©EEI 2007 All Rights Reserved Strictly confidential – For discussion purposes only Excellent Energy International Co., Ltd. (Thailand) 1 Private sector.

1©EEI 2007 All Rights Reserved Strictly confidential – For discussion purposes only

Excellent Energy International Co., Ltd. (Thailand)

Private sector needs

-------------------------------------------UNFCCC workshop on best practices with conducting

TNAs

By Mr.Arthit Vechakij, Managing Director

Hotel Arnoma, Bangkok, Thailand27-29 June 2007

2©EEI 2007 All Rights Reserved

Mr. Arthit VechakijManaging DirectorExcellent Energy International Co., Ltd. (EEI)

DirectorESCO Ventures Co., Ltd. (EV)

PreidentAssociation Energy Efficiency Consultant (AEEC)

Address:475 Sri Ayudhaya Rd.,Rajthevee Bangkok 10400ThailandE-mail: [email protected]: +66-2-201-3466-7Fax: +66-2-201-3465Cell: +66-81-806-8233

Speaker

ESCO Ventures

3©EEI 2007 All Rights Reserved

Agenda

About EEI Problems encounter during Project

Development phase Suggested Resolutions

Objective: To share Project Development Experience (Obstacles and

suggested Resolutions) relating to ESCO (Energy Service Company) business…From One company = EEI In One country = Thailand

- But hope it would be a good case study for all of us global wide

Objective: To share Project Development Experience (Obstacles and

suggested Resolutions) relating to ESCO (Energy Service Company) business…From One company = EEI In One country = Thailand

- But hope it would be a good case study for all of us global wide

4©EEI 2007 All Rights Reserved

About EEI

An Investment Partner in Energy Efficiency Management P rovide Investment/Engineering Consulting Services and promp

tly fund under Energy Performance Guaranteed Contract (EPC) in the innovative field of Energy Service Company (ESCO)

Develop integrated energy efficiency and productivity improve ment project with attractive return on investment

Guarantee success and return on investment from the beginning to the end of project payback period

Achieved reputation for being the most highly regarded ESCO in Thailand and was selected for the pilot ESCO project of Thailand in 1999

EEI, stands for Excellent Energy International Co., Ltd. (Thailand), is:

EEI Is the first ESCO in Thailand that successfully implements ESCO project with excellent base of support from the Thai Government & the World Bank.

EEI Is the first ESCO in Thailand that successfully implements ESCO project with excellent base of support from the Thai Government & the World Bank.

5©EEI 2007 All Rights Reserved

Business Case Example:Large scale investment – Big Saving

Start Savings: Nov 02

Located: Kangkoi, Saraburi

Bangkok Produce Merchandising Public Co., Ltd.Bangkok Produce Merchandising Public Co., Ltd.

Energy Conservation Measure (ECM) Project Investment Cost = 188.4

MB

Energy Cost Savings = 47.0 MB/Year

Payback Period = 4.5 Years

IRR = 20.5 %

NPV (DR @ 0%) = 418.6 MB

Cogeneration4.5 MW (Fuel: Natural Gas)

Motor Optimization Lighting Control

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The listed company on the Stock Exchange of Thailand with the registered paid-up capital of Baht 515.11 million, specialized in financial investment which so far emphasizing in Property investment.

The listed company on the Stock Exchange of Thailand with the registered paid-up capital of Baht 515.11 million, specialized in financial investment which so far emphasizing in Property investment.

EEI World Class PartnersEEI has been established in Thailand since 1999 by three major partners and key investors.

The largest energy research institute in United States, with 30 years of proven success, is recognized as a world leader in creating innovation technology and environmental solutions for the energy industry and society. EPRI spends 18,000 Million Baht per year for research and development facilities to develop and conduct research on energy and industrial technology.

A premier engineering firm in United States, as the provider of technically, environmentally and financially sounds end-use solutions for energy companies, government agencies, and industrial and commercial establishments.

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Performance GuaranteedOne-Stop Service

Total Integration Services

Well Recognized by Government & Private Sector

Sources of funds

Share Risks, Losses and Benefits

Specialist/Expertise

Various Proven Technology

Measurement & Verification System

(M&V)

Why EEI ESCO?

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Our Clients

NanyanNanyang g Textile, Textile, Knitting, Knitting, EnergyEnergy

Sun Food Sun Food InternationalInternational

Bangkok Bangkok Produce Produce

MerchandisinMerchandisingg Siam Oil & Siam Oil &

FatFat

Muangthong Muangthong Aluminuim Aluminuim IndustrialIndustrial

Thonburi Thonburi Automotive Automotive

Assembly PlantAssembly Plant

NongbuafarmNongbuafarmCountry Home Country Home

VillageVillage

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Business Case Example:ESCO Shared Savings – ESCO & Client Co-Invest

• SS Cogen Technology & Investment Optimization

Products:Modified Starch, Glucose

Low Season: April-June

Expansion Plan:new glucose unit & spray dryers Sahasin is located in Chanthaburi, which is about 260km to the South East of

Bangkok

Sahasin is … One of the top 3 glucose manufacturer in Thailand (25,000 ton per year) One of the top 5 producers of modified starch (15,000 ton/year) Expansion of a new glucose plant (100 MT/day) totaling over 200 MT/day Expected sales to grow from 600 MB in 2004 to 1,400 MB in 2009 with 15%

gross margin.

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Start Savings: Mar 07

Located: Chanthaburi Province

Sahasinwattana Cogeneration Co., Ltd.Sahasinwattana Cogeneration Co., Ltd.

Energy Conservation Measure (ECM) Project Investment Cost = 150

MB

Energy Cost Savings = 42 MB/Year

IRR = 26 %

Contract Period = 8 Years

Cogeneration 1.7 MW, 25 TPH(Fuel: Palm Shell & Coal)

Business Case Example:ESCO Shared Savings – ESCO & Client Co-Invest

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Structure of Sahasin Cogen Co., Ltd.

Sahasin CogenSahasin

ZONE3 – Import & IncomeTax Exempt

Land Leasing Agreement- Sahasin Cogen to rent land from Sahasin

EEI

Energy Performance Contract(Guaranteed Saving)

Engineering (IGA) and Implementation Phase-Project Development

Reimbursement Phase-Guarantee Savings to cover full investment + interest-Compensate Deficit Savings-Get shared saving on Performance

Steam and Electricity Sales & Purchase Agreement

Condition:-Minimum Steam Take-Sahasin to purchase the facility at the 9th years for xx MB

Steam Tariff:-Price varied with fuel (No Risk on Fuel Price!)

Shareholder Agreement

Structure-FE Clean 64%-ESCO Ventures 20%-Noppanun Intertrade 16%

-Capital Calls-Board, Right, Vote-Dividend payout after debt services

Loan80 MB

EXIM

Loan Agreement

Interest Rate:- Year 1-3: prime rate + 0.5%- Year 4-7: prime rate

- Term: 7 years- Grace Period 14 months

PP&E141 MB

ESCOVentures*

Noppanun

FE Clean

Equity85 MB

17 MB

13.6 MB

54.4 MB

60% UV25% EEI Group15% OneAM

Blended with Low Interest Rate through MoE ENCON Fund

12©EEI 2007 All Rights Reserved

Agenda

About EEI

Problems encounter during Project Development phase Problems as encountered by EEI (as a Project Developer)

Problems as encountered by other Project Developer

Problems as encountered by other key players

Suggested Resolutions

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10 Key Success Factors for ESCO in developing Energy Efficiency Project

1. Overall System Efficiency

2. Emission Control under Environmental Regulation

3. Optimization Design (on client point of view, not on supplier point of view)

4. Feasibility on all necessary factor under the fact basis

5. Long-term Price Performance Evaluation Basis

6. Competitive & Transparent Procurement Process

7. Qualified Measurement & Verification System

8. Rigid Commissioning Procedures

9. Good Contract Management

10. Good Investment Option

Pre-Development and Project Development Phase

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During the Project Development phase, there are various of problems encountered by each key player as tried to summarize below

1. Project Developer

2. Knowledge Supplier (i.e. Hardware / Software)

3. Financier (i.e. Investor & Financial Institute)

Unsuitable Skill in Technical, Financial, Legal, Commercial Suffer from high Development cost and effort before cashing (maybe with

premium) far later on Concern on releasing Intellectual Property Rights Protection (IPR Protection) Enforceable Legal Binding (e.g. MoU, Contract, …) Lack of Support from other players (See all in #2 and #3 below )

Concern on releasing Intellectual Property Rights Protection (IPR Protection) Enforceable Legal Binding (e.g. MoU, Contract, …) Environment (Economics – Global wide & Nationwide, Political Situation,

Regulation)

Enforceable Legal Binding (e.g. MoU, Contract, …) Chicken & Egg (paying development fee first vs. seeing the project in detail first) Believable Financial Return (which mostly requires higher development effort) Committed Financier partner (if not one equity investor / one bank for 100% cash) Environment (Economics – Global wide & Nationwide, Political Situation, Regulation)

Zoom into the problems

15©EEI 2007 All Rights Reserved

Agenda

About EEI

Problems encounter during Project Development phase

Suggested Resolutions

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Suggested Resolutions are actually counteracting all those known-for-a-long-time problems…

1. Project Developer

2. Knowledge Supplier (i.e. Hardware / Software)

3. Financier (i.e. Investor & Financial Institute)

Unsuitable Skill in Technical, Financial, Legal, Commercial Suffer from high Development cost and effort before cashing (maybe with

premium) far later on Concern on releasing Intellectual Property Rights Protection (IPR Protection) Enforceable Legal Binding (e.g. MoU, Contract, …) Lack of Support from other players (See all in #2 and #3 below )

Concern on releasing Intellectual Property Rights Protection (IPR Protection) Enforceable Legal Binding (e.g. MoU, Contract, …) Environment (Economics – Global wide & Nationwide, Political Situation,

Regulation)

Enforceable Legal Binding (e.g. MoU, Contract, …) Chicken & Egg (paying development fee first vs. seeing the project in detail first) Believable Financial Return (which mostly requires higher development fee) Committed Financier partner (if not one equity investor / one bank for 100% cash) Environment (Economics – Global wide & Nationwide, Political Situation, Regulation)

Zoom into the problemsSuggested Resolutions and How PFAN may help

Coaching Training Guidebook

Supporting Development Fund

Supporting Financial Closure

Simply to close a deal Assure Financier Confidence Eliminate Technical Risk (and all

other risk) New Innovation could make project

more feasible Comfort Developer effort

Simply to close a deal Assure Financier Confidence Eliminate Technical Risk (and all

other risk) New Innovation could make project

more feasible Comfort Developer effort

BenefitBenefit

17©EEI 2007 All Rights Reserved

Mr. Arthit VechakijManaging DirectorExcellent Energy International Co., Ltd. (EEI)

DirectorESCO Ventures Co., Ltd. (EV)

PreidentAssociation Energy Efficiency Consultant (AEEC)

Address:475 Sri Ayudhaya Rd.,Rajthevee Bangkok 10400ThailandE-mail: [email protected]: +66-2-201-3466-7Fax: +66-2-201-3465Cell: +66-81-806-8233

Thank you and Contact

ESCO Ventures