Delivering Energy Efficiency Solutions to the Private and Public sector

without capital expenditure by the Client

For commercial clients using Power Purchase Scheme

Presented byDavid Collett

Managing Director

May 14

About us SESPCo is an independent Limited company working for the benefit

of other businesses and end users in the Public and Private Sector. We provide funding for Solar PV, Biomass and LED projects to be

installed free of charge on public and private sector buildings UK wide and our target is to have access to over £50 million of funding through various Blue Chip funding partners.

We enable businesses to benefit from long-term savings through generating green electricity, or saving energy, with no capital outlay

Our management team has experience of funding over 150mw of solar PV systems, our funders and partners have experience of installing and maintaining much more.

We provide an interface and a way to utilise these schemes using our extensive partners and network to get you the best opportunity, with the best companies.

The solution

• SESPCo have sourced Green Funds which provides the mechanism to deliver the solutions without Asset Finance, Loans or CAPEX.

• SESPCo have already identified for many clients the source of high energy costs and carbon emissions and can now provide the method of installing renewable energy and upgrading the current inefficient equipment without capital spend.

The funding structure• The SESPCo model differs from conventional financing and is only

available where carbon emissions are reduced by the installation of energy efficiency measures.– SESPCo have secured from a variety of funds that are in the Green

Energy Sector such as:– Calvin Capital– Norse Energy– SEE

• We are seeking from our panel of funders to secure combined facility of £50m for SESPCo who source potential clients and provide consultancy, project management for the installation of the technologies to turnkey and monitor the performance throughout the period of agreement for the fund.

SESPCo funding The SESPCo Funding proposition offers a risk-free alternative to existing and traditional

Capital Improvement works financing, with energy efficiency improvement costs repaid through bill savings.

Finance is provided by institutional green funds which are prepared to take a longer-term view over 10 to 20 years; this is far longer than most traditional funding routes.

It is not a financial agreement and operates off balance sheet. The green funds retain ownership of the assets, with the benefiting organisation at no risk or increased liability.

The fund remains responsible for all maintenance, warranties and servicing of the equipment during the lifecycle of the technologies.

You benefit from an immediate reduction in energy usage, increased system efficiency, reduced long-term maintenance costs and long-term bill savings, as well as permanently reducing the building’s carbon emissions.

Further new technologies can often be added as it is approved by the fund, adding to your CRC reduction targets.

Funding partners• Norse Energy £30 million - part of Norfolk

County Council • Energy Money £5 - £10 million – European fund

manager• Toshiba / Calvin Capital (Infra Capital) £10 -

£100 million

Electricity price increases 2014-2020 @ 9% increase

2013 2014 2015 2016 2017 2018 2019 20200

5

10

15

20

25PKh

Partners and contractors

The increasing energy efficiency savings of the LED retrofit programme – actual recent case study

Year

Current electricity and maintenance costs for

lighting (£)

Energy Bill after Retrofit of LED

(£) Energy

Savings (£)

Managed Service Fee Payment (£) Savings (£)

Share of Savings

1 67,033 21,197 45,836 41,252 4,584 10%2 73,066 23,105 49,961 41,252 8,709 17%3 79,642 25,184 54,458 41,252 13,206 24%4 86,810 27,450 59,360 41,252 18,108 30%5 94,622 29,920 64,702 41,252 23,450 36%6 103,138 32,613 70,525 41,252 29,273 41%7 112,420 35,549 76,871 41,252 35,619 46%8 122,538 38,748 73,790 41,252 32,538 44%9 133,567 42,235 91,332 41,252 50,080 55%

10 145,588 46,036 99,552 41,252 58,300 59%11 158,691 41,432 117,259 0 117,259 100%

AssumptionsThe table is based on the premise that energy prices will increase by 9%

How does the SESPCo Model Operate?The fund receives payments over a period of time depending on the technology from the RHI and FIT for Biomass and Solar and receives a percentage of the energy savings from LED retrofit

LED Retrofit

Based on the results of the survey and utility bills provided by a client, SESPCo can install LED and maintain the lighting system for the agreed period of time.

The period of time is based on the cost of installation, maintenance and interest payments to be recouped by the fund.

These are quarterly payments calculated on a percentage of the energy savings from retrofitting LED.

Manufacturers and Distributors

How does the SESPCo Model Operate?....

Solar PV• The model for solar PV is based on retention of the FIT tariff by the

funders and a PPA agreement for electricity generated at a discounted rate from the existing electricity cost.

• The fund will pay for the installation, hardware, cleaning and replacement inverters for the entire period.

• There is no payment or loan agreement required between the client and the fund.

• An O&M Agreement from the fund is provided and only contractors and installers with strong balance sheets and established businesses are used for the installation and maintenance.

Bluegen explained

How does the SESPCo Model Operate?....

BlueGEN www.bluegen.info • The model for BlueGEN is based on retention of the FIT by the fund, in

return the fund will pay for the installation, maintenance, insurance for a period of 10 years.

• All savings created by the installation of BlueGEN system will be retained by the client.

• There is no payment or loan agreement required between the client and the fund.

• An O&M Agreement from the fund is provided and only contractors and installers with strong balance sheets and established businesses are used for the installation and maintenance.

BlueGEN explained• BlueGEN is a fuel cell which converts gas through

hydrogen ceramic fuel cells to electricity.

• The advantage is that gas is less expensive than electricity and therefore the fuel cell process delivers gas up to 20% less than the lowest electricity tariff operated by the client.

BlueGEN explained• This is classified as micro CHP and is therefore

eligible for the Feed in Tariff.

• A client can have one BlueGEN for every Meter Point Administration Number (MPAN) which in some cases will allow clients to have up to three systems.

• BlueGEN helps reduce the cost of electricity in terms of equipment, such as computers, air conditioning, kitchens etc.

Trust in Biomass• Biomass is a tried, trusted and reliable heating

solution• Wood pellet boilers are compatible with standard UK

heating expectations• Wood pellets are available nationally and are very

cost effective today• It makes economic sense today• Carbon is now currency, the more we save the better

the return.

How does the SESPCo Model Operate?

Biomass• The model for Biomass is based on retention of the RHI tariff by the fund,

in return the fund will pay for the installation, maintenance, insurance for a period of 20 years.

• All savings created by the installation of more efficient boiler system will be retained by the client and vary according to the current fossil fuel used by the client.

• There is no payment or loan agreement required between the client and the fund.

• An O&M Agreement from the fund is provided and only contractors and installers with strong balance sheets and established businesses are used for the installation and maintenance.

Biomass Explained - Wood Pellets

Renewable Sustainable Carbon neutral Environmentally friendly No reliance on fossil fuels Clean and Easy to handle Cost Effective

The Carbon CycleCo2 emitted during the combustionof wood pellets is equal to or less than that absorbed by the tree during its natural growth or produced if thetree were to decompose.

Wood Pellet Availability

Production capacity of ENPlus pellets in the

UK is c. 310k with a total of c.500k capacityOver recent years the UK has been an

exporter of wood pellets.Pellets are delivered into an internal

hopper to the plant room, with monitoring systems and automatically delivered into the boiler.

Pellets are also available in 10/15Kg bags.Other pellet mills are planned in the UK.Blown bulk deliveries, the optimum size is

14 tonnes to maximise delivery tonnage and best price

Pellets can be stored indefinitely, in the correct conditions.

Referencing CPL published data

Growth market• Oil and Gas production is on the decline.

• Wood fuels offer a viable, sustainable and secure alternative.

• From 2000 – 2007 annual global production of wood pellets tripled, from 3M tonnes to 9M tonnes.

• Global production end 2010 circa 18M tonnes per annum.

• Europe is currently leading the world in wood pellet technology

Source: CPL reference data

Comparable energy content1 litre oil 10 kWh/l1 kg coal 8 kWh/kg1 m³ gas 10,28 kWh/m³1 kg pellets 4,9 kWh/kg1 kg wood (w = 20 %) 4 kWh/kg

At £200 per tonne wood pellets equate to an oil cost of approximately 45p / litre. (oil today is circa 70p per litre)

Source : CPL

BioCABIN Pre-Packaged Plant Rooms

The Process• Based on the information provided by client which in the

first instance are the utility bills.

• A number of surveys are carried out to evaluate the potential savings based on installing energy efficient technology.

• The surveys create a baseline from which the fund’s Project Manager can calculate the payback period.

• Subject to the payback falling within the timeframes required by the fund which varies depending on the technology between 7 and 20 years.

The Process continued• The data is verified by EEVS (see next slide) so

that the fund and the client are satisfied with the baseline calculations.

• In the case of LED for example, a Managed Service Fee Agreement (MSFA) would be signed by the client and the fund.

• A quarterly payment (based on the baseline calculations would be paid to the fund over the agreed period).

Energy Efficiency Verification Specialists

Independent ‘Measurement and Verification

• Energy Performance Contracting:

Periodic expert evaluation of savings performance without commercial interest

Report to all parties – gives confidence in outcomes, demonstrates success

EPC provider able to offer robust savingsguarantee or other kWh payment mechanism

Attribution analysis (by individual measure) if needed

‘Safety net’ to avoid disputes

A key risk mitigation measure for both client and ESCO

A condition of financing or audit

EEVS is Europe’s largest independent M&V provider

Contractual structure

Questions?