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Ana María Ruz – January 23rd, 2013

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1 Ana María Ruz – January 23rd, 2013
Creating Business Plan for establishing an ESCO Knowledge for the Promotion & Establishment of an ESCO Industry in Jamaica Agreement No. C Based on TECHNICAL ASSISTANCE IN THE PREPARATION OF ESCO BUSINESS PLANS that Fundación Chile contracted from ECONOLER, as part of the program “Promotion of Market Opportunities for Clean Energies”, co-financed by IDB-MIF (ATN/ME-9862 CH) Ana María Ruz – January 23rd, 2013

2 Contents Introduction Contents of a Business Plan
BACKGROUND THE ESCO’s VISION THE ESCO’s MISSION TARGET MARKET (DEMAND) THE ESCO ENVIRONMENT OFFER (ESCOs Products and Services) OBJECTIVES AND GOALS FINANCIAL ANALYSIS RISK ANALYSIS Jamaican EE Target Market ESCO Environment

3 Introduction Fundación Chile provided technical assistance to the project’s Chilean ESCOs (3) in the preparation of their own business plans A guide was created to allow the Chilean ESCOS to define their business plans. Available. Summary of that guide was presented on Oct 2012 Now we propose to work below two schemes: Individual work by company or Joint work for developing common aspects of ESCOs business plans

4 Contents of a Business Plan
Introduction Contents of a Business Plan BACKGROUND THE ESCO’s VISION THE ESCO’s MISSION TARGET MARKET THE ESCO ENVIRONMENT OFFER OBJECTIVES AND GOALS MARKETING ORGANIZATION RESOURCES FINANCIAL ANALYSIS RISK ANALYSIS SHAREHOLDERS TIMELINES

5 Contents Introduction Contents of a Business Plan
BACKGROUND THE ESCO’s VISION THE ESCO’s MISSION TARGET MARKET (DEMAND) THE ESCO ENVIRONMENT OFFER (ESCOs Products and Services) OBJECTIVES AND GOALS FINANCIAL ANALYSIS RISK ANALYSIS Jamaican EE Target Market ESCO Environment

6 Background This section should describe the entrepeneur’s general idea. Relevant elements could be: The history of the company The company’s most important current products in terms of sales Internal or external events that led to the creation of the ESCO Definition of the ESCO adopted From the typical ESCO model and adapt it to the circumstances. The simple definition of an ESCO is: "a unit or company that offers one or more of the following services: 1 –a comprehensive service that is a one-stop shop for the implementation of a full EE project, 2 - a way of sharing a project’s technical risks with a performance contract, and 3 - help a client to obtain investment financing. Why the ESCO model is being adopted and why is it an interesting business opportunity?

7 Contents of a Business Plan - Background
About Us Ameresco, Inc. is a leading independent provider of comprehensive energy efficiency and renewable energy solutions for facilities throughout North America, delivering long-term value through innovative systems, strategies and technologies. Ameresco's solutions range from upgrades to facility's energy infrastructure to the development, construction and operation of renewable energy plants combined with tailored financial solutions. We work with customers on both sides of the meter to reduce operating expenses, upgrade and maintain facilities, stabilize energy costs, improve occupancy comfort levels, increase energy reliability and enhance the environment. The Company was founded in 2000 by George Sakellaris, a pioneer in the energy service business. To best serve its wide-ranging clientele, Ameresco has regional offices located throughout North America. With dedicated energy and business professionals with years of experience and strong commitment to customer satisfaction and service, Ameresco offers you the resources needed to successfully plan, execute and even finance the energy program that will create real, sustained economic and operating benefits to fulfill your unique requirements.

8 Contents of a Business Plan - Background

9 Contents of a Business Plan - Background

10 Background This section should describe the entrepeneur’s general idea. Relevant elements could be: The history of the company The company’s most important current products in terms of sales Internal or external events that led to the creation of the ESCO Definition of the ESCO adopted From the typical ESCO model and adapt it to the circumstances. The simple definition of an ESCO is: "a unit or company that offers one or more of the following services: 1 –a comprehensive service that is a one-stop shop for the implementation of a full EE project, 2 - a way of sharing a project’s technical risks with a performance contract, and 3 - help a client to obtain investment financing. Why the ESCO model is being adopted and why is it an interesting business opportunity? Could you write in one to three paragraphs your Company Background? (10 minutes)…. or share with us…….

11 ESCOs Vision This section should describe the ESCO’s aspirations.
The vision is a short text (a sentence less than half page). It is a good strategy to present the vision to employees and customers in a way that generates pride It should also be presented to suppliers and trade associations in such a way that it creates a brand image For example: “The ESCO fights climate change sustainably for the benefit of future generations” A list of the values of the company can be developed: a series of words that characterize the ideals of the enterprise or the unit. For example: "excellence", "quality", "thorough", "professionalism", "commitment", "innovation", etc.

12 Contents of a Business Plan – ESCOs Vision

13 Contents of a Business Plan – ESCOs Vision

14 Could you write in one paragraphs/sentence your Company Vision?
ESCOs Vision This section should describe the ESCO’s aspirations. The vision is a short text (a sentence less than half page). It is a good strategy to present the vision to employees and customers in a way that generates pride It should also be presented to suppliers and trade associations in such a way that it creates a brand image For example: “The ESCO fights climate change sustainably for the benefit of future generations” A list of the values of the company can be developed: a series of words that characterize the ideals of the enterprise or the unit. For example: "excellence", "quality", "thorough", "professionalism", "commitment", "innovation", etc. Could you write in one paragraphs/sentence your Company Vision? (5 minutes)

15 ESCOs Mission This section describes in a practical way what the ESCO’s role is. Examples of elements to include are: what it sells and to whom what economic area it belongs to what its specialty is what its target market is who are its suppliers what are its main activities what will be its sources of investment financing, etc. For example: The ESCO’s Mission is to sell energy saving projects to organizations in Jamaica’s public sector, such as hospitals and schools, including measures for saving energy with medium and/or high levels of investment. The ESCO mainly sells engineering services, including: energy efficiency audits, detailed engineering, construction supervision, starting-up, and monitoring the measurement and verification (M&V) of the equipment purchases and works together with a contractor; it takes the technical risk with a "guaranteed savings" model and helps its clients in the search for financing from commercial banks.

16 Contents of a Business Plan – ESCOs Mission

17 ESCOs Mission This section describes in a practical way what the ESCO’s role is. Examples of elements to include are: what it sells and to whom what economic area it belongs to what its specialty is what its target market is who are its suppliers what are its main activities what will be its sources of investment financing, etc. For example: The ESCO’s Mission is to sell energy saving projects to organizations in Jamaica’s public sector, such as hospitals and schools, including measures for saving energy with medium and/or high levels of investment. The ESCO mainly sells engineering services, including: energy efficiency audits, detailed engineering, construction supervision, starting-up, and monitoring the measurement and verification (M&V) of the equipment purchases and works together with a contractor; it takes the technical risk with a "guaranteed savings" model and helps its clients in the search for financing from commercial banks. Could you write in one paragraph/sentence your Company Mission? (5 minutes) … or share with us……

18 Target Market Succinctly state what economic sector or branch of industry will be the ESCO’s target market Qualitative description Market size Determination of the sales goal (sector(s), client(s))

19 Case 1: Target Market & OFFER
Case 1: One specific new technology (Heat recovery) PRODUCTS Identified technologies from strategic suppliers (partners) M&V of savings M&O CONTRACTS EPC Support for getting financing leasing or borrow Medium term Performance Contract – Guaranty Savings or Direct Loans Long term Share savings or Fast Out MARKET SIZE 3000 Boilers in Santiago Region with 1000 Industrial Boilers Market Target 100% in 10 years Unknown market in Peru, Argentina & Bolivia FINANCING Short Term direct financing from client or bank Medium Term after building a trust relation with banks go to loans Total or partial financing could be offer

20 Target Market and goals
Case 1: One specific new technology (Heat recovery) Assumptions Based on products and associated services Market annual rate penetration of x% Loan by 80% of the invesment at 5 years

21 Target Market and Risks
Case 1: One specific new technology (Heat recovery) Risk Analysis 1. Technical risks Suppliers must give valid warranties Equipment must have clear Minimum Performance levels 2. Project risks Good insurance Have credit lines “available” during construction, using contracts as backup with financing institutions 3. Measurement and Verification Risks Client must understand and accept documented/signed M&V methodology Number of times than Measurements will be made (M&V) must be defined on contracts Base line model and criteria also must be part of contracts 4. Financing risks Have preaproved/simultaneous financing with financing institution Take care of financing institution interest rate (could make less interesting/kill the business)

22 Case 2: Target Market and Offer
Case 2: EE Chilean market PRODUCT EE Pre diagnosis Energy Audits Investment projects studies Project profitability studies Technical Inspection of construction M&V of savings, M&O CONTRACT Consulting services Contracts were supplier takes the risk In the future ESCOs performance contracts MARKET SIZE By sectors General level FINANCING Now, payment direct Medium term - Leasing ESCOs Long term - Private Investment Fund

23 Contents Introduction Contents of a Business Plan
BACKGROUND THE ESCO’s VISION THE ESCO’s MISSION TARGET MARKET (DEMAND) THE ESCO ENVIRONMENT OFFER (ESCOs Products and Services) OBJECTIVES AND GOALS FINANCIAL ANALYSIS RISK ANALYSIS Jamaican EE Target Market ESCO Environment

24 Jamaican EE Target Market

25 Jamaican EE Target Market

26 Jamaican EE Target Market

27 Jamaican EE Target Market

28 Jamaican EE Target Market
1%  11MMUSD/year Source: JPS annual Report 2011

29 Jamaican EE Target Market
Source: PCJ annual Report 2010 1%  11MMUSD/year

30 Important for ESCOs Business size ESCOs market needs
Be aware of real EE market size Utilities could be the best and worst partners ESCOs market needs Technical trust Regulatory framework Financing options Source: IFC Energy Service Company Market Analysis, ECONOLER 2011

31 Important for DBJ Business plans are highly confidential for ESCOs
Normally, ESCOs professionals are in the day by day work and they have no time at all International experience has not always local aplicability, ecosystems are different in each country Commercial Plans and Management on EE and ER SMEs has low level of development ESCOs can start with a LIGHT Business Plan ESCOs can develop their own strategies, it is good to help them improving EE ecosystem

32 The Esco Environment For the understanding of the business environment should be reviewed Macroeconomics Energy sector The energy efficiency environment Financial environment Tax related issues Technology environment Competition

33 Thanks for your attention¡¡¡
Creating Business Plan for establishing an ESCO Knowledge for the Promotion & Establishment of an ESCO Industry in Jamaica Agreement No. C Based on TECHNICAL ASSISTANCE IN THE PREPARATION OF ESCO BUSINESS PLANS that Fundación Chile contracted from ECONOLER, as part of the program “Promotion of Market Opportunities for Clean Energies”, co-financed by IDB-MIF (ATN/ME-9862 CH) Thanks for your attention¡¡¡


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