Development and Financing of Renewable Thermal Energy Projects ...
Development and Financing of Renewable Thermal Energy Projects Clarke Fenner Vice President, Sales and Marketing LVestus Energy, Inc.
GeoTPAtm Thermal Purchase Agreement A utility-like approach to Geothermal Heating and Cooling
Clarke Fenner Sr. Vice President Title of Presentation (603) 396-9692
LVestus
LVestus Energy Today
LVE is based north of Boston in Portsmouth, NH
LVE’s predecessor company, American EcoThermal was formed in November, 2008
AET successfully installed over 100 fully functional geothermal heating and cooling systems throughout the New England region.
LVE now offering financing programs to include: Geothermal installations
PV Solar projects
Debt+Equity+Tax Equity+SREC Presale+Insurance Structures
Hybrid installations that including Geo and Solar to achieve “Net Zero” energy operation.
GeoTPA Thermal Purchase Agreement – Third Party, Utility-Like, Loop Field Ownership
Debt+Equity+Tax Equity+SREC Presale+Insurance Structures
Large Scale Renewable Energy Project Finance
Debt+Tax Equity
Commercial, Municipal, University -
Project Capital provided by multiple debt, equity, & tax equity investors.
Title of Presentation LVestus
GeoTPAtm Thermal Purchase Agreement
Features & Benefits • Process • Effect on Industry • Primary Beneficiaries •
Title of Presentation LVestus
The GeoTPAtm Model
LVestus Energy Inc. (LVE)’s goal is to make Ground Source Heat Exchange systems and loop fields financially competitive for commercial customers nationwide, through utilizing a utility-like business process/financing model known as the GeoTPAtm or Thermal Purchase Agreement (TPA). This is provided at potentially ZERO capital cost to the user
Title of Presentation LVestus
GeoTPAtm Program – Loop Field Only • Structure of Program • 200,000 sq/ft Building Example
Title of Presentation LVestus
GeoTPAtm - Thermal Purchase Agreement Loop Field Only
• Key Benefits • Loop field provided at no cost to building owner • Overall system installation cost competitive with other HVAC alternatives • Operational costs targeted >10% lower than conventional HVAC • Utility-like payment for life of contract • Hedge against fossil fuel volatility and inflation • Minimum $75,000 Loop Field value • Removes primary barrier to widespread adoption of geothermal HVAC Title of Presentation LVestus
200,000 Sq. Ft. Building – Loop Field Only Fossil Fuel Based System Total Conventional System Installation Cost
$1,030,000
Geothermal Installation – GeoTPATM Total Geothermal System Installation Cost
$1,446,000
External Loop Field Cost
$395,000
Total Conventional System Installation Cost
$1,030,000
Total Internal Components Installation Cost
$1,051,000
0% Fed Tax Credit
$0
10% Fed Tax Credit (Internal Components)
($105,100)
Yr 1 S/L Depreciation
($11,629)
MACRS Depreciation (Yr 1) (Internal Components)
($233,637)
Yr 1 Cost – Conventional
$1,018,371
Net Cost – (Yr 1) Internal Components
$712,263
System Installation
39 yr Depreciation
Net Cost – Install (Yr 1)
Current Operating Costs (Subject to rising fuel prices)
6 yr Depreciation
$960,226
$110,000
Net Cost - Install (6 Yr)
$556,505
Net Savings – Internal Components (GeoTPATM )
$494,495*
Projected Operating Costs (GeoTPATM + Electricity)
$99,000**
* 41% savings on Installation costs vs. fossil fuel ** Immediate 10% savings on operational costs
LVestus
The GeoTPAtm Process
Collect Building HVAC information
Perform Financial Analysis
Owner/ME Firm:
LVESTUS:
LVESTUS:
Owner:
Provide Building
Review Project Worksheet Complete Financial Analysis Roughly 1 week turnaround
Present TPA Payment Schedule to Customer
Review Proposal Agree and Sign GeoTPAtm Provide Easement for loop field
HVAC requirements BTU Loads Energy Costs Complete LVestus Project Worksheet
GeoTPAtm Proposal
Customer Review & Signature
LVestus
The GeoTPAtm Program FEATURES
BENEFITS
Utility-Like Installation
Reduced Operational Costs
ZERO COST for external loop field, possibly the entire system. Third-Party Ownership Easier Credit qualification Less than AAA Rapid project qualification Approval process in-house Virtually fixed operational costs for life of TPA. FMV ownership option at end of TPA.
Utility-like payment Price per BTU/kWH is FIXED for life of contract (20 yrs) Savings ~ 10% vs. existing fossil fuel systems = immediate payback! Hedge against rising cost of fossil fuels = savings increase over time! 40-63% lower maintenance costs than fossil fuel systems** Off-Balance Sheet GeoTPA payment is an expense Frees up owners: Credit lines Lease lines ** www.GeoExchange.org Title of Presentation
LVestus
The GeoTPAtm Effect on Industry Architect/Design Firm
Opens up the firm to propose more geothermal projects. No longer face cost objections. Green
Engineering/Geo Consulting Firm
Work closely w/LVestus to generate GeoTPAtm proposal. More geo jobs awarded.
General Contractor
Proceed as usual. As loop field owner, LVestus retains the right to approve driller/installer subcontractor.
Driller/Installer
More opportunities to drill and install loop fields than are now available. Proceed as usual.
Building Owner/Property Manager
Installation/retrofit costs reduced vs. fossil fuels. HVAC operational costs reduced. Capital costs reduced. Fossil fuel eliminated. Green
LVestus Energy
Provides capital and quality assurance. Owns systems and loop fields and bills for the LVestus energy use.
The GeoTPAtm Program Primary Market Beneficiaries Project owners/developers with fixed construction budgets.
Project owners looking to minimized operating expenses. Project owners/developers with less than AAA credit. Smaller, commercial geothermal projects with loop field costs ranging from $75,000 up to $1,000,000. Generally, projects with larger loop field requirements have no issue acquiring capital to fund the projects. Developers of large scale projects generally have access to low interest capital, and the GeoTPA will be more expensive.
Title of Presentation LVestus
Summary
• LVestus Energy’s goal is to promote the use of renewable energy by making it financially competitive with conventional energy technologies. • LVestus offers multiple financing structures to address the needs of the renewable energy industry. • Primary focus for Geothermal HVAC is the GeoTPA, third party ownership, Thermal Purchase Agreement. • Zero upfront capital required for Loop Field installation • Savings on operating expenses relative to fossil fuels • Off Balance Sheet expense, 20 year term, FMV purchase at end. • Market focus is smaller developers • Loop Field project size of $75,000 to $1,000,000. • Less than AAA credit. Title of Presentation LVestus
GeoTPAtm - The path to widespread adoption of geothermal heating and cooling
Contact LVestus Energy to Begin… [email protected] 603-601-6925 x30
Title of Presentation LVestus
GeoTPAtm Thermal Purchase Agreement A utility-like approach to Geothermal Heating and Cooling
Clarke Fenner Sr. Vice President Title of Presentation (603) 396-9692
LVestus
LVestus Energy Today
LVE is based north of Boston in Portsmouth, NH
LVE’s predecessor company, American EcoThermal was formed in November, 2008
AET successfully installed over 100 fully functional geothermal heating and cooling systems throughout the New England region.
LVE now offering financing programs to include: Geothermal installations
PV Solar projects
Debt+Equity+Tax Equity+SREC Presale+Insurance Structures
Hybrid installations that including Geo and Solar to achieve “Net Zero” energy operation.
GeoTPA Thermal Purchase Agreement – Third Party, Utility-Like, Loop Field Ownership
Debt+Equity+Tax Equity+SREC Presale+Insurance Structures
Large Scale Renewable Energy Project Finance
Debt+Tax Equity
Commercial, Municipal, University -
Project Capital provided by multiple debt, equity, & tax equity investors.
Title of Presentation LVestus
GeoTPAtm Thermal Purchase Agreement
Features & Benefits • Process • Effect on Industry • Primary Beneficiaries •
Title of Presentation LVestus
The GeoTPAtm Model
LVestus Energy Inc. (LVE)’s goal is to make Ground Source Heat Exchange systems and loop fields financially competitive for commercial customers nationwide, through utilizing a utility-like business process/financing model known as the GeoTPAtm or Thermal Purchase Agreement (TPA). This is provided at potentially ZERO capital cost to the user
Title of Presentation LVestus
GeoTPAtm Program – Loop Field Only • Structure of Program • 200,000 sq/ft Building Example
Title of Presentation LVestus
GeoTPAtm - Thermal Purchase Agreement Loop Field Only
• Key Benefits • Loop field provided at no cost to building owner • Overall system installation cost competitive with other HVAC alternatives • Operational costs targeted >10% lower than conventional HVAC • Utility-like payment for life of contract • Hedge against fossil fuel volatility and inflation • Minimum $75,000 Loop Field value • Removes primary barrier to widespread adoption of geothermal HVAC Title of Presentation LVestus
200,000 Sq. Ft. Building – Loop Field Only Fossil Fuel Based System Total Conventional System Installation Cost
$1,030,000
Geothermal Installation – GeoTPATM Total Geothermal System Installation Cost
$1,446,000
External Loop Field Cost
$395,000
Total Conventional System Installation Cost
$1,030,000
Total Internal Components Installation Cost
$1,051,000
0% Fed Tax Credit
$0
10% Fed Tax Credit (Internal Components)
($105,100)
Yr 1 S/L Depreciation
($11,629)
MACRS Depreciation (Yr 1) (Internal Components)
($233,637)
Yr 1 Cost – Conventional
$1,018,371
Net Cost – (Yr 1) Internal Components
$712,263
System Installation
39 yr Depreciation
Net Cost – Install (Yr 1)
Current Operating Costs (Subject to rising fuel prices)
6 yr Depreciation
$960,226
$110,000
Net Cost - Install (6 Yr)
$556,505
Net Savings – Internal Components (GeoTPATM )
$494,495*
Projected Operating Costs (GeoTPATM + Electricity)
$99,000**
* 41% savings on Installation costs vs. fossil fuel ** Immediate 10% savings on operational costs
LVestus
The GeoTPAtm Process
Collect Building HVAC information
Perform Financial Analysis
Owner/ME Firm:
LVESTUS:
LVESTUS:
Owner:
Provide Building
Review Project Worksheet Complete Financial Analysis Roughly 1 week turnaround
Present TPA Payment Schedule to Customer
Review Proposal Agree and Sign GeoTPAtm Provide Easement for loop field
HVAC requirements BTU Loads Energy Costs Complete LVestus Project Worksheet
GeoTPAtm Proposal
Customer Review & Signature
LVestus
The GeoTPAtm Program FEATURES
BENEFITS
Utility-Like Installation
Reduced Operational Costs
ZERO COST for external loop field, possibly the entire system. Third-Party Ownership Easier Credit qualification Less than AAA Rapid project qualification Approval process in-house Virtually fixed operational costs for life of TPA. FMV ownership option at end of TPA.
Utility-like payment Price per BTU/kWH is FIXED for life of contract (20 yrs) Savings ~ 10% vs. existing fossil fuel systems = immediate payback! Hedge against rising cost of fossil fuels = savings increase over time! 40-63% lower maintenance costs than fossil fuel systems** Off-Balance Sheet GeoTPA payment is an expense Frees up owners: Credit lines Lease lines ** www.GeoExchange.org Title of Presentation
LVestus
The GeoTPAtm Effect on Industry Architect/Design Firm
Opens up the firm to propose more geothermal projects. No longer face cost objections. Green
Engineering/Geo Consulting Firm
Work closely w/LVestus to generate GeoTPAtm proposal. More geo jobs awarded.
General Contractor
Proceed as usual. As loop field owner, LVestus retains the right to approve driller/installer subcontractor.
Driller/Installer
More opportunities to drill and install loop fields than are now available. Proceed as usual.
Building Owner/Property Manager
Installation/retrofit costs reduced vs. fossil fuels. HVAC operational costs reduced. Capital costs reduced. Fossil fuel eliminated. Green
LVestus Energy
Provides capital and quality assurance. Owns systems and loop fields and bills for the LVestus energy use.
The GeoTPAtm Program Primary Market Beneficiaries Project owners/developers with fixed construction budgets.
Project owners looking to minimized operating expenses. Project owners/developers with less than AAA credit. Smaller, commercial geothermal projects with loop field costs ranging from $75,000 up to $1,000,000. Generally, projects with larger loop field requirements have no issue acquiring capital to fund the projects. Developers of large scale projects generally have access to low interest capital, and the GeoTPA will be more expensive.
Title of Presentation LVestus
Summary
• LVestus Energy’s goal is to promote the use of renewable energy by making it financially competitive with conventional energy technologies. • LVestus offers multiple financing structures to address the needs of the renewable energy industry. • Primary focus for Geothermal HVAC is the GeoTPA, third party ownership, Thermal Purchase Agreement. • Zero upfront capital required for Loop Field installation • Savings on operating expenses relative to fossil fuels • Off Balance Sheet expense, 20 year term, FMV purchase at end. • Market focus is smaller developers • Loop Field project size of $75,000 to $1,000,000. • Less than AAA credit. Title of Presentation LVestus
GeoTPAtm - The path to widespread adoption of geothermal heating and cooling
Contact LVestus Energy to Begin… [email protected] 603-601-6925 x30
Title of Presentation LVestus
