1. The Energy Service Company (ESCO) Concept And EED's ambitions for the future Essent Energie Diensten BV 8th October 2007, Deventer Reinier Heerink

2. 2 Content The ESCO Concept EED Ambitions

3. 3 The ESCO concept 1-4 "An ESCO is defined as a company engaged in developing, installing and financing comprehensive, performance-based facility improvement projects, typically 7-10 years in duration, centered around improving the energy efficiency and reducing maintenance costs for facilities owned or operated by customers (NAESCO,1997)"

4. 4 Before Contract During Contract After Contract € Monitoring Costs Financing Costs Maintenance Costs Energy Costs Performance Contract Structure The ESCO concept 2-4

5. 5 The concept started in the 70's in the USA, first European ESCO company was founded in '82 in Italy Holland is far behind (Why?), Essent Energie Diensten is the only organization that can be called an ESCO company. Average number of companies in Europe per country is respectively with and without Germany 60 and 12 companies (1) Source: An international Survey of the ESCO Industry, Edwar Vine, 2003 Concept is an international success, Holland behind The ESCO concept 3-4

6. 6 The ESCO concept 4-4 1.Knowledge and experience 2.Integrator of multidisciplinary skills (project management, energy analysis, solution development, installation etc) 3.Innovative supplier base 4.Takes care of financing 5.Takes responsibility for risks 6.Savings guaranteed 7.Being operational guaranteed 8.Customer is owner so is able to deduct investment Advantages of an ESCO:

7. 7 Existing Markets (Utilities)New Markets New Products: Lighting, Isolation, Cooling, PCM Existing Products: High Efficiency Boilers, Heat Pumps, Mini-WKK's etc Looking for new market/product combinations Healthcare (cooling) Utilities: Housing Associations Governmental Buildings Education Sports and Recreation Healtcare (in development) Working together with Philips and Trilux (lighting) Current EED Ambitions 1-4 Market Development Market PenetrationProduct Development Diversification Ambitions: to penetrate and develop markets/ products

8. 8 North-America (2C, 52 ESCOs)Zuid-Amerika (4C, 75 ESCOs) Europe (15C, 912 ESCOs) Asia (7C, 224 ESCOs) Bron: An international Survey of the ESCO Industry, Edwar Vine, 2003 Charts show weighted average of turnover per marketsector Residential Commercial Industrial Agricultural Municipal Other EED Ambitions 2-4

9. 9 Africa (3C, 24 ESCO's)Oceania (1C, 5 ESCO's) World (38C, 1358 ESCO's) Bron: An international Survey of the ESCO Industry, Edwar Vine, 2003 Residential Commercial Industrial Agricultural Municipal Other EED Ambitions 3-4

10. 10 EED Ambitions 4-4 Plans to enter the Industrial market as it is the biggest energy consuming sector and a much targeted sector by international ESCO's Energy Efficiency high on political agenda Industrial Sector most likely more complex than other sectors, therefore important to learn quick and gain first mover advantages Statistics Netherlands (CBS) expects a huge grow of investments of the Industrial Sector (+19%). Especially the metal and electrical engineering sectors are willing to invest (+35%) Existence of agreements between Government and business life focusing on the Industrial sector EED wants to enter the Industrial Sector

11. Energy services in practice In relation to Multiple Year Agreements Essent Energie Diensten BV Deventer, 8 October 2007 Ger Kempen

12. 12 Content What I would like to tell you Energy services EED Industrial project Eshuis Multiple Year Agreements (MJA's)

13. 13 Energy Contracting means to us: Energy savings combined with more comfort and guaranteed direct lower operating costs. Parts of the performance contract Design optimal energy concept Old buildings: EED finances replacement of equipment, New Buildings: EED finances surplus value of newer equipment Energy management Guarantee on maximum volume energy consumption with bonus 50/50 Contract period max. 15 years, minimum investment 40K Energy Services EED 1-3

14. 14 Energy Services EED 2-3 Storage of warmth and coldness Heat pumps Energy efficient lighting Heating, ventilation, isolation, compressed air Monitoring of energy consumption Reuse of warmth surplus How to save energy in utilities Although not (yet) being fully commercialized, EED has knowledge/ experience of:

15. 15 Before Contract During Contract After Contract € Monitoring Costs Financing Costs Maintenance Costs Energy Costs Performance Contract Structure Energy Services EED 3-3

16. 16 Characteristic features Printing - office Initial annual energy use: 2.000.000 kWh electricity 70.000 m 3 natural gas CO 2 emission 1.256 tons/year Problem: increasing cooling because of enlarged factory, 540 kW cold Possible solutions: - conventional cooling - heat/cold storage Industrial Project: Eshuis 1-5

17. 17 Conventional cooling Investment € 220.000 Electricity increase with 500.000 kWh/year CO2 emission 1.540 tons/year Industrial Project: Eshuis 2-5 Heat/cold storage with heat pumps Investment € 460.000 Electricity increase with 180.000 kWh/year Gas decrease with 60.000 m3/year CO2 emission 1.250 tons/year Environmental Reduction CO2 emission 296 tons/year 19 %, i.e.

18. 18 Industrial Project: Eshuis 3-5

19. 19 Advantages Eshuis: - Yearly cost the first 10 years equal conventional cooling - Advantage after 10 years, 24 % of the annual cost - Advantage investment VAMIL/ EIA 235.000 - Guaranty on working heat/cold storage - No own investment Industrial Project: Eshuis 4-5

20. 20 Dry cooler Industrial Project: Eshuis 5-5 Heat pump Drilling Hole

21. 21 Multiple Year Agreements 1-3 Multiple Year Agreements (MJA's) The multiple year agreements are agreements between government and professional/ business organizations concerning a more effective and efficient manner of using energy. 900 companies 25 branches 36 professional/ business organizations

22. 22 Branches, Sectors: Agriculture Cultivation under glass Services Vocational training, Sports and recreation, Academic hospitals Industry Ceramic industry, Surface treating companies Nutritional, luxury industry Potatoe industry, Dairy industry Multiple Year Agreements 2-3

23. 23 Focus on: -Industry -Nutritional and luxury industry Which we would like to provide our services by using our knowledge/ experiences with: Storage of warmth and coldness Heat pumps Energy efficient lighting Heating, ventilation, isolation, compressed air Monitoring of energy consumption Reuse of warmth surplus New products? Multiple Year Agreements 3-3

24. Workshop: How to enter the Industrial Market?

25. 25 Potential Customers: Which branches of the Industrial Sector would be interested in the ESCO concept ? Business Models: which Business Model/ Contract form is suitable? Approach, what would you need to approach a potential customer and how would you do it? Workshop

26. 26 Workshop: Potential Customers Why would they be interested? Not willing to finance project Lack of know-how Wants to focus on core business Attractive pay-back time Corporate Social Responsibility Outsourcing of maintenance Outdated machinery, need for replacement Environmental obligations Outsourcing of risks Guaranteed savings …

27. 27 Workshop: Potential Customers Who would be interested? Food and Beverages Textile and clothing Leather (non clothing) Wood products (no furniture) Paper Oil and Coal products Chemical products Rubber and synthetic material products Earthenware, glass, gypsum and cement products Metal Machines Electrical and Optical engineering Automotive, Aerospace Furniture and other goods Big or small players? Aim at process or process supporting energy technology?

28. 28 Presentation of Jan W. Bleyl Workshop: Business Model

29. 29 Workshop: Customer Approach How would you describe the Industrial Sector from a customer point of view? -More reluctant to let an external company adjust/ influence/ study their primary process? -More likely to have "a double agenda" ? -More likely to be presumed with the idea that they can do it better and cheaper? -… Given the nature of the Industrial Sector, what key competences would you need?

30. 30 Workshop: Customer Approach In our opinion, the customer needs to trust the concept and Essent, we need proofs of concept! Start easy, start with one branche… Ease of Execution Business Impact High Low Must Haves Low Hanging Fruit Quick Wins Money Pits Existing Concepts Easy Technologies

31. 31 On behalf of Essent Energie Diensten, thank you very much for your attention and input The End