Delivering Energy Efficiency Solutions to the Private and Public sector without capital expenditure by the Client - SESPco

1. Delivering Energy Efficiency Solutions
to the Private and Public sector
without capital expenditure by the
Client
For commercial clients using Power Purchase Scheme
Presented by
David Collett
Managing Director
May 14

2. 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.

3. 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.

4. 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.

5. 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.

6. 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

7. Electricity price increases 2014-2020
@ 9% increase
0
5
10
15
20
25
2013 2014 2015 2016 2017 2018 2019 2020
PKh

8. Partners and contractors

9. 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%
Assumptions
The table is based on the premise that energy prices will increase by 9%

10. 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.

11. Manufacturers and Distributors

12. 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.

13. Bluegen explained

14. 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.

15. 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.

16. 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.

17. 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.

18. 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.

19. Biomass Explained - Wood Pellets
 Renewable
 Sustainable
 Carbon neutral
 Environmentally friendly
 No reliance on fossil fuels
 Clean and Easy to handle
 Cost Effective
The Carbon Cycle
Co2 emitted during the combustion
of wood pellets is equal to or less
than that absorbed by the tree during
its natural growth or produced if the
tree were to decompose.

20. Wood Pellet Availability
Production capacity of ENPlus pellets in the
UK is c. 310k with a total of c.500k capacity
Over 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

21. 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

22. Comparable energy content
1 litre oil 10 kWh/l
1 kg coal 8 kWh/kg
1 m³ gas 10,28 kWh/m³
1 kg pellets 4,9 kWh/kg
1 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

23. BioCABIN Pre-Packaged Plant Rooms

24. 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.

25. 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).

26. 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 savings
guarantee 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

27. Contractual structure

28. Questions?