Akron Thermal - Sigma Capital Group, Inc.

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Energy Savings for Industrials,
Municipalities and Universities
Version 23
Executive Summary
• District heating, combined with energy savings, can significantly
improve energy costs, reliability and local economic development
• Conversion to low cost fuels like waste wood is key for cost
benefits to developer and customers
• Thermal Ventures, Inc. (TVI) and Carl Avers have over 30 years of
experience in successfully developing district heating systems,
thereby reducing new development
l risk
• Current and historical operations
• Youngstown Thermal – various ownership positions since 1980
• Akron Thermal – lease part and own part of system since 1995
• Detroit Thermal – acquired steam system in 2003
• New projects: Carmeuse, V&M Star and Finlandia/Hancock, the deal
and investor returns
Confidential, Thermal Ventures, Inc. All rights reserved.
2
Overview of Thermal Ventures, Inc.
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Confidential, Thermal Ventures, Inc. All rights reserved.
3
Carl E. Avers, Chairman and CEO
• BS ME Michigan Technological Univ., Utility Finance - Stanford University
• Director of Advanced Energy Systems Division at Ellers, Fanning, Oakley,
Chester & Rike, an engineering firm in Memphis
• Formed district steam and co-generation systems for San Diego Gas and
Electric Company, resulting in over 100MW of co-generation units,
managed Nashville Thermal DHC
• From 1980 to 1989, Chairman/President/Founder of Catalyst Thermal
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Energy, acquired and grew 6 of the larger district energy systems in the
US, and grew revenues from under $3M to $125M within five years
• Co-founded Thermal Ventures, Inc.™ in 1989 with Lewis Mahoney, has
been in the district energy business for more than 30 years
• Board member and former President of the International District Energy
Assoc. (IDEA) and received the highest honor, the Norman Taylor Award
• Published numerous articles and presented many technical papers on
energy and environmental issues; PE Licenses in California, Tennessee,
and Florida
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4
James A. Mullen, Jr., P.E., Vice Chairman
• Vice Chairman of Thermal Ventures, Inc.
• Former president and general manager of TVI’s Youngstown and
Akron steam utility operations
• Former director of the steel industry’s PECOR, Lectromelt and
Central Engineering divisions that designed, manufactured and
installed BOF, AOD, EAF and LMF steel-making processes
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• Past president of Metacon Systems
Company that pioneered
automatic start and thin slab casting slidegate systems
• Former chief engineer of Alliance Machine Company that designed
and manufactured coke oven equipment
• BE EE Youngstown State University, registered professional
engineer, and member of the National Society of Professional
Engineers, the Institute of Electrical and Electronics Engineers, the
Association of Energy Engineers, and the International District Energy
Association
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5
Carl Avers History of Success
• Mr. Avers has 30 years of experience in developing district energy
and energy savings projects
• Currently co-owns Thermal Ventures II as passive investor
• Revenue: $65 million
• Earnings: $8 million
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• The average return realized by investors has been very high:
• From 1980 to 1986, investors netted $17 million with no equity
investment
• The 6 steam systems assembled from 1986 to 1990 by Catalyst
Thermal were sold at a profit of $50 million
• From 1990 to 1999, TVI grew zero equity into $17 million equity
for only two of its four systems
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History
1980
1986
Carl Aver’s coFounded
Catalyst
Thermal,
acquiring
Youngstwon
Steam
System
Grew Catalyst Thermal to 6
steam generating
plants
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with 122 miles of
distribution, 2000 steam
customers / 500 employees
• Boston
• Cleveland
• Youngstown
• Philadelphia
• St. Louis
• Baltimore
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1989
Sold
Catalyst
Thermal to
Trigen
Energy
except
for
Youngstown
system,
which went
to TVI.
Co-founded
Thermal
Ventures.
7
History
1989
1993
Carl Avers coFounded
Thermal
Ventures
and began
managing
Pittsburgh
and San
Francisco
steam
systems
1995
1999
Acquired San Francisco
Sold 50% of Sold remaining
and Pittsburgh Steam
company
50% of SF
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for total of $16.4 million
to
NRG
and Pitt to
Energy for
NRG Energy
$7.4M,
for $9.7M,
leased
kept Young.
Akron
and Akron
Thermal
In sum, NRG Energy
assumed the debt, and
the $17.1M was profit to
the equity investors,
providing infinite return
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8
History
2000
2002
Formed Thermal
Ventures II,
transferred in
Youngstown
Thermal from
TVI
2004
2005
Transferred
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Akron
Thermal
from TVI
to TV II
Acquired
Detroit
Thermal
Started V&M
Star and
built
Oberlin
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2007
2008
Started
Kingsville
Thermal
Started
Carmeuse
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Today
• Came out of retirement in 1989 to form Thermal Ventures, Inc., a
developer of energy-savings/district energy systems with major
energy users as the hub, employing the Denmark Energy Model
• Owns, operates and manages the Youngstown, Akron and Detroit
district heating systems through an affiliate company, Thermal
Ventures II, where TVI is a passive owner of 17% interest of TV II
• Business model: shared energy savings
and third party investors
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along with district heating system development
• Currently involved in developing energy savings systems and
managing over $1 billion/year of industrial energy usage:
• Industrial systems – three steel mills and several greenhouses
• University systems – currently working with seven
• Municipalities – beginning to work with Calumet and Oberlin
• Agricultural systems – waste wood boiler systems that serve
greenhouses
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10
Financial Structure
Thermal
Ventures
100% owner
17% owner
Carl Avers
100% owner
22.5% owner
Thermal
Ventures II
Thermal
Ventures
Youngstown
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Energy / V&M
Star Project
$65M Revenue
$8M EBITDA
+18 other
projects
Detroit
Thermal
Youngstown
Thermal
River
Rouge
Energy
Akron
Thermal
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11
Current and Historical Success
• Akron Thermal, LP – TVI has leased two Akron Thermal plants from
the City of Akron, OH since 1995 – $ 13 million revenue business
• Akron Thermal Cooling Works, LLC – The City’s district cooling
system began in 1997 – serves stadium, buildings, industrial park
• Virginia Commonwealth University/Richmond Steam Plant – In
l the 375,000-pound-per-hour
1998, awarded contract to manage
steam boiler plant – serves college, government, and others
• Current managers of Thermal Ventures have led the acquisition and
growth of district energy systems in several major U.S. Metropolitan
areas:
• San Francisco, CA, Boston, MA, Baltimore, MD, St. Louis, MO,
Philadelphia and Pittsburgh, PA, Cleveland, OH, Youngstown,
OH, Akron, OH, and Detroit, MI
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12
Notable Customers
Customers of TVI and Mr. Avers projects include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Agmet Metals – Oakwood Village, OH
Canton Drop Forge – Canton, OH
Cargil – Akron, OH
Denman - Leavittsburg, OH
District Energy St. Paul – St. Paul, MN
Forum Health – Youngstown, OH
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Gleason Works – Rochester, NY
Green Circle Growers – Oberlin, Ohio
Hoover Co. – North Canton, Ohio
H.J. Heinz World Headquarters – Pittsburgh, PA
University of Colorado – Boulder, CO
University of Rochester & Strong Memorial Hospital – Rochester, NY
V&M Star - Youngstown, Ohio
Virginia Commonwealth University Medical Center – Richmond, VA
Longwood University – Farmville, VA
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13
Strategic Relationships
• TVI and Mr. Avers have the following key relationships:
•
•
•
•
Joint marketing and development with Conestoga Rovers, a
3,000 person environmental engineering company
Thermal Engineering Group (Nashville), supports engineering for
all of TVI projects functioning as its Chief Engineer
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Co-developers on energy projects
for United States steel
companies where TVI offer no risk energy services to
customers, while creating 50% annual energy savings
• V&M Star Steel Company in Youngstown was the first in a
series of customers
Co-Marketing agreement with Worley Parsons, a 30,000 person
engineering company, to install EAF Energy Efficiency
Management Systems
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14
New Project Structure
University and School
Miscellaneous Industry
Project
Stage
Project
Stage
Oakland1
Funded
Carmeuse1, 3
MOU
Williams1
Funded
Kingsville Thermal1
Self-funded
Aquanous1
Funded
Kingsville Energy II1, 3
MOU
Oberlin1
Funded
Kingsville Energy III2, 3 MOU
Stanford1
Funded
l Stoney Field1
Discussions
Stanford1
Funded
Smart Paper1
Discussions
Finlandia1, 3
MOU
Calumet1, 3
Discussions
V&M Star2
Self-funded
Michigan Tech1, 3
Discussions
Severstal1, 4
Discussions
Footnotes:
Ameristeel1
1. TVI Developer
2. Youngstown Energy Developer
3. Blue Harbor Co-developer
4. $5.0M of the $80.0M is shovel ready and needed immediately
Self-funded
Steel Industry
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15
Overview of District Energy and Energy
Savings Systems
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Development Phases
• Phase One, Energy Audit
• Paid for by Thermal Ventures, returns 300% of investments
• Takes several months to complete, 3 year contracts
• Phase Two, Energy Savings/Utility Services
• Water Service Utility Agreements
• Electrical Service Utility Agreements
Long-Term
Agreements
• Heating Service Utility Agreements
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10-20 yrs
• Compressed Air Service Utility Agreements
• Phase Three, District heating
• Provide waste heat recovery to surrounding area with district
heating model, where appropriate
• Convert to more efficient form of combustion, lower cost energy
source (have been using wood as fuel, saving customers fuel
dollars while building profitable district energy systems using the
Denmark formula)
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17
Energy Savings
• Building envelope
• Windows, doors, insulation
• Electrical
• Hi-efficiency lighting, motor controls and motors, load balancing
• Air handling systems
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• Eliminate leaks, load balancing
• Water systems
• Eliminate leaks, pressure control
• Heat
• Boiler controls, temperature control, operational enhancements,
fuel management, fuel changing, rework HVAC logic/control
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18
District Energy & Energy Savings
• Typically save 30% to 50% on energy costs, in addition to supplying
steam, hot water, or chilled water to customers
• Services provided under long-term contracts or tariff schedules
• Numerous benefits, including: lower utility expenses, greater reliability,
reduced capital costs, and reduced maintenance costs
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Source: International District Energy Association
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District Energy Advantages
Efficiency
A few centralized large boilers are more efficient than hundreds
of small boilers.
Air Quality
Large central plants are better equipped to meet air quality
regulations than smaller plants, primary way to become green.
Fuel Purchasing
District energy‘s centralized purchasing negotiates lower fuel
prices based on larger volume discounts of as much as 80%.
Multiple Fuels
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More flexibility as most have two or more fuel options with
wood waste being a possibility as well.
Reliability
District plants typically have standby energy capacity available
in emergencies, fostering greater reliability.
Building Design
More rentable space offered by eliminating the space dedicated
to boiler rooms, chiller areas, etc.
Hassle-free
Operations
Buying energy from a community system eliminates labor,
maintenance, capital, regulatory and chemical-disposal costs.
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20
Examples of District Heating and Energy
Savings Projects
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Youngstown Thermal
• In 1980, Youngstown Thermal acquired the then fuel oil burning
North Avenue Steam Plant from Ohio Edison
• Thermal Ventures, Inc. reactivated coal use with a clean coal
burning technology using state-of-the-art pollution control
systems
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Youngstown Customers
• Customers include:
• Youngstown State University
• City and County Buildings
• YMCA and most of downtown’s CBD
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Chase Bank
First National
Bank
Industrial Museum
Youngstown State University
The combustion/control technology at Youngstown Thermal was recently
adopted as best available technology for the State of Pennsylvania.
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23
Youngstown Savings and Returns
• Since 1980, Youngstown Thermal has saved the Central Business
District (CBD) approximately $140,000,000 in energy savings
• It would cost $5,000,000 more each year if the CBD buildings used
natural gas for their fuel source for
l heating instead of clean coal
• Part of the acquisition group of steam companies that netted
investors $17 million with no equity investment
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Akron Thermal
• Thermal Ventures, Inc. has operated the Akron Thermal system
under a lease with the City of Akron, Ohio, since 1995
• TVI built and owns the district cooling system
• Two plants operated: one on natural gas, tire derived fuel, wood
waste, or wood chips; other on natural gas and coal
• The project cost $10 million of new investment to complete,
reducing operating expenses by $8.5 million per year initially
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Akron Steam Plant
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Akron Skyline
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Akron Customers
• 20 miles of distribution piping and serves more than 200
businesses and residences in and around downtown, including:
• Children’s Hospital
• Akron General Hospital
• Akron City Hospital (3 miles away from steam plant)
• The University of Akron
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John Knight Center
Main Street
Akron High School
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Akron State University
26
Akron Thermal Savings
• Since 1995, the Akron Thermal system has saved the Central
Business District approximately $221,000,000 in fuel savings
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• In Akron, it would cost $20,000,000
more each year if the CBD
buildings used natural gas for their fuel source for heating instead of
clean wood and/or coal
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27
Proposed Oberlin Energy Project
Hospital
Industrial Park
Land Fill Gas
Source
Oberlin College
Municipal Electric
Power Plant
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Wal-Mart
Green Circle Growers
Vo-Tech School
Replacing natural gas with wood waste fuels produces large annual savings for the
community. Wood is carbon neutral along with land fill gas.
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Concord, NH Steam
• Concord Steam is a small town
example of an independently
owned district heating and
energy savings system
• Cogeneration facility uses
biomass to produce steam to
heat downtown Concord, NH
and also to produce electricity
for sale to utilities
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• One of a few wood-fired districtheating plants in the world
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Concord Customers
• 8 miles of distribution piping supplying steam to approximately 110
customers, with 200 commercial and institutional buildings
including government agencies:
• City of Concord
• State of New Hampshire
• Federal Government
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• State and federal office buildings
• The Concord Hospital
• The New Hampshire Hospital
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30
Concord Benefits
• Benefits are many and include:
• Lower capital costs, lower energy costs, operating and
maintenance costs, stable energy rates, local jobs and increased
tax base
• State of the art pollution control and monitoring systems
• Burning wood rather than oil prevented
the emissions of more
l
than 6,000 tons of sulfur oxides to the atmosphere
• 800,000 tons of woodchips burned, replacing 36 million gallons of
imported oil, and sending $12 million back to the local forest
industry rather than overseas
• Concord employs 15 people, and each year pays $125,000 in city
taxes and $187,000 in city water and sewer fees
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31
Denmark: Most Energy Efficient Country
• Employed energy efficiency
initiatives and cut energy usage
by 50% among University and
Industrial campuses
• Natural part of infrastructure in l
almost every city
• Built Pipeline Utilities that
transport waste heat from
industrials to buildings that need
heat
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Denmark Efficiency
• Built Cogeneration systems that are 80% efficient in producing
electricity versus 30%
• Cogeneration is possible only with district steam / hot water
utility systems
• Denmark recognized that:
• Simple payback periods for power plants are 25 years
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• Whereas simple payback periods
for energy efficient
technologies are 1 to 3 years
• Furthermore, energy efficient technologies eliminate the need for
more power plants
• CFL light bulbs use 75% less energy – other like new
technologies were installed to reduce energy consumption at
colleges and factories by 50%
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33
District Heating with Many Fuels
• Copenhagen and other communities installed district steam utilities so
alternative fuels such as wood waste can be used as fuel
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Map of the heat transmission network supplying Greater Copenhagen (www.dbdh.dk)
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34
New Projects: Carmeuse Lime Kiln
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Carmeuse/ River Rouge Energy
• Carmeuse Lime and Kiln, a $1.5B+ international lime and kiln
operation, is the host and base tenant
• Belgium HQ’s with 35 plants in North America, of which Thermal
Ventures is managing energy for the first plant with the goal of
becoming 100% green
• Provides land, water, waste heat, and fuel for the project
• Will buy electricity
• The first project – River Rougel Energy
• Install energy savings, waste heat power and steam generation
systems
• Neighbors
• US Steel, Severstal Steel, Ford Motor company, Shell Oil,
Chevron Oil, Marathon Oil, City of River Rouge, City of Detroit
WWTF
• Additional waste heat available from them
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36
River Rouge Energy Investment
• $250,000 development financing for engineering
• Investors receive 40% interest per annum
• One year term
• Option to takeout at project finance of $26 million (6 to 9 months)
or ride in the project finance investment
• Non-recourse loan
• Subject to satisfactory completion of due diligence
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Source of Funds
Convertible loan
Total
Uses of Funds
250,000 Thermal Engineering Group
PSI
Conestoga Rovers
TVI and Blue Harbor Energy
Fundraising expenses
Contingency
$250,000 Total
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40,000
40,000
90,000
40,000
11,250
18,750
$250,000
37
River Rouge Energy Project
• $26,000,000 in first phase (install gasifier)
• Potential steam customers have already been contacted and
have expressed interest in purchasing all of the steam
• $22,000,000 in second phase (expansion project to additional
customers)
• Reclaim heat from steel mills, continue and expand district
heating system
l 3x the energy as Carmeuse
• Immediate neighborhood needs
• BOO Utility District steam model, long-term contracts
• $11.2 million in steam and $0.8 million in electricity revenue
• Structured on a “project finance” basis
• Investors realize the benefit of:
• Investment tax/green credits
• MACRs depreciation over five years
• Cash distributions from income stream from energy sales
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38
River Rouge Energy Project Details
Item
Description
Initial Phase Cost
$26 million
Total Project Cost
$48 million
Payback Period
3.5 years
Completion Time
11 months after development phase
Steam Produced from Waste Heat
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70 MLB sold @ $20/mmbtuh
Electricity Produced from Waste
Heat
1.4 MW @ 7.5c/kwh
Steam Revenue
$11,172,000 annually
Electricity Revenue
$837,900 annually
Fuel Cost
Less than $.001/kw
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39
Summary of Tax Incentives
Description of Award
Federal Waste Energy
Recovery Incentive Grant
Next Energy Business
Activity Tax Credit
Brownfield MBT Credit
Real Property Tax
Abatement
Personal Property Tax
Abatement
MBT Investment Tax Credit
Renaissance Zone
Estimated Award
$1,530,000 - $2,700,000
Term
3-yrs
Category
Grant
$1,850,000 - $2,000,000
1-yr
Nonrefundable MBT Tax Credit
$2,300,000 - $2,500,000
$15,200
10-yrs
12-yrs
MBT Tax Credit
Tax Abatement
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$1,700,000 - $3,500,000
10-yrs
Tax Abatement
$530,000 - $580,000
$11,700,000
1-yr
Up to 15yrs
Nonrefundable MBT Tax Credit
Tax Abatement
The estimated total potential award, excluding renewable
energy credits, for this project is $2,250,000 - $4,100,000.
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40
River Rouge Energy Carbon Credits
• Electricity offset
• 1.4MW of electricity offsets about 7,800 tons of carbon per year
• Steam offset
• Equivalent of 7 MW of electricity
• 70,000 lbs/hour of steam offsets about 30,000 tons of carbon per
year assuming the offset is against
natural gas
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41
River Rouge Financials
• Steam Revenue
• Calculated by multiplying 70MLB by the hours of operation by
the steam value ($20/mmbtuh)
• Electricity Revenue
• Calculated by multiplying 1.4MW
by the hours of operation by
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the cost to purchase (7.5 cents per kwh)
• Debt Service
• Calculated by taking a $26M capital investment and annualizing
the payments over 3 years with a 8% interest rate
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42
River Rouge Financials (Years 1-4)
Years
Annual Revenue
Steam Sales
Electricity Sales
Performance Contract Costs
Debt Service
M&V
Other (identify)
Other (identify)
Total Contract Cost
1
2
3
4
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
2,623,925
2,623,925
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Proposed Cash Flow
$ 9,385,975
$ 9,385,975
$ 9,385,975
$ 9,385,975
Other O&M Expenses
Maintenance
Operating Labor
Other
Subtotal: Cash Expenses
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
Net Annual Cash Flow
$
8,391,975
$
8,391,975
$
8,391,975
$
8,391,975
Memo: Cum Net to Plant
$
8,391,975
$
16,783,950
$
25,175,925
$
33,567,900
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43
River Rouge Financials (Years 5-8)
Years
Annual Revenue
Steam Sales
Electricity Sales
Performance Contract Costs
Debt Service
M&V
Other (identify)
Other (identify)
Total Contract Cost
5
6
7
8
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
2,623,925
2,623,925
l
Proposed Cash Flow
$ 9,385,975
$ 9,385,975
$ 9,385,975
$ 9,385,975
Other O&M Expenses
Maintenance
Operating Labor
Other
Subtotal: Cash Expenses
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
Net Annual Cash Flow
$
8,391,975
$
8,391,975
$
8,391,975
$
8,391,975
Memo: Cum Net to Plant
$
41,959,875
$
50,351,850
$
58,743,825
$
67,135,800
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44
River Rouge Financials (Years 9-15)
Years
Annual Revenue
Steam Sales
Electricity Sales
Performance Contract Costs
Debt Service
M&V
Other (identify)
Other (identify)
Total Contract Cost
9
Total for
Year 15
10
$
$
11,172,000
837,900
$
$
11,172,000
837,900
$
$
167,580,000
12,568,500
$
$
$
$
$
2,623,925
- l
2,623,925
$
$
$
$
$
2,623,925
2,623,925
$
$
$
$
$
26,239,250
26,239,250
Proposed Cash Flow
$ 9,385,975
$ 9,385,975
$
153,909,250
Other O&M Expenses
Maintenance
Operating Labor
Other
Subtotal: Cash Expenses
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
242,000
230,000
522,000
994,000
$
$
$
$
3,630,000
3,450,000
7,830,000
14,910,000
Net Annual Cash Flow
$
8,391,975
$
8,391,975
Memo: Cum Net to Plant
$
75,527,775
$
83,919,750
Confidential, Thermal Ventures, Inc. All rights reserved.
138,999,250.50
45
Financial Assumptions
Technical Assumptions
Steam Value ($/mmbtuh)
Electric Cost to sell($/kwh)
Electric Cost to purchase ($/kwh)
Labor Rates (US$/hour)
Concept 2 Scope
Heat Recovery from lime kiln
Generate Elect MW
l
Generate Steam MLB
Generate Steam Lbs/Hr
Hours per year of operation
Amounts
$
20.00
$
0.040
$
0.075
$
-
1.40
70.00
62,500
7,980
Other O&M Expenses
Maintenance
Operating Labor
Other
$ 242,000.00
230,000.00
522,000.00
Subtotal: Cash Expenses
$ 994,000.00
Confidential, Thermal Ventures, Inc. All rights reserved.
46
Financial Assumptions
Capital Investment
Amounts
(pct.)
Feasibility & Design Services
Intrest During Construction
Detail Engineering
Legal Fees
Total Eng./Const. Services
$30,000
$250,000
$1,100,000
$500,000
l
Total Installation Costs
Direct Costs Direct Costs Direct Costs Direct Costs Subtotal Materials
Taxes
7.00%
Total Capital Investment
$1,880,000
0.12%
0.99%
4.37%
1.99%
0.00%
0.00%
7.47%
$21,750,000
$0
$0
$0
$0
$21,750,000
$1,522,500
86.47%
0.00%
0.00%
0.00%
0.00%
86.47%
6.05%
$ 25,152,500
Confidential, Thermal Ventures, Inc. All rights reserved.
100.00%
47
Financial Assumptions
Financial Requirements
Total Capital Investment
Debt
Equity
Term (years)
Financing Rate
70%
30%
Debt Service
$
$
$
25,152,500
17,606,750
7,545,750
10
8.00%
$2,623,925
l
Contract Termination Discount Rate
Performance Contract Costs
Debt Service
M&V
Other (identify)
Other (identify)
Total Contract Cost
Confidential, Thermal Ventures, Inc. All rights reserved.
6%
$ 2,623,924.95
$
$2,623,924.95
48
Financial Assumptions
Annual Revenue
Utility Generation
Electricity
Steam
Total Annual Revenue
$837,900
$11,172,000
l
Confidential, Thermal Ventures, Inc. All rights reserved.
$12,009,900
49
River Rouge Investment Considerations
• Experienced management team with track record of developing
successful energy savings and district heating projects
• Mr. Avers has 30 years of experience in managing or developing
over 10 district heating systems
• Realized investor returns have consistently been very high
l
• Strong relationships with numerous engineering companies and
industrial companies that seek Mr. Avers’ and TVI’s expertise
Confidential, Thermal Ventures, Inc. All rights reserved.
50
River Rouge Investment Considerations
• Attractive investment return and rapid payback
• 40% interest per annum on development financing
• Payback period for the project is estimated to be 3.5 years or less
• Estimated tax credits, excluding
l renewable energy credits, for this
project are $2,250,000 - $4,100,000
• Assumes only the most likely awards, although these awards
are not guaranteed: real property tax abatement, personal
property tax abatement, and MBT investment tax credit
• Estimated electricity offset of 7,800 tons of carbon per year
• Estimated steam offset of 30,000 tons of carbon per year (natural
gas)
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51
River Rouge Investment Considerations
• Well-established base tenant for the energy savings model and
surrounding companies
• Carmeuse Group has operations in 13 countries, with 70 lime
production plants, 3,700 employees, and production of more
than 23 million tons of lime and limestone products annually
• Detroit Water and Sewerage lDepartment has expressed strong
interest in receiving 200,000 lbs/hr of steam
• Further industrials in the immediate area include U.S. Steel, U.S.
Gypsum, Shell Oil, Chevron Oil, Ford Motor Company, Severstal
Steel, and Marathon Oil
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52
New Project: V&M Star
Installation of a New High-Efficiency Energy System
and Distributedl Energy System
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53
Project Highlights
• Significantly reduces energy costs at V&M Star, neighboring
hospitals, and the University, thereby making the manufacturing and
business base in Ohio more competitive
• “Green” Project for energy efficiency and the environment
• Sizable reduction in the emissions of CO2, CO, NOX, particulate,
and SO2
l wasted energy and biomass
• Utilization of 35MW of currently
• Uses Ohio fuel sources such as coal, tire derived fuel, and biomass
as a substitute for natural gas
• Projected to create 210 permanent and 1100 temporary jobs in Ohio
• Projected to create $5.0 million in Ohio state and $1.6 million in
Youngstown local taxes
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54
V&M Star / Youngstown Energy, LLC
• V&M Star, a $500 million steel company, is the host and base
tenant
• Owned by the French company Vallourec Group, which has $8.9
billion in revenue
• Provides land and waste heat for the project
• Will buy electricity, manufactured gas, and water
l
• Some energy efficiency projects have already been completed
• Furnace project complete and in trial runs; compressed air
reduction project engineering is complete and implementation
will soon be under way
• Steam and cooling potential customers
• Forum Health Hospital, St. Elizabeth Hospital, Youngstown State
University, Youngstown Thermal
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55
V&M Star Project
• Three main sub-projects with multiple revenue streams:
• Recover 35MW of waste heat
• Heat and cool neighboring customers (90 million BTU/hr) in a
distributed energy system
• Produce electricity for sale to V&M Star (335 million BTU/hr)
l
• Install 350 million BTU/hr Circulating Fluidized Bed Gasifier
fueled by coal, wood, and Tire Derived Fuel (TDF)
• Produce 995 Btu/CF of manufactured gas to sell to V&M Star
• Pump, process and filter water from the Mahoning River
• Pipe and sell to V&M Star cooling towers
Confidential, Thermal Ventures, Inc. All rights reserved.
56
Job and Tax Creation
• Significant job creation:
• On-site Operational and Maintenance (O&M) personnel will be
approximately 35 permanent people
• Off-site fuel production and supply personnel will be
approximately 175 permanent people
l
• On-site construction personnel will be approximately 1100
people, short-term, over a 24 month period
• Tax revenue projection
• Approximately $5.0 million in state taxes and $1.6 million in local
taxes projected over the first 6 years of the project
Confidential, Thermal Ventures, Inc. All rights reserved.
57
New Steam Distribution System
l
Confidential, Thermal Ventures, Inc. All rights reserved.
58
Project Site at V&M Star
l
Confidential, Thermal Ventures, Inc. All rights reserved.
59
V&M Star Project
• $6,200,000 in first phase
• Install several projects, including river water supply, smart gas,
and slag analysis system
• $77,000,000 in second phase
• Install gasification, cogeneration, and district energy systems
l
• BOO Utility District steam model,
long-term contracts
• $6.4 million in steam and cooling sales, $10.5 million in
electricity sales, $14.9 million in manufactured gas sales, and
$1.1 million in water sales
• Structured on a “project finance” basis
• Investors realize the benefit of:
• Investment tax/green credits
• MACRs depreciation over five years
• Cash distributions from income stream from energy sales
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60
V&M Star Project Details
Item
Description
Initial Phase Cost
$6.2 million
Total Project Cost
$77 million
Payback Period
3.5 years
Completion Time
12-18 months after development
l phase
Steam and Cooling Revenue
$6,400,000 per year
Electricity Revenue
$10,500,000 per year
Manufactured Gas Revenue
$14,900,000 per year
Water Revenue
$1,100,000 per year
Fuel Cost
Less than $0.001/kw
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61
V&M Star Carbon Credits
l
372,000 tons per year of CO2 offset
Confidential, Thermal Ventures, Inc. All rights reserved.
62
Emission Reductions
l
Near 100% reduction in NOX, particulate, CO, and SO2 emissions
Confidential, Thermal Ventures, Inc. All rights reserved.
63
V&M Star Financials
Year 1 Profit & Loss Statement
Revenue
Steam Sales
Cooling Sales
Manufactured Gas Sales
Electricity Sales
Water Sewer Sales
Total
$ 3,920,614
$ 2,512,973
$ 14,881,000
$ 10,515,000
$ 1,056,000
$ 32,885,587
Expenses
l
Labor
Coal
Tire Derived Fuel
Maintenance
General & Administrative
Water & Sewer
Electricity
Cooling Expenses
Total
$
$
$
$
$
$
$
$
$
EBITDA
$ 24,992,587
Confidential, Thermal Ventures, Inc. All rights reserved.
900,000
3,277,000
446,000
1,400,000
300,000
20,000
50,000
1,500,000
7,893,000
64
V&M Star Financials
Capital Expenditures
Water Plant 800 GPM
Gasifier 350 million btu/hour
Power Plant (Cogeneration System)
Steam Lines
l
Steam Line to Youngstown Thermal
Contingency
Total
Confidential, Thermal Ventures, Inc. All rights reserved.
$ 1,000,000
$ 15,000,000
$ 45,000,000
$ 8,000,000
$ 1,400,000
$ 3,600,000
$ 74,000,000
65
V&M Star Financial Assumptions
Assumptions
Steam Price
Cooling Price
Manufactured Gas Price
Electricity Price
l
Steam Price to Youngstown Thermal
Coal Price
Tire Derived Fuel
$
$
$
$
$
$
$
Confidential, Thermal Ventures, Inc. All rights reserved.
11.0
0.168
6.70
0.0426
2.76
46.0
22.0
per million btu
per ton hour
per million btu
per kwh
per million btu
per ton
per ton
66
Contact Information
l
Thermal Ventures, Inc.
142 Poland Boardman
Road Suite #2
Boardman, Ohio 44513
Mr. Carl Avers, Chairman
(330) 398-2452
[email protected]
www.thermalventures.com
Confidential, Thermal Ventures, Inc. All rights reserved.
67
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