Danfoss Solutions

EnSave

Utility Management Process

Cleantech p det globale marked

20. May 2010

By Lars Grnbk

The Danfoss Group

Danfoss offices / plants

Agents and distributors

Founded in 1933

HQ in Denmark

Sales EUR 3,5 Bill.

93 factories

139 Sales Companies

Tot. 28,000+ people

Market Leaders in:

Refriger. & A/C

Heating Controls

Motion Controls

Mobile Hydraulics

Danfoss GlobalOrganisation Structure

Niels B. ChristiansenPresident & CEO

Kim FausingExecutive Vice President & COO

Nis StorgaardExecutive Vice President & CDO

CorporateFunctions

Danfoss Climate & Energy

Danfoss Development

Sauer-DanfossOwner share 76%

Danfoss Refrigeration & Air Conditioning Controls

Danfoss Commercial Compressors

Danfoss Heating Solutions

Danfoss District Energy

Danfoss Power Electronics

Propel

Work Function

Controls

Danfoss High-PressureSystems

Danfoss HouseholdCompressors

Danfoss Appliance Controls

Danfoss Water Controls

Danfoss Gearmotors

GlobalServices

Danfoss Solutions in brief

ESCO -Energy Service COmpany

A business unit within the Danfoss Group

HQ in Denmark with regional offices in Mexico and UK

Deliver utility cost savings with on no cure no pay

Offers average utility cost savings of 10-15% with an IRR of 40% (2-3 years pay-back time)

Typical project delivers 400,000 @ 40% IRR

Title:How energy savings can finance projects

Energy efficiency projects can be financed through the savings they generate with the ESCO (Energy Service COmpany) concept. Funding is provided by the ESCO partner who offers a savings guarantee. Learn about strong and self-financing business cases with this model.

Why is this interesting?

Energy and hence Energy Efficiency is now STRATEGIC

Energy Costs are close to Labour costs and rising by 15-25% p.a.

Energy efficiency can increase competition power AND -help keep jobs in WE

But why is every company not doing it today?

Assuming that initial investment is an obstacle, the ESCO model supplies a solution

We want to tell you how

www.solutions.danfoss.com

How does ESCO operate?

Utility company

Technology

Know-how

Process

Financing

Savings

Guarantee

Customer

Capital Partners, sub-contrators

ESCO

Payment

Subsidy

Raw materials Products

Savings guarantee / performance guaranteeHow and why?

How

Measured on the Billing Meters and based on the IPMVP

Has ESCO delivered promissed savings?

Yes split over performance

No ESCO to re-pay difference

Why

Belief in potential

Lower risk to client

Incentive to act

Reconciliation*

No cure no pay

Promise

If we promise to save you 1 million EUR in an EnSave project and

only manage to save you 800,000 EUR, we pay you the 200,000 EUR

difference. If we save more, we split the over-

performance.

How can energy savings pay your investment?

Old utility cost New utility cost New utility cost

ESCOs share of

savings generatedClient savings

Before project During project After project

Energy Performance Contracting paid by savings

No new capital required from client

Positive cash-flow throughout project

Financing of utility management project through ESCO or third party

Utility Consumption in an average Site

0

10

20

30

40

50

60

70

80

90

100

Necessary use

Un"feasible" Waste

Total use tomorrow

75

60

15

Energy Management

5

Change of behaviour

10

Technology

10

Total use today

60

40

% Energy Consumption

The Energy Savings business case- Before finding out how to finance them!!

1 year100%

80%

60%

40%

20%

2 years

2 years

4 years

Operational measures

3 - 5% 10% 15% 20% 25% 30%

Energy savings /

CO2 reduction potentialStrong business case

Strategic investmentBreak-even case

W.A.C.C.

Payback time / R.O.I.

Meeting Climate Goals- while protecting the BCR

Goals for CO2 emission (absolute and relative = Carbon Footprint)Goals for financial savingsPlatform for Public Relations & Policy Building

CO2e (1000T)

Today 2025

2025 emission if no action

2025 Target

1. Reduce Consumption (10-20%)

2. Invest Savings to More Savings!

3. Close GAP GREEN ENERGY SUPPLY

Example:Monetary framework for EPC?

No upfront Investments

EPC example; Guaranteed Savings of EUR 1,000,000 p.a. in 3 years

Savings will be (over 3 years) EUR 3,000,000

Payment to Danfoss will be EUR 2,700,000

1.000.0001.000.0001.000.0001.000.0001.000.000

-900.000-900.000-900.000

201320122010 2011 2014

Payments

Savings

Copamex, Monterrey

Large Paper manufactor

Very Energy Intense

Energy Spend > 100 mio

1 Wave target ~10% reduction

References

Spend more than 3 Mill EUR p.a. on utility costs

Consume different utilities

Operate in markets with small growth

Use a considerable amount of production costs on utilities

Consider Utility Consumption a strategic parameter

Reasons to do EnSave Projects Examples of results

Industry Brewery Food Components

Total cost savings: EUR 670,000 EUR 335,000 EUR 500,000

CO2 reduction: 2,500 tonnes 1,000 tonnes 3,000 tonnes

IRR: > 100% > 35% > 30%

Total utility reduction: 10% 15% ~20%

Investment: EUR 440,000 EUR 695,000 EUR 1,210,000

Questions?

Microcebus danfossi

is the worlds smallest lemur. Discovered recently on Madagascar.

It exemplifies how nature has solved the problem the world faces: to optimize energy consumption.

Thank You

Lars Grnbk, Sales Director

+45 5133 0137

lars.gronbak@danfoss.com

For any requests, feel free to contact us: