Environmental Upgrade Finance Managing Climate Risk in Agriculture Conference 2018 Scott Bocskay, CEO 7 April, 2019

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Who we are Shared services for councils: Enabling Councils to offer EUAs, open to all lenders, cost effectively since 2010 Work with Councils, lenders and businesses to demonstrate value of EUAs and grow the market place in Victoria Investor: Non bank lender into innovative approaches to achieve ‘sustainability’ outcomes since 2002 Work with customers to identify the commercial opportunities in ‘sustainability’ through EUAs BetterBuildingFinance.com.au @BB_Finance Sustainablemelbournefund.com.au @SMFAus

The Problem: Business costs are rising Utility Bills are rising Eroding business profitability Future business risk of business input costs Energy market uncertainty Electricity Gas Available capital Opportunity Costs Split incentives

Solutions are commercial now Saving and Generating your own Energy Capital costs have reduced Business Case strong for investment in an increasing number of businesses Rising energy costs Make business case compelling for investment How to Finance?

Agriculture – Opportunities and Barriers 32,500 agri-businesses registered in regional and rural Victoria Cost and reliability of Energy a driver for action High upfront capital costs with long simple payback periods Opportunities around Water (efficiency and recycling as well as water pumping) and other sustainability projects Victoria: Agriculture Energy Investment plan. Assessments Capital subsidies Source: Agriculture Energy Investment plan

Environmental Upgrade Agreements (EUAs) A long term, fixed interest loan, available for up to 100% of a project cost Repayments made via quarterly council rates For projects that deliver greater profitability, which also yield an environmental benefit Available for non residential property only Retail, Office, M’facturing, Agriculture etc… Can be used in partnership with Government Grants

Why EUA’s? No Additional Security – Mortgages, PPSR 100% Finance Greater cash flow for your business Statutory charge = fixed quarterly repayments A loan you don’t need to repay upon sale of land Transparent, simple loan where you own the assets with no hidden charges

Long loans = more cash in your business now When repayments are spread out over long periods you have more cash in your business now Cheaper 10 year loan, but more annual cash outflow 15 year loan (more expensive) but more cash in your business now

How Does an EUA Work?

Case Study 1 - Kevin Minogue

CASE STUDY 2 – BOOTH TRANSPORT “Repayments were attractive as they come in the council rates once a quarter rather than every month so it make it a lot more manageable servicing than a normal loan.” - Mitchell Booth, Principal, Booth Transport Booth is one of Australia's most respected national freight and logistics service providers. The company has around for 80 years with four generations of the family involved in the business. Its operations expand across five states with multiple depots in NSW, VIC and SA, which includes 600 employees and approximately 300 trucks. Strathmerton – Solar $126,000 in energy bills $690,000 capital cost 100% financed Summary First EUA, the business chose solar to save on energy bills at their Strathmerton site which will reduce costs by 15-20 percent over a twelve month period, enabling these savings to be invested in other parts of the business. 391kW solar array will generate around 561,000 kWh of electricity per year. Strathmerton – Annual Savings $1.2M cost savings 2,749 tonnes of CO2-e 77 FTE created $4.0M capital cost, 100% financed Summary After the success of the Solar array, a water treatment plant (recycling 120,000 kilolitres of water) with an additional EUA on their Strathmerton deport.

Participating Councils Plus more

Facebook: sustainablemelbournefund Twitter: @SMFAus Scott Bocskay, CEO scott.bocskay@sustainablemelbournefund.com.au www.sustainablemelbournefund.com.au +61 3 9658 8740 Facebook: sustainablemelbournefund Twitter: @SMFAus