Other Loans &Investment

Relationships

Donations –Grants &

Energy Cures

Borrowings – People + Planet

Notes

Services

SMEEntrepreneurs

&MFIs

Capital

Principal, Interest & DividendsDevelopment Benefits

Environmental Benefits

Carbon Revenues

Operations

Debt Equity End-userFinance

Other Loans & Investment

Relationships

Donations –Grants &

Energy Cures

Borrowings – People + Planet

Notes

Services

SMEEntrepreneurs

&MFIs

Capital

Principal, Interest & DividendsDevelopment Benefits

Environmental Benefits

Carbon Revenues

Operations

Debt Equity End-userFinance

$1.00 $0.20 $0.10

$1.07 $0.23

2/3rd @ 10%, 7 y

1/6th @ 12%, 9 y

1/6th @ 11%, 5 y

10.7%return

Provision for financial losses:9.2% of P + I + D … 10.7% becomes 8.7%On $1.00 …equals 7.3% on $1.07

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

100% 94.25% 88.50% 82.75% 77%

Return

Sensitivity of Return to Amount Borrowed of each $1.30 Required10.7% hurdle rate, 9.2% losses, 1.30 formula

7.3% base caseBorrow $1.07Invest $1.00

Grants + Carbon= $0.23

% of full cost borrowed

Carbon MonetizationTo E+Co Enterprises

2008-2012

Investment Capital

Grants, Donations and Carbon Value

Energy for People and Planet

$190 million

Energy Enterprises andCustomer Finance

People Planet

$150 million

$40 million

24.5 millionwith modern

energy

19.5 millionMetric tons of carbon dioxide

saved

335 investments

Financial Leverage$0.9 billion

© E+Co, Sept 2008© E+Co, Sept 2008

$21 million

$211 million

Fund Manager

Biogas Fund Step 1

Investors Donors or Sponsors

Clean Development Mechanism

**Households: 20,000 200,000 Fund: Euro 6.3 million E 60 million

Down Payments

Monthly Payments Carbon Credit Buyer

CapitalCost

approvals

Household Biogas Fund - Step 1 20,000 Households**

Household Biogas Fund - Step 1 20,000 Households**

• 20,000 household biogas units serving 100,000 people in rural Bangladesh

• Annual CO2 benefit – 80,000 tonnes• Required investment – Euro 6.3 million

– From investors Euro 6.0– From donors or sponsor investors* (one time and start-up costs)

Euro 0.3• Cost Reduction to Households from [6 year] sale of

carbon credits 23%• Return to Investors 6.5%• **Full Program and Fund 200,000 units (Euro 60+

million) serving 1 million people• *Sponsor investors might include EC “Patient Capital

Initiative”• Hurdles: CDM methodology, CDM process and

approvals, timely roll-out, integration of diverse elements, pricing and cost

      6.53%IRR

240,000

240,000

240,000

1,830,307

1,820,307

2,508,804

(5,997,840)

Cash Flow (Euro 000s) (from)/to investors

-

- Recycle Reserve for next phase

25,000

25,000

25,000

25,000

25,000

25,000 Operating Costs - CERs

15,000

15,000

15,000

15,000

25,000

50,000 Operating Costs - fund management

200,000

200,000

200,000

200,000

200,000

200,000

Operating Costs - loan servicing + Defaults

65,000 Set-up Costs for CERs

100,000 Set-up Cost of Fund

-

340,000

Grants to Reduce Costs or Support Operations

480,000

480,000

480,000

480,000

480,000

480,000

Sales of CERs (certified emission reductions)

1,590,307

1,590,307

1,590,307 Monthly Payments from Customers

713,498 Down Payments from Customers

(6,172,840)Capital Cost of Biogas Plants

654321Year 0Cash Flows (Euro, 000s)

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Approval Mechanism (CDM)6-Company in Need of GHG Benefits7-Innovation Funding Organization8-Catalyst

1

2

34

56

7

8

January 2006Household Biogas

Fund Example

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Approval Mechanism (CDM)6-Company in Need of GHG Benefits7-Innovation Funding Organization8-Catalyst

1

2

34

56

7

8.

Income per hh at $1080-$1260py…e@$189-$252 py

Builds hh biogas units At $400 w. 20% margin

MFI-makes loans 2 yrs, 1% month +/-

Supports enterprises

Supportssustainableinitiatives

Needs carbon offsets

Organizes purchasesand sales of GHGs

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Approval Mechanism (CDM)6-Company in Need of GHG Benefits7-Innovation Funding Organization8-Catalyst

1

2

34

56

7

8.

Income per hh at $1080-$1260py…e@$189-$252…dp=$100 w/o and $77 wCO2e

Enterprise20,000 units @$400 w/ 20% marginif $800k w/c

Mfi-20,000 loans at $2312 yrs, 1% month + adj

Investment co2 year $824,000w/c loan + services

600,000 tonnes of GHG offset for$3,600,000+/- Mkt ~ $6 per tonne per yr

For 10 years

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Approval Mechanism (CDM)6-Company in Need of GHG Benefits7-Catalyst Funding Organization8-Catalyst

1

2

34

56

7

8.

Income per hh at $1080-$1260py…e@$189-$252…dp=$100 w/o and $77 wCO2e

Enterprise20,000 units @$400 w/ 20% marginif $800k w/c

Mfi-20,000 loans at $2312 yrs, 1% month + adj

Investment co2 year $824,000w/c loan + services

Support for start-up& services

600,000 tonnes of GHG offset for$3,600,000+

$6 per tonne per yrFor 10 years

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Approval Mechanism (CDM)6-Company in Need of GHG Benefits7-Catalyst Funding Organization8-Catalyst

1

2

34

56

7

8.

January 2006

Income per hh at $1080-$1260py…e@$189-$252…dp=$100 w/o and $77 wCO2e

Enterprise20,000 units @$400 w/ 20% marginif $800k w/c

Mfi-20,000 loans at $2312 yrs, 1% month + adj

Investment co2 year $824,000w/c loan + services

Support for start-up& services

600,000 tonnes of GHG offset for$3,600,000+

$6 per tonne per yrFor 10 years 4-6-8% IRR

PKG

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Approval Mechanism (CDM)6-Company in Need of GHG Benefits7-Innovation Funding Organization8-Catalyst Euro 1 = Tk 81 = US 0.77

1

2

34

56

7

8.

Income per hh at Tk$ 67,000 to 79,000py…e@17% to 20%

Builds hh biogas units At Tk 25,000 w. 20% margin

MFI-makes monthly loans For 3 yrs, service chargeof 6% (simple) per year15% down payment

Supports enterprises

Supportssustainableinitiatives

Needs carbon offsets

Organizes purchasesand sales of GHGs

• Dot 1: Our “typical” household has income of Tk 67,000 to 79,000. The household spends between 17% and 20% of its income on energy sources (liquid fuels, batteries, solid fuels).

• A new biogas unit would have a “typical” capacity of four cubic meters. There are smaller and larger units that accommodate smaller or larger incomes or greater or lesser needs. All-in this translates to a capital cost of Taka 25,000

• Our household can afford an upfront payment of 15% • A microfinance institution offers loans on the following

terms: up to 85% of the cost, repayable over three years on a monthly basis with 6% annual simple interest / service charge added to the initial cost (thus for 3 years add 18% to the amount being financed)

• What would be the new monthly cost for the household?• What would be the incremental savings?• What happens if a 25% capital “subsidy” or other price

reductions are offered? What does that mean in terms of increasing the affordability of these units to lower income groups.

• Next: the role of avoided CO2 if monetized.

Connect the dots … update

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Certification / Approval Mechanism (CDM CERs or VERs)6-Company in Need of GHG Benefits7-Innovation Funding Organization8-Catalyst … YOU! Euro 1 = Tk 81 = US 0.77

1

2

34

56

7

8.

Income per hh at Tk 67,000 to 79,000py…e@17% to 20% …Tk 11,400 to 15,800 py …TK950 to TK1317 per month

Builds hh biogas units At Tk 25,000 w. 20% margin

MFI-makes monthly loans For 3 yrs, service chargeof 6% (simple) per year15% down payment

Supports enterprises

Supportssustainableinitiatives

Needs carbon offsets

Organizes purchasesand sales of GHGs

Down paymentOf Tk3750 …Mo PMT of Tk697

Initial “cost”= 3750 … monthly savings of 253 to 620 … simple paybackof 6 to 14 months

1-Rural Household 2-Biogas Construction Company3-Microfinance Institution 4-Enterprise Investment Company 5-Greenhouse Gas Certification / Approval Mechanism (CDM CERs or VERs)6-Company in Need of GHG Benefits7-Innovation Funding Organization8-Catalyst … YOU! Euro 1 = Tk 81 = US 0.77

1

2

34

56

7

8.

Income per hh at Tk 67,000 to 79,000py…e@17% to 20% …Tk 11,400 to 15,800 py …TK950 to TK1317 per month

Builds hh biogas units At Tk 25,000 w. 20% marginSupports enterprises

Supportssustainableinitiatives

Organizes purchasesand sales of GHGs

Down paymentOf Tk3750 …Mo PMT of Tk697

Initial “cost”= 3750 … monthly savings of 253 to 620 … simple paybackof 6 to 14 monthsRevised initial cost = 3059 … revised monthly savings of 382 to 749 …simple payback of 4 to 8 months

2.5 tonnes py CO2e @ Euro 6 pt py5 year forward purchase … NPV of2.5*6*5 at 10% discount rate equalsTK4606 = 18.4%

697 568 New PMT

25,075 versus 20,455 Add: finance charge

1.1817,335 New Finance Amt

3,059 New Down Payment

3750versus305915%20,394 Adjusted Cost

Down Payment 25,000 Original Cost

18.4%equals4,606 NPV of CO2e

10%Discount Rate

12151215121512151215

486486486486486TK per 2.5 tonne

2.52.52.52.52.5TPY

54321YEAR

2008-2012

Investment Capital

Donations and Carbon Value

Energy for EnvironmentAnd Development

$190 million

Energy Enterprises andCustomer Finance

People Planet

$150 million

$40 million

$202 million

17.1 millionwith modern

energy

16.7 millionMetric tons of carbon dioxide

Saved*

374 investments

$213 million

Financial Leverage$1.4 B

© E+Co, Oct 2007© E+Co, Oct 2007

$20 million carbon monetizationTo E+Co enterprises

~6%

P+P Notes plus Managed Accounts

*Monetize 4-6 mts at ~$11 pt, 50-50 with enterprise