Excellent Energy International Co Ltd Thailand Private sector

Excellent Energy International Co. , Ltd. (Thailand) Private sector needs ---------------------- UNFCCC workshop on best practices with conducting TNAs By Mr. Arthit Vechakij, Managing Director • ©EEI 2007 All Rights Reserved 1 Hotel Arnoma, Bangkok, Thailand • 27 -29 June 2007 Strictly confidential – For discussion purposes only

Speaker Mr. Arthit Vechakij Managing Director Excellent Energy International Co. , Ltd. (EEI) ESCO Ventures Director ESCO Ventures Co. , Ltd. (EV) Preident Association Energy Efficiency Consultant (AEEC) Address: 475 Sri Ayudhaya Rd. , Rajthevee Bangkok 10400 Thailand E-mail: arthit@eei. co. th Phone: +66 -2 -201 -3466 -7 Fax: +66 -2 -201 -3465 Cell: +66 -81 -806 -8233 ©EEI 2007 All Rights Reserved 2

Agenda q About EEI q Problems encounter during Project Development phase q Suggested Resolutions Objective: P To share Project Development Experience (Obstacles and suggested Resolutions) relating to ESCO (Energy Service Company) business… PFrom One company = EEI P In One country = Thailand - But hope it would be a good case study for all of us global wide ©EEI 2007 All Rights Reserved 3

About EEI, stands for Excellent Energy International Co. , Ltd. (Thailand), is: R An Investment Partner in Energy Efficiency Management R Provide Investment/Engineering Consulting Services and promptly fund under Energy Performance Guaranteed Contract (EPC) in the innovative field of Energy Service Company (ESCO( R Develop integrated energy efficiency and productivity improvement project with attractive return on investment R Guarantee success and return on investment from the beginning to the end of project payback period R Achieved reputation for being the most highly regarded ESCO in Thailand was selected for the pilot ESCO project of Thailand in 1999 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 2007 All Rights Reserved 4

Business Case Example: Large scale investment – Big Saving Bangkok Produce Merchandising Public Co. , Ltd. Energy Conservation Measure (ECM) a. Cogeneration 4. 5 MW (Fuel: Natural Gas) a. Motor Optimization a. Lighting Control Project Investment Cost = 188. 4 Energy Cost Savings = 47. 0 Payback Period = 4. 5 IRR = 20. 5 % NPV (DR @ 0%) = 418. 6 MB Start Savings: Nov 02 Located: Kangkoi, Saraburi ©EEI 2007 All Rights Reserved 5 MB MB/Years

EEI World Class Partners EEI 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. 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 2007 All Rights Reserved 6

Why EEI ESCO? Well Recognized by Government & Private Sector Total Integration Services Various Proven Technology Performance Guaranteed One-Stop Service Sources of funds Measurement & Verification System (M&V( Share Risks, Losses and Benefits ©EEI 2007 All Rights Reserved 7 Specialist/Expertise

Our Clients Sun Food International Bangkok Produce Merchandising Nongbuafarm Country Home Village Nanyang Textile, Knitting, Energy Thonburi Automotive Assembly Plant Muangthong Aluminuim Industrial ©EEI 2007 All Rights Reserved 8 Siam Oil & Fat

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 260 km to the South East of Bangkok Sahasin is … þ One of the top 3 glucose manufacturer in Thailand (25, 000 ton per year) þ One of the top 5 producers of modified starch (15, 000 ton/year) þ Expansion of a new glucose plant (100 MT/day) totaling over 200 MT/day þ Expected sales to grow from 600 MB in 2004 to 1, 400 MB in 2009 with 15% gross margin. ©EEI 2007 All Rights Reserved 9

Business Case Example: ESCO Shared Savings – ESCO & Client Co-Invest Sahasinwattana Cogeneration Co. , Ltd. Energy Conservation Measure (ECM) a. Cogeneration 1. 7 MW, 25 TPH (Fuel: Palm Shell & Coal) ©EEI 2007 All Rights Reserved Project Investment Cost = 150 MB Energy Cost Savings = 42 MB/Year IRR = 26 % Contract Period = 8 Start Savings: Mar 07 10 Located: Chanthaburi Province Years

Structure of Sahasin Cogen Co. , Ltd. 54. 4 MB EXIM Blended with Low Interest Rate through Mo. E ENCON Fund Interest Rate: - Year 1 -3: prime rate + 0. 5% - Year 4 -7: prime rate Loan Agreement - Term: 7 years - Grace Period 14 months 17 MB 13. 6 MB Steam and Electricity Sales & Purchase Agreement Condition: -Minimum Steam Take -Sahasin to purchase the facility at the 9 th years for xx MB Steam Tariff: -Price varied with fuel (No Risk on Fuel Price!) Land Leasing Agreement - Sahasin Cogen to rent land from Sahasin ©EEI 2007 All Rights Reserved ESCO 60% UV 25% EEI Group Ventures*15% One. AM Noppanun Equity 85 MB Loan 80 MB Sahasin Cogen Sahasin FE Clean PP&E 141 MB ZONE 3 – Import & Income Tax Exempt EEI Energy Performance Contract (Guaranteed Saving) Shareholder Agreement Structure -FE Clean 64% -ESCO Ventures 20% -Noppanun Intertrade 16% -Capital Calls -Board, Right, Vote -Dividend payout after debt services 11 Engineering (IGA) and Implementation Phase -Project Development Reimbursement Phase -Guarantee Savings to cover full investment + interest -Compensate Deficit Savings -Get shared saving on Performance

Agenda þ About EEI q Problems encounter during Project Development phase Ø Problems as encountered by EEI (as a Project Developer) Ø Problems as encountered by other Project Developer Ø Problems as encountered by other key players q Suggested Resolutions ©EEI 2007 All Rights Reserved 12

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 ü Pre-Development and Project Development Phase 10. Good Investment Option ©EEI 2007 All Rights Reserved 13

Zoom into the problems During the Project Development phase, there are various of problems encountered by each key player as tried to summarize below 1. Project Developer x Unsuitable Skill in Technical, Financial, Legal, Commercial x Suffer from high Development cost and effort before cashing (maybe with premium) far later on x Concern on releasing Intellectual Property Rights Protection (IPR Protection) x Enforceable Legal Binding (e. g. Mo. U, Contract, …) x Lack of Support from other players (See all in #2 and #3 below ) 2. Knowledge Supplier (i. e. Hardware / Software) x Concern on releasing Intellectual Property Rights Protection (IPR Protection) x Enforceable Legal Binding (e. g. Mo. U, Contract, …) x Environment (Economics – Global wide & Nationwide, Political Situation, Regulation) 3. Financier (i. e. Investor & Financial Institute) x x x ©EEI 2007 All Rights Reserved Enforceable Legal Binding (e. g. Mo. U, 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) 14

Agenda þ About EEI þ Problems encounter during Project Development phase q Suggested Resolutions ©EEI 2007 All Rights Reserved 15

Zoom into the problems Suggested Resolutions and How PFAN may help Suggested Resolutions are actually counteracting all those known-for-a-long-time problems… 1. Project Developer ü Supporting x Unsuitable Skill in Technical, Financial, Legal, Commercial Development x Suffer from high Development cost and effort before cashing (maybe with premium) Fund far later on x Concern on releasing Intellectual Property Rights Protection (IPR Protection) ü Supporting x Enforceable Legal Binding (e. g. Mo. U, Contract, …) Financial Closure x Lack of Support from other players (See all in #2 and #3 below ) ü Coaching 2. Knowledge Supplier (i. e. Hardware / Software) ü Training x Concern on releasing Intellectual Property Rights Protection (IPR Protection) ü Guidebook x Enforceable Legal Binding (e. g. Mo. U, Contract, …) x Environment (Economics – Global wide & Nationwide, Political Situation, Regulation) 3. Financier (i. e. Investor & Financial Institute) x x x ©EEI 2007 All Rights Reserved Benefit R Simply to close a deal R Assure Financier Confidence Enforceable Legal Binding (e. g. Mo. U, Contract, …) R Eliminate Technical Risk (and all other Chicken & Egg (paying development fee first vs. seeing the project in detail first) risk) Believable Financial Return (which mostly requires higher development fee) R New Innovation could make project more Committed Financier partner (if not one equity investor / one bank for 100% cash) feasible Environment (Economics – Global wide & Nationwide, Political Situation, Regulation) R Comfort Developer effort 16

Thank you and Contact Mr. Arthit Vechakij Managing Director Excellent Energy International Co. , Ltd. (EEI) ESCO Ventures Director ESCO Ventures Co. , Ltd. (EV) Preident Association Energy Efficiency Consultant (AEEC) Address: 475 Sri Ayudhaya Rd. , Rajthevee Bangkok 10400 Thailand E-mail: arthit@eei. co. th Phone: +66 -2 -201 -3466 -7 Fax: +66 -2 -201 -3465 Cell: +66 -81 -806 -8233 ©EEI 2007 All Rights Reserved 17