l 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. l 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l • 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l • 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 Confidential, Thermal Ventures, Inc. All rights. 6 History 1980 1986 Carl Aver’s coFounded Catalyst Thermal, acquiring Youngstwon Steam System Grew Catalyst Thermal to 6 steam generating plants l with 122 miles of distribution, 2000 steam customers / 500 employees • Boston • Cleveland • Youngstown • Philadelphia • St. Louis • Baltimore Confidential, Thermal Ventures, Inc. All rights reserved. 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 8 History 2000 2002 Formed Thermal Ventures II, transferred in Youngstown Thermal from TVI 2004 2005 Transferred l Akron Thermal from TVI to TV II Acquired Detroit Thermal Started V&M Star and built Oberlin Confidential, Thermal Ventures, Inc. All rights reserved. 2007 2008 Started Kingsville Thermal Started Carmeuse 9 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 10 Financial Structure Thermal Ventures 100% owner 17% owner Carl Avers 100% owner 22.5% owner Thermal Ventures II Thermal Ventures Youngstown l Energy / V&M Star Project $65M Revenue $8M EBITDA +18 other projects Detroit Thermal Youngstown Thermal River Rouge Energy Akron Thermal Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 15 Overview of District Energy and Energy Savings Systems l Confidential, Thermal Ventures, Inc. All rights reserved. 16 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 l 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) Confidential, Thermal Ventures, Inc. All rights reserved. 17 Energy Savings • Building envelope • Windows, doors, insulation • Electrical • Hi-efficiency lighting, motor controls and motors, load balancing • Air handling systems l • 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l Source: International District Energy Association Confidential, Thermal Ventures, Inc. All rights reserved. 19 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 l 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. Confidential, Thermal Ventures, Inc. All rights reserved. 20 Examples of District Heating and Energy Savings Projects l Confidential, Thermal Ventures, Inc. All rights reserved. 21 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 l Confidential, Thermal Ventures, Inc. All rights reserved. 22 Youngstown Customers • Customers include: • Youngstown State University • City and County Buildings • YMCA and most of downtown’s CBD l 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. Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 24 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 l Akron Steam Plant Confidential, Thermal Ventures, Inc. All rights reserved. Akron Skyline 25 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 l John Knight Center Main Street Akron High School Confidential, Thermal Ventures, Inc. All rights reserved. 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 l • 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 Confidential, Thermal Ventures, Inc. All rights reserved. 27 Proposed Oberlin Energy Project Hospital Industrial Park Land Fill Gas Source Oberlin College Municipal Electric Power Plant l 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. Confidential, Thermal Ventures, Inc. All rights reserved. 28 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 l • One of a few wood-fired districtheating plants in the world Confidential, Thermal Ventures, Inc. All rights reserved. 29 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 l • State and federal office buildings • The Concord Hospital • The New Hampshire Hospital Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 32 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 l • 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% Confidential, Thermal Ventures, Inc. All rights reserved. 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 l Map of the heat transmission network supplying Greater Copenhagen (www.dbdh.dk) Confidential, Thermal Ventures, Inc. All rights reserved. 34 New Projects: Carmeuse Lime Kiln l Confidential, Thermal Ventures, Inc. All rights reserved. 35 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 l $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. Confidential, Thermal Ventures, Inc. All rights reserved. 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 l Confidential, Thermal Ventures, Inc. All rights reserved. 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 l 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 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 $ 8,391,975 $ 16,783,950 $ 25,175,925 $ 33,567,900 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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) Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 52 New Project: V&M Star Installation of a New High-Efficiency Energy System and Distributedl Energy System Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Confidential, Thermal Ventures, Inc. All rights reserved. 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 Carl.Avers@Yahoo.com www.thermalventures.com Confidential, Thermal Ventures, Inc. All rights reserved. 67