent Exhaust Fan Sizing 4.5 inches of static consider for scrubber 2.5 inches of static consider for operation 2 fans operate at 18,000 cfm @ 7 inches of static plus 1 for redundancy General Exhaust Fan Sizing Assuming no tool connection. 2 fans operate at 36,000 cfm @ 3.5 inches of static plus 1 for redundancy

Cooling Load Calcs for 1- Cell 1 - Cell

kW

BTU

Tons

Load

4193

14306516

1192

Support Bldg Area

People

BTU

Assumption

People

15000

20

5000

250 Btu / Person

Space

15000

20

450000

30 Btu / Sq Ft

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Lighting

15000

20

4396.248535

1 Watt / Sq Ft

Office Bldg Area

People

BTU

Assumption

Office Space

6000

40

10000

250 Btu / Person

Break Rm

2250

25

6250

250 Btu / Person

Office Bldg

8250

65

247500

30 Btu / Sq Ft

Lighting

8250

65

2417.936694

1 Watt / Sq Ft

CUB Area

People

BTU

Assumption

Space

20440

2

613200

30 Btu / Sq Ft

Lighting

20440

2

5990.621336

1 Watt / Sq Ft

Total Tons

1304

Cooling Load Calcs for 4- Cells 4 - Cells

kW

BTU

Tons

16793

57297716

4775

Area

People

BTU

Assumption

People

30000

40

10000

250 Btu / Person

Space

30000

40

900000

30 Btu / Sq Ft

Lighting

30000

40

8792.497069

1 Watt / Sq Ft

Area

People

BTU

Assumption

Office Space

6000

40

10000

250 Btu / Person

Break Rm

4500

80

20000

250 Btu / Person

Office Bldg

10500

120

315000

30 Btu / Sq Ft

Lighting

10500

120

3077.373974

1 Watt / Sq Ft

Load Support Bldg

Office Bldg

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CUB Area

People

BTU

Assumption

Space

69165

2

2074950

30 Btu / Sq Ft

Lighting

69165

2

20271.10199

1 Watt / Sq Ft

Total Tons

5055

Cooling Load Calcs for 10- Cells 10 - Cells

kW

BTU

Tons

41984

143249408

11937

Area

People

BTU

Assumption

People

60000

60

15000

250 Btu / Person

Space

60000

60

1800000

30 Btu / Sq Ft

Lighting

60000

60

17584.99414

1 Watt / Sq Ft

Area

People

BTU

Assumption

70

17500

250 Btu / Person

Load Support Bldg

Office Bldg Office Space 11900 Break Rm

10125

200

50000

250 Btu / Person

Office Bldg

22025

270

660750

30 Btu / Sq Ft

Lighting

22025

270

6455.158265

1 Watt / Sq Ft

CUB Area

People

BTU

Assumption

Space

168295

2

5048850

30 Btu / Sq Ft

Lighting

168295

2

49324.44314

1 Watt / Sq Ft

Site Specific Total Tons

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Clean Dry Air (CDA) CDA, sometimes referred to as “oil-free air”, is required by manufacturing equipment. Each cell has a significant usage of 3505 scfm at 60 psig. Corresponding air flow requirements for the ten cell facility is 35,052 scfm. The flow for one cell will be provided by three centrifugal air compressors and associated air dryers per cell. A fourth, redundant air compressor will be provided for N+1 redundancy. Natural Gas Natural gas is required to service the furnaces associated with the Extrusion/Calendar/Cutter manufacturing equipment. Natural gas is utilized for these furnaces for several reasons: gas furnaces are suitable for the process requirement, gas furnaces are commercially available, and electrical requirements are reduced. It is estimated that each production cell will require 10,000 cubic feet per hour (CFH) of natural gas. At full production, this equates to 100,000 CFH plus an additional 5,000 CFH for other building uses. Dominion/People’s Gas has been contacted and this information has been passed on to them. Dominion/People’s Gas was aware of a 105,000 CFH demand for one semiconductor facility and other smaller site buildings (office and flex space), and made a commitment to supply these needs. Dominion/People’s Gas has verbally stated they could meet the required additional 100,000 CFH. BUILDING SHELL The facility is planned to maximize the efficiency of the fabrication and assembly process, which results in a large (800- by 1000-foot) footprint. The large roof takes a saw tooth configuration which allows solar panels to be arrayed facing south at the optimum angle to maximize solar exposure. The north face of each saw tooth is used for air intake to the elevated air handlers and to bring high quality daylight onto the floor of the plant, improving energy efficiency and work place quality. OFFICE AREA, SUPPORT SPACE, AND AMENITIES The proposed facility has 80,000 square feet of area dedicated for office space, conference rooms, research and development, training areas, a lunchroom/cafeteria, locker rooms, restrooms, and areas for support activities such as security, building maintenance, and safety. The breakdown is as follows: Office

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Conference Rooms

7,200 sq. ft.

Research & Development

7,500 sq. ft.

Training Space

2,000 sq. ft.

Cafeteria/Lunchroom

8,000 sq. ft.

Locker Rooms

5,300 sq. ft.

Restrooms

5,000 sq. ft.

Security

1,500 sq. ft.

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Maintenance

2,200 sq. ft.

Safety/Medical Supplies

1,300 sq. ft.

Office Mechanical

3,200 sq. ft.

Circulation/Egress

17,500 sq. ft. TOTAL

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80,000 sq. ft.

July 2, 2004 Page 68 of 159

Section 6

PRODUCTION RAMP UP, ORGANIZATION AND MANPOWER PROOF OF CONCEPT Proving that the design of the product and the manufacturing process used to produce the panel is the first critical step to gain confidence that the panel functions as desired and can be manufactured as designed. This is the time to tweak design elements and manufacturing steps so that pilot production can be focused on fine tuning the units of operation in preparation of full scale production ramp-up. Appendix 7.0 contains a technical paper, coauthored by David Causey, who participated in the production of this report. This paper outlines the challenges in transitioning from R&D (Proof of Concept) to pilot production, then to full-scale production. PRODUCT DESIGN To prove the design concept, it is recommended to complete detail design drawings of the CPC module components and assemblies and to produce prototypes on temporary tooling. All three panels of the module assembly could be produced on vacuum-forming equipment. This will enable the resolution of design issues such as the interface of the bottom panel with the top/middle panel assembly to completing the vessel seal without incurring the cost of hot press forming equipment and dies. Screen-printing and PV placement sensitivity should also be verified. PROCESS DESIGN Once the product design concept has been tested and proven, the processing equipment and tooling can be designed and the first prototype cell installed. It is recommended that this first cell contain the minimum equipment necessary to prove the manufacturing process. The prototype cell should contain one line of sheet forming equipment and the necessary dies to produce all three panels of the completed module. Again, vacuum-forming equipment would be suitable and, in fact, could be outsourced to save the cost of the equipment at this stage in product development. The screen print, PV, and cure process equipment should also be limited to one line in the prototype cell. The prototype cell will also need to include all equipment necessary for water submersion, thermal, and chemical bonding, as well as material handling of the panels and finished modules. The estimated price of this prototype cell could be up to $15,000,000 if all the process equipment is purchased. This value includes approximately $10,400,000 for “one of” each primary unit process equipment, plus an allowance for material handling equipment, storage racks, leased space, and other miscellaneous costs. For prototyping, a leased space of 10,000 to 15,000 square feet should be adequate. PRODUCTION RATE Once the process design has been verified, it is recommended to install one complete manufacturing cell to verify the production rate of the facility.

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PRODUCTION RAMP UP Building ready will be achieved in Project Month 21. Equipment procurement, production start up. Ramp up to Production Capacity Target #1 (5 GW per year) will take approximately six months from the start of pilot line installation and will be achieved in Project Month Number 27, and will proceed in the following Phases: n

Product Line Install

n

Pilot Line Startup & Test

n

Manpower Training & Ramp Up

n

Production Ramp to Target #1 – 5 GW per year rate (5,252,649, 4- by 8-foot panels per year)

After successful Pilot Line testing and commissioning, it is feasible to install approximately 1 additional cell per month. This will allow capacity increases to meet Target #2 and Target #3, as follows: n

Production Ramp to Target # 2 – 30 GW per year rate (31,515,892, 4- by 8-foot panels per year) – projected to be achieved Month 31.

n

Production Ramp to Target #3 – 97 GW per year rate (101,901,384, 4- by 8-foot panels per year) – projected to be achieved Month 47.

Ramp up from Production Capacity Target #1 to Production Capacity Target #2 will take an additional four months and will be achieved in project week number 31. Interim Production Target #2 will be achieved in approximately 22 months. This is the optimal ramp up period that can be reasonably anticipated due to equipment procurement lead times, installation and testing, manpower hiring, and training requirements.

Production Ramp Up 60.0 50.0 Units per Year (Millions)

40.0 30.0 20.0 10.0 0.0 25 26 27 28 29 30 31 32 33 34 35 36 Product Life Cycle Month

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Production Ramp Up 120.0 100.0 Panels per Year (Millions)

80.0 60.0 40.0 20.0 0.0 37 38 39 40 41 42 43 44 45 46 47 Project Life Cycle Month

These production capacity projections assume the following: n

3 shift per day operations, 52 week per year.

n

Installation of 1 cell per month.

n

Availability of trained labor.

n

Availability of production equipment.

ORGANIZATION RECOMMENDATIONS The challenge for the Mök organization will be to meet changing needs as the business rapidly evolves from the present stage of the business, the Initiation Stage, through the Developmental, Organizational and Expansion stages of the business. This will create a need for an organization that can quickly make decisions in response to a changing company environment as illustrated in the chart below.

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Early Stages of a Business Stage

Activity

Characteristics

Initiation

Culture New Venture

Great ideas

Forming

Entrepreneur (visionary)

Selling it

Dependent

Performer (task oriented)

Gaining commitment

Gathering

Administrator (TOS, OAS)

Hands on leadership

Person-to-person contact Product development & market development

Developmental

Making it work Testing it

Expansion

Pressure to produce results

Growing pains

Moving from task to task

Storming

Must develop infrastructure

Produce & distribute

Counterdependent

Turmoil creates counterdependence among within the organization

Short term orientation Repeating Every opportunity a priority

Start & stop of objectives

Highly centralized

Operational systems

Informal Leadership involved in everything

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Early Stages of a Business Stage Organizational

Activity

Characteristics

Organization takes on identity

Culture Professionalization More formal planning

Time previously spent doing & selling now spent planning & coordinating Administration rises in importance

Norming Independence Sharing

Functional structure develops

Develop a strategic planning & management system Defined roles & responsibilities Sensitivity and orientation to people

Policies and procedures are established

Management systems

Salary systems Accounting systems Tension between entrepreneurs and administrators Management essential Expansion

Moving into prime

Consolidation

More focus on “out there”

Maintain growth & development

Growing reputation Organizational culture Need to determine level of aspiration

Performing Interdependent

Restructuring (decentralizing)

Transforming

Acknowledge organization’s Mission implementation strategies Culture system

Mgt. Information Systems for expanded & decentralized structure Manager/strategist (innovator)

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Our proposed organization creates an important group of Corporate level managers within operations, consisting of a Corporate Supply Chain Manager, Corporate Manufacturing Manager and Corporate Engineering Manager to assist the Director of Operations in the development and implementation of an integrated Strategic Plan and make timely decisions to support the growth of the business. Major functions in the recommended organization are as follows: n

Operations

n

Administration and Finance

n

Sales

n

Marketing

n

Human Resources

n

Information Systems

Overall, the purpose of IDC’s recommendations is to help Mök Industries to initiate a lean, simple, efficient organization in alignment with the Lean Enterprise philosophy. Most companies tend to concentrate their efforts to become lean on the process at the plant floor level. Lean is a human system driven by and focused on the customer. Therefore, the organization and the culture must focus upon serving internal and external customers with a minimum of waste. When this is done successfully, it creates a pull system throughout the organization. For these reasons, implementing as flat an organization as possible with the minimum number of sub-layers is recommended. We also recommend organizing along functional lines. Combined with standardized processes and organizations, a functionally aligned organization also promotes the concentration of appropriate resources on the execution of strategic and tactical initiatives. The Mök organization should have the following general responsibilities at the Corporate and Plant levels:

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Corporate Manufacturing Strategy Asset Utilization Supply Management Planning/Estimating Management Accounts Fleet Management Scheduling Reconciliation Capacity Planning/Forward Planning Facilities & Specialized Maintenance Quality Assurance Inventory Control Cost Control

Plant Regulation Production Engineering 1st Line Maintenance Liaison & Quality Assurance Cell Scheduling Warehousing Distribution

In order to cope with the complexities of establishing and rapidly growing the business, the corporate organization plan proposed is based on the following five specific objectives: n

Focus the entire organization towards an internal and external client service approach.

n

Clearly define the roles and interaction procedures between corporate management and operations.

n

Standardize systems, methods, procedures, objectives, and strategies for the whole group.

n

Minimize the levels of hierarchy within the organization.

n

Minimize the number of personnel.

IDC’s recommendations are intended to divide responsibilities among management functions to maximize coordination and control of the operational network, human resources, and capital assets as described below: n

Corporate Administration and Finance Director

n

Corporate Marketing Director

n

Corporate Sales

n

Corporate Human Resource Director

n

Corporate Systems Management Director

n

Corporate Operations Director

The resources required to undertake a supply chain optimization for Mök Industries include strategic planning analysis, engineering analysis, material flow analysis, cost justification, 40111

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project management, and system implementation. In the recommended organization, these resources are controlled by Operations. Further, day-to-day operations of a distribution center are also the responsibility of operations. The Operations Director assumes direct line responsibility for Operations and the largest portion of the supply chain. Specifically, this applies to the entire supply chain, except the portion of the supply chain from the plant and distribution center (DC) out to the panel array site(s). The purpose for centralizing all activities related to Operations is to standardize systems and procedures across the organization and optimize the entire supply chain network. For the Director of Operations to assume the added responsibilities described above, resources with specialized skill sets will have to be included in the corporate organization. Care has been taken in development of the proposed Operations organization to assure that the number of direct reports to any individual is in line with responsibilities and the vertical functionality required of the new organization. Direct reports to the Director of Operations in the proposed organization include: n

Corporate Supply Chain Manager

n

Plant Manager

n

Corporate Engineering Manager

A brief description of the responsibilities each of the corporate operations managers follows. Each of these managers will have a vertical functional responsibility down through the plant. n

Corporate Supply Chain Manager will be responsible for fleet management and corporate purchasing support functions. At the corporate level, the Corporate Supply Chain Manager will have under him, a Corporate Purchasing Manager and a Corporate Fleet Manager. Fleet Management (transportation management) will be especially important given the projected number of truck shipments.

n

Plant Manager will be responsible for day-to-day manufacturing and distribution center operations. System standardization, utilization of assets, and meeting production requirements will be the critical drivers for this manager. These responsibilities will be overseen through a functional vertical organization. This includes day-to-day panel manufacturing operations.

n

Corporate Engineering Manager. We recommended that a corporate sheet forming technical services group be reorganized under the Corporate Engineering Manager. This group will still be responsible for technical services support plant. The Corporate Engineering Manager will have two ways of supplying technical services support to the plant. First is a corporate engineering bench comprised of engineers with specialized skill sets. The second method is through outsource engineering resources brought in on an as-needed basis.

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Chairman William Mook

Vice Chairman

Admin & Finance Director

Marketing Director

Sales Director

Operations Director

Corp. Supply Chain Mgr.

Corp. Purchasing Manager

Corp. Fleet Manager

Outsource Engineering

Info. Systems Management Director

Human Resources Director

Corp. Engr. Manager

Corp. Training Manager

Engineering Bench

Plant Level

To support the Director of Operations in both annual operations plans and strategic plans, IDC recommends that a strategic planning team will be formed at the corporate level. From the operations side, the team will be comprised of Corporate Supply Chain Manager, Corporate Manufacturing and DC Manager, and Corporate Engineering Manager. This would be a most effective group for planning purposes since from an operational perspective they are the ones ultimately responsible for system wide operations. The organization at the plant level must be aligned to properly execute its tactical functions and take advantage of the corporate and regional support structures. This alignment requires a degree of standardization throughout the Mök manufacturing plant(s). The IDC team has developed a “4-Dimensional” approach to cellular manufacturing that addresses the integration of four major elements: n

Logistics & Control

n

Organization & People

n

Production Flow

n

Performance Metrics

IDC’s recommended Plant Level organization is aligned to take advantage of the matrix of support to value-adding operations. The Manufacturing Support Manager will be responsible for making sure processes are set up to enable workers within the plant to do their jobs, motivating plant personnel, coordinating production support, and coaching.

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The organizational practices of lean operations, which include the transition to cellular teams at the plant level, are an essential element of IDC’s recommendations. To be successful, however, team-based processing will also need to include all four dimensions of cellular processing. PLANT LEVEL ORGANIZATION CHART Directorof Operations

PlantManager

Cell Support Team

Process Engineering Manager

Procurement Supervisor

FleetSupervisor

Logistics/ Warehouse

Manufacturing Support Manager

QualityControl

Administration Manager

Human Resources Manager

Maintenance

Scheduler

Typical Cell (10 required)

Fab & Test Cell

CellLeader

CellLeader

Fab & Test Cell

Facilitator

Facilitator

Shift Leader

Shift Leader

Operators

Operators

IDC’s proposed organizations for cells are based on start-up requirements. These requirements will be reduced as improvements are made to the cell. For example, the Cell Leader is a temporary position and will be phased out as the cell teams gain experience. The use of cell teams for demand-pull processing will have a substantial effect upon the working culture and the management organization. Traditional hierarchical chains of command are replaced by task oriented teams working in a matrix style organization. Leadership within each cell must replace the current emphasis placed on extra-cell control. Tasks and skills including such functions as production engineering, production control and management services will, be the responsibility of cell team members. Cell support personnel will consist of a Process Engineer, Scheduler, Logistics Planner, Quality Engineer, and Maintenance Technician. Representatives from each of these will be 40111

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allocated responsibility for specific cells and individual resources will be shared among multiple cells. These functions will play a more consultative or advisory role in the future than at startup, eventually becoming “centers of excellence” where cell teams can go to obtain skills and information that they will apply on their own initiative.

THE CELL CONCEPT Specialist Support People • Prod. Engineering • Quality • Maintenance • Information Services Centers of Excellence • Cell contained within well defined boundary inputs : • All processes Fit for purpose owned by the cell • materials • Cell team • tools accountable for its Multi - Skilled • information Production Team own performance

The Cell Leader • Trained as a leader • Has most skills • Understands cell logistics

Outputs: • products on time • rapid response • performance data

STAFFING RAMP UP Corporate Staffing at full production, 3-shift operations will equal approximately 104 people. It is advisable to begin assembling the corporate staff as soon as possible after initiation of facility design in order to ensure the ability to acquire manufacturing equipment, hire personnel, develop and administer training programs, handle financial matters, install and test equipment, and complete other key activities required for manufacturing startup as soon as the facility is ready.

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Recommended Corporate Staffing Headcount Chairman Vice-Chairman Administration & Finance Director Accounting Department Staff Administration Staff Sales Director Staff Marketing Director Staff Operations Director Information Systems Director Staff Human Resources Director HR Asst. R&D Director R&D Staff Corporate Supply Chain Manager Purchasing Manager Staff Fleet Manager Staff Corporate Engineering Manager Outsource Engineering Manager Engineering Bench Staff Corporate Training Manager Staff Total Corporate Staff

3-Shift Operation Pre-Start Start Full Prod 1 1 1 1 1 1 1 1 1 3 5 10 16 18 20 1 1 1 1 1 1 1 1 1 1 2 2 3 3 3 1 1 1 2 5 8 1 1 1 2 3 5 1 1 1 3 3 3 1 1 1 1 1 1 2 2 4 1 1 1 2 3 6 1 1 1 1 2 2 7 14 21 1 1 1 2 3 6 58 77 104

The hiring and training of manufacturing personnel should begin approximately 3 months prior to initial pilot production and equipment commissioning. The following manufacturing manpower ramp up chart assumes that corporate staff is already on board. Manufacturing staffing at full production, 3-shift operations will equal approximately 555 people.

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Manufacturing Manpower Ramp Up 600 Headcount

500 400 300 200 100

45

43

41

39

37

35

33

31

29

27

25

23

21

0

Project Life Cycle Month

TRAINING RECOMMENDATIONS At a minimum, training programs must be established for start up operations as follows: n

Indoctrination, company policy – internal training

n

Safety Training – internal training

n

Machine operator training for cell team members – vendor supplied

n

Lean Manufacturing training for all employees – outside supplier short term, internal training long term

n

Work team dynamics training for all cell team and cell support team personnel - internal

n

Routine maintenance training for cell team members – vendor supplied short term, internal long term

n

Equipment Maintenance training for maintenance personnel – vendor supplied

n

Information systems training for administrative and support personnel – systems supplier short term, internal long term

These training programs must be developed prior to the hiring of plant staff and implemented/expanded in alignment with manpower and operations ramp up. We recommend that the development and implementation of internal training programs should be the responsibility of the Human Resources manager and developed with the assistance of outside resources as needed.

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Section 7

MILESTONE SCHEDULE The following schedule is conceptual in nature and incorporates progress already made regarding the development of the Millennium Park site.

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Section 8

ROM COST ESTIMATE FACILITY The estimate for the facility and site infrastructure is budgetary in nature based on the conceptual information developed for this report. The ROM cost estimate accuracy can be expected to be plus 50 percent or minus 30 percent of the actual cost. A high level breakout of the estimate is included in the Appendix as well as an Estimating Accuracy Curve as defined by the Association for the Advancement of Cost Engineers (AACE). Any resulting conclusions on project financial, economic feasibility, or funding requirements should be made with this in mind. The final costs of the project and resulting feasibility will depend on actual labor and material costs, competitive market conditions, actual site conditions, final project scope, implementation schedule, continuity of personnel and engineering and other variable factors. The recent increases in material pricing may also have a significant impact that is not predictable. Careful review or consideration must be used in evaluation of material prices. Total cost of Work includes general conditions, overhead, and profit. Not included are escalation and contingency. The following table presents the cost for the facility. PROCESS EQUIPMENT The estimate detail for manufacturing equipment is also included in the Appendix. Values assigned are based on conversations with vendors. For example, CDL Technology provided input for the panel sheet and forming equipment. All values include installation. The process equipment cost is presented in Appendix 2.0. OPERATING COSTS While not specifically part of the scope of this report, it is important to consider operating costs to help determine overall project economic feasibility. Therefore, IDC identified major variable operating costs, including raw material, labor, utility, and transportation. Appendix 2.0 includes a simple summary of these costs as well as fixed costs of the facility and process equipment. The pie chart below graphically shows the proportional costs on a per module basis assuming the plant operates for 7 years at peak production. For a shorter period, the fixed cost proportion increases.

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Cost Breakdown per Module

Facility Cost Equipment Cost PV Cost Resin Cost Circuitry Cost Labor Cost Utilities Transportation Cost

It is worthy to note, based on the peak production rate and the process that this report has defined, the electrical demand is huge, and the natural gas demand is very high as well. The energy demand is being driven primarily by the heat needed to form the plastic layers of the panel using hot press molders. At full production, this plant would be one of the highest power consumers in the country. And while the utility costs account for only 3% of the cost per module in the pie chart above, it may be worthwhile to research other plastic material composites with properties suitable for forming the panels at lower temperatures and thereby requiring less energy. Appendix 6.0 gives a material comparison of the three materials under consideration for the bottom panel: ABS, PET UV, and CPVC. The pie chart below shows the proportional utility costs for electricity, natural gas, and water. Telecom and sewage costs should be relatively minor in comparison.

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Projected Utility Cost Breakdown

Electricity Natural Gas Water

SUMMARY The final project costs will vary from the opinions of cost presented herein. Because of these factors, project feasibility, benefit/cost ratios, risks, and funding needs must be carefully reviewed prior to making specific financial decisions or establishing project budgets to help ensure proper project evaluation and adequate funding. The projected facility cost is $416.7 million. The projected cost for manufacturing equipment is $827.3 million. The total project cost for a 97 GW plant is $1.244 billion.

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Section 9

ANALYSIS AND PRELIMINARY RECOMMENDATIONS GENERAL During the course of the project, an Open Issues list was compiled to capture those items that pose risk or uncertainty to the successful implementation of the concepts developed. The complete list is included in the Appendix. Several of the issues from that list are addressed in the following section to ensure the nature of the issue is fully identified. AREAS/ISSUES OF CONCERN Cost per Watt- Typical costs of commercially available, terrestrial (stationary nonconcentrating) PV systems are $3.00-$3.50/W, not including Balance of Systems. This cost has dropped steadily, but linearly, over the past 10 years for non-concentrator systems. Historically, decreases in the price per watt have been evolutionary, resulting from incremental improvements in manufacturing techniques, and in some cases, lowered raw material costs. The CPC product proposed here targets a cost/watt that is 1/100th of conventional systems. This target may, in fact, be achievable. It would be unprecedented in power generation history, for either conventional or alternative energies. Strength and Temperature Characteristics of Substrate- Selection of the material(s) of construction for the substrate (bottom panel in the 3-piece concept) focuses on the following criteria: n

Low Cost

n

Availability of Raw Material

n

Dimensional Stability

n

Service Temperature/Strength

n

Chemical and Physical properties (including aging)

n

Surface Characteristics (including welding and wetting by conductive material)

PET has been tentatively chosen for this material due to its reasonable conformity to all of these criteria, although others will be evaluated during the course of product design. The material will need to perform consistently at several temperature cycles during processing, as well as thousands of temperature cycles during field service. Historically, performance degradation due to material aging has proven to be a significant issue for PV technologies. It is unclear what fraction of the solar radiation will be dissipated as heat energy rather than electrical energy in actual application. In any case, the module components must prove to be exceptionally stable over a wide range of temperatures for several years.

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Screen Print Size/Indexing n

The product design presents several challenges for printing the conductive grid for the module. The low service temperature of the PET substrate obviates the use of conventional silver-based frits or conductive pastes. The costs of low temperature solders are prohibitively high, as the Lead-Tin mixture requires significant additions of Antimony or Bismuth for use at low temperatures. Additionally, it is critical that the electrical connectors be made of the lowest resistivity material possible. At an output of nearly 1 kW/module, the current density is unusually high for most thick film systems and the possibility of arcing at 300V must be addressed. Also, for concentrated PV systems, series resistance losses become more important at high current densities.

n

Commercially available screen printers (and offset printers) are typically repeatable over a number of cycles at 25-100 µm (0.001-0.004 in). The ability to achieve 5 µm is available, but requires extensive calibration and maintenance. This error in repeatability will be compounded by normal variations in the leading edge (or corner) of the substrate. Due to the small area required in each PV cell, the normal deviation of the print operation is 10 percent of the cell diameter.

Vertical Alignment Tolerance of CPC- The vertical alignment sensitivity of the CPC has not been characterized. It is known that a degree of precision is required, but the process must be designed to accommodate a specific variability. Ideally, power output of each cell is a function of the verticality of the CPC. Normal variation of operations such as hot pressing, punching, and ultrasonic welding will result in some degree of deviation. Laser alignment is a possible solution, as is precision mechanical orientation. Both of these in-line procedures are time-consuming and tedious, but may be required, particularly in the early stages of process development. Horizontal Alignment of PV cells- The 3-piece module concept provides the capability for excellent repeatability in manufacturing steps. The assembly of the three sheets, however, introduces the possibility of compounding product variability. Reducing this variability to an acceptable level is a manageable problem, as the Flat Panel, Printed Wire Board (PWB) and Photovoltaic industries have utilized “sandwich”-type assembly extensively, and have addressed most of the manufacturing issues. Horizontal alignment of the three sheets is the most immediate issue. Prior to welding and chemical sealing, each sheet has been processed separately. The finished product will require precise and repetitive horizontal alignment between all three sheets. The relationship between CPC position, PV cell position, and interconnect wiring is critical. The slightest degree of horizontal misalignment between the top and middle sheets will result in vertical alignment of the CPC, which is addressed above. Additionally, the PV cell itself must be fixed relative to the CPC to ensure optimal concentration. Once the product variability has been characterized, the horizontal alignment issue can likely be addressed by a type of registration, such as a laser mark or mechanical scribe. Registration will probably be required in several locations on all three sheets, all of which must be properly indexed for product quality. Optical alignment before screenprinting is a common technique, and should be readily adaptable to the proposed process.

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DI Water Usage/Substrate Cleaning- In addition to its use in filling the CPC, DI/RO water will be required for several rinsing operations. Welding, forming, chemical sealing, and screen print are processes that will contaminate the sheets with particulate and organic impurities. As discussed in Sec 3, particulate or other impurities will degrade the optical properties of the CPC, lowering the efficiency of the module. IDC’s intent is to minimize water consumption, and achieve optimum sheet cleaning. This may be addressed by a cascading counterflow wet bench. This equipment is commonly used in semiconductor and PV manufacturing, and may provide a workable solution. Transportation Costs- A cursory analysis was performed to assess the cost impact from transportation. The basis of the analysis is contained in the Production Capacity planning model located in the Appendix. Based on this analysis, the transportation cost per module is approximately $3.40. Based on a target finished product cost of $25 per module, this transportation cost represents almost 14 percent. Many factors will need to be considered in site selecting, including raw materials supplier locations, labor availability and cost, water and other utilities availability and cost, as well as others. An alternative to minimize the impact of transportation cost would be to locate the pilot line and initial production at the Pennsylvania site, and subsequently locate the mass-production line adjacent to the installation site. Equipment Lead Times- In general, the equipment lead time issue will be driven by (1) extrusion and press equipment, and (2) screen print/PV assembly equipment. Discussions with vendors indicate the following: Design (assuming proven concepts)

Initial Lead Time

Follow-on Lead Times

Extrusion and Press Equipment

6 ~ 8 weeks

8 ~ 10 months

1 year for balance

Screen Print and PV Assembly Equipment

10 ~12 weeks

8 ~ 12 months

4 ~ 6 months per work cell

Much of the equipment set will be standard and require minimal, if any, modification by the manufacturer. In other cases, most notably screen print and some items of test and measurement, the tools will likely be custom fabricated to some extent. The most costeffective methodology here is a close coordination between Mök and the respective vendors to adapt standard equipment in an attempt to minimize the cost of modifications required to meet the Mök specifications. The equipment set will come from a variety of industries such as Flat Panel Display, Silicon PV, Printed Circuits, and Optical Electronics. Fortunately, equipment manufacturers in these areas are generally flexible and are accustomed to a range of needs. This approach generally results in significant cost savings to the user, but will extend the procurement phase of the schedule.

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Typically, a pre-qualified equipment vendor will be given a Performance Specification by the user, Mök Industries, and asked to provide submittals, with exceptions noted, within a reasonable date. Mök reviews the submittals, and exceptions are taken into consideration. In most cases, a test run can be made at the vendor site, with any needed modifications agreed upon at that time. Mök Industries and the vendor(s) will agree upon the general requirements and Mök will follow-up with an Equipment Specification and a Data Sheet sent to the vendor. The equipment can be competitively bid or awarded on the basis of best qualified. In any case, final acceptance of the equipment should be conducted at the vendor site, when possible, with acceptance criteria having been stipulated in the specification. The follow-on lead times assume firm orders issued to fabricators for equipment that is identical. In the case of the Screen Print/PV Assembly equipment, a group of fabricators may need to be contracted in order to meet the projected delivery schedule. Critical Path Items- Startup, process verification - In order for the process startup to proceed as smoothly as possible, several prerequisites are in order. First of all, a product specification must be developed with some level of detail. This specification will naturally address module power output and lifetime performance, but will also require some level of precision required for the physical characteristics of the module itself, e.g., dimensional stability, dimensional tolerances, Voc and Isc, and temperature limits. The product information can then be deconstructed to develop the requirements for the parameters at each individual process step. For instance, the optimum power output is achieved when the PV cells are within +/- 5 µm placement. These parameters may be specified initially based on theoretical data, but empirical results are necessary to validate the initial assumptions. This step is normally a part of a “pilot” phase, but may be accomplished in a research environment if the tool set is appropriately similar to that used in the final process. Achievement of this phase is measured by statistical analysis to some level of certainty. Historically, validation of the process steps to comply with product specification is time consuming and requires many iterations, usually with slight adjustments of the process parameters. Interaction between the individual process steps, if present, is also detected at this time. Controlled experiments are often required to quantify and address the interactive effects. Consequently, the time required in the overall schedule is often underestimated. Open Issues in Appendix 2.0 addresses the challenges normally seen in this stage, and how they may best be surmounted. In the ideal case, process verification is accomplished with a one-off tool set that closely replicates the planned tool set. Permitting Issues- All of the permits associated with site development will have been obtained prior to site construction activities. Applicable permits associated with the building such as air quality, discharges, material storage, etc. will have to be obtained. These, however, would require more detailed process information than that currently available. This information would be available after preliminary design.

40111

9-4

July 2, 2004 Page 89 of 159

1.0 - Process Concept Sketches -

PV Circuit/Assembly Concept

-

Bus Bar Screen Printing

-

PV Application

Page 90 of 159

PV Circuit/Assembly Concept

PV Circuit/Assembly Concept

Rolled ScreenPrint

X

PV Feeder and Applicator

Dry and Fire Furnace

Pigtail Applicator and Solder

Y

ELEVATION

BusBar ScreenPrint

PV Application

16 ‘

Dry and Fire Furnace

60’

Pigtail Connect

4’

PLAN VIEW

Page 91 of 159

Bus Bar Screen Printing

BusBar Screen Print

Length-wise Bus Bar

Cross Bus Bar

Page 92 of 159

PV Application

PV Application

PV Feed

PV Feed

PV Feed

PV Feed

Off-set Row PV Applicator

Initial Row PV Applicator

Page 93 of 159

2.0 - Planning Data -

Production Capacity

-

Equipment

-

Utilities

-

Open Issues

-

Plastics Cost

-

Labor Cost Estimate – Manufacturing Operations

-

“Simple” Cost Summary

Page 94 of 159

Mok Industires

insert values in these cells

Production Planning - 4' X 8' MODULE Item Concentrator H/D Ratio Module Area Add Factor Distance Add Factor Panel Size Sun Power Sun Power Water Estimate Circle "Nesting" Factor Production Rate #1 Production Rate #2 Production Rate #3 Work Weeks per Year Weight of Water

Value 1.5 1.27 1.01 48 96 0.1 0.6452 0.17 0.93 5 30 97 51 8.34

Square and support (lense area times factor for module area) Assumption of 1/100 Inches Inches W/cm2 (full sun) W/in2 (full sun) 1/6th times cylinder volume Factor times 2 diameters for length of 2 rows of cirlces nested GW per year 0.0078125 <<< sq. mi. GW per year GW per year Weeks lbs./gal

Cost Goal Cost Goal

30.00 0.03

$ per 4' x 8' module (per original 1100 W per module) $ per peak W output

width length

Item Height - Concentrator Diameter - Concentrator Area of Lense "Long" Number Cells/Width "Short" Number of Cell/Width Number Cells/Length Number Cells/Module PV Diameter PV Area Power/PV (peak) Power/Module (peak) Volume of Water / Concentrator Volume of Water / Concentrator Volume of Water / Module Weight of Water / Module

Unit Meas inches inches in2 # # # # inches in2 W W in3 gallons gallons lbs.

Notes

1 0.1377949 0.09 0.01 517 516 1108 572,282 0.0013 0.0000014 0.0017 979 0.000152 0.0000007 0.38 3.1

2 1 0.67 0.35 71 70 152 10,716 0.010 0.00007 0.09 965 0.058 0.0003 2.70 22.5

3 1.5 1.00 0.79 47 46 101 4,697 0.014 0.00016 0.20 952 0.196 0.0008 3.99 33.3

4 2 1.33 1.4 35 34 76 2,622 0.02 0.00028 0.36 945 0.465 0.0020 5.28 44.1

Baseline Scenario

$25.96 <<< Allowable cost per module - 4' X 8' MODULE *** Based on Wattage per Module

SCENARIO 5 6 3 4.1 2.00 2.73 3.1 5.9 23 17 22 16 50 37 1,125 610.5 0.03 0.04 0.00064 0.0012 0.81 1.5 912 924 1.6 4.0 0.0068 0.0 7.65 10.60 63.8 88.4

7 8.9 5.93 27.6 8 7 17 127.5 0.08 0.006 7.1 910 41.0 0.2 22.64 188.8

8 11.8 7.87 48.6 6 5 12 72 0.11 0.010 12.5 903 95.6 0.4 29.79 248.5

9 35.6 23.73 442.4 2 1 4 8 0.34 0.090 114.2 913 2624.9 11.4 90.90 758.1

10 71.2 47.47 1769.6 1 0 2 2 0.68 0.361 456.7 913 20998.9 90.9 181.81 1516.3

<<<<<<<<< Not Nested >>>>>>>>> Cross Check Power/PV >>>

W

0.0

0.1

0.2

0.4

0.8

1.5

BASELINE

Scenario Item Production Rate

Unit Meas Modules per Year Modules per Week Modules per Day Modules per Hour Modules per Minute Modules per Second

5 5,252,649

30

7.1

#3

Scenario 97

31,515,892 101,901,384

5

30

97

5,108,093

30,648,560

99,097,010

102,993

617,959

1,998,066

100,159

600,952

1,943,079

14,713

88,280

285,438

14,308

85,850

277,583

613

3,678

11,893

596

3,577

11,566

10

61

198

10

60

193

0.2

1.0

3.3

0.2

1.0

3.2

Gallons per Day

58,736

352,414

1,139,473

5,396

32,374

104,676

Water Weight to be Transported

Lbs / day

489,856

2,939,136

9,503,206

45,000

269,999

872,996

1,442

1,442

1,442

15,262

15,262

15,262

768

768

768

8,360

8,360

8,360

19

115

372

2

10

33

0.8

4.8

15.5

0.1

0.4

1.4

3.4

3.4

3.4

0.3

0.3

0.3

1,613,034

9,678,202

31,292,852

Panels per Trailer

Trailers

What-If Cost

# per Hour (per volume) Transport $ per Module Transport $ per Year

114.2

456.7

#1

Water Consumption

Modules per Trailer (per weight) Modules per Trailer (per volume) # per Day (per volume)

12.5

WHAT IF

18,055,980 108,335,878 350,286,006

Page 95 of 159

Mok Industries

Production Target #1 >>>

613

Production Target #2 >>> 3,678

"Sheet Approach" Equipment Planning

Modules / Hour Modules / Hour

Production Target #3 >>> 11,893 Modules / Hour

PRODUCTION TARGET #1 Raw Capacity (units/hour)

Extrusion, Calendar and Cutter

PRODUCTION TARGET #2

PRODUCTION TARGET #3

Utilization

Effective Capacity (units/hour)

Qty per Cell

Cost per Unit

Cost per Cell

# of Cells

Extend Qty

Extended Cost

# of Cells

Extend Qty

Extended Cost

# of Cells

Extend Qty

Extended Cost

Notes

1350

89%

1201.5

3

$4,000,000

$12,000,000

1

3

$12,000,000

4

12

$48,000,000

10

30

$120,000,000

Qty per cell set to match Hot Press Molding

Hot Press Molder - TOP & MIDDLE

1350

89%

1201.5

1

$4,000,000

$4,000,000

1

1

$4,000,000

4

4

$16,000,000

10

10

$40,000,000

Hot Press Molder - BOTTOM

1350

89%

1201.5

1

$4,000,000

$4,000,000

1

1

$4,000,000

4

4

$16,000,000

10

10

$40,000,000

50

81%

40.5

30

$2,000,000

$60,000,000

1

30

$60,000,000

4

120

$240,000,000

10

300

$600,000,000

Thermal Welder - TOP/MIDDLE

1350

89%

1201.5

1

$150,000

$150,000

1

1

$150,000

4

4

$600,000

10

10

$1,500,000

Chemical Sealer - BOTTOM

1350

89%

1201.5

1

$250,000

$250,000

1

1

$250,000

4

4

$1,000,000

10

10

$2,500,000

60

89%

53.4

1

$1,500,000

$1,500,000

1

2

$1,500,000

4

5

$7,500,000

10

11

$16,500,000

1215 1620 12150 12150 2430 12150 12150 12150 11475 11475 12150 12150 12150 12150

150 1 6 1 1 0.1 0.1 0.5 0.1 0.1 0.5 0.1 0.1 0.1 0.1 0.6 3

$500 $75,000 $15,000 $80,000 $90,000 $950,000 $80,000 $35,000 $30,000 $7,000 $30,000 $5,400 $4,000 $60,000 $60,000 $0 $40,000

$75,000 $75,000 $90,000 $80,000 $90,000 $95,000 $8,000 $17,500 $3,000 $700 $15,000 $540 $400 $6,000 $6,000 $0 $120,000

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

150 1 6 1 1 0.1 0.1 1 1 1 1 0.1 0.1 0.1 0.1 2 3

$75,000 $75,000 $90,000 $80,000 $90,000 $95,000 $8,000 $35,000 $30,000 $7,000 $30,000 $540 $400 $6,000 $6,000 $0 $120,000

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

600 4 24 4 4 0.4 0.4 2 1 1 2 0.4 0.4 0.4 0.4 2.4 12

$300,000 $300,000 $360,000 $320,000 $360,000 $380,000 $32,000 $70,000 $30,000 $7,000 $60,000 $2,160 $1,600 $24,000 $24,000 $0 $480,000

10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

1500 10 60 10 10 1 1 5 1 1 5 1 1 1 1 6 30

$750,000 $750,000 $900,000 $800,000 $900,000 $950,000 $80,000 $175,000 $30,000 $7,000 $150,000 $5,400 $4,000 $60,000 $60,000 $0 $1,200,000

Equipment

Screen Print, PV Application, and Curing

Flash Tester Material Handling - Work Cell Conveyor (incl interface to equipment) - Water Fill - Vertical Buffer (to 18' height) - Stacker (located at the output of the cell) - Stretch wrapper (located in shipping area) - Finished Goods Conveyor - Conveoyor queue in Shipping Area - Lift Trucks Shipping(charger & extra battery) - Lift Trucks Receiving (charger & extra battery) - Lift Truck roll attachment - Lift Trucks for supplying work cells - Drive-in racks - Pallet racks in receiving/storage area - Yard Tractor for Receiving - Yard Tractor for Shipping - Unloading / Silo storage for PET pellets - Pneumatic conveying for PET pellets

TOTAL

1350 1800 13500 13500 2700 13500 13500 13500 13500 13500 13500 13500 13500 13500

90% 90% 90% 90% 90% 90% 90% 90% 85% 85% 90% 90% 90% 90%

$82,582,140

$82,647,940

$331,850,760

Qty per cell set to match Screen Print / Wiring

Assume ~5% sampling, second tester added to first work cell for early debug

Estimated LF per work cell

Provided by resin supplier

$827,321,400

SPACE PRODUCTION TARGET #1

PRODUCTION TARGET #2

PRODUCTION TARGET #3

Area per Cell (SF)

# of cells

Total Area (SF)

# of cells

Total Area (SF)

# of cells

Total Area (SF)

Production Space

51,600

1

51,600

4

206,400

10

516,000

Receiving Space

2,580

2,580

10,320

25,800

Shipping Space

2,580

2,580

10,320

25,800

Stack/Stretch Wrap

5,160

Support Space (prep, labs, R & D, etc.)

-

assumed 5% of production space raw material straight from trailers to line assumed 5% of production space load direct to trailers

5,160

20,640

51,600

- assumed 10% of production space

15,000

30,000

60,000

- estimates

Canteen/Break Area

20 people per line per shift

2,250

4,500

10,125

- estimate based on 200 person capacity - also doubles at meeting space - Space estimated as 10'x10' per 4 people times 1.5

Office

170 SF per person

6,000

6,000

11,900

- assumed 40 mngt/support at #1 and #2 - assumed 70 mngt/support at #3

Central Utilities

Assume 20% of above

SUBTOTAL GROSS UP (circulation, misc.) TOTAL

61,920

17,034

57,636

140,245

102,204

345,816

841,470

15%

15%

15%

117,535

397,688

967,691

DOCK ASSESSMENT PRODUCTION TARGET #1

PRODUCTION TARGET #2

PRODUCTION TARGET #3

Truck Loads per Hour

0.8

4.8

15.5

Modules per Trailer

768

768

768

"Stacks" per Trailer

24

24

24

"Stacks" per Hour

19

115

372

Minutes per Stack

3.1

0.5

0.2

Shipping Dock Locations

27

27

27

33.8

5.6

1.7

Maximum Trailer Turn Time (Hours)

"SIMPLE" COST PRODUCTION TARGET #1

PRODUCTION TARGET #2

PRODUCTION TARGET #3

Equipment Cost

$82,647,940

$331,850,760

$827,321,400

Modules Produced in 7 years

37,077,520

222,465,119

719,303,885

Equipment Cost Per Module

$2.23

$1.49

$1.15

$0.0023

$0.0016

$0.0012

Equipment Cost per "Peak Watt Capacity"

Page 96 of 159

Mok Industries

Tool Utility Matrix

3

480VAC, 3ph

1,000

3,000

58%

Hot Press Molder - TOP & MIDDLE

1

480VAC, 3ph

2,500

2,500

Hot Press Molder - BOTTOM

1

480VAC, 3ph

2,500

2,500

Screen Print, PV Application, and Curing

30

480VAC, 3ph

240

Thermal Welder - TOP/MIDDLE

1

Chemical Sealer - BOTTOM

1

480VAC, 3ph

Flash Tester

1

480VAC, 3ph

580

1

58% 1,450

1,450

58% 1,450

1,450

7,200

60%

144

4,320

10

80

80

35%

28

28

10

100

100

25%

25

25

- Work Cell Conveyor (incl interface to equipm150 480VAC, 3ph

0.1

15

60%

0

- Conveyor (out of cell transport)

480VAC, 3ph

0.1

3

60%

0

480VAC, 3ph

1.0

6

60%

1

2

2,160

0.85

1,479

50%

740

1

2,500

0.85

1,233

50%

616

1

2,500

0.85

1,233

50%

616

20

5,280

0.85

3,672

5%

184

20

1,360

0.85

24

70%

17

1

100

0.85

21

70%

15

9

335

34

0.85

8

40%

3

2

335

34

0.85

2

40%

1

4

6

6

0.85

3

40%

DIW

PCW

Natural Gas

(C FH ) Ex ten de d

Ex ten de d

Ch ara cte ris tic s Lo ad (gp m) Di ve rsi ty

Ex ten de d

(gp m) Ch ara cte ris tic s Lo ad (gp m) Ex ten de d (gp m) Ch ara cte ris tic s Lo ad (C FH )

(S CF M)

Ex ten de d

(C FM )

CLEAN DRY AIR

Ch ara cte ris tic s Lo ad (S CF M) Di ve rsi ty

(C FM ) NE R GE

NE R

TE LV EN SO

AL EX H

Ex ten de d(

AL EX H

XH

Lo ad ( XH TE LV EN

SO

oa d( kW )

Ro om

He at L

to

He at in

in kW %

De ma nd

Po we rF ac tor

Qu an tity at Qu PE an AK tity a t Pe DE ak MA (kV ND A)

(kV A)

De ma nd

1,740

Lo ad

CF M)

EXHAUST

CF M)

Extrusion, Calendar and Cutter

De ma nd

Op era tin g

Di ve rsi ty Lo ad (K VA )

A) (K V Co nn ec t (k VA )

Co nn ec ted Lo ad

Qty

Ch ara cte ris tic s

Equipment

HEAT LOAD

GE

ELECTRICAL

ESTIMATES FOR TYPICAL WORK CELL

3,333

9,999

Comments Electrical load includes dedicated chilled water system (100 Ton per cell) Electrical load includes dedicated chilled water system (100 Ton per cell) Electrical load includes dedicated chilled water system (100 Ton per cell)

1,000

30,000

2,000

60,000

60 psig

130

70%

2,730

60 psig

15

60%

9

60 psig

1

70%

105

1

60 psig

10

70%

42

90 psig

50

70%

35

Electrical load included in press figures

Material Handling 30

- Water Fill

1

- Vertical Buffer (to 18' height)

6

79

- Stacker (located at the output of the cell)

1

480VAC, 3ph

15.0

15

60%

9

9

1

15

0.85

8

40%

3

- Pneumatic conveying blower motor

3

480VAC, 3ph

15.0

45

60%

9

27

1

15

0.85

23

0%

0

- Battery Chargers

2

480VAC, 3ph

7.0

14

60%

4

8

1

7

0.85

7

40%

3

HVAC / CDA / UPW / Ltg & Misc Equip.

1

480VAC, 3ph

3,500

4,500

SUBTOTAL CONTINGENCY (20%) TOTAL

60% 2,100

2,100

1

79

2,100

19,978

11,172

16,110

7,711

2,198

30,000

60,000

2,921

79

0

20%

20%

20%

20%

20%

20%

20%

20%

20%

20%

20%

23,974

13,406

19,332

9,253

2,638

36,000

72,000

3,505

95

0

11,999

GENERAL NOTES: [1] Connected load reflects expected peak, demand load reflects expected operating load.

HEAT LOAD DESIGN

ELECTRICAL Conncected

Demand

Demand kW

Heat Load kW / Connected kVA Ratio = 0.11

EXHAUST Heat kW

Solvent

CLEAN DRY AIR General

Demand

DIW

PCW Demand

Natural Gas

Demand

Demand

7,050

2,527

18,000

36,000

1,867

95

0

11,999

53,625

58,625

37,013

10,550

144,000

288,000

14,021

380

0

47,995

134,062

139,062

35,052

950

0

119,988

19,654

10,814

Production Target #2 >>>>>>>>>

95,894 239,736

HEAT LOAD "Realistic" Peak

9,999

16,164

Production Target #1 >>>>>>>>>

Production Target #3 >>>>>>>>>

100%

92,532

26,375

360,000

720,000

Loads same as 10GW (per work cell) except half of PV tools (15 in lieu of 30).

"Realistic" Peak at Prod. Targets #2 and #3 calculated by Demand + 5000 KVA (assumes each work cell started individually)

Page 97 of 159

Mok Industries

OPEN ISSUES

Description

Impact

Mitigation Approach

Water use per day (>1 million gallons)

- Not unusual for industrial plants.

Power use at site (> 100MVA)

- Available at site?

- Equipment install is phased … utility provider to plan for peak requirements 3 ~5 years out.

Volume of bottles / day (~1.2 billion)

-

Estimate of 400+ blow molders. Delivery schedule of blow molder quantity. Capacity of blow molder suppliers. Resin supply (limited # of suppliers).

-

Material effectiveness of PET

-

PET may not perform well to sunlight and heat. Resistance to impact (hail, dust). Swelling in water. Surface getting dirty over time (loss in efficiency).

- Alternate materials (polycarbonate, other). - Further research required.

Number of connections to be made (function of concentrators)

- Reliability. - Efficiency loss of connectors.

"Wiring" of PV's, insulation?

- Conductivity of water … short connection wires?

Shipping (Penn -> NV) ~350 trucks per day at $340 million/year

- Cost of transport to site. - # of trucks/trailers (deadheading).

- Locate plant next to site ("batch plant" approach). - Install pilot line in Penn., other lines near site.

PV Cell supply

- Limit output.

- See comment.

Z-fold / hinge

- Complexity to include hinge spriral.

- If needed, use thin plastic connection.

CD measurements

- Repeatability in process. - Efficiency reduction.

- Further research required.

Dry and Fire temperatures for screen printed circuit?

- Effect of 120 deg C to plastic back.

- Further research required.

Comment Should not be issue.

Multiple plants? Higher thru-put design? Use of "pre-forms"? Alternate approach?

- Reduce connection requirements (larger bottles)? - Further research required.

Per Bill Mook, SpectraLabs can ramp capacity (possibly on site) to meet demand.

Page 98 of 159

Mok Industries

OPEN ISSUES

Description

Impact

Mitigation Approach

Only bulk shipping of finished panels addressed

- Retail business could be a large part of the sales generated; however, an additional packaging operation - Building addition to house additional packaging and space dedicated to packaging is needed if individual operation or utilize a 3rd party to package. panels are to be packaged for resale.

Comment

- Use more economical opaque resin, possibly not PET, for the base layer of the panel & minimize the use of all resins consistent with required panel strength.

Pricing of PET and other resins

- Very volatile recently due to oil price increases.

Plastic resin availability

- Regardless of type selected, volume may exceed what - May need to work with supplier(s) to increase is readily available in the market. capacity.

Equipment lead times

- Delay in output schedule and/or output capacity.

- Work with vendors to understanding limiting - The volume of equipment is significant constraints. in order to achieve the output targets (in - Engage multiple vendors to minimize risk from 1 particular #3, 97GW). vendor not performing.

Permit approval and timing

- Delay schedule to production.

- Based on process emissions, utilize equipment to the treat the exhaust emissions.

Freezing/expansion of water in CPC

- Deformation of CPC - Damage to CPC

- Use of additive to lower freezing point (glycerol, silica gel or silicic acid, and others). - Requires further research.

Heat in building from plastics and curing operations.

- High residual heat in the building.

- Separate these areas from others in the building to allow "localized" resolution (exhaust).

Exhaust emissions from the circuit process could be significant.

Page 99 of 159

Plastics Cost for a 4'X8' Panel 100% PET, Variable Layer Thickness, Fixed Price PET $/Lbs

Layer Thickness (Inches) Lens Layer Mid Layer Base

Volume Length (ft)

Width (ft)

in3

ml

Density gm/ml

Kilos of Plastic

Pounds of Plastic

Cost of Plastic

Total Panel PET Cost

$0.60

0.06

0.06

0.06

8

4

829

13,592

1.3

17.67

38.96

$23.37

$23.37

$0.60

0.01

0.01

0.06

8

4

369

6,041

1.3

7.85

17.31

$10.39

$10.39

$0.60

0.005

0.005

0.06

8

4

323

5,286

1.3

6.87

15.15

$9.09

$9.09

$0.50

0.06

0.06

0.06

8

4

829

13,592

1.3

17.67

38.96

$19.48

$19.48

$0.50

0.01

0.01

0.06

8

4

369

6,041

1.3

7.85

17.31

$8.66

$8.66

$0.50

0.005

0.005

0.06

8

4

323

5,286

1.3

6.87

15.15

$7.57

$7.57

Length (ft)

Width (ft)

in3

ml

Density gm/ml

Kilos of Plastic

Pounds of Plastic

Cost of Plastic

Total Panel PET Cost

8

4

553

9,061

1.3

11.78

25.97

$15.58

8

4

276

4,531

1.5

6.8

14.98

$11.24

8

4

92

1,510

1.3

1.96

4.33

$2.60

8

4

276

4,531

1.5

6.8

14.98

$11.24

8

4

92

1,510

1.3

1.96

4.33

$2.60

8

4

230

3,776

1.5

5.66

12.49

$9.36

PET & PVC, Variable Layer Thickness PET $/Lbs $0.60

Layer Thickness (Inches) PET Lens PET Mid PVC Base 0.06

0.06

$0.75 $0.60

0.06 0.01

0.01

$0.75 $0.60 $0.75

0.06 0.01

0.01 0.05

Volume

$26.82

$13.83

$11.96

\

Page 100 of 159

Mok Industries

LABOR COST ESTIMATE - MANUFACTURING OPERATIONS Production Target #1 Rate (burdened, per year)

# per shift per work cell

#

Extended Cost

Plant Manager

$100,000

-

1

Op's Manager

$70,000

1

Maintenance Manager

$70,000

Lead Operator/Technician

Production Target #2

Production Target #3

#

Extended Cost

#

Extended Cost

$100,000

1

$100,000

1

$100,000

1

$70,000

4

$280,000

10

$700,000

1

1

$70,000

4

$280,000

10

$700,000

$60,000

1

4

$240,000

16

$960,000

40

$2,400,000

Operator/Technican

$40,000

12

34

$1,344,000

192

$7,680,000

480

$19,200,000

Support

$30,000

4

11

$336,000

64

$1,920,000

160

$4,800,000

Purchasing

$50,000

2

2

$100,000

8

$400,000

20

$1,000,000

QC

$40,000

1

1

$40,000

4

$160,000

10

$400,000

55

$2,300,000

293

$11,780,000

731

$29,300,000

Employee Category

TOTAL

# of Modules Produced per Year >>> Labor Cost per Module >>>

5,252,649

31,515,892

101,901,384

$0.44

$0.37

$0.29

Notes (1) Shift work via compressed work week (4 on, 3 off, 12 hr days), 4 shift schedules. (2) Operator/Tech and Support headcount for Production Target #1 at 70% of 1 work cell.

Page 101 of 159

Mok Industries

"SIMPLE" COST SUMMARY

Cost Category

Assumptions (1) 7 year duration at peak production (97GW/yr) (2) Does not include inflation, escalation, or "time value of money"

$ / module

%

Comments

FIXED COST Facility Cost

$0.58

1%

Facility Cost divided by (7 years x 102 million modules per year)

Equipment Cost

$1.16

3%

Equipment Cost divided by (7 years x 102 million modules per year)

$1.74

4%

PV Cost

$18.00

42%

Estimate

Resin Cost

$11.96

28%

PET top and middle, PVC bottom

Circuitry Cost

$6.00

14%

Estimate for materials (bus bars, PV "connection", pigtail) … range of $4 ~ $8

Labor Cost

$0.32

1%

Corporate staff - 104 @$70,000/year Operations staff - 555 people @ $45,000/year

- Electricity

$0.71

2%

Demand of 134,000 kVA x 0.9 PF divided by 11,893 modules/hour x $0.07/kWh

- Natural Gas

$0.30

1%

Demand of 120,000 CFH divided by 11,893 modules/hour x $0.03/CFH 4 gallons per module x $0.02/gallon

FIXED SUBTOTAL

VARIABLE COST

Utilities Cost

- Water

$0.08

0%

Transportation Cost

$3.44

8%

VARIABLE SUBTOTAL

$40.81

96%

TOTAL >>>

$42.55

per module

Cost per Watt (Peak) >>>

$0.045

assumes 952W (peak output) per module

Confidential

Page 102 of 159

3.0 – Larger Illustrations -

“Sheet” Module

-

Typical Cell

-

Block Layout - Baseline

-

Block Layout - Option

Page 103 of 159

“Sheet” Module Concept 3 Piece Approach TOP

MIDDLE

BOTTOM

Legend

PV Wiring Sealer/weld Anchor Tab

COMPLETE

submersion fill

General Process Steps (1) (2) (3) (4) (5) (6) (7) (8)

Hot Press Mold the top (better precision for lenses). Hot Press Mold middle (punch hole) and bottom (add dimple). PV install/wiring on bottom (screen print, filament wiring). Ultrasonic weld top to middle. Fill CPC assembly (upside-down, submersion). Insert and chemically seal CPC assembly to bottom. Flash test. Stack to bundles and load to trailer.

General Equipment Set (1) (2) (3) (4) (5) (6) (7) (8) (9)

Hot Press Molders Stringers (screen print? wiring?) Ultrasonic Welders Fillers Chemcial Sealers Flash Testers Stackers Conveyor and buffers Fork Lifts (loading)

Page 104 of 159

215Fe e t

V e rt ic a l B u f f e r

B ottom Panel

R aw M a t e ria l Input F e e d e rs & E x t ru d e r

F e e d e rs & E x t ru d e r

To p P a n e l

M id d le P a n e l

D ie , G e a r Pum p, S c re e n C hanger

D ie , G e a r Pum p, S c re e n C hanger

R o ll F o rm , 3 R o ll S t a n d w it h in d iv id u a l d riv e s

220Feet

R o ll F o r m , 3 R o ll S t a n d w it h in d iv id u a l d r iv e s

A c c u m u la t o r, P re h e a t , H o t P r e s s M o ld , C u t , D is c h a rg e , Th e rm a l B o n d To p & M id d le Sheet

S u b m e rg e d W a t e r F ill S t a t io n

V e rt ic a l B u f f e r

F e e d e r & E x t ru d e r

D ie , G e a r P u m p , S c re e n C h a n g e r

R o ll F o rm , 3 - R o ll S t a n d w it h in d iv id u a l d riv e s

A c c u m u la t o r , P re h e a t , H o t P r e s s M o ld , C u t , D is c h a r g e

V e rt ic a l B u f f e r

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

S c r e e n P rin t , P V A s s e m b ly , C u r e

V e r t ic a l B u f f e r

V e rt ic a l B u f f e r Te s t

C h e m ic a l W e ld B o t t o m P a n e l

V e r t ic a l B u f f e r

F la s h Te s t

S h ip p in g

Page 105 of 159

Block Layout - Baseline

Page 106 of 159

Block Layout - Option

Page 107 of 159

4.0 – Master Plan - Building -

Millennium Park Master Plan Showing Mök Industries

-

Perspective and Section for Mök Industries, Lawrence County, PA, Solar Panel Fabrications Plant

Page 108 of 159

Page 109 of 159

.. MOK Industries Solar Panel Fabrication Plant - Lawrence County, PA

Perspective view

7/2/2004 Page 1 IDC confidential

Page 110 of 159

Section Elevation

5.0 – Estimating Accuracy Curve

Page 111 of 159

Estimating Accuracy Curve

(Source: Derived from AACE Data; 18R-97)

50 45

E s t i m a t e

40 35 30 25 20 15

A c c u r a c y

10 5

Engineering Completion (%)

0 10

20

30

40

50

60

70

80

90

100

-5 -10 -15 -20

Programming Design

Class 5

Schematic Design

Class 4

Design Development

Class 3

Control or Bid Tender

Class 2

Construction Documents

Class 1

Page 112 of 159

6.0 – Material Comparison -

ABS

-

PET UV

-

CPVC

Page 113 of 159

Acrylonitrile Butadiene Styrene – ABS High Impact UV Stabilized Polymer Type Thermoplastic

Advantages Can be used in outdoor applications involving exposure to UV radiation (sunlight).

Disadvantages Should not be processed above 220°C ( 430°F ) to prevent material degradation. Incorporation of UV stabilizer reduces notched izod impact strength ( ~ 0.3 KJ/m -5.6 ft lb/in ) compared with unmodified high impact grades.

Typical Properties Property Density (g/cm3) Surface Hardness Tensile Strength (MPa) Flexural Modulus (GPa) Notched Izod (kJ/m) Linear Expansion (/°C x 10-5) Elongation at Break (%) Strain at Yield (%) Max. Operating Temp. (°C) Water Absorption (%) Oxygen Index (%) Flammability UL94 Volume Resistivity (log ohm.cm) Dielectric Strength (MV/m) Dissipation Factor 1kHz Dielectric Constant 1kHz HDT @ 0.45 MPa (°C) HDT @ 1.80 MPa (°C) Material. Drying hrs @ (°C) Melting Temp. Range (°C) Mould Shrinkage (%) Mould Temp. Range (°C)

Value 1.06 RR103 35 2.3 0.3 9 6 2 70 0.3 19 HB 14 20 0.007 3 98 89 2 @ 90 230 - 270 0.6 40 - 60

Applications Recreational vehicle bodies and parts, agricultural parts, ski boots.

Page 114 of 159

Polyethylene Terephthalate – PET UV Stabilized Polymer Type Thermoplastic

Advantages Good resistance to sunlight / UV radiation with little yellowing compared with unmodified grades.

Disadvantages The processing problems associated with unmodified PET, i.e. very dry granules needed and high moulding temperature required for optimum properties.

Typical Properties Property Density (g/cm3) Surface Hardness Tensile Strength (MPa) Flexural Modulus (GPa) Notched Izod (kJ/m) Linear Expansion (/°C x 10-5) Elongation at Break (%) Strain at Yield (%) Max. Operating Temp. (°C) Water Absorption (%) Oxygen Index (%) Flammability UL94 Volume Resistivity (log ohm.cm) Dielectric Strength (MV/m) Dissipation Factor 1kHz Dielectric Constant 1kHz HDT @ 0.45 MPa (°C) HDT @ 1.80 MPa (°C) Material. Drying hrs @ (°C) Melting Temp. Range (°C) Mould Shrinkage (%) Mould Temp. Range (°C)

Value 1.38 RR68 50 2.3 0.03 8 200 4 115 0.15 20 HB 13 20 0.01 3.7 150 70 2 @130 270 - 290 2 90 - 110

Applications Outdoor applications such as lawn mower housings, power tool casings, shades for outdoor lamps, pump casings, seat shells.

Page 115 of 159

Chlorinated Polyvinyl Chloride – CPVC Chlorinated PVC Polymer Type Thermoplastic

Advantages Service temperature of 90°C (190°F), accompanied by self-extinguishing properties. Reasonable weathering performance.

Disadvantages More difficult to process than UPVC or Plasticised PVC.

Typical Properties Property Density (g/cm3) Surface Hardness Tensile Strength (MPa) Flexural Modulus (GPa) Notched Izod (kJ/m) Linear Expansion (/°C x 10-5) Elongation at Break (%) Strain at Yield (%) Max. Operating Temp. (°C) Water Absorption (%) Oxygen Index (%) Flammability UL94 Volume Resistivity (log ohm.cm) Dielectric Strength (MV/m) Dissipation Factor 1kHz Dielectric Constant 1kHz HDT @ 0.45 MPa (°C) HDT @ 1.80 MPa (°C) Material. Drying hrs @ (°C) Melting Temp. Range (°C) Mould Shrinkage (%) Mould Temp. Range (°C)

Value 1.52 RR120 58 3.1 0.06 7 30 5 90 0.1 50 V0 14 14 0.025 3.1 110 105 2 @ 75 220 - 240 0.5 40 - 70

Applications Hot water piping.

Page 116 of 159

7.0 – Planning for Success in Transitioning New Technologies into Economical Full-Scale Production

Page 117 of 159

PLANNING FOR SUCCESS IN TRANSITIONING NEW TECHNOLOGIES INTO ECONOMICAL FULL-SCALE PRODUCTION David Causey, IDC and William Westmoreland A number of technology-driven industries, including semiconductor manufacturing in its early development as well as other related industries more recently, have been characterized by the failure of many R&D initiatives to reach the goal of affordable products that can be manufactured on a large scale. There is hardly a shortage of brilliant concepts which have been readily proven on a laboratory scale. Likewise, there is not a lack of market research into the potential commercial application of many of these concepts, and at what price range a given product can make a successful entry into an available market. What is absent is a life-cycle template to serve as a methodology for smooth transition from R&D to volume manufacturing. In many of these cases, the failure is due in large measure to the inability of corporate management, using a specific set of attributes, to technically assess the economics of transition from the laboratory to large-scale production. For the purpose of this discussion, the focus will be a rather broad range of process-based technologies with most, if not all, of the following characteristics: ƒ ƒ

Multi-step processing in which various layers or films are applied onto a substrate A requirement for cleanroom manufacturing conditions for all steps or certain critical steps ƒ One or more patterning steps by photolithography and/or laser ablation ƒ Fabrication of an optical or optoelectronic device or component ƒ The requirement to ramp from development to production on substrates which are much larger (4X or more) than the “proof” size and or require a volume increase of greater than 100X from product prototyping to full production.

Virtually all technology-driven process, product, and factory maturation will progress through a natural life cycle from R&D to pilot operations to full-scale manufacturing, as indicated by Figure 1.

R&D Phase

Pilot Phase

Production Phase

Staff

Staff

Staff

Equipment/ Facilities

Equipment/ Facilities

Equipment/ Facilities

Process, Product, Procedures

Process, Product, Procedures

Process, Product, Procedures

Materials

Materials

Materials

Figure 1 - Typical phases of industrial R&D process Page 118 of 159

These different phases may be thought of as a series of “gates,” each of which has it own distinct set of characteristics. These phases can be characterized with respect to the following: ƒ ƒ ƒ ƒ

Staff Equipment and Facilities Process, Product, and Procedures Materials

It must be emphasized that although life cycle phase duration, transition management, and characteristic specifics must be modified and optimally managed on a technology to technology basis to allow for competitive success, failing to follow the basic natural sequence will almost always insure failure characterized by extended production schedules, inflated operation costs, and a sub-optimal final product feature set.

Life Cycle Template Research and Development Figure 2 represents the typical support components and tasks associated with the R&D Phase of an industrial research and development process. These characteristics are by no means comprehensive, and will naturally vary depending upon the structure, philosophy, and collective experience of each organization. It is intended as a template, or guideline, by which technology managers can assess progress and plan accordingly. Although there are often different objectives for both research and development, they are combined here to reflect the actual organization usually found in most technology-driven companies. This environment ideally focuses on individual achievement by a technical staff driven by discrete events. Demonstration of concepts is far more important that repetition of results during this phase.

R&D Phase Staff

Pilot Phase

Production Phase

•Define and demonstrate theoretical concepts in a lab-scale industrial environment. •Technical staff hard science- and research-oriented (80% technologists, 20% engineers). •High degree of individual contribution. •Primary compensation based 90% individual, 10% team. •Focused on discrete events and intradiscipline interactions.

Equipment/ Facilities

•Provide a lab-scale industrial environment for development and prototyping activities. •Uncharacterized tools utilized with non-optimized equipment recipes. •Tool set flexible, portable, and multifunctional. •Work areas decentralized with layout optimized for intradiscipline research and development.

Process, Product, Procedures

•Define individual process steps and confirm initial sequence of operations. •Process variables understood through modeling/simulation and individual step sensitivity studies. •Chemical reactions and scaling parameters understood. •Produce a fully featured and functional prototype. •Initial prototype produced and characterized with respect to key performance variables. •Provide a flexible framework for the coordination of diverse development activities.

Materials

•Provide a basic set of materials specifications including initial sensitivity analysis with respect to intramaterial variation. •Initial experiments done with lab purity materials to obtain highest theoretical properties. •Material alternatives and substitutions freely examined with “decision to use” based on first-order impacts.

Figure 2 - Composition of the R&D Phase Page 119 of 159

In the R&D Phase, scientists typically have work and laboratory spaces that foster creativity, and they are unencumbered by the demands of daily production. In many cases, the R&D Phase is unfortunately marked by a lack of documentation, possibly attributable to the fact that the necessary support systems and infrastructure are not in place. There is also a natural tendency to disregard “failures,” although the experiential knowledge gained from these failures is vital to future developments. Thus, our experience has shown that meticulous documentation is most important during this phase, preventing expensive and timeconsuming redundant engineering, although documentation's importance cannot be overstated at any point in the life-cycle. Pilot Figure 3 shows the organizational elements needed for a typical transition into a product's Pilot Phase. (The term pilot is often misleading, and has no universal standard. In this usage, "pilot" is equivalent to "prototype," and refers to an environment providing full-scale manufacturing, although a “one-of” tool set is common.) One aspect of this phase that is often overlooked is the makeup of the technical staff. The key during piloting operations is the staff transition from hard scientists to inter-functional teams, composed primarily of manufacturing engineering disciplines. The technical staff during piloting is ideally balanced evenly between hard science and engineering disciplines, with the scientists naturally predominating early in this phase. Early in the initial transition from R&D, it is important to supplement the predominantly research-oriented staff with engineers who will become the core engineering staff for the future full-scale operations.

R&D Phase Staff

Pilot Phase

Production Phase

•Integration of developed concepts in a prototype manufacturing environment. •Technical staff balanced (50% hard science- and research-oriented and 50% engineering). •High degree of intrafunctional teams. •Focused on system-level events with balance between intra- and interdiscipline interaction.

Equipment/ Facilities

•Provide a manufacturing-scale environment for initial production equipment burn-in and pilot production. •One-of-each fully sized tools with optimized equipment recipes. •Tool set user-friendly, repeatable, and functionally optimized. •Layout optimized for efficient manufacturing flow and support area centralization. •Involve vendors in partnership relationships.

Process, Product, Procedures

•Integrate process steps and define manufacturing flow. •Process integration variables understood through sensitivity analysis. •Manufacturing process model defined and characterized. •Produce a fully featured and functional production-worthy product in limited volumes. •Final production product defined framework supporting manufacturing requirements. •Provide a flexible but defined framework supporting manufacturing requirements. •Production support infrastructure defined and implemented.

Materials

•Freeze production bill-of-materials and provide initial intermodule/intermaterial sensitivity analysis. •Define final material purity and compositional requirements. •Determine proper cost vs. performance material trade-offs with ‘decision to use’ based on first-order. •Develop qualification requirements for vendors and materials. •Involve vendors in partnership relationships.

Figure 3 - Composition of the Pilot Phase

Page 120 of 159

Process transfer is a useful metric that occurs near the conclusion of the Pilot Phase. Process transfer, usually implemented incrementally by process steps, is generally accompanied by a definition of the process parameters by which a product of a certain quality (not always optimal) may be produced. It marks the end of formal development and provides a baseline against which other processes may be measured. Production The defining characteristics of the Production Phase are generally well understood and almost universally accepted across a wide range of industries. As shown in Figure 4, staffing requirements, equipment and facilities, process, product and procedures markedly differ from the R&D Phase and the Pilot Phase. Typically in technology-driven companies, the overwhelming focus during this phase is on procedure, often at the expense of other equally important life-cycle elements. Throughout the production phase, the operation should be driven by statistical process control, and procedural issues such as rigorous documentation and process change control should be weighted heavily. At this point, process decisions are made on the basis of data, not the intuition of researchers.

R&D Phase Staff Equipment/ Facilities Process, Product, Procedures Materials

Pilot Phase

Production Phase

•Sustain and continually improve the ongoing production operations. •Technical staff 90% engineering and 10% hard science- and research-oriented. •High degree of interfunctional teams. •Primary compensation based 40% individual, 60% team. •Focused on system-level events and interdiscipline interaction. •Provide a fully operational manufacturing environment for high-volume production. •Multiplexed, fully characterized production tool set running stable, frozen equipment recipes. •Tool set fully instrumented, in-situ monitored, and optimally automated. •Layout optimized for maximum output, minimal cycle time, and lowest manufacturing cost. •Running a frozen manufacturing process flow. •Process driven by statistical controls. •Manufacturing process model only changed through continued characterization in incremental steps and market-driven demand changes. •Fully characterized products running in high volumes. •Final production product specifications frozen. •Provide a stable, defined framework preventing variation. •Production support infrastructure optimized. •Bill-of-materials components optimized for cost reduction and supply consistency. •Low cost materials substitutes investigated and qualified. •Cost vs. performance trade-offs controlled tightly. •Vendors become full partners and part of the manufacturing flow.

Figure 4 - Composition of the Production Phase If the process and product are to be frozen at this point in the life-cycle, it follows that the technical staff, including support functions such as information technology and procurement, must be adjusted accordingly as well. This does not mean, of course, that the process engineers who have supplanted the research-oriented staff of earlier phases should lack creativity. On the contrary, their creativity should now be focused on troubleshooting and fixing the existing process, not changing the process. In a similar manner, the flexibility demanded of a purchasing manager during R&D is no longer an asset, and that person's ability to implement an active program to include raw material vendors as full partners now becomes critical. Page 121 of 159

Key Success Drivers A careful analysis of those technologies, facilities, and products whose transition from R&D to manufacturing has been successful reveals a number of remarkable similarities. It is useful to review these similarities with respect to the underlying supporting factors which drive maturation and phase transition utilizing them to develop a “roadmap” for future successes. It is critical that corporate managers be given the tools and the insight to make accurate assessments as progress is made through the natural life-cycle so that optimal orchestration of the four areas listed above can then be shaped accordingly. This discussion offers a detailed review of the key drivers, which enable promising new concepts destined for high-technology manufacturing, to economically evolve into large-scale production. As a technology, facility, or product progresses through its maturation life-cycle, it is important to understand how the critical success factors constantly change. For example, during the R&D Phase, optimizing cycle-time on specific process experiments needed to verify the baseline process is the primary WIP (Work in Progress) movement goal. During the Pilot Phase, however, this focus needs to shift toward manufacturing priorities enabling process integration, process flow qualification, and equipment certification. Finally, during the manufacturing ramp into the Production Phase, sheer product output, factory overall product cycle-time, and operating costs become the primary drivers. There is risk in misreading the priority success factors that dominate at any given time in the life-cycle. Manufacturing Drivers A successful factory understands and balances critical “Manufacturing Success Drivers.” These include Product Output, Product Performance, Constraint Equipment Uptime (Reliability), Constraint Equipment Cycle-Time (Run-Rate), Constraint Equipment Utilization (Effectiveness), and Production Yield. These drivers are in turn influenced by several factors, all of which evolve throughout the life-cycle. Equipment Capabilities Equipment capability requirements vary throughout a factory’s life-cycle. During the R&D phase, flexibility and multi-functionality are at a premium, whereas during the Prototype (Ramp) Phase, user-friendliness and reliability become the critical considerations. During the Production Phase, controls instrumentation, optimal automation, and in-situ process monitoring become the key attributes. Equipment Maintenance Leveraging tool performance and enhancing operability and serviceable life are critical. This is necessary due to the complexity and cost for large scale, high-volume production equipment such as 300mm production tools, which must be specified, constructed, and maintained for successful operation. Today's manufacturers must be prepared to plan and fund for the staffing, training, and management of high-performance equipment maintenance teams.

Page 122 of 159

Equipment Characterization/Monitoring Methodologies The most fail-safe method to insure equipment suitability for manufacturing is to establish a thorough equipment specification for the tool vendor. In addition, setting a clear set of acceptance criteria, which include both performance and equipment metrics, is vital. Once equipment characterization/initial process parameters are established, a repeatable method for equipment and process monitoring must be determined. The instrumentation for these process controls (equipment and process metrology) must be designed into the tools and systems from the outset, and not added belatedly as an afterthought. Constraining Tool Utilization Improvements Identification and elimination of key production capacity bottlenecks is mandatory in managing an aggressive manufacturing ramp. Throughout a manufacturing ramp, the constraining tools will shift and process/production simulation can be utilized to preview the constraint sequencing. A balance between equipment characterization, equipment upgrade/modification, engineering process development/optimization, and production material needed for baseline establishment must be actively directed. Run-Rate Prototyping Strategies We have found it most valuable to implement specific programs designed to “shake-out” portions of a manufacturing line prior to their required full-capacity utilization. Many problems which occur during a production ramp are not detected until the equipment and process are exercised at capacity level rates. Areas specifically vulnerable to this phenomenon are mechanical repeatability during maximum cycling, process control, and optimized preventative maintenance requirements. Factory Ramp Up/Capacity Planning A factory moving from the R&D Phase and initial start-up into the Prototype/Ramp Phase is at its most critical juncture. Many yet unseen hurdles pertaining to staffing, materials, equipment, and process emerge during this stage. Setbacks at this stage can most immediately manifest themselves as failures to attain the technical milestones required for continued project viability. Simulation/Factory Layout Full factory floor layout and production simulations are imperative to prevent unforeseen factory floor design flaws. It is difficult to overstate the importance of these tools in the planning phase. Without these tools there is a significant risk of improperly matched operating capabilities, poorly designed manufacturing flows, and restricted options for future expansions and process changes.

Page 123 of 159

Production/Operating Plan Generation and Risk Analysis It is vital to understand the pertinent variables required to build a self-consistent, multi-year operating plan including the materials, labor, and equipment input components as well as the product output and associated costs. All of these factors must be incorporated into the development of an operating template. In addition, realistically understanding the associated risks and developing early contingency plans is critical to reducing the overall time-toindependence viability for the business. Manufacturing Benchmarking It is advantageous that a project management team has functional, practical experience with manufacturing companies from a low-volume, custom product emphasis as well as a mass production, lowest-cost focus. That enables a team to reliably compare performance actuals with realistic milestone goals, and to effectively judge a reasonable rate of progress leading to successful full capacity manufacturing.

Business/Enterprise Success Drivers There are three fundamental parameters that dictate the cost effectiveness model for many emerging high-technology production operations: „

Product performance

„

Manufacturing yield.

„

Product durability, i.e. reliability.

Any comprehensive program must focus on these parameters, and map out a plan to achieve economic viability milestones in each parameter. Underlying these parameters also exists a set of factors which must be closely managed throughout the life-cycle. Technology Maturity A technology survey early in a product development program is exceptionally important to expeditiously scale up processes whose technologies and performance are already proven. As a result, the manufacturer gains insight into which processes have a high probability of success through direct scale-up, and which processes must be piloted so that more process knowledge can be gathered. Processing Step Interaction High-technology manufacturing involves multi-step processing in which each unit operation may be quite dependent on the preceding step. Accordingly, process experiments must be designed to take into account both dependent and independent variables, and how those variables will interact during production scale-up. Failure to do this properly would threaten the ultimate optimization of the process parameters.

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Process Characterization In order to communicate effectively with potential equipment and materials vendors, a process specification for each process step must be developed. The only way to establish an effective definition for both materials suitability and equipment performance is to characterize the process sensitivity ranges for individual process steps as well as for the integrated process flow. By focusing early on process characterization, significant time and costs can be saved during the subsequent production ramp, where both customer dissatisfaction and a growing expense base are significant negatives. Process Monitoring It is important to attend to instrumentation and monitoring considerations during the early Prototype Phase, since that is when many critical variables are identified. Many of the successful products appear to be overly instrumented and controlled at the Pilot Phase, but this is often necessary to adequately define the critical variables at each step as well as interdependent variables between the process steps. This is also an appropriate time to develop a strategy to properly monitor and eventually control the various process steps in the Production Phase. The focus needs to be on reducing variability first, and then optimizing the parameter targets. Task Force/Technical Program Management In many cases, a “Tiger Team” approach to program management must be taken. One case history of this approach enabled a cross-functional team of engineers, scientists, process technicians, and maintenance technicians to successfully increase equipment uptime by 50% and increase the effective run-rate by 150%. Related Technology Understanding There is much technology and manufacturing methodology that is common to the production of such varied products as semiconductors, flat panel displays, fine chemicals, photovoltaics and architectural glass coating technologies. It is valuable to draw upon the knowledge and experience that “cross pollinates” among those industries. This broad awareness helps identify the "best of the best” technologies and strategies from these different industries related to manufacturing practices and methods, overall factory productivity optimization, instrumentation and controls, and familiarity with equipment manufacturers. Expense, Capital, and Cost Management The ability to construct a logical, realistic operating budget, with a clear understanding of the risk management which must be utilized to successfully guide the applications of resources, is critical not only during the implementation portion of a manufacturing start-up business but also during operating plan development. Without real knowledge of the potential resource hurdles a production start-up will encounter, a realistic, executable business strategy is extremely difficult to construct and implement. Page 125 of 159

Materials Procurement/Vendor Sourcing/Partnering Strategies In some cases, vendor sourcing may take the form of a partnership between a manufacturer and its suppliers. This is particularly important in developmental processes to which the equipment manufacturer brings a depth of process experience. Vendors, like the clients they serve, want to be associated with success. The qualification procedure works in both directions, and equipment manufacturers and material suppliers generally want to be an interactive part of the team. Also, much of the equipment required for high-technology manufacturing is long lead and requires significant time for start-up and debugging. The procurement process must be integrated into the overall plan early in the process. Organizational Alignment-Design/Institutional Skill Identification The identification and management of the specific technical/operational talent required is critical for factory success. Part of this process includes the ability to map the current institutional skill-set with the strategic organizational goals and objectives identifying core competency gaps. This process requires an understanding of in-depth organizational dynamics as well as practical, high-level operational management experience. Change Management The phase transitions experienced in a manufacturing ramp are dramatic and varied. Consequently, the methodology by which one manages, leads, and directs an organization through these phases becomes imperative to success. The economics of capital costs and time required to re-tool an organization throughout this maturation process would be prohibitive. For that reason, it is important to apply an optimal deployment of resources at the outset. Achieving this requires transition of process control from research scientists to an emerging plant engineering organization; and the transfer of equipment sustaining and maintenance responsibilities from the engineering organization to a focused equipment maintenance group. Life Cycle Schedule The attached Technology Product Industrial Life Cycle (Figure 6) provides a hypothetical time-line for the three discrete phases in the life cycle of a technology-driven product. While the durations shown are of course dependent upon the complexity of the technology involved, the actual linkages among the individual phases provides a historically accurate model. In some cases, there have been specific products which have been accelerated quickly through one or more of the phases. Even though it may appear that the phase has been “skipped,” the transition in staff, materials, procedures, etc. is still necessary to establish the groundwork for future success. These transition phases may be apparently short in duration, but they are a necessary “stepping-stone” for future generations of product(s) that will ensure successful continuity.

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Annual Investment 20+ Years 1-2 Years R&D Phase Pilot Phase

20+ Years Production Phase

Figure 6 - Technology Product Industrial Life Cycle The Authors - Mr. Causey is a member of the Advanced Technology Group for IDC, a leading provider of design and construction services for industrial clients worldwide. His areas of expertise include microelectronics manufacturing, flat panel display technology, fiber optic manufacturing, specialty fibers and composites, photovoltaic processing, vacuum coating operations, and continuous and batch high temperature processing. Mr. Causey has been a central figure in the development of conceptual processes and equipment engineering strategies for new high-technology manufacturing enterprises. His involvement in such efforts encompasses development of specifications, data sheets, functional requirements for a range of process and process support equipment, cleanroom layouts, process utility matrices, and overall process flow concepts. Mr. Westmoreland is an expert in advanced technology manufacturing processes including microelectronics, charge coupled devices and photovoltaics. He served as a technologist for IDC for three years and is currently an independent consultant in advanced technology production strategies. Mr. Westmoreland specializes in the development of technology and management approaches that enable the cost-effective transition of innovative technologies into high-volume production modes.

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Spectrolab, Inc. P.O. Box 9209, Sylmar, CA 91392-9209 USA 12500 Gladstone Avenue, Sylmar, CA 91342-5373 USA Telephone: 818-365-4611; Fax: 818-361-5102

In reply refer to 04L00079b-99131-R2

May 19, 2004

Mr. William Mook Mök Industries, LLC 4449 Easton Way Columbus, OH 43219 Subject:

Spectrolab Acknowledgement of Funds and Conditional Acceptance of Your Order for Spectrolab Concentrator Systems

Reference:

(a) (b) (c) (d)

Initial Spectrolab Quotation Letter No. ACD-4-131-L dated 02/13/04 Revised Spectrolab Quotation Letter No. ACD-4-131-L-R1 dated 04/19/04 Spectrolab e-mail (R. Sherif) dated 05/14/04 Mayk Kalachian e-mail dated 05/17/04

Dear Mr. Mook:

Spectrolab acknowledges receipt of your wire transfer of $30,000.00 as a partial payment for Spectrolab Concentrator Systems, in support of the effort to develop high concentration photovoltaic (HCPV) products using Spectrolab’s multi-junction cells and Mök Industries’ Terrestrial-Tuned Filters. We conditionally accept the funds and your order based upon your acceptance of our enclosed updated Terms and Conditions of Sale as they relate to Intellectual Property and Proprietary Information, as well as a revised delivery date; all else remains as stated in our previous quotation. With respect to the revised Terms and Conditions, we have replaced our previous quotation’s Terms and Conditions of Sale (08/01 with IP mod 04/04) with the attached version OA Terms and Conditions of Sale (08/01 with IP & Proprietary Info mods 05/04). In this latest version, we have modified Paragraph 14 which pertains to Spectrolab Proprietary Information, replaced previous Paragraph 19 with new Paragraph 19 which pertains to Customer Proprietary Information, and added new Paragraph 20 which addresses Intellectual Property. With respect to the delivery date, our new estimated delivery date is on or before 08/31/04, rather than eight (8) weeks, as previously stipulated. We look forward to your acceptance of these updates to our quotation and working with you on this project. For ease of acknowledgement and to expedite processing your order, it is suggested that you sign and date the signature block below and fax this letter back to the attention of Linda M. Schwartz (facsimile 818-361-5102) as soon as possible.

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Page 2 – Letter 04L00079b-99132-R2 to Mok Industries, LLC/W. Mook dated 05/19/04

If you have any programmatic and technical questions, please contact Dr. Raed Sherif at 818838-7479 or via E-mail at [email protected]. For contractual matters, please contact the undersigned at 818-898-2818 or via E-mail at [email protected] or via FAX 818-3615102 with reference to Quotation ACD-4-131-L-R2. Sincerely, SPECTROLAB, INC.

Linda Schwartz Contract Manager

Acceptance by:

____________________ ___________ Signature Date ____________________ (printed name)

Enclosure: 1. Spectrolab OA Terms and Conditions of Sale (08/01 with IP & Proprietary Info mods 05/04). cc: R. Sherif, M. Kalachian, N. Karam T. Grochow and File: ACD-4-131-L

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Sugico Mök

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  Sugico Graha Management Teaam  2006   

  Sugico Major Equipment 

CONFIDENTIAL

Sugico Mök Page 135 of 159

PT. SUGICO GRAHA Group of Mine in South Sumatera Province NO 1

Head Office Address

2

Mine Address

3

Estimate Reserves (TOTAL)

4

Amount of reserves available for conversion to liquid fuels using our process

5

Area already mined, Area to be mined and under development

6

Total Concession

7

8 9

Power needs, water needs, power and water availability Rate of production Estimation of coal price

10

Cost of labor

Jalan Imam Bonjol No. 68-70 Menteng Jakarta 10310, Indonesia PT. Sriwijaya Bintangtiga Energy District Muara Lakitan PT. Brayan Bintangtiga Energy District Rawa Ilir PT. Brayan Bintangtiga Energy District Muara Lakitan PT. Sugico Pendragon Energy District Rawas Ilir PT. Lion Power Energy District Gunung Megang PT. Tansri Madjid Energy District Muara Enim PT. Sugico Graha District Rambang Dangku 5,36 Million ton ( = about 5 billion ton) which consist of : PT. Sriwijaya Bintangtiga Energy = 122 Million ton PT. Brayan Bintangtiga Energy = 113 Million ton PT. Brayan Bintangtiga Energy = 119 Million ton PT. Sugico Pendragon Energy = 4,43 Million ton PT. Lion Power Energy = 210 Million ton PT. Tansri Madjid Energy = 366 Million ton PT. Sugico Graha = not yet estimate Sugico is on exploration step right now so if we can start up with MoU they will provide the amount quantity needed. During last meeting, they can provide 60,000 MT / month. But if Sugico also share (own) the new liquefaction company they will supply quantity moreover we need (they confirmed for first agreement 100,000 MT / month is available). Sugico’s concession is on exploration step and will be exploited and production once received contract from buyer. Mean, only small exploitation right now. They are currently negotiating with PLN (government electrical company) and private electrical companies. Now, they are very interesting with our liquefaction technology and starting to discuss with us. 90,192 Ha. (=222,868.4 acre). We can built outside or inside their concession if you require about 350 Ha (=864.87 acre) for sun collector. Mines are using generator for their need and using deep well or river for water need. We can use river for the production. There are many big river in Sumatera Island. USD 13 / MT excluding tax USD 50 / MT (my personal estimation base on local price but I think can be reduce /discount on the agreement in huge quantity). The lowest is IDR 1 million / month excl. tax. Technician is vary from 3 to 4 million / moth excl. tax. Salaray paid 14 times

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11 12 13

Language Available property for solar collector (total labor) Issue

14

Level of training required

15

Method of access

16

Transportation to Terminal

a year since the balance 2 month are for muslim/christmas holiday allowance. Sugico can provide the labor with needed qualification. Indonesian for labor and English for enggineer/technician. No detail information but Sugico can arrange on the agreement base. No crucial issue. Local government is very cooperative and accommodate for new investment/investor. Usually, experience labor will primary choosen but Sugico usually tranied their labor like technical, OHSAS etc. Road, air and water (river). Flight from abroad will be arrived in Jakarta airport and from Jakarta airport to Palembang airport (about 1.5 hour). Palembang to Muara Enim is 5 hours by road. Need for export or inter island activities. The concession located about 5 to 100 km from Musi River. Usually use railway or truck to Musi River (1 hour only) and from Musi River to Lampung port will take 9 hours (300 to 450 km). But for our condition which plan near the mine, there will only need truck or rail to our stockpile.

17

Cost of Transportation

Depend of the distance (about IDR 100,000 / MT). The capacity of truck is 10 ton – 20 ton.

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Indonesia Country Analysis Brief

Home > Country Analysis Briefs > Indonesia Country Analysis Brief

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PDF version | PDB version

July 2004 Background | Oil | Natural Gas | Coal | Electricity Generation | Environment | Profile | Links

Indonesia Indonesia is important to world energy markets because of its OPEC membership and substantial, but declining, oil production. Indonesia also is the world's largest liquefied natural gas (LNG) exporter. The information contained in this report is the best available as of July 2004 and can change. GENERAL BACKGROUND Indonesia's economic growth surpassed expectations in 2003, largely fueled by consumer spending. Indonesia's real gross domestic product (GDP) grew at a rate of 4.1% in 2003, up from 3.7% in 2002. Real GDP growth is forecast to be 4.7% for 2004, although imbalances in the macroeconomic picture, such as increasing budget deficits caused by oil price subsidies on the local market, could lead to future problems. Last year was the final year of the IMF assistance program designed to pull Indonesia's economy out of the emergency situation that had developed during the 1997/98 Asian financial crisis. In March 2003, the IMF disbursed the scheduled $469 million tranche of its bailout package after reporting that Indonesia had made good progress instituting reforms. The IMF review cited Indonesia's continued economic growth, decreasing inflation rates, and strengthened banking sector as examples of progress made, while mentioning that more reforms were still necessary. Conditions of the $43 billion bailout agreement included improving the transparency of government financing and especially the operation of government-owned enterprises such as the state-run PT Pertamina oil monopoly. The government of Megawati Sukarnoputri expressed a commitment to reforms when it took office in 2001, but progress has been limited since then, with the April 2004 ouster of reform-minded Pertamina head Baihaki Hakim renewing concerns – especially among urgently needed foreign investors – that Indonesia's efforts to improve transparency have faltered. President Megawati has been in power since July 2001, assuming the presidency after her predecessor, President Abdurrahman Wahid, was removed from office by the national legislature. The regional challenges facing the Indonesian government remain the same: a separatist movement in Aceh, an oil and gas rich province in north Sumatra which abuts the strategically important Strait of Malacca; and a separatist movement in Irian Jaya, a gas-rich province at the eastern end of the country. The government is also managing threats posed by an Al Qa'ida-linked terrorist group, called Jemaah Islamiyah. Jemaah Islamiyah was responsible for the 2001 nightclub bombing in Page 148 of 159

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Bali, a 2003 hotel bombing in Jakarta, and is now targeting Western business and political figures in Indonesia, according to recent reports. Jemaah Islamiyah is seeking to undermine foreign economic interests in the country, according to Western security officials. Tension exists between the central government in Jakarta and leadership at the regional level. The distribution of oil and gas revenues between the central government in Jakarta and regional governments in areas which produce oil and gas has been regularly disputed. Since Indonesia's transition to democracy in 1999, the country's regional governments have been pressing for a greater share of oil and gas revenues. In particular, the separatist movement in Aceh continues to cause security problems for oil and gas companies in that region, despite the government's energetic offensive against the separatists this year. OIL Indonesia currently holds proven oil reserves of 4.7 billion barrels, down 13% since 1994. Much of Indonesia's proven oil reserve base is located onshore. Central Sumatra is the country's largest oil producing province and the location of the large Duri and Minas oil fields. Other significant oil field development and production is located in accessible areas such as offshore northwestern Java, East Kalimantan, and the Natuna Sea. Indonesian crude oil varies widely in quality, with most streams having gravities in the 22o to 37 o API range. Indonesia's two main export crudes are Sumatra Light, or Minas, with a 35 o API gravity, and the heavier, 22o API Duri crude. A study released in August 2002 by Indonesia's Directorate General of Oil and Gas shows that oil reserves in the Cepu block alone, located in Central/East Java, are close to 600 million barrels, about half of which is considered recoverable. In 2003, Indonesian crude oil production averaged 1.02 million barrels per day (bbl/d), down from the 2002 average of 1.10 million bbl/d and continuing the decline of the past several years. The decline is due mainly to the natural fall off of aging oil fields, a lack of new investment in exploration and regulatory hurdles unlikely to be addressed until after the 2004 elections. Besides crude oil, Indonesia also produces approximately 133,800 bbl/d of natural gas liquids and lease condensate, which are not part of its OPEC quota. Indonesia is the only Southeast Asian member of OPEC, and its current OPEC crude oil production quota is 1.22 million bbl/d. The majority of Indonesia's producing oil fields are located in the central and western sections of the country. Therefore, the focus of new exploration has been on frontier regions, particularly in eastern Indonesia. Sizable, but as of yet unproven, reserves may lie in the numerous, geologically complex, pre-tertiary basins located in eastern Indonesia. These regions are much more remote and the terrain more difficult to explore than areas of western and central Indonesia. China National Offshore Oil Corporation (CNOOC) became the largest offshore oil producer in Indonesia in January 2002, after purchasing nearly all of Repsol-YPF's assets in the country for $585 million. Pertamina is a CNOOC partner in each Production Sharing Contract (PSC). However, in 2003 CNOOC's production dropped 20,500 bbl/d, or 17.5%, from its 2002 level. Page 149 of 159

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Companies producing from existing fields are attempting to increase recovery rates and to prolong the life of the fields. Caltex, which has the largest operation of any multinational oil company in Indonesia, undertook a steam injection project at the Duri field on Sumatra, but nonetheless experienced a drop of about 71,000 bbl/d in production in 2003 over 2002. Half of the drop is attributed to natural depletion. The country's declining oil production could be turned around once the new Cepu field in Java comes online. The field, estimated to hold reserves of at least 600 million barrels of oil, is being developed by ExxonMobil in partnership with Pertamina. However, the two oil giants have been unable to reach an agreement over profit sharing, with Pertamina demanding half the field's output and ExxonMobil demanding that Pertamina cover half the field's production costs. Additionally, ExxonMobil wants Jakarta to extend its technical assistance contract, due to expire in 2010, for 20 years. ExxonMobil officials have indicated that the field could be operational in 2006 and could produce up to 180,000 bbl/d, according to recent reports. Smaller fields could help boost production numbers if they become fully operational in 2004 and 2005. Unocal's West Seno field, under development offshore from East Kalimatan, is producing 40,000 bbl/d and is expected to produce up to 60,000 bbl/d when the second phase of development is completed in early 2005. ExxonMobil's Banyu Urip field, in Java, is expected to come onstream in 2006, according to the company, and reach its peak production capacity of 100,000 bbl/d soon after. Even with these new fields, though, Indonesia's oil production is not likely to rise markedly, due to the continuing decline of mature fields. Oil Sector Reforms The liberalization of Indonesia's downstream oil and gas sector has been under discussion for several years. In October 2001, the Indonesian legislature passed the much-vaunted Oil and Gas Law 22/2001 which limited Pertamina's monopoly on upstream oil development (which requires it to be included in all PSCs) by the end of 2003. Also, Pertamina's regulatory and administrative functions were transfered to other entities, while its regulatory role was spun off to a new body, BP Migas. Reports from foreign firms are that BP Migas is proving to be even less efficient than the original Pertamina entity. Almost three years after the law was passed, several regulations have still not been finalized and are unlikely to be before a new government is elected in July. Pertamina maintained its retail and distribution monopoly for petroleum products, until July 2004 when the first licenses for a foreign firm to retail petroleum products are due to be awarded to BP and Petronas of Malaysia. The government is still promising to open the sector to full competition by 2005, although progress has been very slow to date. Political interests with ties to Pertamina are likely reluctant to see the state-run firm lose its assured revenue streams. Pertamina itself was changed to a limited liability company by presidential decree in 2003, and is slated to be fully privatized by 2006. Indonesia's Ministry of Mines and Energy has taken over the function, formerly carried out by Pertamina, of awarding and supervising PSCs with foreign oil companies. Foreign firms also are to be freed from some of the regulatory approval requirements which they argue hinder their efficiency. One concern foreign oil companies have with the new law is the granting of a limited authority to regional governments to tax oil companies' profits. Refining Indonesia has seven refineries, with a combined capacity of 992,745 bbl/d. The largest refineries are the 348,000-bbl/d Cilacap in Central Java, the 240,920-bbl/d Balikpapan in Kalimantan, and the 125,000-bbl/d Balongan, in Java. Page 150 of 159

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PT Kilang Minyak Intan Nusantara, a joint venture of Al-Banader International Group of Saudi Arabia (40%), China National Electrical Equipment Corporation (40%) and PT Intanjaya Agromegah Abadi (20%), are investing a total of $6 billion to build two Indonesian oil refineries -one in Pare-Pare, South Sulawesi and the other in Batam Island, Riau. Both projects are expected to be operational in 2005, with crude refining capacities of 300,000 bbl/d. The refineries will be export-oriented, taking Saudi crude and refining it for sale primarily to the Chinese market. In January 2004, the state-owned National Iranian Oil Co. and Pertamina announced that they will consider cooperating in a $1 billion venture to build and operate an oil refinery in East Java. The facility is expected to process up to150,000 bbl/d of crude oil mainly from the Cepu block, according to local press reports. As of June 2004, however, the feasibility study was still not finalized. Pertamina has decided to resume construction of the partly built petrochemical facility in Tuban, East Java. The project has stalled since 1998. By the terms of the agreement, Pertamina will guarantee $400 million in loans from foreign banks and supply inputs to the plant. Domestic investors in the project include several men with close ties to former Indonesian leader Suharto. Pertamina's partnership with Saudi Arabia's Hi-Tech International Group collapsed in 2002 when the Saudi firm failed to raise enough money to finance its portion of the plant. Another attempt to restart the project failed when the World Bank and IMF informed the Indonesian government in 2003 that Pertamina's attempt to finance the project alone, using collateralized revenue from the Cilcap refinery, was forbidden under the terms of their respective lending programs. When complete, the plant is expected to produce 1 million tons of aeromatic, 1 million tons light naptha, and 1.6 million tons of kerosene and diesel annually. NATURAL GAS Indonesia has proven natural gas reserves of 92.5 trillion cubic feet (Tcf). Most of the country's natural gas reserves are located near the Arun field in Aceh, around the Badak field in East Kalimantan, in smaller fields offshore Java, the Kangean Block offshore East Java, a number of blocks in Irian Jaya, and the Natuna D-Alpha field, the largest in Southeast Asia. Despite its significant natural gas reserves and its position as the world's largest exporter of liquefied natural gas (LNG), Indonesia still relies on oil to supply about half of its own energy needs. About 70% of Indonesia's LNG exports go to Japan, 20% to South Korea, and the remainder to Taiwan. As Indonesia's oil production has leveled off in recent years, the country has tried to shift towards using its natural gas resources for power generation. However, the domestic natural gas distribution infrastructure is inadequate.The main domestic customers for natural gas are fertilizer plants and petrochemical plants, followed by power generators. Indonesia is facing a declining share of global LNG markets, despite its past status as the world's leading LNG and dry gas exporter. The decline can be attributed to questions over the reliability of Indonesian supply and lower investment in the Indonesian energy sector. Uncertainties over political support for the sanctity of contracts, regulatory transparency, and unfavorable PSC terms have undermined investment support. As a result, Indonesian LNG exports have been partially replaced by exports from Oman, Qatar, Russia, and Australia on world markets. The sector has also faced restructuring under the terms of Indonesia's World Bank and IMF lending agreements, with BP Migas taking over the supervisory and Page 151 of 159

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management roles formerly filled by Pertamina. Despite Pertamina's reduced authority, the company's key role in the gas sector was reinforced in early June when BP Migas announced that PT Pertamina has been appointed as the sole sales agent for LNG sales to South Korea and Taiwan. Pertamina will negotiate sales for Total, Unocal, Vico and BP Indonesia. Current contracts with South Korea and Taiwan are due to expire in 2007 and 2009, respectively. One project that holds tremendous promise for Indonesia's future in worldwide LNG markets is BP's Tangguh project in Papua province (also known as Irian Jaya), based on over 14 Tcf of natural gas reserves found onshore and offshore the Wiriagar and Berau blocks. The project will involve two trains with a combined capacity of 7 million tons per annum (tpa), expandable to 14 million tpa. BP's current plans call for the project to be completed by 2007. Initial planning was stalled when BP lost the bids to supply Guandong Province and Taiwan in early 2003. However, in late 2003 and early 2004, BP secured supply agreements with Fujian, China for 2.6 million tpa, with leading Korean steel producer POSCO for 1.5 million tpa, and with Sempra Energy for 3.7 million tpa over 15 years to begin in 2007. These supply agreements made possible the $2.2 billion investment to develop the fields. Talks are underway for BP's Tangguh to supply 5 million tpa to Jiangsu, China beginning in 2007. The 400-mile Natuna pipeline is one of the longest undersea gas pipelines in the world, bringing gas from blocks operated by Premier Oil, ConocoPhillips, and Star Energy to customers in Singapore. Singapore is a major consumer of Indonesian natural gas, which it uses for its growing electricity generation needs. New pipeline proposals that would link East Natuna with the Phillipines are under consideration, but the high financing costs and security concerns in regions to be traversed by the lines make the projects unlikely. In another possible use for Indonesia's gas resources, Shell is examining the possibility of building a gas-to-liquids (GTL) plant in Indonesia. The plant, if the project goes forward, would produce 70,000 bbl/d of diesel and other middle distillates using the Fischer-Tropsch GTL process. COAL Indonesia has 5.9 billion short tons of recoverable coal reserves, of which 58.6% is lignite, 26.6% is sub-bituminous, 14.4% is bituminous, and 0.4% anthracite. Sumatra contains roughly two-thirds of Indonesia's total coal reserves, with the balance located in Kalimantan, West Java, and Sulawesi. According to U.S. Embassy reports, Indonesia produced 114 million metric tons of coal in 2003, up 11% from 2002. The entire increased production was exported, primarily to Japan and Taiwan, but also South Korea, the Philippines and Hong Kong. Indonesia plans to double coal production over the next five years, mostly for export to other countries in East Asia and India. The new capacity will come primarily from private mines. The Clough Group of Australia was awarded a $215 million contract for improvements at the Indonesian firm GBP's Kutai mine in East Kalimatan. Another foreign firm with major interests in Indonesian coal mining is Australia's Broken Hill Proprietary (BHP). July, 2003 saw the divestment of Australian mining company Rio Tinto and BP from their joint venture in Kaltim Pima Coal (KPC).The shares were sold to Indonesian firm, PT Bumi Resources for $500 million. According to several reports, the divestment was prolonged and acrimonious as the government objected to Rio Tinto's divestment plan, and threatened to mobilize public action to block the mine's operations. Ultimately, Rio Tinto and partner BP sold their combined 100% stake Page 152 of 159

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for about half of its assessed value. ELECTRICITY GENERATION Indonesia has installed electrical generating capacity estimated at 21.4 gigawatts, with 87.0% coming from thermal (oil, gas, and coal) sources, 10.5% from hydropower, and 2.5% from geothermal. Prior to the Asian financial crisis, Indonesia had plans for a rapid expansion of power generation, based mainly on opening up Indonesia's power market to Independent Power Producers (IPPs). The crisis led to severe financial strains on state-utility Perusahaan Listrik Negara (PLN), which made it difficult to pay for all of the power for which it had signed contracts with IPPs. PLN has over $5 billion in debt, which has grown markedly in terms of local currency due to the decline in the value of the rupiah. The Indonesian government has been unwilling to take over the commercial debts of PLN. Indonesia is facing an electricity supply crisis, with some observers predicting that PLN may be unable to take on any new customers by 2005. Intermittent blackouts are already an issue across Java. Demand for electrical power is expected to grow by approximately 10% per year for the next ten years. The majority of Indonesia's electricity generation is currently fueled by oil, but efforts are underway to shift generation to lower-cost coal and gas-powered facilities. Geothermal energy and hydropower are also being investigated. In January 2003, the World Bank announced that it was planning to build three micro-hydropower plants in the Indonesian province of Papua (Irian Jaya). A feasibility study on all of the area's water sources has already been conducted by the Bank, and the results are being studied. By building these facilities, the World Bank hopes to improve services to the local population as well as to encourage development activities in the province. In October 2003, the World Bank approved a $141 million loan to Indonesia for the purpose of improving the power sector on Java-Bali, which uses approximately 80% of Indonesia's power generation capacity. The project includes support for a corporate and financial restructuring plan for PLN and technical assistance for a restructuring program for state gas company, Perusahaan Gas Negara (PGN), that will provide for increased natural gas supplies for electricity generation. The restructuring plan requires that PLN must restructure two of its subsidiaries, PT Indonesia Power and PT Pembangkit Jawa Bali (PJB). The two together supply about 80% of the power supply for Java and Bali, according to reports. Also in 2003, the government renegotiated 26 power plant projects with the IPPs. Of those, five projects will be assumed by the government, in cooperation with PLN and Pertamina. The government foresees inviting private investors to participate in some electricity generation development projects, according to the U.S. Embassy. Competition for power generation will be open on the islands of Batam, Java, and Bali by 2007. In 2008, retail competition in the electricity market will begin under the terms of the nation's new electricity law, approved in September 2002. The law requires an end to PLN's monopoly on electricity distribution within five years, after which time private companies (both foreign and domestic) will be permitted to sell electricity directly to consumers. However, all companies will need to use PLN's existing transmission network. ENVIRONMENT Indonesia's major environmental challenges involve supporting its large population. Air and water pollution have reached critical levels, especially on the most populated island of Java. Indonesia's Page 153 of 159

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carbon emissions remain low, but there is concern that an increase in the use of indigenous coal will increase Indonesia's carbon emissions in the coming years. Indonesia is well endowed with renewable energy potential, especially geothermal energy. Indonesia's renewable resouces are not yet fully exploited. In March 2003, the Asian Development Bank approved a $600,000 grant to help combat Jakarta's air pollution problem. The technical assistance grant will be used primarily to promote a clean vehicle fuel program, known as the "Blue Skies" project. Indonesia is also phasing out the use of leaded gasoline, with a complete ban set to come into force in 2005. Sources for this report include: AFX Asia; Asia Times; APS Review Oil Market Trends; CIA World Factbook 2003; Dow Jones News Wire service; Economist Intelligence Unit ViewsWire; Energy Intelligence Group; Financial Times; Global Insight World Overview; The Jakarta Post; Mining Magazine; Oil & Gas Journal; Petroleum Economist; Petroleum Intelligence Weekly; Platt's International Coal Report; Platt's Oilgram News; Reuters News Wire; U.S. Energy Information Administration; U.S. Department of State; Wall Street Journal; World Bank Group; World Gas Intelligence; World Markets Analysis. COUNTRY OVERVIEW President: Megawati Sukarnoputri (since July 2001) Independence: Proclaimed independence on August 17, 1945. On December 27, 1949, Indonesia became independent from the Netherlands. Population (2004E): 238.5 million Location/Size: Southeastern Asia/735,310 sq. mi., slightly less than three times the size of Texas Major Cities: Jakarta (capital), Surabaya, Bandung, Medan, Semarang, Palembang, Ujung Pandang Languages: Bahasa Indonesia (official), English, Dutch, local dialects including Javanese Ethnic Groups: Javanese (45%), Sundanese (14%), Madurese (7.5%), coastal Malays (7.5%), other (26%) Religions: Muslim (88%), Protestant (5%), Roman Catholic (3%), Hindu (2%), Buddhist 1%), other (1%) ECONOMIC OVERVIEW Minister for Economic Affairs: Kuntjoro-Jakti Dorodjatun Currency: Rupiah Exchange Rate (06/30/04): US$1 = 9,399 rupiah Gross Domestic Product (2003E): $208.3 billion (2004F): $225.0 billion Real GDP Growth Rate (2003E): 4.1% (2004F): 4.7% Inflation Rate (Consumer Price Index) (2003E): 6.8% (2004F): 5.8% Merchandise Exports (2003E): $63.2 billion Merchandise Imports (2003E): $38.0 billion Merchandise Trade Balance (2003E): $25.2 billion Major Export Products: Manufactured goods, petroleum, natural gas and related products, foodstuffs, raw materials Major Import Products: Capital equipment, raw and intermediate materials, consumer goods, petroleum products Major Trading Partners: Japan, United States, Singapore, Hong Kong, Britain, Australia ENERGY OVERVIEW Energy Minister: Purnomo Yusgiantoro Proven Oil Reserves (1/1/04E): 4.7 billion barrels Oil Production (2003E): 1.26 million barrels per day (bbl/d), of which 1.02 million bbl/d was Page 154 of 159

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crude oil OPEC Production Quota (since 4/01/04): 1.218 million bbl/d (as of 7/01/04): 1.32 million bbl/d Oil Consumption (2003E): 1.13 million bbl/d Net Oil Exports (2003E): 130,000 bbl/d (2004F): 16,000 bbl/d Major Oil Customers: Japan, United States, South Korea, China, Australia, Taiwan, Singapore, Thailand Crude Oil Refining Capacity (1/1/04E): 992,745 bbl/d Natural Gas Reserves (1/1/04E): 90.3 trillion cubic feet (Tcf) Natural Gas Production (2002E): 2.48 Tcf Natural Gas Consumption (2002E): 1.20 Tcf Net Gas Exports (2002E): 1.28 Tcf Major LNG Customers (2003): Japan, South Korea, Taiwan Coal Reserves (2002E): 5.92 billion short tons of recoverable reserves of which 85% is lignite and 15% is anthracite Coal Production (2002E): 144 million short tons (Mmst) Coal Consumption (2002E): 31.1 Mmst Net Coal Exports (2002E): 112.8 Mmst Major Coal Customers (2002): Japan, Taiwan, South Korea, the Philippines Electric Generation Capacity (2002E): 25.6 gigawatts Electricity Production (2002E): 99.3 billion kilowatt hours Electricity Consumption (2002E): 92.4 billion kilowatt hours ENVIRONMENTAL OVERVIEW Total Energy Consumption (2002E): 4.45 quadrillion Btu* (1.0% of world total energy consumption) Energy-Related Carbon Dioxide Emissions (2002E): 299.8 million metric tons (1.2% of world total carbon dioxide emissions) Per Capita Energy Consumption (2002E): 20.5 million Btu (vs U.S. value of 339.1 million Btu) Per Capita Carbon Dioxide Emissions (2002E): 0.38 metric tons (vs U.S. value of 5.45 metric tons) Energy Intensity (2002E): 5,870 Btu/ $ nominal-PPP (vs. U.S. value of 9,344 Btu/$ nominal-PPP) Carbon Dioxide Intensity (2002E): 0.40 metric tons/ $ nominal-PPP (vs. U.S. value of 0.17 metric tons/thousand $ nominal) Fuel Share of Energy Consumption (2002E): Oil (48.5%), Natural Gas (29.2%), Coal (16.1%) Fuel Share of Carbon Dioxide Emissions (2002E): Oil (52.8%), Natural Gas (25.8%), Coal (22.0%) Status in Climate Change Negotiations: Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified August 23rd, 1994). Signatory to the Kyoto Protocol (signed July 13th, 1998 - not yet ratified). Major Environmental Issues: Deforestation; water pollution from industrial wastes, sewage; air pollution in urban areas. Major International Environmental Agreements: A party to Conventions on Biodiversity, Climate Change, Endangered Species, Hazardous Wastes, Law of the Sea, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94 and Wetlands. Has signed, but not ratified, Desertification and Marine Life Conservation. * The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar, wind, wood and waste electric power. The renewable energy consumption statistic is based on International Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions are also based Page 155 of 159

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on IEA data. **GDP based on CIA World Factbook estimates based on purchasing power parity (PPP) exchange rates. OIL AND GAS INDUSTRIES Organizations: Perusahaan Pertambangan Minyak dan Gas Bumi Negara (Pertamina) - oil exploration, production, transportation, and marketing; Perum Gas Negara (PGN) -gas distributor and transmission company Major Producing Oil Fields: Duri, Minas, Belida, Ardjuna, Arun, KG/KRA, Widuri, Nilam, Attaka Oil Refineries (1/1/04): Cilacap, Central Java (348,000 bbl/d); Pertamina-Balikpapan, Kalimantan (240,920 bbl/d); Musi, South Sumatra (109,155 bbl/d); EXOR-1, Balongan, Java (125,000 bbl/d); Dumai, Central Sumatra (114,000 bbl/d); Sungai Pakning, Central Sumatra (47,500 bbl/d); Pangakalan Brandan, North Sumatra (4,750 bbl/d); Cepu, Central Java (3,420 bbl/d) Product Pipelines: Trans-Java (serving the Surabaya market) Oil Tanker Terminals: Java: Cilegon, Cilacap, Surabaya, Ardjuna B (offshore) Sumatra: Pangkalan Brandan, Belawan, Dumai, Musi, Perlak, Palembang, Tanjung Uban (offshore) Kalimantan: Balikpapan Sulawesi: Ujung Pandang Irian Jaya: Sorong, Jaya Seram: Bula Natuna Sea: Ikan Pari Major Gas Fields: Sumatra: Arun, Alur Siwah, Kuala Langsa, Musi, South Lho Sukon, Wampu East Kalimantan: Attaka, Badak, Bekapai, Handil, Mutiara, Nilam, Semberah, Tunu Natuna Sea: Natuna Java: Pagerungan, Terang/Sirasun Irian Jaya: Tangguh Major Gas Pipelines: Sumatra: Pangkalan Brandan-Dumai LNG Plants: Bontang, Arun LINKS For more information from EIA on Indonesia, please see: EIA - Country Information on Indonesia Links to other U.S. government sites: CIA World Factbook - Indonesia U.S. Department of Energy - Office of Fossil Energy - Indonesia U.S. State Department Consular Information Sheet Library of Congress Country Study on Indonesia U.S. Embassy in Jakarta U.S. Commercial Service in Indonesia Country Commercial Guides and Market Research on Indonesia The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites. Indonesian Embassy in the United States Indonesian Consulate General of the United States in Houston Pertamina Indonesian Links PT Perusahaan Gas Negara (PGN)

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Indonesia Country Analysis Brief

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Preliminary Estimates of Value Hectares required for liquid fuels production Solar Hours/da 4.5 H2/Coal Ratio 5.00% 6.25% 7.50% 8.75% 10.00% 11.25% 12.50%

Solar Solar Solar Efficiency Electrical Hydrogen Hydrogen Hydrogen Hours/yr Watts/m2 kWh/m2/yr Solar/Elec. kWh/m2/yr HV MJ/kg Prod. Eff. kWh/kg 1643.6 850 1397.1 28.00% 391.2 142 70.00% 56.349 Coal Coal MT/mos kg/m2/mos 60,000 65,000 70,000 75,000 80,000 85,000 90,000 11.570 518.57 561.79 605.00 648.22 691.43 734.65 777.86 9.256 648.22 702.24 756.25 810.27 864.29 918.31 972.33 7.713 777.86 842.68 907.50 972.33 1,037.15 1,101.97 1,166.79 6.612 907.50 983.13 1,058.75 1,134.38 1,210.01 1,285.63 1,361.26 5.785 1,037.15 1,123.58 1,210.01 1,296.43 1,382.86 1,469.29 1,555.72 5.142 1,166.79 1,264.02 1,361.26 1,458.49 1,555.72 1,652.95 1,750.19 4.628 1,296.43 1,404.47 1,512.51 1,620.54 1,728.58 1,836.62 1,944.65

Hydrogen kg/m2/yr 6.942 95,000 821.08 1,026.34 1,231.61 1,436.88 1,642.15 1,847.42 2,052.69

100,000 864.29 1,080.36 1,296.43 1,512.51 1,728.58 1,944.65 2,160.72

The hydrogen/coal ratio depends upon coal quality and the desired liquid fuel product and yield.

Indonesian Insolation

This map shows worst case average solar hours per day for this region. This is a preliminary planning document. Detailed engineering analysis of terrain at the proposed installation determines the actual output and area required. Terrain orientation and cloud conditions for example, can impact areas required.

Liquid Fuels Production (Barrels per Day) Oil/Coal Coal MT/mos bbls/tonne 60,000 5.8 11,433.26 5.9 11,630.39 6.0 11,827.52 6.1 12,024.64 6.2 12,221.77 6.3 12,418.89 6.4 12,616.02

65,000 12,386.04 12,599.59 12,813.14 13,026.69 13,240.25 13,453.80 13,667.35

70,000 13,338.81 13,568.79 13,798.77 14,028.75 14,258.73 14,488.71 14,718.69

75,000 14,291.58 14,537.99 14,784.39 15,030.80 15,277.21 15,523.61 15,770.02

80,000 15,244.35 15,507.19 15,770.02 16,032.85 16,295.69 16,558.52 16,821.36

85,000 16,197.13 16,476.39 16,755.65 17,034.91 17,314.17 17,593.43 17,872.69

90,000 17,149.90 17,445.59 17,741.27 18,036.96 18,332.65 18,628.34 18,924.02

95,000 18,102.67 18,414.78 18,726.90 19,039.01 19,351.13 19,663.24 19,975.36

100,000 19,055.44 19,383.98 19,712.53 20,041.07 20,369.61 20,698.15 21,026.69

The volume of liquid fuels produced by a tonne of coal varies according to coal quality and the nature of the liquid fuel produced.

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Facility Value Item Liquid Fuel Coal Facility Cost Labor

LOW HIGH 11,430 21,025 1,874 3,447 $ 251.46 $ 462.55 631 1,162

Units bbls/day MT/day millions people

Sales/yr Labor/yr Coal/yr Maintenance Capital Cost Margin

$ $ $ $ $ $

millions millions millions millions millions millions

Value

292.24 3.77 30.80 12.57 26.57 218.52 $1,229.79

$ $ $ $ $ $

537.56 6.94 56.65 23.13 48.88 401.96

$2,262.15 millions

This facility will produce between 11,000 and 21,000 barrels of liquid fuels per day. The cost of this facility will be approximately $250 million to $463 million depending upon the amount of coal handled, coal yield, and solar insolation. It will produce between $218 million to $402 million per year in pre-tax profits. This translates to an enterprise value of between $1.2 billion and $2.2 billion. The value of liquid fuels produced is valued at $70 per barrel. Labor estimates range from 630 to 1,200 people depending on facility size. Labor cost per person is assumed to be $5,970 per year (4,000,000 IDR/month x 14 pays /9,379 IDR/$). Coal is valued at $45 per MT at these volumes. Maintenance costs are typical for coal processing facilities. Capital cost assumes an 8.5% discount rate over 20 years. Present value assumes a 20 year period of operation and a 17.0% per year discount rate.

Investment Program Item LOW HIGH Value $ 1,229.79 $ 2,262.16 Value of 33% $ 405.83 $ 746.51 Cost of 33% $ 62.87 $ 115.64 Time 5 5 Annual Return 45.2% 45.2%

Units millions millions millions years

Raising 25% of the facility cost by selling 33% of the enterprise provides a 45.2% annual rate of return, assuming that the facility takes 5 years to complete. The funds raised will be used to organize the needed land, supply contracts, government approvals, labor, pay non-recurring engineering costs, provide needed equity for project loans and provide for other early stage costs. Once the facility is operational, enterprise shares can be listed on a public exchange and sold for many times the value computed here, providing even higher returns for early investors.

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