josh bourone

TBLI Zurich 2013

SUSI_TBLI ZH 2013_JB-SK_20131112

Energy Efficiency Projects An Alternative to Fixed Income Investments

TBLI Zurich14th of November 2013

Josh Bourone

TBLI Zurich 2013


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Generate Stable Returns for Investors while Financing the Energy Turnaround

01 SUSI Partners AG >> 02 Energy Efficiency >> 03 The SUSI Energy Efficiency Fund

Politicians pledged to reduce global warming and fight Climate Change, while Institutional Investors are facing a drought of suitable fixed income products.

TBLI Zurich 2013


SUSI Partners AG

Verwaltungsrat: Jürg Bucher (Präsident), Kai-Uwe Ricke, Prof. Dr. Uwe Krüger, Stephanie Schoss, RA Björn Bajan

Measurable impact in tons CO2 reduced for every investment

Two topics: Climate Change and Infrastructure

Minimal correlation to traditional asset classes while generating stable returns for institutional investors

Renewable Energy Energy EfficiencyEnergy Distribution

and Storage

SUSI Sustainable Euro Fund I(Solar- and Windprojects in

Western Europe; closed)

SUSI Sustainable Euro Fund II(Solar- and Windprojects in

Western Europe, fundraising starts in Q1 2014)

SUSI Energy Efficiency Fund(Financing Energy Efficiency

measures through a contracting model,

presently fundraising)

SUSI Energy Storage Fund(Storage capacity

for utilities, planned for end of 2014)


SUSI Partners AG

Founders: Tobias Reichmuth,Otto von Troschke

Board of Directors: Jürg Bucher (President), Kai-Uwe Ricke, Moritz Leuenberger, Prof. Dr. Uwe Krüger, Stephanie Schoss, Björn Bajan

Minimum correlation and stable returns for institutional investors

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Infrastructure as an Ideal Portfolio Diversifier

In the model, the integration of European infrastructure resulted in a considerable reduction of risk atgrowing target returns

Source: Chair of Real Estate Economics, University Regensburg (2011); 633 Infrastructuretransactions were observed from 1993 to 2010 (transaction based index) as a diversifying component in a model portfolio (80% government bonds , 40% short-term government bonds , 40 % long-term government bonds , 10% listed stock, 10% real-estate).

Through allocation into infrastructure an identical estimated portfolio return (with a lower risk exposure) can be generated Incl. Infrastructure

Excl. Infrastructure

Portfolio Return

Allocation Infrastructure

Risk Reduction

Po

rtfo

lio R

etu

rn

Portfolio Risk


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The Energy Turnaround – Investment Needs

Switzerland (Goals Energy Strategy of the Government) Renewable Energy: CHF 17 bn (Photovoltaic, Wind Power, Geothermy) Energy Efficiency: CHF 40 bn (until 2035, savings goal of 40%) Grids: CHF 4-5 bn (until 2020, maintenance only, without expansion) Storage: ?

Germany (EU 20-20-20 Goals) Renewable Energy: EUR 300 bn Energy Efficiency: EUR 150 bn (until 2020) Grids: Valuations differ (from EUR 20 bn to 100 bn) Storage: ?

Europe (EU 20-20-20 Goals) Renewable Energy: EUR 2,000 bn Energy Efficiency: EUR 2,000 bn (until 2020) Grids: Valuations differ (EUR 500-2,000 bn) Storage: ?

Source: European Commission (2010); Reichmuth et al. «Financing the Energy Turnaround», NZZ 2013.; European Commission Directorate-General for Energy, 2012;SUSI Analytics 2013

Governments and utilities can not provide the necessary funding for the implementation of the energyturnaround.


TBLI Zurich 2013


Source: Eco-efficiency. Chapter 6 – Environmental performance of constructions / McKinsey Abatement Curve; Communication from the European Commission: Action Plan for Energy Efficiency: Realising the Potential 2006

Gt CO2

By investing in energy efficiency measures, more CO2 emissions can be reduced per million EUR invested than with any other measure.

22

24

26

28

30

32

34

36

38

2005 2010 2015 2020 2025 2030

Energy Efficiency Fossil fuel switch

Renewable energies Nuclear energy

Carbon capture and storage Remaining CO2 emissions

Energy Efficiency: the biggest Lever to fight Climate Change


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A Market Potential of EUR 2,000 Bn in Europe

Source: European Commission (2010): 2020 Vision: Saving our Energy, Directorate General for Energy and Transport; DENA Deutsche Energie Agentur (2012)

Energy Savings Potential in Europe by 2020 (in TWh)

Estimated savingspotential of 4,117 TWh in Europe

Necessary investments in energy efficiencymeasures of EUR 2,000 bnto reach the 20-20-20 goals of the European Union

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Houshold(residential)

Commercialbuildings

Transport Manufacturingindustry

2008

2020 forecast

The SUSI Energy Efficiency Fund is investing in one of the fastest growing markets over the next 20 years.


= =

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A Market Potential of EUR 150 Bn until 2020 in Germany

Source: European Comission (2010): 2020 Vision: Saving our Energy, Directorate General for Energy and Transport

Energy efficiency is one of the fastest growing markets over the next 20 years in Germany; the largestsavings potenial has been identified in the building sector.

112

9

5215

48

27

61

17

Total 340 TWh

Residential Heating

Residential Electricity

Non-residentialHeating

Industrial Fuel Consumption

Industrial Electricity

Consumption

Passenger Transportation

Freight Transportation

Non-residentialElectricity

Energy savings potential in Germany by 2020 (in TWh)

Estimated annualsavings potential of EUR 33,2 bn only in Germany

=Necessary investmentsin energy efficiencymeasures of EUR 150 bnto reach the EU’s 20-20-20 goals

=


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Increasing Energy Efficiency of Public Infrastructure, Industry and Buildings

Buildings in Europe consume more than 40% of the total energy consumption.


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Savings Potential in the Building Sector

Hospital

-26%

Office

-26%

Restaurant

-41%

Hotel

-41%

Shopping Mall

-49%

School

-52%

Source: Siemens Building Technologies


Energy savings result from technical measures that have a pay-back period between 3 to 7 years. Governmental subsidies are rebundant for energy efficiency retrofits to be profitable.

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Reduced Energy Costs:EUR 15 M

Initial Investment:EUR 20 M

Retrofit of Building

Guaranteed Minimum

Savings

70% Savings:EUR 3.5 M p.a.over 10 Years

30% Energy Savings: EUR 1.5 M

Yearly Energy Cost : EUR 20 M

Property Owner Technology Partner

SUSI Energy Efficiency Fund

Yearly Savings:EUR 5 M

The Fund investsEUR 20 M and receives over

a period of 10 yearsEUR 35 M (10 x EUR 3.5 M)

The Fund adds a new Source of Financing to a Proven Business Model (Energy Performance Contracting)


Note: For illustration purposes only, linkeage to inflation not considered

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Stable Cash-Flows from the First Year after Investing in a Project

Commencement of contract End of contract

Contract duration

Time

Ene

rgy

Co

sts

Energy costs without implementation

Reduction in energy costs for the client

Energy costs after implementation

Energy Saving Contracting (illustration) Cash-Flows for the parties involved (illustration)

3.5

0

3.5

4

3.5

7

3.6

1

3.6

4

3.6

8

3.7

2

3.7

5

3.7

9

3.8

3

1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5

5.0 5.0

5.0

0.52 0.58 0.63

-€ 4

-€ 3

-€ 2

-€ 1

€ 0

€ 1

€ 2

€ 3

€ 4

€ 5

€ 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Mill

ion

s

Avoided Energy Price Increases

Savings for Customer

Investment/Return SUSI

-2

0

-€ 20


The Fund makes yearly distributions comprised of dividends and amortisation – no exit-risk. The resultingdistributions are stable and at least partially inflation adjusted.

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Inflation Protection

The Fund links project returns to price development whenever possible. Projects are individually indexed to:

Consumer Price Index (CPI)

Energy Price Index

If a project is linked to an Energy Price Index, usually so-called «floors» are implemented to prevent a decline below the basis price. However, the goal is to index as many projects as possible to a Consumer Price Index.

Increasing amount of indexed projects in the portfolio increase net IRR of the Fund given inflation


TBLI Zurich 2013


Josh BouroneAssociate

SUSI Partners AGFeldeggstrasse 12

CH-8008 ZürichTel: +41 44 386 98 06Fax: +41 44 386 98 09

[email protected]

Thank you for your attention!

TBLI Zurich 2013


SUSI has realized a reference project in order to demonstrate the validity of the business case.

Key Information

Project: Building retrofit of 5 buildings (portfolio)

Technology Partner: Johnson Controls

Building owner: Principality of Monaco

Project duration: 12 years

Fund’s share of savings: 64%

Net Return: 6.3% (due to relatively high SPV cost for small project size)

Risk: Irrevocable guarantee of payment by the Principality of Monaco

Cost of retrofit: EUR 831,0001

Annual gross revenues: EUR 114,000

Energy Savings

Johnson Controls guarantees savings of 23% of today’s energy consumption (equaling 27% of energy cost) equaling 1,624 MWh peryear. This corresponds to a 35% reduction in carbon emissions and annual carbon savings of 243 tons.

Project Summary

The project shows very stable free cash flows. SUSI is working with a leading ESCO and a credit worthy governmental building owner.The Technology Partner guarantees the minimum savings and the Principality of Monaco guarantees the payments to the Fund overthe project duration. SUSI achieves a very attractive credit-risk-adjusted IRR. The project will generate annual distributions of around12% of investment, allowing the project a safe payback of just over eight years.

1) While this project is not levered, generally projects with excellent solvency can use leverage. The maximum for the avg. leverage is 50%


Reference Project: AAA-risk and 6.3% net return

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