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Catriona McLeod, CFAAssociate, ReEx Capital Asia

ASIA CLEAN ENERGY FORUMMANILA, JUNE 20-24 2011

Energy Efficiency Investments in Southeast Asia:Opportunities in the Short Term and in the Long Term

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Outline

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Potential Long-Term Opportunities

Some Energy Efficiency markets are notattractive now, but may be in the future

Barrier #1: Artificially low electricity prices

Barrier #2: Investment risks

Short Term OpportunitiesThere are many attractive Energy Efficiencyinvestments available

High returns

Which sector is best?

Which country is best?

Ways to Invest

Energy Efficiency Investment Strategies

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Energy Efficiency High Returns (1/2)

3**Source: McKinsey

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Which Sector? (1/2)

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INDUSTRIAL SECTOR:EE Potential inProduction Processes, Heating andCooling systems in production facilitiesof industry sectors like Semi-con,Pharmaceuticals, Automotive, F&B etc.

COMMERCIAL SECTOR:EE Potentialin Heating, Cooling, Lighting systemsin Private and Government Offices,Hotels, Malls, Hospitals, DataCenters and Educational institutions

Low Operational RiskHigh Operational Risk

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Which Sector? (2/2)

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0%

10%

20%

30%

40%

50%

60%70%

Yearly Savings/Investment

Industrial Commercial

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Which Country? (1/2)

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0

2

4

6

810

12

14

16

18

20

Electricity Tariff (US cent/kWh)

0

5

10

15

2025

30

35

4045

Investment Returns (%)

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Tax Incentives?

Grants /Subsidies?*

Mature ESCOSector?

100% ForeignOwnership OK?

Grants available through: Thailand: Energy Efficiency Revolving Fund (EERF), ESCO Fund Singapore: GREET scheme

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PHILIPPINES THAILAND SINGAPORE MALAYSIA INDONESIA VIETNAM

Which Country? (2/2)

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Short Term: How Do I Invest?

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Building Owners / Energy Users

Invest directly in Energy

Efficiency measures

Non- Owners / Private Investors

Buy shares in an EnergyServices Company (ESCO)

OR

Invest in an Energy Efficiency

Fund

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Long Term: Even Larger Market

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0

200

400

600

800

1000

1200

1400

1600

Malaysia Indonesia Thailand Singapore Vietnam Philippines

Energy Efficiency Market Size - Investment Potential

(US$ millions)

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Barrier #1: Subsidies (1/2)

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ElectricitySubsidies

MalaysiaIndonesia

Vietnam Thailand

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Barrier #1: Subsidies (2/2)

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02

4

6

8

10

12

14

16

18

20

Electricity Tariff (US cents / kWh)

0

5

10

15

20

25

30

35

4045

Investment Returns (%)

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Barrier #2: Investment Risks

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Performance Guarantees Supplied by ESCOs Measurement and Verification

Performance Risk

Insurance Products Aggregation of Projects

Credit Risk

Hedging Instruments

Electricity Price Uncertainty

Insurance Products Aggregation of Projects

Energy Usage Uncertainty

Securitization of Savings Cash Flows

Secondary Market

Time Horizon Uncertainty

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Contact us

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Catriona McLeod

ReEx Capital Asia16 Collyer Quay Hitachi Tower #20

Singapore 049318www.reexasia.com

Mobile: +65 9860 7806Tel: +65 6818 9710catriona.mcleod@reexasia.com