steven fawkes
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TBLI CONFERENCE™ EUROPE 2011- London - United Kingdom TBLI CONFERENCE™ is the prime annual global networking and learning event on Environment, Social, Governance (ESG) and Impact Investing.TRANSCRIPT
OPPORTUNITIES FOR INVESTING IN ENERGY EFFICIENCY
STEVEN FAWKES
TBLI EUROPE 11 NOVEMBER 2011
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CONTENT
• The potential for energy efficiency
• Drivers, barriers and policies
• Opportunities to invest
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CONTENT
• The potential for energy efficiency
• Drivers, barriers and policies
• Opportunities to invest
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JUST HOW INEFFICIENT ARE WE?
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475
5555
Source: University of Cambridge, global figures , in EJ
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INEFFICIENCY EVERYWHERE
The US runs at least 8 large power stations just to power stuff that is turned off
Less than 10% of the power plant fuel that makes electricity for pumping applications actually creates customer value
Less than 1% of the power plant fuel that makes electricity for a data centre actually creates customer value
US buildings could save between 38 and 69% with an investment of $0.5 trillion by 2050 and an NPV of $1.4 trillion
Source: Rocky Mountain Institute
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THE BUILT ENVIRONMENT
8Source: World Economic Forum
Energy efficiency measures in the US building stock would:
Buildings:
GLOBAL POTENTIAL
$170bn a year investment would:- halve the projected growth in energy demand (reducing demand
by ~ 64 million barrels a day)- produce half the emissions abatement required to keep
atmospheric CO2 at 450ppm- have an average IRR of all projects 17% (at $50/barrel oil)
Source: McKinsey
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BARRIERS
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CONTENT
• The potential for energy efficiency
• Drivers, barriers and policies
• Opportunities to invest
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DRIVERS
High energy pricesLegislation and Regulation- EU ETS- EPB Directive- EEES Directive- IPPC- CRCEnergy security- National- CorporateEnvironment
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BARRIERS
30 years of research on barriers to energy efficiency:- Availability of capex
- Hidden costs
- Lack of information
- Risks and uncertainty
- Poorly aligned incentives
- Regulatory
- Organizational
- Psychological
- etc
ALL CAN BE ADDRESSED EXCEPT ONE:
- The ribbon problem14
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THE TWIN PILLARS OF UK ENERGY POLICY?
Over budgetDelays to programmePublic acceptance of risk
Over budgetDelays to programmePoor economicsPublic acceptance of cost
Supply risksCheap shale gas??
Cost effectiveNo subsidies neededInstitutional barriers
CONTENT
• The potential for energy efficiency
• Barriers, drivers and policies
• Opportunities to invest
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OPPORTUNITIES TO INVEST
Four categories:
- Technology development companies
- Project development companies
- Projects
- Financing vehicles
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TECHNOLOGY DEVELOPERS
Many interesting, high growth areas including:
- LED lighting
- Waste heat to power
- High technology glazing
- Analytics
- Green building materials
- Energy storage
- New industrial processes
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PROJECT DEVELOPERS
Engineering consultants
Energy Service Companies (ESCOs)
Green building consultants / architects
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ESCO PROJECTS
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Funding vehicles seek to address the gap between investors and projects – size, skills etc and match project stage to investors
Transaction vehicles
Funds
UK tax efficient structures
-VCTs
-EIS
Others emerging
-Green bonds
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FUNDING VEHICLES
CONCLUSIONS
Energy efficiency is:
- Critical resolving energy problems
- Under-exploited
- A very large market
- Not dependent on subsidies
- Growing in importance in policy circles
- An attractive area for investors
- Has a range of investment types from venture to infrastructure
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Steven FawkesPartner, Corporate FinanceMatrixOne Vine StreetLondonW1J 0AH
020 3206 7185077 0223 1995
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