FINANCING OPPORTUNITY OVERVIEW

Transcription

1 FINANCING OPPORTUNITY OVERVIEW

2 Executive Summary Divers Energy is lking fr Prject Financing fr the develpment f Canadian and US based Ge-Exchange (GX) Pwer Purchase Agreement (PPA) prjects. What we are lking fr: Access t $30M-$40M f Cmmitted Capital ver the next 3 years t fund the cnstructin f GX systems. What we are ffering: 6-7% interest n each lan amrtized ver years. High Security f Cash Flws due t: Divers Energy s leadership team experience. Cntractual ability t turn ff heating and cling in the event f default. 2

3 What is Ge-Exchange The Earth as a Renewable Energy Surce The Ge-Exchange System Grund is the median annual air temperature 3 Main Cmpnents: and remains cnstant between 43 F 57 F. Grund Lp, a series f high density plyethylene pipes buried under the grund. Circulating pumps that mve the fluid within the grund lp. A heat exchanger that cnnects the grund lp t the building s mechanical system. During the winter Extracts heat frm the grund and distributes thrughut the building. During the summer Cllects heat frm the building and sends it t the grund lp t be dissipated. 3

4 The Market Opprtunity 1. Building Cde Requirements: Increased fcus n envirnmental sustainability and energy efficiency frm bth the Federal and Prvincial/State gvernments (i.e. Targets set at the COP 21 climate change summit in Paris). 2. The Cmpetitive Landscape: The trend tward investing in sustainability (LED lighting, imprved windw glazing, etc.) has been led by the large real estate hlding cmpanies. 3. Shifting Buying Patterns: Millennials, which represent ver 25% f the ppulatin, place significant value n building sustainability and accessible green space (ften nly available n the rftp). 4. Ge-Exchange is a Prven and Rbust Technlgy: Benefits include: reduced energy cnsumptin, reduced GHG emissins, reduced water cnsumptin and chemicals, eliminating nise pllutin, etc. 4

5 The Challenge There are tw key hurdles that have histrically hindered the success f large scale Ge-Exchange prjects Capital Cst & Technlgy Risks The Divers Energy Slutin addresses bth f these 5

6 The Divers Energy Slutin Divers Energy prvides a unique utility-like Ge-Exchange mdel Design, installatin, lng term maintenance f the Ge-Exchange slutin fr n upfrnt cst The PPA cnverts a capital cst int a lng term perating expense: Cst can be passed alng t tenants r cnd wners as a cmmn area peratinal expense A Divers Energy gal is t ensure the PPA cst will nt exceed the peratinal savings realized frm the Ge-Exchange system (energy, water, maintenance, etc.) Perfrmance guarantee remves the peratinal risk frm wner 6

7 Pwer Purchase Agreement (PPA) Each PPA cntract will cntain the fllwing cmmn elements: A year term Guaranteed mnthly fees with a 2% annual escalatr A perfrmance guarantee based n prper building peratin PPA t be registered n title Ability t turn ff heating and cling in the event f default 7

8 The Divers Energy Advantage Benefits t the Develper/Owner include: Cnstructin Budget Reductin (cling twers, bilers etc.) Reduce space requirements f HVAC (Architectural Optins) Marketing appeal f a Green Building Financial Benefits f a Ge-Exchange slutin withut the cst (i.e. accelerated depreciatin and rebates like the T.G.S.) LEED pints This slutin allws Develpers t respnd t external Sustainability pressures that wuld therwise be impssible 8

9 The Divers Energy Advantage Benefits t the Lng Term Owner include: Hedging against future gas price increases (fixed thermal energy cst fr life f PPA) & cst certainty. Expected financial savings ver the lifetime f the cntract. Imprved real-estate market value & marketability. A quiet utdr green space r terrace due t the eliminatin f a cling twer r cndensing unit. 9

10 The Divers Energy Executive Team TIM WEBER : 11 years Ge-Exchange sales, installatin and service experience fr multifamily residential and cmmercial prjects. JON MESQUITA, MBA : 9 years f Business Management, Business Develpment and Operatins Experience fr bth small and large technlgy firms. SERGIO ALMEIDA, P.Eng.: 5 years f Ge-Exchange Engineering experience in design, implementatin and crrecting distressed existing GHX installatins. Successful prtfli f ver 80 Ge-Exchange prjects. Currently wns and manages the largest Ge-Exchange Engineering cmpany in Canada. ERIC GERMAIN: 8 years f Ge-Exchange Drilling experience. Currently wns and manages a Ge-Exchange Drilling cmpany in Canada. 10

11 The Divers Energy Business Strategy The Divers Energy Business Philsphy is Structured arund 4 Key Ideals: Be Cnsistent: Leverage the technical and financial expertise f the Divers Energy Leadership team t utilize the mdel and prcesses that are easily replicated t ensure the success f each prject. Be Lean: Leveraging partnerships with vetted and trusted industry experts t execute the cnstructin f each prject allwing Divers Energy t scale quickly t address market pprtunities. Be Fcused: Stick t what we are gd at and can guarantee success. Be Prudent: Manage grwth carefully, maintain strng cash reserves, nly select partners wh share ur visin fr excellence etc. 11

12 Our Target Market Primary Secndary CONDO & RENTAL MULTI FAMILY OFFICE BUILDINGS SCHOOLS & UNIVERSITIES GOVERNMENT BUILDINGS Legend: Current Target Market Plans t Expand t these Markets (BD wrk underway fr many) Ptential Future Market Opprtunity Factrs Impacting ur Reginal Fcus: Existing Partner Relatinships (i.e. Ge-Exchange Drillers) Market Dynamics (Is Sustainability Imprtant?) Energy Csts Climate Factrs Cmpetitin 12

13 G t Market Strategy Current Strategy: Fcus n New Cnstructin Future Strategy: Expand t include the Retrfit Market PROS CONS PROS CONS Market Size is large (majrity f buildings in target market are a fit) Pre-surface drilling technlgy allws Divers t minimize impact n develpers cnstructin timeline Cnstructin timeline is mnths (Cnstructin t cmmissining) Cnstructin Risk hwever mitigated by a stringent lending culture in Canada mnths Cnstructin timeline is shrter (3-6 mnths) In building drilling technlgy has recently been develped Buildings with the right characteristics t be a fit are mre scarce Owners traditinally haven t been interested in investing in the infrastructure f these buildings - this is nw changing 13

14 The Perfect Fit Divers Energy is uniquely psitined t establish itself as the Leader in Ge- Exchange Slutins in Nrth America The right Leadership Team & Partners The right mdel The right market timing 14

15 Win-Win-Win Business Mdel DEVELOPER / OWNER TENANT / CONDO OWNER DIVERSO ENERGY / PARTNER Payments are ff balance sheet and are accunted fr as a pass-thrugh perating expense Saves significant upfrnt develpment capital Increased building marketability Payments are predictable and stable thereby reducing expsure t vlatile energy csts Lwer mnthly energy and maintenance csts Increased marketability and value Predictable, lucrative and lw risk lng-term returns Rbust and lw maintenance technlgy Scalable business mdel (can scale t bth vlume and gegraphy) Example Example Example System Cmparisn: Traditinal System Cst $1,750,000 Ge-Exchange System Cst $2,500,000 (minus) Divers funded lp $1,200,000 Net Ge-Exchange Cst $1,300,000 Upfrnt Cst Savings $450, year Average Annual Savings: (per unit) Traditinal HVAC Cnd Fee $1,200 Divers Energy Slutin Fee $750 Net Annual Savings $450 Investment: Upfrnt Cnstructin Cst $1,200,000 Annual Revenue* (starting within 18 mnths frm first disbursement) Term * + 2% Annual Inflatin Adjustment $144, Years 15

16 In Summary The market pprtunity fr Ge-Exchange is significant, hwever, the capital cst and peratinal risk has histrically been a barrier t entry. Divers Energy s slutin remves bth the financial and peratinal risk f Ge- Exchange and allws the develper t retain all f the benefits including reducing their cnstructin cst. This slutin is uniquely designed t prvide a win-win-win slutin rewarding the Develper, the Tenant/Cnd Owner and Divers Energy/Investment Partner. The Divers Energy slutin is lucrative, easily scalable and secure. Yield Scalability Secure Cash-Flws 16

17 Ideal Partnership Structure Divers Energy is pen and flexible t varius partnership structures, hwever, ur preference is a debtbased prject finance structure. Divers Energy Respnsibilities: Divers will design, install, wn and maintain the Ge-Exchange system fr the life f the cntract Divers will perfrm all administrative duties as it relates t the PPA (i.e. Invicing, remitting payments t investment partner, etc.) Divers Energy will interface with the Building Owner n all technical and financial queries. Divers Energy Requirements: Access t $30M - $40M f Cmmitted Capital ver the next 3 years based upn a predetermined qualificatin criteria (The average GX System is apprximately $1M) Prf f cmmitted capital t be prvided upn request (ften a requirement by Develpers) 17

18 Ideal Partnership Structure Investr Return Prfile: 6-7% interest n each lan amrtized ver years. Investment Security: Cnstructin Risk is mitigated by the Divers Energy s leadership team experience and prven prcesses & cntractual requirements frm the Develper. Payment Risk is mitigated by the cntractual ability fr Divers Energy t shut ff access t heating and cling (seen as an essential service in the event the building ges int receivership). 30 year PPA cntract will be assigned t the Finance Partner in the event f a Divers Energy default. Lan t value rati f 52% - 65% (7% discunt rate) 18

19 Prject Prfile Detail Each Prject is Brken dwn int 3 Sectins: 1. Qualificatin and Due Diligence: Prir t mbilizatin n any prject, Divers Energy requires prf f the fllwing minimum requirements: Histry f successfully building similar prjects. Senir Lending is in place including a cpy f the term sheet frm the Lender. Recgnitin frm the Lender that the PPA will be registered n title Estimated Budget r Pr-frma fr the building (different if cnd vs rental) Details (ptentially including CV n PM, Architect, MEP and develper) Site Plan Apprval dcumentatin Building Permit Divers Energy will als perfrm a feasibility study n each prject including: Heating and Cling lad analysis (peak and annual lads) balancing these lads is critical Full financial analysis (see sample pr-frma n next page) t ensure that the Divers Energy fee is cmpletely ffset by peratinal savings and the return is in line with Divers Energy and investr requirements Ge-Exchange design cnfirming it can accmmdate the structural design f the building Gelgical feasibility (cnfirming gelgical characteristics f the drill site) 19

20 Example Prject Financials 20

21 Prject Prfile Detail 2. Prject Cnstructin: Prject Cnstructin fr new cnstructin will be cmpleted ver 3 phases: PHASE 1 PHASE 2 PHASE 3 Timing: Pre-Building Cnstructin Duratin: 2-3 Mnths % f Drawdwn Required: 85% Scpe f Wrk: Full Ge-Exchange Engineering Design Site Assessment and cnductivity tests (as needed) Cmplete Brehle drilling including installatin f vertical pipes and gruting Timing: Final Stages f Fundatin cnstructin Duratin: 1-2 Weeks % f Drawdwn Required: 5% Scpe f Wrk:. Hrizntal cnnectins including running all supply and return lines int the buildings mechanical rm tie ins f all vertical pipes including cnstructin f Ge-Exchange manifld Timing: Mechanical System Cmpletin Duratin: 1 Week % f Drawdwn Required: 10% Scpe f Wrk: Build the Header and cnnect t the hrizntal cnnectins Install circulating pumps and wireless cntrl system Cmmissining f the Ge-Exchange lp including flushing, etc.. * The typical prject will span mnths (frm the date f the first drawdwn t the cmpletin f Phase 3) **Divers Energy will Design and Prject Manage each Ge-Exchange installatin ensuring it is cmpleted t the required standard 21

22 Prject Prfile Detail 3. PPA Cmmencement: Each PPA cntract will cntain a predetermined cmmencement date that cntractually requires the Develper t begin payments independent f the prgress made n the building r Ge-Exchange System Payments will be made mnthly t Divers Energy fr mnths Payments t Divers Energy are subject t a 2% annual inflatin adjustment ** As the exclusive heating and cling ptin, cupled with the cntractual ability t turn ff r thrttle access t the system, the security f these cash flws are extremely high. 22

23 THANK YOU

24 Benefits f Ge-Exchange Cling Imprve Building Esthetics & Allw Architectural Freedm 24

25 Benefits f Ge-Exchange Cling Eliminate Csts Frm Traditinal HVAC Structural Accmmdatins 25

26 Divers Energy What Des Divers Energy Prvide? Preliminary n-cst analysis and pre- qualificatin Financial mdeling Full Engineering f Ge-Exchange system Design supprt fr MEP during integratin f Divers grund lp Lng term thermal energy purchase agreement Build, Own, and Operate the grund lp infrastructure Prject Capital 26

27 Engineering and Design Supprt Bre Field Design: Based n building s heating and cling lads Hurly lad calculatins are critical Understanding building diversificatin Thermal cnductivity f the grund Minimizing lp size t maximize ROI Hybrid pssibilities 27

28 Divers Energy: Cnstructin Phase Divers Energy will design & install the entire grund lp heat exchanger. This includes: Site assessment, permits, surveying Drilling Hrizntal tie-in Indr manifld and cntrls Crdinate all wrk and requirements with the general cntractr 28

29 Divers Energy: Cnstructin Phase Divers Energy Will pre-drill the entire lp under the building s ftprint befre site wrk begins N impact n cnstructin timeline Can ften begin befre final building permit 29

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32 Divers: Cnstructin Phase 32