Steven Fawkes

OPPORTUNITIES FOR INVESTING IN ENERGY EFFICIENCY

STEVEN FAWKES

TBLI EUROPE 11 NOVEMBER 2011

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CONTENT

• The potential for energy efficiency

• Drivers, barriers and policies

• Opportunities to invest

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CONTENT

• The potential for energy efficiency

• Drivers, barriers and policies

• Opportunities to invest

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JUST HOW INEFFICIENT ARE WE?

5

475

5555

Source: University of Cambridge, global figures , in EJ

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INEFFICIENCY EVERYWHERE

The US runs at least 8 large power stations just to power stuff that is turned off

Less than 10% of the power plant fuel that makes electricity for pumping applications actually creates customer value

Less than 1% of the power plant fuel that makes electricity for a data centre actually creates customer value

US buildings could save between 38 and 69% with an investment of $0.5 trillion by 2050 and an NPV of $1.4 trillion

Source: Rocky Mountain Institute

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THE BUILT ENVIRONMENT

8Source: World Economic Forum

Energy efficiency measures in the US building stock would:

Buildings:

GLOBAL POTENTIAL

$170bn a year investment would:- halve the projected growth in energy demand (reducing demand

by ~ 64 million barrels a day)- produce half the emissions abatement required to keep

atmospheric CO2 at 450ppm- have an average IRR of all projects 17% (at $50/barrel oil)

Source: McKinsey

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BARRIERS

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CONTENT

• The potential for energy efficiency

• Drivers, barriers and policies

• Opportunities to invest

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DRIVERS

High energy pricesLegislation and Regulation- EU ETS- EPB Directive- EEES Directive- IPPC- CRCEnergy security- National- CorporateEnvironment

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BARRIERS

30 years of research on barriers to energy efficiency:- Availability of capex

- Hidden costs

- Lack of information

- Risks and uncertainty

- Poorly aligned incentives

- Regulatory

- Organizational

- Psychological

- etc

ALL CAN BE ADDRESSED EXCEPT ONE:

- The ribbon problem14

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THE TWIN PILLARS OF UK ENERGY POLICY?

Over budgetDelays to programmePublic acceptance of risk

Over budgetDelays to programmePoor economicsPublic acceptance of cost

Supply risksCheap shale gas??

Cost effectiveNo subsidies neededInstitutional barriers

CONTENT

• The potential for energy efficiency

• Barriers, drivers and policies

• Opportunities to invest

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OPPORTUNITIES TO INVEST

Four categories:

- Technology development companies

- Project development companies

- Projects

- Financing vehicles

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TECHNOLOGY DEVELOPERS

Many interesting, high growth areas including:

- LED lighting

- Waste heat to power

- High technology glazing

- Analytics

- Green building materials

- Energy storage

- New industrial processes

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PROJECT DEVELOPERS

Engineering consultants

Energy Service Companies (ESCOs)

Green building consultants / architects

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ESCO PROJECTS

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Funding vehicles seek to address the gap between investors and projects – size, skills etc and match project stage to investors

Transaction vehicles

Funds

UK tax efficient structures

-VCTs

-EIS

Others emerging

-Green bonds

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FUNDING VEHICLES

CONCLUSIONS

Energy efficiency is:

- Critical resolving energy problems

- Under-exploited

- A very large market

- Not dependent on subsidies

- Growing in importance in policy circles

- An attractive area for investors

- Has a range of investment types from venture to infrastructure

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Steven FawkesPartner, Corporate FinanceMatrixOne Vine StreetLondonW1J 0AH

020 3206 7185077 0223 1995

steven.fawkes@matrixgroup.co.uk

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