Developed under SEAF H2020 (Sustainable Energy Asset Framework), a European Commission funded project led by Joule Assets Europe that ran from 2016 to 2018, eQuad is a holistic online platform and set of services created to bridge the gap between Sustainable Energy Asset (SEA) projects and financiers, catalysing market growth in Europe. Since its commercial launch in May 2018, over €160 million of SEA projects from 5 countries have been submitted to eQuad. Joule has now gone through multiple cycles of processing projects and matching them to investors. This webinar will therefore challenge Joule’s original hypothesis of the “finance gap” against real market experience post launch of the eQuad platform.

1. From EU Project to Market Enabler: Creating the Marketplace for Sustainable Energy Assets
Bridging the Finance Gap
Presented for IEA DSM
18 April 2019

2. 1. About Joule Assets
2. The market–related rationale for SEAF
3. Information on the SEAF consortium
4. The eQuad Platform – Features and Process
5. Where are we today? Project pipeline and
current available investment
6. Case studies and lessons learned
7. The way forward: further development needs
and exploitation approaches;
8. Q&A
Agenda
The Presentation Title
Creating the Market Place for
Sustainable Energy Assets

3. About us
From the
US… …to Europe
Joule Assets launched in 2010 as a NY-based investment
fund for Energy Reduction Assets (ERA) – focusing on
projects under $1 million.
Today Joule Assets Inc. deploys PV and clean energy with
municipalities as clients through Joule Community Power.
With a history Joule Assets Europe launched in
2016 with the SEAF H2020 project, to shape the EU
SEA market.
The SEAF project aimed to bridge the gap between
finance and sustainable energy projects across
Europe, through the development of an online platform,
eQuad.
c
Creating the Market Place for
Sustainable Energy Assets

4. OUR MISSION
“Our mission at Joule Assets Europe is to bridge the gap between finance and sustainable energy projects. We
create the market through our eQuad platform, which expedites the finance process for real projects on the ground,
and we shape the market through influencing policy at EU and local level, and our involvement in EU projects.”
Jessica Stromback, Chair and SVP, Joule Assets Europe
CREATING THE MARKET
SHAPING THE MARKET
• Stakeholder engagement and outreach for wider industry
• Market shaping through EU project expertise
• Influencing policy through engagement at EU and national level, with a focus on supporting ESCO growth and
innovative financing mechanisms.
• Portfolio development and market creation for EE and DRES in Europe through platform
• Financial due diligence and risk assessment
• Contract development – from term sheet to master agreement
Creating the Market Place for
Sustainable Energy Assets

5. Bridging the Finance Gap
• The SEAF Project was funded by the European Commission*
• Budget: €1.700.000
• Duration: 28 months
*This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 696023. The sole
responsibility for the content of this document lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EASME nor the
European Commission are responsible for any use that may be made of the information contained therein
Creating the Market Place for
Sustainable Energy Assets

6. A project’s journey toward finance
We help ESCOs, engineering firms, and construction companies across Europe
access appropriate project investment by providing third-party valuation,
performance insurance, project certification, and due diligence that facilitate and
expedites funding for energy efficiency projects.
The Journey:
Project Developer
VALUATION INVESTOR-PROJECT
HANDSHAKE
INSURANCE
QUOTATION
STANDARDISATIONCONTRACT
DEV.
SUPPORT
Creating the Market Place for
Sustainable Energy Assets

7. • Lowered project processing fees
• Vetted, viable opportunities
• Risk mitigation: Meet the fund’s financing requirements
• Due diligence: Have had technical due diligence preformed by accredited ICP rep.
• Insurance: Have the option of a insurance quotation for performance insurance
• Standard Contracts: Can be structured according to the fund’s contractual
requirements
Results:
For Investors
Investor Journey
FUND
REQUIREMENTS
PROJECTINSURANCE
QUOTATION
ICP
DUE
DILIGENCE
KEY
CONTRACT
ELEMENTS
Creating the Market Place for
Sustainable Energy Assets

8. Innovation in deal structure:
• Umbrella contracts to bundle projects with equal capabilities
• Clear risk mitigation strategies which fits their projects/profile
• Performance risk mitigation through performance insurance
• EPC contracts: off balance sheet and performance based
• SPV structures: Align requirements between projects
Technical criteria:
• Portfolio appropriate rates
• Project appropriate duration
• Partnership
ESCO finance needs
The key to growth is not technical it is contractual!

9. Main criteria:
• Strong project pipeline to pay for upfront engagement
• Credit worthiness of end-client
• Credit worthiness of the ESCO
• Low payback time (3-7 years depending on technology type)
• Longer payback time may be accepted for larger projects with
higher returns (in the millions)
• Robustness of the project design
• Project investment is part of ESCO’s core growth strategy
Investor requirements
Creating the Market Place for
Sustainable Energy Assets

10. eQuad launched
May 2018
Creating the Market Place for
Sustainable Energy Assets

11. Where are we today?

12. Active projects by country
Creating the Market Place for
Sustainable Energy Assets

13. Project Pipeline Today
NOTE: everything but deep renovation
Main Technologies
Creating the Market Place for
Sustainable Energy Assets

14. Financing Options
Bridge
Finance
Full
Equity
Ethical
Bank
Factoring
Finance for Energy Efficiency Projects
Creating the Market Place for
Sustainable Energy Assets

15. Opportunity 1: Bridge Capital
SPV
INVESTOR
ESCO
Y2Y1
A3
Y1 / Y2 Y3
TECH
O&M M&V
CONTR.
20-40 %
60-80 %
REQUIRED RETURN
7 + % IRR (6-36m)
Then: 4 + % IRR
BALANCE SHEET
ASSETS LIABILITIES
EQUITY
SELF FINANCE
20 – 40 %
SPV
TECH
CONTR.
Creating the Market Place for
Sustainable Energy Assets

16. Opportunity 1: Bridge Capital
TECHNOLOGY
INCENTIVES
END CLIENT
CONTRACT TYPE
PROJECT/PIPELINE SIZE
• EE upgrades
• Public lighting
• District heating
• CHP / PV
• Min. Project size: 50k €
• Min. Pipeline size: 1M €
• Government incentives
recognized
• All sectors
• Operating lease
• EPC
• PPA
• Additionally the investor
requires a LOI from another
investor to re-finance after
2-3 years
Creating the Market Place for
Sustainable Energy Assets

17. Opportunity 2: Full Equity
Y1 Y2 Y3
SPV
REQUIRED RETURN
7 – 9 % IRR
BALANCE SHEET
ASSETS LIABILITIES
EQUITY
SELF FINANCE
0 %
TOTAL
YIELD
INVESTOR ESCO
O&M M&V
SPV
TECH
CONTR.
Creating the Market Place for
Sustainable Energy Assets

18. TECHNOLOGY
INCENTIVES
END CLIENT
CONTRACT TYPEPROJECT/PIPELINE SIZE
Opportunity 2: Full Equity
• Government incentives
recognized
• All sectors – except residential
• End-Client must have 10M€ +
annual turnover and not more than
3x Debt/EBITDA
• Operating lease
• Energy Service Contracts
• PPA
• EE upgrades
• Public lighting
• CHP / PV
• Min. Project size: 100k €
• Min. Pipeline size: 100k €
• Max. project size: 3M €
Creating the Market Place for
Sustainable Energy Assets

19. Opportunity 3: Ethical Bank
Y1 Y2 Y3
REQUIRED RETURN
2 + % IRR
BALANCE SHEET
ASSETS LIABILITIES
EQUITY
SELF FINANCE
0 – 40 %
20-40 %
60-80 %
INVESTOR
ESCO
O&M M&V
SPV
TECH
CONTR.
Creating the Market Place for
Sustainable Energy Assets

20. TECHNOLOGY
INCENTIVES
END CLIENT
CONTRACT TYPEPROJECT/PIPELINE SIZE
Opportunity 3: Ethical bank
• Tertiary, Residential and
Public Administration
• Important: End Client needs
to meet specific ESG criteria
• Min. Pipeline size: 2.5M €
• Max. project size: 15M €
• Government incentives
recognized
• EE upgrades
• PV
• District Heating
• CHP
• Operating Lease
• Energy Service Contracts
• EPC
Creating the Market Place for
Sustainable Energy Assets

21. Opportunity 4: Factoring
(sale of receivables)
Y1 Y2 Y3
REQUIRED RETURN
5 + % IRR
BALANCE SHEET
ASSETS LIABILITIES
EQUITY
SELF FINANCE
0 %
INVESTOR ESCO
O&M M&V
SPV
TECH
CONTR.
Creating the Market Place for
Sustainable Energy Assets

22. TECHNOLOGY
INCENTIVES
END CLIENT
CONTRACT TYPEPROJECT/PIPELINE SIZE
Opportunity 4: Factoring
(sale of receivables)
• Government incentives
NOT recognized
• Min. Project size: 100k €
• Min. Pipeline size: 2M €
• All sectors• EE upgrades
• Public Lighting
• Building management systems
• DRES – behind-the-meter
• Energy Service Contracts
• EPC
• PPA
Creating the Market Place for
Sustainable Energy Assets

23. Case studies
before & after financing deal

24. PROJECT
2
PROJCT
4
PROJECT
5
Pipeline
£45M
PROJECT
1
PROJECT
3
PROJECT
4
PROJECT
5
PROJECT
6
PROJECT
7
END
CUSTOMER
Housing
Association
PROJECT
DEVELOPER
Energy Efficiency
project using solar
and batteries
PROJECT
Initial improvement
of 200 homes
scalable to +5000
BENEFITS
Lower utility payments
Improved comfort for families
Ability to carry out Demand Response
Solid client credit rating
PROJECT DETAILS
Total Initial Investment £ 12,000
IRR 14 %
Payback Time 7-9 years
Contract Period 20 years
Case Study: Hybrid Home
Creating the Market Place for
Sustainable Energy Assets

25. Case Study: Hybrid Home
 Finance type: Bridge financing and ethical bank
 Financing model mismatch: not only the projects are highly specific. Funds
are as well
 Different requirements, risk mitigation strategies and appetite, money types
(debt, equity) contract types (SPV, EPC…)
 Investment size: The investment may be too small/large, in the wrong country,
wrong technology…
 Stage of the fund: The fund may either be in too early, too late a stage in their
own fund deployment
MARKET REALITY
• Credit risk of client CRITICAL: What happens if the low income families don’t pay their
bills?
 Have a portion of each payment go to an account to protect against default
 Housing association will step in after this
 Default in reality for this group is very low
• Credit risk of contractors: A minor technology supplier in the group is a small company:
will they last?
 Be ready to change out one technology provider for another
• Contractual risk: Investors need protection through your client contract
 Have a clear and fair contract, deals with default risk, reputational risk
• Technological risk: This could be a lot of technology risk – what are your guarantees?
 Include performance insurance and technology insurance
EXAMPLES OF WHAT CAN BE MITIGATED
Creating the Market Place for
Sustainable Energy Assets

26. Hybrid Homes bring real societal benefits and returns – also with today’s
prices
• Technology providers focus on:
1. The technological solution
2. Creating a good offering for customers
3. Gaining access to strong customers and to market market share
The time and energy required securing investment should not be
underestimated
• This is still a new industry and funds are not familiar with such solutions
• The investments/projects are not yet standardized and make risk
assessment difficult
Project can access finance but time has a cost and a risk
The housing association may not wait (the families have no choice)
CONCLUSIONS
Case Study: Hybrid Home
Creating the Market Place for
Sustainable Energy Assets

27. eQuad
Due Diligence
Performance
Insurance
Finance offer
of £5 million
7 days 10 days
PROJECT
1
PROJECT
2
PROJECT
3
PROJECT
4
PROJECT
5
Pipeline
£370k
Standardized investor-agreed
LaaS agreements
Off balance
sheet finance
LED supplier Product
warranties
Case Study: Lighting-as-a-service finance

28.  Finance Type: Full equity
 Financing Process: lighting-as-a-service well understood and safe. Fund was
interested and the negotiations were simple.
 Criteria: we have £5 million to spend in 1 year – “you spend it for us on lights”.
Contractor had clients to make this realistic.
 Contracting Phase for finance: fund is large, took over 5 months to
complete 3 simple agreements with ESCO
 RESULT 1: ESCO lost most of their clients – has had to start again.
 Contracting w/clients: Fund has spent 10-15k in legal fees on the first £40k
 RESULT 2: the client is confused and the fund will now definitely lose money
on these lighting deals. They will blame the contractor.
Process
• Contract standardization matters! ESCO-client, ESCO-fund, Fund-Client
• The Fund’s experience level matters
• The ESCO: will use this as a launching pad for their business. Gain clients and
attract an equity investor in their company
Main Learnings
Case Study: Lighting-as-a-service finance

29. Conclusions:
The way forward

30. • A lack of contract standardisation
• A lack of risk assessment standardisation
• A lack of access to growth capital for ESCOs
• A lack of SEA Developers’ robust project pipelines
Markets are different, taxes are different, tariffs are different
Issues with finance are unified
Many of these problems are beyond what eQuad was designed to do
CONCLUSIONS

31. Joule’s Vision Remains
to remove finance as a barrier to the growth of the green economy
European level conclusions
• Information exchange and best practice support
• ESCO standardized certification criteria
• Recognition that banks will not be solving this issue for a long
time. Independents funds, crowd financing, community
engagement.. are all critical stepping stones and enablers
• Better representation of ESCOs at EU level is a key industry
responsibility.

32. Look to develop the market in a way that creates the
basis for tradable securities
• A billion € market rather than millions
• Leading to lowered cost of capital
• Confidence and scaling, tradeability
• Growth
Joule’s Vision Remains
to remove finance as a barrier to the growth of the green economy
TO DO THIS
THINK BIG

33. Next development: support the market in a manner that
creates the basis for tradable securities
 Continue to improve technical usability of the eQuad platform
 Active support with due diligence process itself
 Funds risk assessment standardisation
 Cooperation with securities traders
 Closer cooperation with best of class funds
 Standard ESCO presentation templates for private equity investors
 Growth of projects through improving ESCOs value propositions
 Funds Contract standardisation
Joule’s Vision Remains
to remove finance as a barrier to the growth of the green economy

34. The International Energy Agency’s Energy Efficiency 2018
Report, published in October 2018, cites eQuad platform as
market enabler, reducing project risk and expediting deal
closure.
https://webstore.iea.org/market-report-series-energy-efficiency-
2018
IEA Energy Efficency Report 2018
The white paper provides ESCOs with a guideline of investor
expectations, available financing structures, and key criteria
to successfully reach a deal with a financial institution. For
financiers who are looking to identify viable projects to invest
in, this paper describes how opportunities are pre-selected by
eQuad to meet a given investor’s appetite.
https://www.it.jouleassets.com/il-libro-bianco
The Sustainable Energy Asset Framework
Publications
Creating the Market Place for
Sustainable Energy Assets

35. 35
Thank you!
Caroline Milne
Director of Marketing and
Communications
Joule Assets Europe
+32 (0) 4 87 54 39 07
cmilne@jouleassets.com