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Utilities & O&M Service Tesco/EES Energy Joint Venture (Service & Payment Flows) EES TESCO Project Funding at Commissioning (£) Commitment Fees (£) Lease.

Published byKory Sims Modified over 7 years ago

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Presentation on theme: "Utilities & O&M Service Tesco/EES Energy Joint Venture (Service & Payment Flows) EES TESCO Project Funding at Commissioning (£) Commitment Fees (£) Lease."— Presentation transcript:

1 Utilities & O&M Service Tesco/EES Energy Joint Venture (Service & Payment Flows) EES TESCO Project Funding at Commissioning (£) Commitment Fees (£) Lease Payments (£) Dividends Utilities & O&M Baselines (£) O&M Services SPV Maintenance Contractors EES Project Cost Less Residual Value (£) Utilities (£) £ Operational Optimization Commissioned Projects Utilities Banks Fair Value for Assets (End of Lease Terms) O&M ContractorsBanks Asset Purchase Option (End of Lease Terms)

2 Tesco/EES Energy Joint Venture (Agreements) EESTESCO Master Agreement (Lease Line) Lease Agreements SPV Agreement > Equal Ownership/Control > Defined Distribution of Economic Value > 10 Year Term > Joint Resource Dedication > Clear Investment Criteria > Project Exclusivity at Specified Facilities > Defined Exclusivity Term SPV O&M Contractors EES Banks Utilities Agreement Lease Agreements Utilities Agreement Individual Project Development Agreements O&M Agreements > New Energy Assets > Lease Obligations > Project Development Resources O&M Agreement

3 Energy Outsourcing Partnership Structure Banks EES Funding (£) Tesco Lease Payments (£) Syndication (once asset pool funded) Utilities Agreement Energy Services Agreement Savings Payment* (£) Lease Agreements (at project completion) Completed Projects Asset Purchase Option (end of lease term) Lease Payments (£) * % of Difference Between Baseline Utilities/O&M Cost and Actual Utilities/O&M Cost Ongoing O&M Cost Optimisation Utilities Payment (£) Project Development Resources and Expertise

4 Energy Outsourcing Partnership Significant Terms 10 Year Term Identification of Project Sponsors (both parties) Commitment of Project Development Resources (both parties) Shared Savings Scope of Facilities & Equipment Types Clearly Defined Project Exclusivity for Energy Infrastructure Clear Investment Criteria & Project Approval Process Timeline & Objectives Regarding Levels of Investment/Savings Level of Lease Funding Commitment Commitment of EES O&M Cost Optimisation Expertise Energy Asset Maintenance Standards (if Tesco retains control of maintenance function)

5 Energy Outsourcing Partnership Benefits Innovative Energy Partnership with Leading Global Energy Company Reduction in Life Cycle Energy Costs Aligned Incentives Through Shared Risk & Savings Ability for Tesco to Maintain Control of Maintenance Function if Desired Commitment of EES Asset Management Expertise –Energy Design & Engineering –Project Management –On-going Operational Cost Optimisation Commitment of EES Risk Management Expertise –Utilities Cost –Project Cost –Maintenance Cost (planned & unplanned) –Funding During Construction –Residual Asset Value

6 Spectrum of Energy Outsourcing Structures Agreements Monthly Utilities Pmts. Shared Savings Pmts. From Projects* Joint Identification & Development of Projects Right to Procure Utilities Right to Procure Maintenance EES Tesco EES Tesco Guaranteed % Discount Off Baseline Utilities/Maintenance Cost Right to Implement Energy Capital Projects AdvantagesDisadvantages Reduced Life Cycle Energy Costs Aligned Incentives - Shared Savings & Risk Over Contract Term Greater Risk - No Guaranteed Savings AdvantagesDisadvantages Reduced Life Cycle Energy Costs Guaranteed Savings Immediately & Each Year of Contract Term Savings Above Guarantee Flow to EES Significant Organizational Approvals May Be Required To Provide EES Project Implementation Rights * % of Difference Between Baseline Utilities/O&M Cost and Actual Utilities/O&M Cost Completed Projects Shared Savings/RiskGuaranteed Savings/Risk Mitigation Agreements Monthly Utilities Pmts. Right to Procure Maintenance Completed Projects Right to Procure Utilities

7 Tesco/EES Energy Outsourcing Partnership Banks EES Master Agreement (Lease Line) Lease Agreements Tesco Lease Payments (£) Commitment Fees (£) Utilities Agreement Utilities Payment (£) Energy Asset Mgmt. Agreement Savings Payment* (£) Commitment Fees (£) Lease Agreements Commissioned Projects Asset Purchase Option (End of Lease Term) Lease Payments (£) Maintenance Standards * % of Difference Between Utilities and O&M Baseline and Actual Utilities and O&M Cost Operational Optimisation

8 Tesco/EES Energy Joint Venture (Income Statement)

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