©eei 2007 all rights reserved strictly confidential – for discussion purposes only excellent...
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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
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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
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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.
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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
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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
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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