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					Heat Management – A business opportunity
CONNECTIVE ENERGY
A company developed by Carbon Trust Enterprises
Carbon Trust Enterprises


 Carbon Trust Enterprises
       is a wholly owned
 commercial subsidiary of
        the Carbon Trust

       Its unique position
   means it is often better
          placed to unlock
    previously unrealised     “To accelerate the               “To become a leading
  opportunities in the low    transition to a low carbon       Creator of Valuable
             carbon sector
                              economy by helping               Low Carbon Businesses
                              organisations reduce their       in the UK and Beyond”
                              carbon emissions and
                              develop commercial
                              low carbon technologies”

                                                           •   Create, develop &
                              •   Facilitate and advise        implement
                              •   Non-profit making        •   Profit making



                                                                                       2
Waste heat opportunity


   Waste heat waste has     • 45% of the UK’s industrial primary energy consumption is currently wasted as
        been a common         heat released into the environment.
  phenomenon in the UK
         for a long time

      Relatively few heat   • Many organisations produce heat in their manufacturing processes or by
       networks exist at      generating electricity
   present; most involve
   community heating or
    bespoke heat supply
                 projects   • 40TWh of waste heat is considered recoverable:
                                     - worth around £1 billion per annum
                                     - potential annual carbon savings of 7.5 million tonnes CO2e
                                     - equivalent to the heating needs of Greater Manchester




                            1. Source: DTI



                                                                                                             3
Economic and Environmental Impact


 The economic impact of      • Increases in energy costs over recent years mean that organisations in the
      the waste heat has       UK currently face both the highest gas prices and amongst the highest
increased recently in line     electricity prices in Europe. This presents a significant challenge to UK
  with energy prices and
     regulatory pressure
                               business competitiveness, particularly against emerging economies.
                             • Government climate change mitigation policies require immediate action from
                               industry and the public sector to stabilise and reduce carbon emission levels
                               to sustainable levels.




                                                                                                               4
Barriers to resolution


   Market complexities in
 the capture and transfer
                            Barriers
of waste heat have so far
prevented the successful    • Complex negotiations between multiple stakeholders with differing
 implementation of these
                projects      objectives

                            • High resource and skills requirement to pursue one-off
                              opportunity

                            • Unwillingness to rely on others for utilities

                            • Projects do not meet internal investment hurdles

                            • Lack of capital

                            • Unwillingness to rely on others for utilities

                            • Not a core business activity



                                                                                                  5
 Launch of new business


Connective Energy is a low-
 carbon solutions provider
      aiming to encourage
neighbouring businesses &
  organisations to combine           CONNECTIVE ENERGY
      resources for shared       A company developed by Carbon Trust Enterprises
                    benefit

                               Our mission is to reduce carbon
                              emissions as part of a commercially
                                  attractive business model.




                                                                                   6
Business Partners


       Connective Energy
Limited is a Joint Venture
                              Carbon Trust Enterprises
  involving three best-in-    • Low carbon leader
    class companies that
                              • Regulatory expertise
  provide complementary
    skills and capabilities   • Lead generation
                              • Funding

                              Mitsui Babcock Energy                  Connective Energy
                              • Carbon abatement technology leader
                              • Engineering expertise                • Full time team
                              • Lead generation                      • London-based
                              • Funding                              • £20m committed funds

                              Triodos Renewable Energy
                              • Renewables project expertise
                              • Financing expertise
                              • Funding



                                                                                              7
Business Streams


    Connective Energy is
   focussed on reducing
                              Scenarios
    carbon emissions by
         various means
                              Products:      Water | Steam | Gas | Compressed Air
      It specialises on the
infrastructure required to
        deliver the product   • Waste Recovery
                              - Capture of heat (primarily) otherwise Wasted to the Environment
  Projects typically cost
                              - Non-invasive Recovery, Owned & Operated by CEL
 between £0.5-£4 million
and have a contract term
            of 5-10 years
                              • Enhanced Waste/Energy Efficiency Recovery
                              - Multiple Plant Efficiency Optimisation
                              - Fuel and Carbon Optimisation
                              - Lower Capital & Operating Costs
                               - Contributes to local business sustainability
                               - New Build

                                                                                                  8
Business Positioning


Connective Energy offers
      a turnkey solution
                            One Stop Shop                  Unlocking Mechanisms

       Heat suppliers and   • Project Identification and
           vendors make       Screening                     Trusted, independent third party can manage
information available and                                    negotiations and provide solutions based on
    commit themselves to                                               standard methodologies
     supply and consume     • Project Development
                   energy
                                                            Aggregation of small projects to access debt
                            • Project Financing                finance and to manage risks through a
                                                                         portfolio approach

                            • Project Construction
                                                            Commitment to projects via equity investment

                            • Operational Management
                                                               Best of breed specialist skills available:
                                                                 Engineering, Regulatory, Finance.
                            • Regulatory Compliance



                                                                                                            9
Project mechanics


  Connective Energy sits
                                                HEAT                     HEAT
 between the heat vendor
    and the heat supplier                              Connective
                            Heat Vendor           £                        £       Heat Consumer
                                                       Energy

                                                       • Identify
                                                       • Develop

                                Commitment to          • Design                 Commitment to
                                supply                                          take
                                                       • Invest
                                                       • Finance
                                                       • Build
                                                       • Own & Operate




                                                                                                   10
 Business Model and consumer benefits


         Connective Energy      Benefits to Heat Vendor:                   Benefits to Heat Consumer:
  quantifies the value of the
opportunity and offers a low    • Additional revenue streams               • Reduced operating costs
    risk option to access it.   • CCL rebates                              • Regulatory compliance
     The business model is      • Reduced operating costs                  • EU ETS credits
     based on transparency
                                • Capital Grants                           • Offset of capital costs
  All the benefits and costs    • Optimisation of asset base               • Hedge against fuel price
        of the heat recovery
     opportunity are pooled     • CSR / Branding                           • CSR / Branding
        before being divided
  amongst the participants                                      Pool benefits
                                                                  & costs;
                                                                   adjust
                                  Purchase of                                             Sale at a
                                                                  pricing
                                  waste heat                                              discount




                                                               Revenue to CEL


                                                                                                        11
 Development Process


    The Connective Energy
  Development Process has
                                                               Proof of             Heads              Contract
been designed to overcome          Initial Screening           Concept             of Terms             Stage             Build              Operate
 the traditional obstacles to
 commercially viable waste
              heat solutions    • Initial Discussion
                                HV and HC              • Technical        • Draft Heat Trading Contracts
                                                       Assessment
                                •Technical                                • Draft EPC contract
                                Feasibility            • Financial
                                                                          • Engineering Design
                                                       Assessment
                                •Financial
                                Feasibility            • Proof of Concept • Secure Funding
                                •Sign EoI Stage I      • Sign EoI Stage II • Planning Considerations
                                                                          • EPC and O&M Costs
                                                                          • Programme of Works
                                                                          • Financial Close & Sign Contracts

                                                                                              • Planning applications
                                                                                              • Order Plant & Equipment
                                                                                                                  • Site Establishment
                                                                                                                  • Construct
                                                                                                                  •Test & Commission
                                                                                                                  • Handover
                                                                                                                                   • Operate & Maintain
                                                                                                                                   • Metering & Billing
                                                                                                                                                    12
Proposition


Connective Energy offers
  something that has not
                            Connective Energy Offering
   been available before.

                                  An independent company backed by best-in-class
                                  shareholders/operating partners


                                  With a unique partnering and open book approach with
                                  customers, shareholders and partners


                                  That delivers projects with real commercial and
                                  environmental benefits




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