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Slide 1: Cross Over Funding: Private Equity to Project Finance David Eva Manager Renewable Power Project Development Quantum Leap Asset Management Beyond the Public Markets: Alternative Investments in the Environmental Economy April 20, 2005
Slide 2: Today’s Discussion Market Context    Need for clean, economical infrastructure No ‘magic bullet’ solutions are expected Many technologies in various stages being developed Cross-Over Requirements   ‘Crossing-over’ into project finance requires major reduction in risk and substantial increases in capital outlay Investors are looking for more than ‘proven technologies’ Case Studies      Case study #1: Clean Energy Developments Case study #2: Encelium Technologies Overview of Quantum Leap The Quantum Leap Company – Asset Management Fund Overviews: Renewable Power and VC Funds Quantum Leap
Slide 3: How to meet energy infrastructure needs in a clean (yet economical) fashion? Ontario electricity supply and demand outlook 40,000 35,000 Generation Capacity (MW) 30,000 25,000 20,000 15,000 10,000 5,000 0 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 Ontario E ak Dem tricity Pe lec and* Supply Gap Aggressive Renewables Existing Generation Capacity
Slide 4: No ‘magic bullet’ – it will likely take a portfolio approach to meeting our growing power needs 1500 S urpris e G eothermal S olar 1000 New Biomas s E xajoules Wind Nuclear Hydro G as Oil & NGL Coal 0 1860 1880 1900 1920 1940 1960 1980 2000 2020 2040 Traditional Biomas s 2060 1500 SHELL: 2003
Slide 5: Many technologies are being developed to address this opportunity Fundamental Research Prototype Development Product Demonstration Initial Mass Production/ Deployment NON-EXHAUSTIVE “Proven” Generation and Fuels Supply • Hydrogen (Fuel Cells, and IC) • Fly Wheels • Super Capacitors Small Hydro Small Wind • Tidal Power • Clean Coal Solar PV Geothermal MSW and Biomass Large Scale Wind Demand Management/ Reduction District Cooling Geoexchange Solar Thermal Smart Meters
Slide 6: Today’s Discussion Market Context    Need for clean, economical infrastructure No ‘magic bullet’ solutions are expected Many technologies in various stages being developed Cross-Over Requirements   ‘Crossing-over’ into project finance requires major reduction in risk and substantial increases in capital outlay Investors are looking for more than ‘proven technologies’ Case Studies      Case study #1: Clean Energy Developments Case study #2: Encelium Technologies Overview of Quantum Leap The Quantum Leap Company – Asset Management Fund Overviews: Renewable Power and VC Funds Quantum Leap
Slide 7: “Crossing over” into project finance requires reductions in risk and large capital outlays Fundamental Research Prototype Development Product Demonstration Initial Mass Production/ Deployment “Proven” Typical Governments / Foundations / Industry sources Angel Investors of financing Venture Capital Traditional Project Finance (Debt & Equity) “Cross-over” Returns Risk Capital 20%+ High Tens of millions Equity 12-20%; Debt 6-11% Moderate/Low Hundreds of millions to billions
Slide 8: Being a “proven technology” isn’t enough for project finance investors Investors Needs Examples  100 operating wind turbines of a given model before able to secure bank financing 2+ years of hydrology data plus 20 year correlation Long-term pricing on outputs Status of 1000 MW+ of wind farm contracts if WPPI not reinstated? US wind industry: roller coaster PTC Developers must be professionals able to anticipate project needs/requirements 1 Proven Technologies + 2 Quantifiable and manageable risks    + 3 Stable Regulatory Regime and Gov’t Policy  With all these requirements, how can emerging technologies achieve mass deployment and access capital? + 4 Solid development partners 
Slide 9: Today’s Discussion Market Context    Need for clean, economical infrastructure No ‘magic bullet’ solutions are expected Many technologies in various stages being developed Cross-Over Requirements   ‘Crossing-over’ into project finance requires major reduction in risk and substantial increases in capital outlay Investors are looking for more than ‘proven technologies’ Case Studies      Case study #1: Clean Energy Developments Case study #2: Encelium Technologies Overview of Quantum Leap The Quantum Leap Company – Asset Management Fund Overviews: Renewable Power and VC Funds Quantum Leap
Slide 10: Example #1: Clean Energy Developments • Provides high efficient heating/cooling/hot water systems to new residential developments. Combines benefits of geoexchange with solar-thermal hot water systems. Payback to new home owners of 3-5 years. Approach and Learning's – 650 home development will require approximately $15 million in financing for geoexchange systems – Had to prove technology was mature (specific team had several operating systems) – Needed to assess several models and approach multiple parties (utilities, builders, banks – mortgages, equipment financing – hot water heaters) – Over time, expect model to evolve: early stage (mortgages) to securitization of cash flows (heating charge / paid from savings / rental payments) •
Slide 11: Example #2: Encelium Technologies The Encelium Energy Control System is a lighting technology that: • Reduces lighting related energy costs in commercial and industrial facilities by 50% to 75% • • • • Improves lighting quality and workplace ergonomics Offers next generation of lighting efficiency hardware and software, providing facilities managers with significant electricity cost savings 2 to 4 year simple payback for system users Approach and Learning's: – Initially: Customers buy outright – Over time: for larger installations, developing a paid-from-savings model (whereby customer not out of pocket for initial capital outlay)
Slide 12: Today’s Discussion Market Context    Need for clean, economical infrastructure No ‘magic bullet’ solutions are expected Many technologies in various stages being developed Cross-Over Requirements   ‘Crossing-over’ into project finance requires major reduction in risk and substantial increases in capital outlay Investors are looking for more than ‘proven technologies’ Case Studies      Case study #1: Clean Energy Developments Case study #2: Encelium Technologies Overview of Quantum Leap The Quantum Leap Company – Asset Management Fund Overviews: Renewable Power and VC Funds Quantum Leap
Slide 13: Quantum Leap – Business Overview A Toronto based asset management and advisory firm focused on building value in the areas of Energy and Efficiency Asset Management Venture Services Principal Business • Venture Capital • Project Finance
Slide 14: Quantum Leap – Private Equity Venture Portfolio Technology applications Portfolio Companies 1. Adventus Remediation 1. Eco Waste 1. Encelium 1. Enerworks 1. Fuel Cell Technologies 1. Oxegen 1. Rtica 1. RuggedCom 1. MeterCo 1. Ventus Wind 1. Clean Energy Developments Energy Conversion Power Control Electronics Energy Convergence Emissions Reduction Water Purification Remediation and Recycling                          
Slide 15: Quantum Leap – Project Finance and Power Development Investee Observatory Inlet Development Corp. Glace Bay Lingan Wind Power Ltd. Springhill Riverhurst Wind Power Ltd. Spuzzum Creek Power Corp. Ventus Energy Inc. SkyPower Corp. Vector Wind Energy Inc. Schneider Power Inc. WindSwept Power Inc. Cape Breton Power Inc. Sector Hydro Wind Wind Hydro Wind Wind Wind Wind Wind Wind Province BC NS NS BC ON ON ON ON SK NS
Slide 16: Thank you ! www.quantumleapco.com