ENCO GREEN ENERGY GROUPPRESENTATION BY

CHRISTOPHER KUNTZCO-WRITTEN BY

MICHAEL KIM

ENERGY SUMMIT 2018

Renewable Energy and Clean Technology Panel

ENCOGreen Energy Group

CANADA’S CLEANTECH INDUSTRY

• Canadian cleantech industry operates across 10 sectors, it encompasses all companies that use renewable solutions

• Cleantech will be a $2.2-trillion industry worldwide by 2022, with an estimated $3.6 trillion of investment up for grabs globally between now and 2030

• Prior to 2014, Canada’s cleantech industry was growing 4x the rate of the country’s overall economy1

• 43% of Canada’s cleantech revenues are domestic

• Of the remaining 57%, 34% is from the US and 23% from the rest of the world

1. http://www.canadianbusiness.com/innovation/canadas-cleantech-industry-is-bigger-than-you-think/

“We know that the number one barrier that the industry has identified is financing… Canadian financial institutions [are] not rising to the challenge [in] support of cleantech companies, and

charging too much for debt financing”

– Celine Bak, CEO of Analytica Advisors

GLOBAL CLEANTECH INDUSTRY

GLOBAL CLEAN-TECH INNOVATION INDEX RANKING

• Canada ranks 4th worldwide and 1st within all G20 countries

• Index is based on 4 pillars:

• General Innovation Drivers

• Canada ranks 3rd

• Cleantech Specific Innovation Drivers

• Canada ranks 4th

• Evidence of Emerging Cleantech Innovation

• Canada ranks 4th

• Evidence of Commercialized Cleantech Innovation

• Canada ranks 6th

• “Canada has tripled the number and value of cleantechfunds and domestic investors targeting the sector”

2017 Rank Country Score

1 Denmark 4.07

2 Finland 3.96

3 Sweden 3.86

4 Canada 3.76

5 USA 3.59

6 Israel 3.56

7 UK 3.37

8 Germany 3.33

9 Norway 2.90

10 Switzerland 2.89

CANADA ON THE DECLINE

• Even though Canada has previously done well, governmental policies have slowed our growth

• Canada’s global share of Environmental Goods is steadily declining and we are the world’s third greatest loser of market share since 2008

• Over the last 10 years, Canada’s global market share has fallen 12%

• Waiting until 2020 to implement climate change policies to meet our 2050 goals will cost Canada $87B2

2. NRTEE (National Round Table on the Environment and the Economy. (2012). Framing the Future: Embracing the low-carbon economy. Report 06.

SUSTAINABILITY RISK/RESPONSE MATRIX

CANADIAN COMPANIES IN THE CLEANTECH SPHERE

3. Export Development Canada (EDC)

BROOKFIELD

• Brookfield is a leading global alternative asset manager who invests in real estate, infrastructure, renewable power and private equity

• Some of their investments include one of the largest portfolios of “pure play renewable power businesses that include more than 200 hydroelectric facilities”

• Rooted in Canada and Brazil, but have now branched out to over 30 countries

• They have over 10,700MW

• Wind Projects

• 100MW wind farm in Portugal

• 3 large wind farms in California

• 10+ wind farms in Ireland

• 4 wind farms in Brazil

• 2 wind farms in Southern Ontario

HYDROGENICS

• Hydrogenics is a leader in designing, manufacturing, building, and installing industrial and commercial hydrogen generation, fuel cells, and MW-scale energy storage solutions

• 95% of Hydrogenic’s revenue comes from outside of Canada

• Hydrogenics has felt the Canadian market’s culture to innovative cleantech

• They have successfully sold hydrogen fuel cell rail technology in Germany, but faced a lot more problems domestically due to Canadian's perceived risk aversion to the technology

• 2017 Revenue - $48.1M

“For almost all of our 20-year history, most of our business has developed outside of the country,” he explains. “Most of our business is focused in Europe, where historically there has always been a much

higher focus on renewable energy and reduction of climate change impact.”

– Daryl Wilson, CEO of Hydrogenics

ALGONQUIN POWER

• Algonquin Power acquires and operates green and clean energy assets across North America

• These include hydroelectric, wind, thermal, solar power facilities, and sustainable utility distribution businesses

• Annual revenue of $1.978B, annual adjusted EBITDA of $883.4M

• Algonquin Power operates through its two subsidiaries

• Liberty Power

• Liberty Utilities

• Algonquin Power has achieved domestic and international growth through:

• Diversified Business Model – Power and Utilities

• Leverage to Multiple Investment Themes

• Healthy Short Term Organic as well as M&A Based Growth

• Attractive Dividend Growth

QUESTOR TECHNOLOGY

• Questor Technology is a world leader in providing solutions through clean combustion of methane

• 50% of the company’s revenue comes from outside of Canada

• Questor recently announced record revenue in Q3 of 2017 of $5.7 million, mainly stemming from their extensive work in the US, specifically Colorado

• Colorado has mandated the use of enclosed combustion through Regulation 7, which has resulted in producers more readily gaining approval for projects from state and local authorities

“[Canada] hasn’t done a great job helping small to medium sized enterprises (SME’s) grow”

– Audrey Mascarenhas, CEO of Questor Technology

HOW WE CAN TAKE MORE MARKET SHARE

• International Energy Agency Report 2015-2020

• How any company, anywhere can take more share • LOBBY GOVERNMENTS: Governments must remove the question marks over renewables if these technologies

are to achieve their full potential,

• AIM FOR 1% OF THE GLOBAL PIE: Renewable electricity additions over the next five years will top 700 gigawatts (GW) - wind and solar photovoltaic panels (solar PV) will represent nearly half of the total global power capacity increase.

• KEEP YOUR EYES ON THE BRICS: Global power generation rising to over 26% by 2020 from 22% in

• CHINA RULES: China alone will account for nearly 40% of total renewable power capacity growth and requires almost one-third of new investment to 2020.

HOW CAN WE TAKE MORE MARKET SHARE

GET INVOLVED WITH CANADA-CHINA CHAMBER OF COMMERCE

HOW WE CAN TAKE MORE MARKET SHARE

• How any company, anywhere can take more share

• Watch how declining costs drive growth• Long-term generation contracts at reduced levels are emerging in areas as diverse as Brazil, India, the Middle

East, South Africa and the United States, Sub-Saharan Africa.

• Renewables can play a critical role in supporting economic growth and energy access in sub-Saharan Africa, meeting almost two-thirds of the region’s new demand needs over the next five years

• RISK: Financing remains key to achieving sustained investment. Regulatory barriers, grid constraints, and macroeconomic conditions pose challenges in many emerging economies. .

• COP21 climate negotiations in Paris in December created a virtuous cycle for renewable deployment by increasing long-term policy vision and predictability.

• While variability of renewables is a challenge that energy systems can learn to adapt to, variability of policies poses a far greater risk

SOLAR IN CANADA – OUR FUTURE

BrazilPeruTexas

CanadaMalta

Luxembourg

Bulgaria

Ukraine

Germany

Lithuania

This clearly shows how politics, price of energy, international debt ratings, supply and demand, and NOT the amount of solar radiation affects solar installs.

GREEN DRAGON ENVIRONMENTAL,UK / TANZANIA

• ENCO Green Energy Group LESSONS LEARNED on a $4.5 Billion Thermal Power Plant.1) After NDA has been signed, get your developer to join you on a Skype call or WeChat discussion. Ask many questions about the

business plan – who does what, when, where, why how. And most important of all, make sure that the party is qualified to spendthe money if you can bring the money

2) Get a budget together to fly over to offices of the company you want to invest in. In our case this would have been UK, with project and offices in Tanzania. If the proponent is telling you that they know people at highest levels of government, then go there and have dinner with highest levels of Government. If the proponent has no such influence then create that influence yourself.

3) Use services of Canadian High Commission or Embassies to get the introductions to correct layers of Government

4) Bring EDC Insurance with you when travelling, to show the cost that will have to be incurred to secure deals in that country

5) Look at all the other options. DO NOT PUT ALL YOUR EGGS IN ONE BASKET. Ask about Wind, Solar, Geothermal, Waste to Energy, Power Storage, Hydro and other “Green Energy” options to see which one makes sense.

6) For any deal that is greater than $1 Billion dollars in size, be prepared for 6 months due diligences, 6 months financial negotiations, and 12 months to close and have all documents signed. Anyone who tells you that these deals can be “sewn up” in less than 6 months is dreaming in technocolour or is trying to hook you into handing over all the information without compensation

7) Last – make sure that you get Consulting Services Agreement signed and money on the table from your investor – and make sure that your Finders’ Fee Agreement is bullet proof, and transparent with both Developer and Investor knowing what your payment schedule is, and why you are asking for the fee you have requested.

ANONYMOUS WASTE TO ENERGY CUSTOMER, CANADA

• ENCO Green Energy Group LESSONS LEARNED on a $85 Million proposed Waste to Energy

1. Get paid for services in advance of making introductions to investors.

2. Take control of the Marketing and Sales functions by way of a solid contract

3. Offer the client 3 opportunities to engage with your investors/interested parties. But if the conversations prove to be unfruitful, don’t be shy to let the client know you are willing to cut them lose if the image or behavior of the client cannot be changed

4. Work harder on deals like this because they are an Ontario Inc., looking to sell in USA and Canada, with global markets to follow.

5. Offer up 3 months of services on the house to win the customer, but let them go if they fail to pay invoices or make too many demand.

6. DO NOT bring them into markets outside of Canada and USA if they are barely capable of entertaining clients inside Canada.

7. Stop with the “nice guys” treatment that is so fashionably cordial between Canadians.

WIND SOHY, USA

• ENCO Green Energy Group LESSONS LEARNED on a $1.2 Billion proposed Power Storage Facility with Wind Farms Developed near by.

1. Call everyone that you know in your contact list and emails from 2,5,10,15 years back, you never know how advanced a technology has become while you have lost contact with people

2. Pay attention to press releases about new technologies that are proven, it is always a good sign when Governments have put in money for R&D

3. Get the NDA signed, look at the numbers

4. Remember that only technologies that are proprietary tend to make big money, who wants to be involved with paper clip sales anyway?

5. After reviewing all documents and discussing internally, if the offer and application is big enough, look East –look to China for volumes to sell. If that makes sense, find a way to broker it.

6. We have several key contacts in China through friends families, and lately from attending trade events right here in Toronto. No need to go to China immediately, as they are coming to Canada looking for opportunities as we speak.

We thank you for your time! Merci pour votre temps!

ENCOGreen Energy Group

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