Overcoming the commercial obstaclesof PV implementation in the UK

Paul LewisSelf Energy UK

www.selfenergy.co.uk

The Energy Performance Guarantee

UK

22 June, London

AgendaUK

1. What is the opportunity – an investor / developer view of the UK FiT

2. Key Challenges to overcome

3. Lessons learnt in Europe

4. Energy Supply vs Energy Performance and the Rooftop delivery model

Self Energy – a modern day ESCoUK

Decentralised Energy partner working with organisations across Europe to cut energy costs and carbon emissions

Financing of integrated onsite, decentralised heat, power and cooling generation for the built environment.

Experience of working with feed-in-tariffs and national Carbon Reduction Commitments across Europe

Takes on risk and financial burden of Energy Performance Projects

Techology “agnostic” but focus on PV in markets with feed-in tariff

Working to overcome key barriers to implementation of Decentralised Energy:• Project / Performance Risk• Capital availability• Operation and Maintenance expertise and capacity

The UK PV OpportunityUK

Why invest in PV?

Long term investment of 25 years

-Stable, predictable returns

Reliable, low maintenance technology

30MWp implemented

250+MWp short term opportunity (to 2012)

Overcoming the challengesUK

Experienced Project

Developers

Well resourced

Contractors

Proven contractors at similar project size

Balanced risk/reward for

project stakeholders

Planning and grid issues

(G59) tackled and

resolved earlytechnical

due dilligence

Access and security

Clear O&M Strategy

Legal due dilligence Financial

due dilligence

Legal due dilligence

Lessons Learnt in EuropeUK

• Feed-in Tariff since 1991 – modified in 2000 and 2004• 12% of energy from renewable sources (4.6% in UK)• 300,000 jobs in the sector

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20180

500

1000

1500

2000

2500

3000

Germany

UK

Series3

Annual PV installations (MWp)

Case Study: Self Energy Project UK

Gran Canary Island Rooftop PV

• 3 MWp over 40 schools and public buildings

• Initial 1.4MWp, additional 1.6MWp in 2010

• Feed-in-Tariff €0.31/kWh

• Financial benefits of €2m for client

• Self Energy provided the capital and will recover the investment over 25 years

• Carbon Dioxide emissions reduced by over 4200 tonnes each year

Supply – Self Energy Rooftop model

Rent of roof / ground space

Due Dilligance

Investor provides capital to install PV system

Generation of electricity

FiT / Energy saving benefits shared by project stakeholders

O&M covered (and guaranteed) by ESCo

Delivery model – Supply vs Performance

Energy Performance Guarantee UK

- Fixed term partnership period- Benefits shared during the partnership

Total Energy savings

Building Operator

Before Beyond the end of Performance Guarantee

Building Operator

Total Energy Consumption

(current)Total Energy Consumption

(post implementatio

n)

ESCo only paid by % of net

savingsESCo

ESCo input:Knowledge

Risk MitigationDeliveryFinance

Southern UK example – 350 kWpUK

50,000 square foot and a pitched roof.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

10,000

20,000

30,000

40,000

50,000

60,000

Mon

thly

Gen

erati

on (k

Wh)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25-£500,000

£0

£500,000

£1,000,000

£1,500,000

£2,000,000

Year

Project Accumulated Cash Flow

Investable returnsStrong end user benefits with zero end user risk

Parting thoughtsUK

• 21 months until April 2012 – we need to move quickly and diligently

• Strong partnering is the key opportunity to maximise returns – there is enough opportunity for everyone

• Every project needs to assessed on its own merits

• Opportunity to utilise ESCOs to remove risk and provide capital

• New wave of ESCOs looking for opportunities in UK PV – the financing opportunities are there.

- Overcoming the commercial obstaclesof PV implementation in the UK

www.selfenergy.co.uk

The Energy Performance Guarantee

UK

22 June, LondonPaul LewisSelf Energy UKpaul.lewis@selfenergy.co.uk